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PennyMac Mortgage Investment Trust Reports Second Quarter 2012 Results

PennyMac Mortgage Investment Trust (NYSE: PMT) today reported net income of $29.6 million, or $0.79 per diluted share, for the second quarter of 2012, on net investment income of $64.4 million. In addition, the Board of Trustees of PMT has declared a cash dividend of $0.55 per common share of beneficial interest. This dividend will be paid on August 31, 2012 to common shareholders of record on August 16, 2012.

Quarterly Highlights

Record financial results:
  • Diluted earnings per common share of $0.79, up 22 percent from the prior quarter on a 27 percent increase in weighted shares outstanding
  • Net investment income of $64.4 million, up 38 percent from the prior quarter
  • Net income of $29.6 million, up 55 percent from the prior quarter
  • Return on average equity of 17 percent 1, up from 13 percent in the prior quarter

Strong operational performance:
  • Correspondent purchases of $3.4 billion in unpaid principal balance (UPB) 2, up 88 percent from the prior quarter
    • Conventional purchases of $1.8 billion, up 79 percent from the prior quarter
  • Correspondent interest rate lock commitments (IRLCs) of $4.6 billion, up 94 percent from the prior quarter
    • Conventional IRLCs of $2.7 billion, an increase of 120 percent from the prior quarter
  • Distressed mortgage loan purchases of $402 million in UPB
  • Cash flow from investments of $116 million, up 46 percent from prior quarter

1   Return on equity calculated using average monthly equity values.
2 FHA purchases were $1.6 billion in UPB, for which PMT earns a sourcing fee and interest income for its holding period.

PMT earned $38.0 million in pretax income for the quarter ended June 30, 2012. The following table presents the contribution of PMT’s Investment Activities and Correspondent Lending segments to pretax income:

Quarter ended June 30, 2012

Investment activities

Correspondent lending
(in thousands)
Net gain on investments $ 27,992 $ - $ 27,992
Interest income 12,881 3,178 16,059
Net gain on mortgage loans acquired for sale - 18,046 18,046
Other income   1,783   583   2,366
  42,656   21,807   64,463
Loan fulfillment fees - 7,715 7,715
Interest 5,071 1,689 6,760
Loan servicing expense 5,756 30 5,786
Other   5,871   356   6,227
  16,698   9,790   26,488
Pre-tax net income $ 25,958 $ 12,017 $ 37,975
*Net of intersegment elimination

“PMT’s results for the second quarter were driven by strong growth across our correspondent and investment activities,” said Chairman and Chief Executive Officer Stanford L. Kurland. “During the quarter PMT’s correspondent volume grew to new highs and we added to our portfolio of distressed whole loans through four acquisitions. Through PCM, our manager, and PLS, our servicer and fulfillment provider, we exceeded our target for correspondent of purchasing $1 billion per month in June by over $400 million and continue to see excellent resolutions in our distressed portfolio. Achieving a return on average equity of over 17 percent during the quarter in which we raised over $200 million in new equity capital demonstrates our ability to quickly and effectively deploy new capital into accretive transactions.”

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