PennyMac Mortgage Investment Trust (NYSE:PMT) Q1 2020 Earnings Conference Call - Final Transcript

May 07, 2020 • 04:30 pm ET


PennyMac Mortgage Investment Trust (NYSE:PMT) Q1 2020 Earnings Conference Call - Final Transcript


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Isaac Garden

Good afternoon, and welcome to the First Quarter Earnings Discussion for PennyMac Mortgage Investment Trust. The slides that accompany this discussion are available from PennyMac Mortgage Investment Trust website at Before we begin, please take a few moments to read the disclaimer on Slide 2 of the presentation. Thank you.

Now, I'd like to introduce David Spector, PMT's President and Chief Executive Officer, who will discuss the Company's first quarter results.

David A. Spector

Thank you, Isaac.

For the first quarter 2020, PMT reported net loss attributable to common shareholders of $600.9 million or $5.99 per common share. PMT reports results through four segments, credit-sensitive strategies, which contributed $960.5 million in pretax loss, interest rate-sensitive strategies, which contributed $324.8 million in pretax income, correspondent production, which contributed $65.3 million in pretax income, and corporate with a pretax loss of $14 million. Our results this quarter reflect non-cash fair value losses on GSE credit risk transfer investments related to the COVID-19 crisis, partially offset by outsized results in the interest rate-sensitive strategies segment, driven by gains on hedge instruments and record correspondent production results.

I will discuss these in more detail later in the presentation.

Book value per common share was $15.16 at March 31, 2020, down from $21.37 at December 31, 2019, and as previously announced, PMT paid a dividend of $0.25 per share for the quarter. PMT's capital investments this quarter continued to be driven by its conventional loan production volumes, which totaled $18 billion in unpaid principal balance, down 20% from the prior quarter, while up 100% from the first quarter of 2019. We delivered to Fannie Mae CRT eligible loans of $14.7 billion in UPB, which resulted in a firm commitment to purchase $555 million of CRT securities. New MSR investments for the quarter totaled $249 million. In February, through our at-the-market equity offering program, we sold 241,000 common shares at a weighted average price of $23.50 for $5.6 million in net proceeds. And in March, we repurchased approximately 783,000 common shares at a weighted average price of $7.37 at a cost of $5.8 million.

Continuing on to Slide 4, after quarter end, we retired our 5.375% senior exchangeable unsecured notes due May 1. In April, we repurchased $123.6 million in principal of the notes at a weighted average price of 98.6% of par value, resulting in total savings of approximately $2.2 million. On the maturity date May 1, we repaid the remaining $126.4 million in principle of the notes.

Now, let's turn to Slide 5 and discuss the developments that have affected the mortgage markets. During the first quarter of 2020, the United States was significantly impacted by the effects of the COVID-19 pandemic and related public health measures, which triggered a substantial slowdown in the economy. Over the last six weeks, 30.3 million workers have filed jobless claims, evidencing increased hardships for homeowners and borrowers, leading to expectations for higher delinquencies in the future. In response to these hardships and in an effort to curtail the coming economic