UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
(Mark One)
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☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2018
Or
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☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number: 001-34416
PennyMac Mortgage Investment Trust
(Exact name of registrant as specified in its charter)
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Maryland |
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27-0186273 |
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(State or other jurisdiction of incorporation or organization) |
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(IRS Employer Identification No.) |
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3043 Townsgate Road, Westlake Village, California |
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91361 |
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(Address of principal executive offices) |
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(Zip Code) |
(818) 224-7442
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer |
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☒ |
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Accelerated filer |
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☐ |
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Non-accelerated filer |
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☐ (Do not check if a smaller reporting company) |
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Smaller reporting company |
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☐ |
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Emerging growth company |
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☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.
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Class |
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Outstanding at August 6, 2018 |
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Common Shares of Beneficial Interest, $0.01 par value |
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60,950,754 |
PENNYMAC MORTGAGE INVESTMENT TRUST
FORM 10-Q
June 30, 2018
TABLE OF CONTENTS
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Item 1. |
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7 |
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8 |
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10 |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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64 |
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64 |
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69 |
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70 |
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85 |
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90 |
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96 |
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97 |
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Off-Balance Sheet Arrangements and Aggregate Contractual Obligations |
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99 |
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Item 3. |
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101 |
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Item 4. |
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103 |
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104 |
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Item 1. |
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104 |
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Item 1A. |
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104 |
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Item 2. |
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104 |
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Item 3. |
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104 |
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Item 4. |
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104 |
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Item 5. |
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104 |
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Item 6. |
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105 |
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (“Report”) contains certain forward-looking statements that are subject to various risks and uncertainties. Forward-looking statements are generally identifiable by use of forward-looking terminology such as “may,” “will,” “should,” “potential,” “intend,” “expect,” “seek,” “anticipate,” “estimate,” “approximately,” “believe,” “could,” “project,” “predict,” “continue,” “plan” or other similar words or expressions.
Forward-looking statements are based on certain assumptions, discuss future expectations, describe future plans and strategies, contain financial and operating projections or state other forward-looking information. Examples of forward-looking statements include the following:
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projections of our revenues, income, earnings per share, capital structure or other financial items; |
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descriptions of our plans or objectives for future operations, products or services; |
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forecasts of our future economic performance, interest rates, profit margins and our share of future markets; and |
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descriptions of assumptions underlying or relating to any of the foregoing expectations regarding the timing of generating any revenues. |
Our ability to predict results or the actual effect of future events, actions, plans or strategies is inherently uncertain. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, our actual results and performance could differ materially from those set forth in the forward-looking statements. There are a number of factors, many of which are beyond our control that could cause actual results to differ significantly from management’s expectations. Some of these factors are discussed below.
You should not place undue reliance on any forward-looking statement and should consider the following uncertainties and risks, as well as the risks and uncertainties discussed elsewhere in this Report and the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2017, filed with the Securities and Exchange Commission (“SEC”) on March 1, 2018.
Factors that could cause actual results to differ materially from historical results or those anticipated include, but are not limited to:
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changes in our investment objectives or investment or operational strategies, including any new lines of business or new products and services that may subject us to additional risks; |
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the occurrence of natural disasters or other events or circumstances that could impact our operations; |
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volatility in our industry, the debt or equity markets, the general economy or the real estate finance and real estate markets specifically, whether the result of market events or otherwise; |
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events or circumstances which undermine confidence in the financial markets or otherwise have a broad impact on financial markets, such as the sudden instability or collapse of large depository institutions or other significant corporations, terrorist attacks, natural or man-made disasters, or threatened or actual armed conflicts; |
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changes in general business, economic, market, employment and political conditions, or in consumer confidence and spending habits from those expected; |
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declines in real estate or significant changes in U.S. housing prices or activity in the U.S. housing market; |
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the availability of, and level of competition for, attractive risk-adjusted investment opportunities in mortgage loans and mortgage-related assets that satisfy our investment objectives; |
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the inherent difficulty in winning bids to acquire mortgage loans, and our success in doing so; |
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the concentration of credit risks to which we are exposed; |
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the degree and nature of our competition; |
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our dependence on our manager and servicer, potential conflicts of interest with such entities and their affiliates, and the performance of such entities; |
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changes in personnel and lack of availability of qualified personnel at our manager, servicer or their affiliates; |
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the availability, terms and deployment of short-term and long-term capital; |
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the adequacy of our cash reserves and working capital; |
1
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our ability to maintain the desired relationship between our financing and the interest rates and maturities of our assets; |
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the timing and amount of cash flows, if any, from our investments; |
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unanticipated increases or volatility in financing and other costs, including a rise in interest rates; |
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the performance, financial condition and liquidity of borrowers; |
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the ability of our servicer, which also provides us with fulfillment services, to approve and monitor correspondent sellers and underwrite loans to investor standards; |
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incomplete or inaccurate information or documentation provided by customers or counterparties, or adverse changes in the financial condition of our customers and counterparties; |
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our indemnification and repurchase obligations in connection with mortgage loans we purchase and later sell or securitize; |
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the quality and enforceability of the collateral documentation evidencing our ownership and rights in the assets in which we invest; |
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increased rates of delinquency, default and/or decreased recovery rates on our investments; |
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the performance of mortgage loans underlying mortgage-backed securities (“MBS”) in which we retain credit risk; |
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our ability to foreclose on our investments in a timely manner or at all; |
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increased prepayments of the mortgages and other loans underlying our MBS or relating to our mortgage servicing rights (“MSRs”), excess servicing spread (“ESS”) and other investments; |
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the degree to which our hedging strategies may or may not protect us from interest rate volatility; |
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the effect of the accuracy of or changes in the estimates we make about uncertainties, contingencies and asset and liability valuations when measuring and reporting upon our financial condition and results of operations; |
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our failure to maintain appropriate internal controls over financial reporting; |
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technologies for loans and our ability to mitigate security risks and cyber intrusions; |
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our ability to obtain and/or maintain licenses and other approvals in those jurisdictions where required to conduct our business; |
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our ability to detect misconduct and fraud; |
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our ability to comply with various federal, state and local laws and regulations that govern our business; |
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developments in the secondary markets for our mortgage loan products; |
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legislative and regulatory changes that impact the mortgage loan industry or housing market; |
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changes in regulations or the occurrence of other events that impact the business, operations or prospects of government agencies such as the Government National Mortgage Association (“Ginnie Mae”), the Federal Housing Administration (the “FHA”) or the Veterans Administration (the “VA”), the U.S. Department of Agriculture (“USDA”), or government-sponsored entities such as the Federal National Mortgage Association (“Fannie Mae”) or the Federal Home Loan Mortgage Corporation (“Freddie Mac”) (Fannie Mae, Freddie Mac and Ginnie Mae are each referred to as an “Agency” and, collectively, as the “Agencies”), or such changes that increase the cost of doing business with such entities; |
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the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and its implementing regulations and regulatory agencies, and any other legislative and regulatory changes that impact the business, operations or governance of mortgage lenders and/or publicly-traded companies; |
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the Consumer Financial Protection Bureau (“CFPB”) and its issued and future rules and the enforcement thereof; |
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changes in government support of homeownership; |
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changes in government or government-sponsored home affordability programs; |
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limitations imposed on our business and our ability to satisfy complex rules for us to qualify as a real estate investment trust (“REIT”) for U.S. federal income tax purposes and qualify for an exclusion from the Investment Company Act of 1940 (the “Investment Company Act”) and the ability of certain of our subsidiaries to qualify as REITs or as taxable REIT subsidiaries (“TRSs”) for U.S. federal income tax purposes, as applicable, and our ability and the ability of our subsidiaries to operate effectively within the limitations imposed by these rules; |
2
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our ability to make distributions to our shareholders in the future; |
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our failure to deal appropriately with issues that may give rise to reputational risk; and |
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our organizational structure and certain requirements in our charter documents. |
Other factors that could also cause results to differ from our expectations may not be described in this Report or any other document. Each of these factors could by itself, or together with one or more other factors, adversely affect our business, results of operations and/or financial condition.
Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update any forward-looking statement to reflect the impact of circumstances or events that arise after the date the forward-looking statement was made.
3
PENNYMAC MORTGAGE INVESTMENT TRUST AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
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June 30, |
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December 31, |
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2018 |
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2017 |
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(in thousands, except share information) |
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ASSETS |
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Cash |
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$ |
63,035 |
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$ |
77,647 |
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Short-term investments at fair value |
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39,484 |
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18,398 |
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Mortgage-backed securities at fair value pledged to creditors |
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1,698,322 |
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989,461 |
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Mortgage loans acquired for sale at fair value (includes $1,753,825 and $1,249,277 pledged to creditors, respectively) |
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1,790,518 |
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1,269,515 |
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Mortgage loans at fair value (includes $701,047 and $1,081,893 pledged to creditors, respectively) |
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749,445 |
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1,089,473 |
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Excess servicing spread purchased from PennyMac Financial Services, Inc. at fair value pledged to secure Assets sold to PennyMac Financial Services, Inc. under agreements to repurchase |
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229,470 |
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236,534 |
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Derivative assets (includes $24,601 and $26,058 pledged to creditors, respectively) |
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133,239 |
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113,881 |
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Firm commitment to purchase credit risk transfer security at fair value |
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4,426 |
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— |
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Real estate acquired in settlement of loans (includes $52,445 and $124,532 pledged to creditors, respectively) |
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109,271 |
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162,865 |
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Real estate held for investment (includes $25,158 and $31,128 pledged to creditors, respectively) |
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46,431 |
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44,224 |
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Mortgage servicing rights (includes $1,010,507 and $91,459 at fair value; $994,212 and $831,892 pledged to creditors) |
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1,010,507 |
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844,781 |
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Servicing advances |
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53,340 |
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77,158 |
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Deposits securing credit risk transfer agreements (includes $385,227 and $400,778 pledged to creditors, respectively) |
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651,204 |
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588,867 |
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Due from PennyMac Financial Services, Inc. |
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4,010 |
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4,154 |
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Other |
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94,147 |
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87,975 |
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Total assets |
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$ |
6,676,849 |
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$ |
5,604,933 |
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LIABILITIES |
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Assets sold under agreements to repurchase |
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$ |
3,780,204 |
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$ |
3,180,886 |
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Mortgage loan participation purchase and sale agreements |
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87,751 |
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44,488 |
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Notes payable |
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445,062 |
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— |
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Exchangeable senior notes |
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247,759 |
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247,186 |
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Asset-backed financing of a variable interest entity at fair value |
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287,719 |
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307,419 |
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Interest-only security payable at fair value |
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7,652 |
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7,070 |
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Assets sold to PennyMac Financial Services, Inc. under agreements to repurchase |
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138,582 |
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144,128 |
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Derivative liabilities |
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3,446 |
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1,306 |
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Accounts payable and accrued liabilities |
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58,612 |
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64,751 |
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Due to PennyMac Financial Services, Inc. |
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19,661 |
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27,119 |
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Income taxes payable |
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47,289 |
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27,317 |
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Liability for losses under representations and warranties |
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7,625 |
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8,678 |
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Total liabilities |
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5,131,362 |
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4,060,348 |
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Commitments and contingencies — Note 20 |
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SHAREHOLDERS’ EQUITY |
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Preferred shares of beneficial interest, $0.01 par value per share, authorized 100,000,000 shares, issued and outstanding 12,400,000 shares, liquidation preference $310,000,000 |
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299,707 |
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299,707 |
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Common shares of beneficial interest—authorized, 500,000,000 common shares of $0.01 par value; issued and outstanding, 60,950,754 and 61,334,087 common shares, respectively |
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|
610 |
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613 |
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Additional paid-in capital |
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1,282,971 |
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1,290,931 |
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Accumulated deficit |
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(37,801 |
) |
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(46,666 |
) |
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Total shareholders’ equity |
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1,545,487 |
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1,544,585 |
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Total liabilities and shareholders’ equity |
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$ |
6,676,849 |
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$ |
5,604,933 |
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The accompanying notes are an integral part of these consolidated financial statements.
4
PENNYMAC MORTGAGE INVESTMENT TRUST AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
Assets and liabilities of consolidated variable interest entities (“VIEs”) included in total assets and liabilities (the assets of each VIE can only be used to settle liabilities of that VIE):
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June 30, |
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December 31, |
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2018 |
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2017 |
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(in thousands) |
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ASSETS |
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Mortgage loans at fair value |
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$ |
301,972 |
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$ |
321,040 |
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Derivative assets |
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119,169 |
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|
98,640 |
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Deposits securing credit risk transfer agreements |
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651,204 |
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588,867 |
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Other—interest receivable |
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|
873 |
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|
904 |
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$ |
1,073,218 |
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$ |
1,009,451 |
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LIABILITIES |
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Asset-backed financing at fair value |
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$ |
287,719 |
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$ |
307,419 |
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Interest-only security payable at fair value |
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|
7,652 |
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|
7,070 |
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Accounts payable and accrued liabilities—interest payable |
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873 |
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|
904 |
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|
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$ |
296,244 |
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$ |
315,393 |
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The accompanying notes are an integral part of these consolidated financial statements.
5
PENNYMAC MORTGAGE INVESTMENT TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
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Quarter ended June 30, |
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Six months ended June 30, |
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2018 |
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2017 |
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2018 |
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2017 |
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(in thousands, except per share amounts) |
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Net investment income |
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Net gain on mortgage loans acquired for sale: |
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From nonaffiliates |
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$ |
6,251 |
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$ |
14,088 |
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$ |
11,237 |
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$ |
30,252 |
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From PennyMac Financial Services, Inc. |
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|
2,891 |
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|
|
3,204 |
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|
|
5,532 |
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|
|
6,065 |
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|
|
|
|
9,142 |
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|
|
17,292 |
|
|
|
16,769 |
|
|
|
36,317 |
|
|
Mortgage loan origination fees |
|
|
8,850 |
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|
|
10,467 |
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|
|
15,887 |
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|
|
18,757 |
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Net gain (loss) on investments: |
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|
|
|
|
|
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|
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|
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From nonaffiliates |
|
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23,989 |
|
|
|
33,477 |
|
|
|
16,256 |
|
|
|
51,568 |
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From PennyMac Financial Services, Inc. |
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|
1,520 |
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|
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(5,885 |
) |
|
|
9,271 |
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|
|
(7,255 |
) |
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|
|
|
25,509 |
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|
|
27,592 |
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|
|
25,527 |
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|
|
44,313 |
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Net mortgage loan servicing fees: |
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|
|
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|
|
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From nonaffiliates |
|
|
27,174 |
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|
|
15,463 |
|
|
|
82,734 |
|
|
|
26,923 |
|
|
From PennyMac Financial Services, Inc. |
|
|
412 |
|
|
|
234 |
|
|
|
1,007 |
|
|
|
526 |
|
|
|
|
|
27,586 |
|
|
|
15,697 |
|
|
|
83,741 |
|
|
|
27,449 |
|
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Interest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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From nonaffiliates |
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|
48,434 |
|
|
|
48,020 |
|
|
|
85,480 |
|
|
|
91,473 |
|
|
From PennyMac Financial Services, Inc. |
|
|
3,910 |
|
|
|
4,366 |
|
|
|
7,844 |
|
|
|
9,013 |
|
|
|
|
|
52,344 |
|
|
|
52,386 |
|
|
|
93,324 |
|
|
|
100,486 |
|
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Interest expense: |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
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To nonaffiliates |
|
|
38,167 |
|
|
|
36,401 |
|
|
|
71,007 |
|
|
|
71,775 |
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|
To PennyMac Financial Services, Inc. |
|
|
1,898 |
|
|
|
2,025 |
|
|
|
3,874 |
|
|
|
3,830 |
|
|
|
|
|
40,065 |
|
|
|
38,426 |
|
|
|
74,881 |
|
|
|
75,605 |
|
|
Net interest income |
|
|
12,279 |
|
|
|
13,960 |
|
|
|
18,443 |
|
|
|
24,881 |
|
|
Results of real estate acquired in settlement of loans |
|
|
(2,297 |
) |
|
|
(3,465 |
) |
|
|
(5,523 |
) |
|
|
(7,711 |
) |
|
Other |
|
|
1,922 |
|
|
|
2,416 |
|
|
|
3,820 |
|
|
|
4,427 |
|
|
Net investment income |
|
|
82,991 |
|
|
|
83,959 |
|
|
|
158,664 |
|
|
|
148,433 |
|
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earned by PennyMac Financial Services, Inc.: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage loan fulfillment fees |
|
|
14,559 |
|
|
|
21,107 |
|
|
|
26,503 |
|
|
|
37,677 |
|
|
Mortgage loan servicing fees |
|
|
9,431 |
|
|
|
10,099 |
|
|
|
20,450 |
|
|
|
20,585 |
|
|
Management fees |
|
|
5,728 |
|
|
|
5,638 |
|
|
|
11,424 |
|
|
|
10,646 |
|
|
Mortgage loan collection and liquidation |
|
|
1,923 |
|
|
|
3,338 |
|
|
|
4,152 |
|
|
|
3,692 |
|
|
Professional services |
|
|
1,757 |
|
|
|
2,747 |
|
|
|
3,076 |
|
|
|
4,200 |
|
|
Mortgage loan origination |
|
|
1,572 |
|
|
|
1,993 |
|
|
|
1,844 |
|
|
|
3,505 |
|
|
Compensation |
|
|
2,220 |
|
|
|
1,959 |
|
|
|
3,488 |
|
|
|
3,851 |
|
|
Real estate held for investment |
|
|
1,301 |
|
|
|
1,353 |
|
|
|
2,739 |
|
|
|
2,441 |
|
|
Other |
|
|
2,214 |
|
|
|
3,899 |
|
|
|
4,864 |
|
|
|
7,403 |
|
|
Total expenses |
|
|
40,705 |
|
|
|
52,133 |
|
|
|
78,540 |
|
|
|
94,000 |
|
|
Income before provision for (benefit from) income taxes |
|
|
42,286 |
|
|
|
31,826 |
|
|
|
80,124 |
|
|
|
54,433 |
|
|
Provision for (benefit from) income taxes |
|
|
5,861 |
|
|
|
3,046 |
|
|
|
15,513 |
|
|
|
(3,083 |
) |
|
Net income |
|
|
36,425 |
|
|
|
28,780 |
|
|
|
64,611 |
|
|
|
57,516 |
|
|
Dividends on preferred shares |
|
|
6,234 |
|
|
|
2,336 |
|
|
|
12,468 |
|
|
|
2,907 |
|
|
Net income attributable to common shareholders |
|
$ |
30,191 |
|
|
$ |
26,444 |
|
|
$ |
52,143 |
|
|
$ |
54,609 |
|
|
Earnings per common share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.49 |
|
|
$ |
0.39 |
|
|
$ |
0.85 |
|
|
$ |
0.81 |
|
|
Diluted |
|
$ |
0.47 |
|
|
$ |
0.38 |
|
|
$ |
0.82 |
|
|
$ |
0.78 |
|
|
Weighted-average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
60,903 |
|
|
|
66,761 |
|
|
|
60,844 |
|
|
|
66,740 |
|
|
Diluted |
|
|
69,370 |
|
|
|
75,228 |
|
|
|
69,311 |
|
|
|
75,207 |
|
|
Dividends declared per common share |
|
$ |
0.47 |
|
|
$ |
0.47 |
|
|
$ |
0.94 |
|
|
$ |
0.94 |
|
The accompanying notes are an integral part of these consolidated financial statements.
6
PENNYMAC MORTGAGE INVESTMENT TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED)
|
|
|
Preferred shares |
|
|
Common shares |
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
|
Number |
|
|
|
|
|
|
Number |
|
|
|
|
|
|
Additional |
|
|
|
|
|
|
|
|
|
|||
|
|
|
of |
|
|
|
|
|
|
of |
|
|
Par |
|
|
paid-in |
|
|
Accumulated |
|
|
|
|
|
|||||
|
|
|
shares |
|
|
Amount |
|
|
shares |
|
|
value |
|
|
capital |
|
|
deficit |
|
|
Total |
|
|||||||
|
|
|
(in thousands, except per share amounts) |
|
|
|
|||||||||||||||||||||||
|
Balance at December 31, 2016 |
|
|
— |
|
|
$ |
— |
|
|
|
66,697 |
|
|
$ |
667 |
|
|
$ |
1,377,171 |
|
|
$ |
(26,724 |
) |
|
$ |
1,351,114 |
|
|
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
57,516 |
|
|
|
57,516 |
|
|
Share-based compensation |
|
|
— |
|
|
|
— |
|
|
|
284 |
|
|
|
2 |
|
|
|
3,125 |
|
|
|
— |
|
|
|
3,127 |
|
|
Issuance of preferred shares |
|
|
4,600 |
|
|
|
115,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
115,000 |
|
|
Issuance costs relating to preferred shares |
|
|
— |
|
|
|
(3,828 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3,828 |
) |
|
Dividends: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares ($0.94 per share) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(63,298 |
) |
|
|
(63,298 |
) |
|
Preferred shares |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2,492 |
) |
|
|
(2,492 |
) |
|
Repurchase of common shares |
|
|
— |
|
|
|
— |
|
|
|
(139 |
) |
|
|
(1 |
) |
|
|
(2,306 |
) |
|
|
— |
|
|
|
(2,307 |
) |
|
Balance at June 30, 2017 |
|
|
4,600 |
|
|
$ |
111,172 |
|
|
|
66,842 |
|
|
$ |
668 |
|
|
$ |
1,377,990 |
|
|
$ |
(34,998 |
) |
|
$ |
1,454,832 |
|
|
Balance at December 31, 2017 |
|
|
12,400 |
|
|
$ |
299,707 |
|
|
|
61,334 |
|
|
$ |
613 |
|
|
$ |
1,290,931 |
|
|
$ |
(46,666 |
) |
|
$ |
1,544,585 |
|
|
Cumulative effect of a change in accounting principle - Adoption of fair value accounting for mortgage servicing rights |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
14,361 |
|
|
|
14,361 |
|
|
Balance at January 1, 2018 |
|
|
12,400 |
|
|
|
299,707 |
|
|
|
61,334 |
|
|
|
613 |
|
|
|
1,290,931 |
|
|
|
(32,305 |
) |
|
|
1,558,946 |
|
|
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
64,611 |
|
|
|
64,611 |
|
|
Share-based compensation |
|
|
— |
|
|
|
— |
|
|
|
288 |
|
|
|
3 |
|
|
|
2,753 |
|
|
|
— |
|
|
|
2,756 |
|
|
Dividends: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares ($0.94 per share) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(57,635 |
) |
|
|
(57,635 |
) |
|
Preferred shares |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(12,472 |
) |
|
|
(12,472 |
) |
|
Repurchase of common shares |
|
|
— |
|
|
|
— |
|
|
|
(671 |
) |
|
|
(6 |
) |
|
|
(10,713 |
) |
|
|
— |
|
|
|
(10,719 |
) |
|
Balance at June 30, 2018 |
|
|
12,400 |
|
|
$ |
299,707 |
|
|
|
60,951 |
|
|
$ |
610 |
|
|
$ |
1,282,971 |
|
|
$ |
(37,801 |
) |
|
$ |
1,545,487 |
|
The accompanying notes are an integral part of these consolidated financial statements.
7
PENNYMAC MORTGAGE INVESTMENT TRUST AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
|
|
|
Six months ended June 30, |
|
|||||
|
|
|
2018 |
|
|
2017 |
|
||
|
|
|
(in thousands) |
|
|||||
|
Cash flows from operating activities |
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
64,611 |
|
|
$ |
57,516 |
|
|
Adjustments to reconcile net income to net cash (used in) provided by operating activities: |
|
|
|
|
|
|
|
|
|
Net gain on mortgage loans acquired for sale at fair value |
|
|
(16,769 |
) |
|
|
(36,317 |
) |
|
Net gain on investments |
|
|
(25,527 |
) |
|
|
(44,313 |
) |
|
Change in fair value, amortization and impairment of mortgage servicing rights |
|
|
18,228 |
|
|
|
52,666 |
|
|
Accrual of interest on excess servicing spread purchased from PennyMac Financial Services, Inc. |
|
|
(7,844 |
) |
|
|
(9,013 |
) |
|
Capitalization of interest and fees on mortgage loans at fair value |
|
|
(4,246 |
) |
|
|
(20,717 |
) |
|
Amortization of debt issuance premiums and costs, net |
|
|
(727 |
) |
|
|
7,004 |
|
|
Accrual of unearned discounts and amortization of premiums on mortgage-backed securities, mortgage loans at fair value, and asset-backed secured financing of a VIE |
|
|
1,462 |
|
|
|
3,007 |
|
|
Results of real estate acquired in settlement of loans |
|
|
5,523 |
|
|
|
7,711 |
|
|
Share-based compensation expense |
|
|
2,756 |
|
|
|
3,127 |
|
|
Purchase of mortgage loans acquired for sale at fair value from nonaffiliates |
|
|
(29,026,386 |
) |
|
|
(31,573,356 |
) |
|
Purchase of mortgage loans acquired for sale at fair value from PennyMac Financial Services, Inc. |
|
|
(1,427,637 |
) |
|
|
(40,222 |
) |
|
Repurchase of mortgage loans subject to representation and warranties |
|
|
(5,603 |
) |
|
|
(6,079 |
) |
|
Sale and repayment of mortgage loans acquired for sale at fair value to nonaffiliates |
|
|
10,556,931 |
|
|
|
10,647,450 |
|
|
Sale of mortgage loans acquired for sale to PennyMac Financial Services, Inc. |
|
|
19,267,316 |
|
|
|
21,244,194 |
|
|
Settlement of repurchase agreement derivative |
|
|
2,495 |
|
|
|
— |
|
|
Decrease in servicing advances |
|
|
32,628 |
|
|
|
4,218 |
|
|
Decrease in due from PennyMac Financial Services, Inc. |
|
|
14 |
|
|
|
1,800 |
|
|
(Increase) decrease in other assets |
|
|
(29,848 |
) |
|
|
23,970 |
|
|
Decrease in accounts payable and accrued liabilities |
|
|
(5,812 |
) |
|
|
(33,496 |
) |
|
(Decrease) increase in due to PennyMac Financial Services, Inc. |
|
|
(7,458 |
) |
|
|
1,309 |
|
|
Increase (decrease) in income taxes payable |
|
|
14,620 |
|
|
|
(3,274 |
) |
|
Net cash (used in) provided by operating activities |
|
|
(591,273 |
) |
|
|
287,185 |
|
|
Cash flows from investing activities |
|
|||||||