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PennyMac Mortgage Investment Trust (PMT) CEO David Spector on Q4 2018 Results - Earnings Call Transcript

Feb. 08, 2019 6:49 PM ETPennyMac Mortgage Investment Trust (PMT)
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PennyMac Mortgage Investment Trust (NYSE:PMT) Q4 2018 Earnings Conference Call February 7, 2019 5:00 PM ET

Company Participants

Chris Oltmann - SVP, IR

Stan Kurland - Executive Chairman

David Spector - CEO

Andrew Chang - CFO

Chris Oltmann

Good afternoon, and welcome to the Fourth Quarter Earnings Discussion for PennyMac Mortgage Investment Trust. The slides that accompany this discussion are available from PennyMac Mortgage Investment Trust's website at www.pennymac-reit.com. 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 turn the discussion over to Stan Kurland, PMT's Executive Chairman.

Stan Kurland

Thank you, Chris. Let's begin with Slide 3. For the fourth quarter, PMT reported net income attributable to common shareholders of $35.4 million or $0.55 per share. Annualized return on average common equity for the quarter was 11%, down from 13% in the prior quarter. PMT paid a dividend of $0.47 per share for the quarter, and book value per common share increased to $20.61 at quarter-end from $20.48 at September 30, 2018.

Our operating results reflect solid contributions from our GSE credit risk transfer or CRT investments and Interest Rate Sensitive Strategies. Fair value declines in CRT and mortgage servicing rights investments held in PMT's taxable subsidiary drove $15.4 million in income tax benefits.

PMT reports results through 4 segments: Credit Sensitive Strategies, which contributed $17.9 million in pretax income; Interest Rate Sensitive Strategies, which contributed $20.1 million in pretax income; Correspondent Production, with a pretax loss of $600,000; and Corporate, with a pretax loss of $11.2 million.

During the fourth quarter, PMT continued to deliver growth in its core investments in CRT and MSRs resulting from its own Correspondent Production activities. Conventional Correspondent Production totaled $9 billion in unpaid principal balance or UPB, up 21% from the prior

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