PennyMac Mortgage Investment Trust Reports Third Quarter 2016 Results

PennyMac Mortgage Investment Trust (NYSE: PMT) today reported net income of $35.4 million, or $0.49 per diluted share, for the third quarter of 2016, on net investment income of $103.3 million. PMT previously announced a cash dividend for the third quarter of $0.47 per common share of beneficial interest, which was declared on September 26, 2016, and paid on October 27, 2016.

Third Quarter Highlights

Financial results:
  • Diluted earnings per common share of $0.49, up from a loss per common share of $0.08 in the prior quarter
  • Net income of $35.4 million, compared with a net loss of $5.3 million in the prior quarter
  • Net investment income of $103.3 million, up 117 percent from the prior quarter
  • Book value per share of $20.21, up from $20.09 at June 30, 2016
  • Return on average equity of 10 percent, up from (1) percent for the prior quarter 1

Investment activities and correspondent production results:
  • Continued investment in GSE credit risk transfer (CRT) and mortgage servicing rights (MSRs) resulting from PMT's correspondent production business
    • Correspondent production related to conventional conforming loans totaled $7.3 billion in unpaid principal balance (UPB), up 40 percent from the prior quarter
    • CRT deliveries totaled $3.4 billion in UPB, resulting in an additional $90 million of new CRT investments
    • Completed third CRT commitment with Fannie Mae and entered into a fourth CRT commitment for $7.5 billion in UPB 2
    • Added $78 million in new MSR investments
  • Repurchased approximately 1 million of PMT's common shares from August 5 th through October 7 th at a cost of $14.4 million; 8.4 million shares repurchased since the program's inception last year
  • Cash proceeds from the liquidation and paydown of distressed mortgage loans and real estate owned (REO) properties were $75 million, reflecting a decrease in REO sales

Notable activity after quarter end:
  • Entered into an agreement to sell $172 million in UPB of performing loans from the distressed portfolio 2

"PMT's earnings have improved significantly as we continue to transition our capital to our newer investment strategies and away from distressed mortgage loans," said Chairman and Chief Executive Officer Stanford L. Kurland. "During the third quarter, our results were driven by the strength of our correspondent business and the investments that it creates, including our unique GSE credit risk transfer investments. We continued to make progress in liquidating and resolving our distressed mortgage investments, including a pending sale of performing loans from the distressed portfolio. We are particularly pleased with the performance of our newer strategies and correspondent production business, and look for continuing improvement from the performance of our distressed investments going forward."

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