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PennyMac Mortgage Investment Trust Reports Fourth Quarter And Full-Year 2012 Results

PennyMac Mortgage Investment Trust (NYSE: PMT) today reported net income of $49.2 million, or $0.83 per diluted share, for the fourth quarter of 2012, on net investment income of $124.9 million. This brings full-year net income earned by PMT to $138.2 million, or $3.14 per diluted share, on total net investment income for the year of $335.2 million. In addition, PMT’s Board of Trustees has declared a cash dividend of $0.57 per common share of beneficial interest. This dividend will be paid on March 1, 2013 to common shareholders of record as of February 21, 2013.

In addition, PMT and its manager, PNMAC Capital Management (PCM), and loan servicer and fulfillment provider, PennyMac Loan Services (PLS), have revised certain key agreements that govern investment management, loan servicing and mortgage banking and warehouse services provided to PMT. Among other things, the agreements extend all services for at least four years, ensure that PLS performs correspondent lending fulfillment services exclusively for PMT, and amend PCM’s and PLS’ compensation for these services.

“I am pleased to announce the revised management and services agreements which secure a long-term partnership among PMT, PCM and PLS.” said Chairman and Chief Executive Officer Stanford L. Kurland. “They address aspects of PMT’s business which have evolved over time and better align the incentives of PCM and PLS with PMT’s financial performance.”

All of the agreements are being filed with the SEC as part of a Current Report on Form 8-K, which can also be accessed at PMT’s investor relations’ website at www.pennymac-REIT.com.

Quarterly Highlights

Financial results:

  • Diluted earnings per common share of $0.83, up 2 percent from the prior quarter
  • Net investment income of $124.9 million, up 26 percent from the prior quarter
  • Net income of $49.2 million, up 22 percent from the prior quarter
  • Return on average equity of 16 percent 1, which was the same as the prior quarter

Mortgage investment activity results:

  • Correspondent acquisitions of $10.0 billion in unpaid principal balance (UPB) 2, up59 percent from the prior quarter
    • Conventional acquisitions of $6.5 billion in UPB, up 76 percent from the prior quarter
  • Correspondent interest rate lock commitments (IRLCs) of $10.4 billion, up 22 percent from the prior quarter
    • Conventional IRLCs of $7.0 billion, up 28 percent from the prior quarter
  • Distressed mortgage loan purchases of $290 million in UPB

Yearly Highlights

Financial results:

  • Diluted earnings per common share of $3.14, up 30 percent from the prior year, with weighted average shares outstanding increasing 65 percent from 2011
  • Net investment income of $335.2 million, up 161 percent from the prior year
  • Net income of $138.2 million, up 115 percent from the prior year
  • Return on average equity of 16 percent 1, up from 15% for 2011

Mortgage investment activity results:

  • Correspondent acquisitions of $21.5 billion in unpaid principal balance (UPB) 3, more than 16 times prior year volumes
    • Conventional acquisitions of $13.0 billion in UPB, up 20 times the prior year volumes
  • Correspondent IRLCs of $25.9 billion, up 19 times the prior year
    • Conventional IRLCs of $16.3 billion, up 22 times the prior year volumes
  • Distressed mortgage loan purchases of $1.0 billion in UPB

PMT earned $65.3 million in pretax income for the quarter ended December 31, 2012, an 11 percent increase from the third quarter. The following table presents the contribution of PMT’s Investment Activities and Correspondent Lending segments to pretax income:

             
Quarter ended December 31, 2012
Investment Correspondent

 

Unaudited Activities Lending Total

 

(in thousands)

Revenues:
External
Net gain on mortgage loans acquired for sale $ - $ 66,465 $ 66,465
Net gain on investments 38,108 - 38,108
Interest income 12,680 7,604 20,284
Other   (5,605 )   5,665   60
  45,183     79,734   124,917
Expenses:
Loan fulfillment fees payable to affiliate - 31,809 31,809
Interest 4,692 5,291 9,983
Servicing expense 4,932 68 5,000
Other   11,237     1,585   12,822
  20,861     38,753   59,614
Pretax income $ 24,322   $ 40,981 $ 65,303
 

“The fourth quarter results were strong in both our Correspondent Lending and Investment Activities segments,” commented Mr. Kurland. “Housing prices continued to stabilize during the quarter, driving valuation gains in our distressed portfolio. Correspondent loan purchase activity continued its robust growth, resulting in solid pretax earnings from the segment that comprised 63% of total pretax earnings.”

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