PennyMac Net Income Grows 630% in Q210 on Mortgage Investments
PennyMac Mortgage Investment Trust (PMT) Wednesday reported a Q210 net income of $8.2m or $0.48 per share, up 630.8% from $1.3m in Q110. The company reported a total net investment income of $13.3m and increase of 630% over last quarter's earnings. PennyMac Mortgage Investment Trust is a mortgage real estate investment trust (REIT) that primarily invests in residential mortgage loans and mortgage-related assets. The board of trustees at PennyMac declared a cash dividend of $0.35 per common share of beneficial interest, payable to common shareholders on August 31. PennyMac attributed earnings to large investments implemented in the second quarter. During Q210, the Company invested $133m in distressed mortgage assets, including $97m in nonperforming residential mortgage whole loans and $36m in mortgage-backed securities (MBS). The aggregate unpaid principal balance of the whole loan investments acquired in the quarter totaled $195m. These investments bring the total fair value of PennyMac's residential mortgage whole loans and residential MBS portfolio to $300m as of June 30, 2010. PennyMac reported that it has begun financing certain investments with debt to add to its capacity for investments. So far it is utilizing two repurchase facilities for a portion of its MBS and is currently in discussions with banks to obtain financing for nonperforming loans and REO properties. The company said it continues to work toward securitization and is targeting completion in the second half of 2010 that, along with cash flow generated from its investment portfolio, will allow PennyMac to continue purchasing additional investments. "The Company continues to see substantial volumes of attractive investments in distressed mortgage assets," said chairman and CEO Stanford Kurland. "We also see an attractive and growing opportunity for PMT in the correspondent originations market. The Company continues to explore ways to finance its growth through various forms of additional debt financing and possible future equity offerings." PMT invested $35m in fair value of nonperforming whole loans after the end of Q210, which are expected to settle in August. The firm also expects investment in these pools to total approximately $36m. Write to Christine Ricciardi.