PennyMac Mortgage Investment Trust Reports Fourth Quarter and Full-Year 2012 Results

Moorpark, CA February 7, 2013—PennyMac Mortgage Investment Trust (NYSE: PMT) today reported net income of $49.2 million, or $0.83 per diluted share, for the fourth quarter of 2012, on net investment income of $124.9 million. This brings full-year net income earned by PMT to $138.2 million, or $3.14 per diluted share, on total net investment income for the year of $335.2 million. In addition, PMT's Board of Trustees has declared a cash dividend of $0.57 per common share of beneficial interest. This dividend will be paid on March 1, 2013 to common shareholders of record as of February 21, 2013.

In addition, PMT and its manager, PNMAC Capital Management (PCM), and loan servicer and fulfillment provider, PennyMac Loan Services (PLS), have revised certain key agreements that govern investment management, loan servicing and mortgage banking and warehouse services provided to PMT. Among other things, the agreements extend all services for at least four years, ensure that PLS performs correspondent lending fulfillment services exclusively for PMT, and amend PCM's and PLS' compensation for these services.

"I am pleased to announce the revised management and services agreements which secure a long-term partnership among PMT, PCM and PLS." said Chairman and Chief Executive Officer Stanford L. Kurland. "They address aspects of PMT's business which have evolved over time and better align the incentives of PCM and PLS with PMT's financial performance."

All of the agreements are being filed with the SEC as part of a Current Report on Form 8-K, which can also be accessed at PMT's investor relations' website at www.pennymac-REIT.com.

PMT earned $65.3 million in pretax income for the quarter ended December 31, 2012, an 11 percent increase from the third quarter. The following table presents the contribution of PMT's Investment Activities and Correspondent Lending segments to pretax income:

	Quarter ended December 31, 2012

Unaudited	Investment Activities			Correspondent Lending		Total
	(in thousands)
Revenues:
External
Net gain on mortgage loans acquired for sale	$	—		$	66,465	$	66,465
Net gain on investments		38,108			—		38,108
Interest income		12,680			7,604		20,284
Other		(5,605	)		5,665		60

		45,183			79,734		124,917

Expenses:
Loan fulfillment fees payable to affiliate		—			31,809		31,809
Interest		4,692			5,291		9,983
Servicing expense		4,932			68		5,000
Other		11,237			1,585		12,822

		20,861			38,753		59,614

Pretax income	$	24,322		$	40,981	$	65,303

"The fourth quarter results were strong in both our Correspondent Lending and Investment Activities segments," commented Mr. Kurland. "Housing prices continued to stabilize during the quarter, driving valuation gains in our distressed portfolio. Correspondent loan purchase activity continued its robust growth, resulting in solid pretax earnings from the segment that comprised 63% of total pretax earnings."

During the quarter ended December 31, 2012, PMT recorded investment revenue on financial instruments totaling $124.9 million, as detailed in the following table:

	Quarter ended December 31, 2012

											Annualized %
Unaudited	Net gain on investments		Interest Income			Total revenue			Average balance		Interest yield			Total return(1)
	(dollars in thousands)
Assets:
Mortgage loans:
At fair value	$	38,108	$	12,607		$	50,715		$	1,002,864		4.92	%		19.79	%
Under forward purchase agreements at fair value		—		1			1			—		—			—
Acquired for sale at fair value		66,465		7,639			74,104			827,335		3.61	%		35.05	%

Total mortgage loans		104,573		20,247			124,820			1,830,199		4.33	%		26.69	%

Other		—		30			30

Mortgage-backed securities:
Non-Agency Alt-A		—		(3	)		(3	)		—		—			—

Total mortgage-backed securities		—		(3	)		(3	)		—		2.69	%		0.27	%

Short-term investments		—		10			10			30,764		0.13	%		0.13	%

	$	104,573	$	20,284		$	124,857		$	1,860,963		4.27	%		26.25	%

Investment gains from financial instruments increased over 38 percent from the third quarter, driven by a 33 percent quarter-over-quarter increase in net gain on correspondent loans acquired for sale, and a 44 percent increase in net gain on mortgage loans at fair value. Net gains on mortgage loans acquired for sale at fair value through the correspondent lending business totaled $66.5 million resulting in an annualized total return for the quarter of 35 percent, down from 42 percent in the third quarter. PMT's distressed whole loan portfolio realized net gain on investments of $38.1 million during the fourth quarter, resulting in an annualized total return of 20 percent, up from 17 percent in the third quarter.

"PMT continued to grow its correspondent activities and the related MSR investments during the quarter, in addition to completing attractive purchases of distressed whole loans for the investment portfolio," continued Mr. Kurland. "Both of our operating segments delivered strong performance in the fourth quarter and throughout 2012 as well. The correspondent segment continued to execute effectively and grow volumes, while our distressed whole loan investments benefitted from solid operational performance and a firming in home prices."

During the quarter, correspondent lending acquired $10.0 billion in UPB of loans, and IRLCs amounted to $10.3 billion, compared to $6.3 billion and $8.5 billion, respectively, in the third quarter of 2012. Of total correspondent acquisitions, conventional loans amounted to $6.5 billion, FHA loans were $3.5 billion, and jumbo loans were $2.1 million. Pretax income attributable to the correspondent lending segment was $41.0 million for the quarter. These results were driven by net gain on mortgage loans acquired for sale of $66.5 million, $7.6 million of interest income, and $5.7 million of loan

origination fee revenue, partially offset by $31.8 million in fulfillment fees and $5.3 million of interest expense.

The following schedule details the net gain on mortgage loans acquired for sale in the fourth quarter of 2012:

Although margins on gains from mortgage loans acquired for sale benefitted from wider secondary spreads early in the fourth quarter, margins narrowed somewhat as the quarter progressed. For the quarter as a whole, margins expressed as the ratio of net gain on mortgage loans to locks during the quarter, were slightly higher than the previous quarter. While margins remained elevated from a historical perspective during the fourth quarter, we expect them to begin normalizing in 2013.

Net loan servicing fee revenue reached $605 thousand in the fourth quarter compared to a $511 thousand loss in the third quarter. Servicing fee revenue rose by $1.1 million from the third quarter, which was offset by higher amortization and impairment charges. The impairment charges resulted from higher prepayment expectations inherent in our estimates of the value of the MSRs due to the low mortgage rate environment that prevailed in the fourth quarter. Positively impacting fourth quarter servicing results were hedge gains of $2.1 million.

The following schedule details the net loan servicing fees in the fourth quarter of 2012:

Unaudited	Quarter ended December 31, 2012

Servicing fees(1)	$	4,878
Effect of MSRs:
Amortization		(3,121	)
Provision for impairment of MSRs carried at lower of amortized cost or fair value		(3,042	)
Change in fair value of MSRs carried at fair value		(233	)
Gains on hedging derivatives		2,123

		(4,273	)

Net loan servicing fees	$	605

PMT's distressed mortgage loan portfolio generated realized and unrealized gains totaling $38.1 million in the fourth quarter of 2012, compared to $26.5 million in the third quarter of 2012. Of the gains in the fourth quarter of 2012, $4.4 million was realized through payoffs in which collections on the loan balances were at levels higher than their recorded fair values.

Valuation gains totaled $33.8 million in the fourth quarter of 2012, compared to $22.9 million in the third quarter. The increase was driven by the Company's portfolio of nonperforming whole loans which produced $30.4 million of valuation increases during the quarter, which was further supplemented by a $3.3 million valuation gain on performing loans. The continued stabilization in home prices was once again a major driver of the unrealized gains on mortgage loans, but fair value accretion of the loans as they progress toward their ultimate resolution also contributed meaningfully to gains on mortgage loans in the quarter.

The following schedule details the realized and unrealized gains on mortgage loans for the fourth quarter of 2012:

Expenses for the fourth quarter of 2012 totaled $59.6 million, compared to $40.2 million in the third quarter of 2012. The increase is primarily attributable to fulfillment fees on sales of correspondent loans, as well as professional services and management fees. Fulfillment fees, which are payable when loans are sold, rose 84% from the prior quarter, in line with the increase in sales of conventional and jumbo loans during the quarter. Interest expense increased from the financing of higher average balances of mortgage loans available for sale during the quarter and servicing expenses declined due to lower distressed loan resolution activity during the quarter, primarily as a result of seasonal factors. Management fee expense rose 22% quarter-over-quarter driven by a higher average shareholder's equity balance over the quarter. Other expense items increased commensurately with increased business activity and asset growth.

The provision for income tax expense totaled $16.1 million in the fourth quarter, resulting in an effective income tax rate of 25%, down from 32% in the prior period. The decline in the effective tax rate is due to a higher proportion of income being generated by business activities in PMT's REIT qualifying entities.

Mr. Kurland concluded, "PMT ended 2012 with a strong fourth quarter and we remain optimistic about the progress that the housing and mortgage markets are making toward normalization. PMT is uniquely positioned to capitalize on a wide variety of residential mortgage opportunities emerging in today's market. We look forward to building upon our successes in 2013 and continuing to deliver solid investment returns as the market continues to evolve."

Management's recorded earnings call and slide presentation will be available in the Investor Relations section of the Company's website at www.PennyMac-REIT.com beginning at 5:30 a.m. (PT) on Thursday, February 07, 2013.

PennyMac Mortgage Investment Trust is a mortgage real estate investment trust (REIT) that invests primarily in residential mortgage loans and mortgage-related assets. PennyMac Mortgage Investment Trust trades on the New York Stock Exchange under the symbol "PMT" and is externally managed by PNMAC Capital Management, LLC, a wholly owned subsidiary of Private National Mortgage Acceptance Company, LLC. Additional information about PennyMac Mortgage Investment Trust is available at www.PennyMac-REIT.com.

This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, regarding management's beliefs, estimates, projections and assumptions with respect to, among other things, the Company's financial results, future operations, business plans and investment strategies, as well as industry and market conditions, all of which are subject to change. Words like "believe," "expect," "anticipate," "promise," "plan," and other expressions or words of similar meanings, as well as future or conditional verbs such as "will," "would," "should," "could," or "may" are generally intended to identify forward-looking statements. Actual results and operations for any future period may vary materially from those projected herein and from past results discussed herein. Factors which could cause actual results to differ materially from historical results or those anticipated include, but are not limited to: changes in general business, economic, market and employment conditions from those expected; continued declines in residential real estate and disruption in the U.S. housing market; the availability of, and level of competition for, attractive risk-adjusted investment opportunities in residential mortgage loans and mortgage-related assets that satisfy our investment objectives and investment strategies; changes in our investment or operational objectives and strategies, including any new lines of business; the concentration of credit risks to which we are exposed; the availability, terms and deployment of short-term and long-term capital; unanticipated increases in financing and other costs, including a rise in interest rates; the performance, financial condition and liquidity of borrowers; increased rates of delinquency or decreased recovery rates on our investments; increased prepayments of the mortgage and other loans underlying our investments; changes in regulations or the occurrence of other events that impact the business, operation or prospects of government sponsored enterprises; changes in government support of homeownership; changes in governmental regulations, accounting treatment, tax rates and similar matters; and our ability to satisfy complex rules in order to qualify as a REIT for U.S. federal income tax purposes. You should not place undue reliance on any forward-looking statement and should consider all of the uncertainties and risks described above, as well as those more fully discussed in reports and other documents filed by the Company with the Securities and Exchange Commission from time to time. The Company undertakes no obligation to publicly update or revise any forward-looking statements or any other information contained herein, and the statements made in this press release are current as of the date of this release only.

PENNYMAC MORTGAGE INVESTMENT TRUST AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

	December 31, 2012		September 30, 2012

	(unaudited)
ASSETS
Cash	$	33,756	$	67,813
Investments:
Short-term investments		39,017		38,322
Mortgage loans acquired for sale at fair value		975,184		847,575
Mortgage loans at fair value		1,189,971		1,089,966
Real estate acquired in settlement of loans		88,078		86,180
Mortgage servicing rights		126,776		65,154
Principal and interest collections receivable		29,204		30,016
Interest receivable		3,029		2,932
Derivative financial instruments		23,706		—
Servicing advances		32,191		—
Due from affiliates		4,829		2,004

		2,545,741		2,229,962
Other assets		13,922		98,763

Total assets	$	2,559,663	$	2,328,725

LIABILITIES
Assets sold under agreements to repurchase:
Mortgage loans acquired for sale at fair value		894,906		755,471
Mortgage loans at fair value		353,805		274,185
Real estate acquired in settlement of loans		7,391		11,715
Derivative financial instruments		967		36,203
Mortgage repurchase liability		4,441		2,378
Accounts payable and accrued liabilities		42,402		25,271
Contingent underwriting fees payable		5,883		5,883
Payable to affiliates		12,216		9,812
Income taxes payable		36,316		23,604
Total liabilities		1,358,327		1,144,522
SHAREHOLDERS' EQUITY
Common shares of beneficial interest—authorized, 500,000,000 common shares of $0.01 par value; issued and outstanding, 58,904,456 and 58,903,681 common shares, respectively		589		589
Additional paid-in capital		1,129,858		1,128,387
Retained earnings		70,889		55,227

Total shareholders' equity		1,201,336		1,184,203

Total liabilities and shareholders' equity	$	2,559,663	$	2,328,725

PENNYMAC MORTGAGE INVESTMENT TRUST AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except share data)

	2012

	Quarter Ended Dec. 31			Quarter Ended Sept. 30
	(unaudited)
Investment Income
Net gain (loss) on investments:
Mortgage-backed securities	$	—		$	(451	)
Mortgage loans		38,108			26,512

		38,108			26,061

Interest income:
Short-term investments		10			13
Mortgage-backed securities		(3	)		502
Mortgage loans		20,247			19,179
Other		30			36

		20,284			19,730

Net gain on mortgage loans acquired for sale		66,465			49,793
Loan Origination Fees		5,665			2,836
Results of real estate acquired in settlement of loans		(6,209	)		1,288
Net loan servicing fees		605			(511	)
Other		(1	)		(1	)

Net investment income		124,917			99,196

Expenses
Loan fulfillment fees		31,809			17,258
Interest		9,983			8,282
Loan servicing expense		5,000			5,208
Management fees		4,472			3,672
Compensation		2,102			1,997
Professional services		2,732			1,693
Other		3,516			2,117

Total expenses		59,614			40,227

Income before provision for income taxes		65,303			58,969
Provision for income taxes		16,065			18,585

Net income	$	49,238		$	40,384

Earnings per share
Basic	$	0.83		$	0.81
Diluted	$	0.83		$	0.81
Weighted-average shares outstanding
Basic		58,904			49,078
Diluted		59,338			49,463
Dividends declared per share	$	0.57		$	0.55



		Media		Investors
		Kevin Chamberlain (818) 746-2877		Christopher Oltmann (818) 746-2046

Unaudited	Quarter ended December 31, 2012

	($ in thousands)
MSR value	$	68,033
Rep & warrant provision		(2,063	)
Cash investment(1)		(25,079	)
Market value adjustments of pipeline, inventory and hedges		25,574

Net gain on mortgage loans acquired for sale	$	66,465

Unaudited	Quarter ended December 31, 2012

	(in thousands)
Valuation changes
Performing loans	$	3,335
Nonperforming loans		30,418

		33,753
Payoffs		4,355

	$	38,108