Pennymac Financial Services, Inc. · NYSE:PFSI
Pennymac Financial Services — Q2 2013 Earnings Presentation
18 slides from Pennymac Financial Services's earnings presentation, Aug 13, 2013
Slide 1: Second Quarter 2013 Earnings Report
Second Quarter 2013 Earnings Report
Slide 2: Forward Looking Statements
Forward Looking Statements 1 This presentation 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
Slide 3: PennyMac Is a Leading Non-Bank Residential Mortgage Specialist
PennyMac Is a Leading Non-Bank Residential Mortgage Specialist 2 Management Agreements Services Agreements Mortgage Banking PennyMac Loan Services (PLS) Mortgage production and servicing businesses Houses required state / local licenses and Agency approvals PNMAC Capital Management (PCM) SEC-registe
Slide 4: PFSI Has a Unique Business Model With Diverse Revenue Sources
PFSI Has a Unique Business Model With Diverse Revenue Sources 3 Loan Production Loan Servicing Investment Management Gain on mortgage loans: Retail lending and government-insured correspondent acquisitions Fulfillment fees from PMT’s correspondent acquisitions Loan origination fees Servicing fees on
Slide 5: Market Outlook
Market Outlook 4 Loan Production Competition Jumbo Loans Mortgage Rates and Housing Increased mortgage rates have significantly reduced refinance activity since early May Total mortgage originations forecast to decline from ~$1 trillion in 1H13 to $500 - $700 billion in 2H13(1) Affordability remains
Slide 6: Rising Rates Present Challenges, But PFSI Remains Well Positioned
2013 Origination Estimates(1) Rising Rates Present Challenges, But PFSI Remains Well Positioned 5 Industry forecasts for the second half of 2013 show origination volumes declining by an average of 36% compared to the first half of the year Purchase volume forecast to grow 16% Refinance volume foreca
Slide 7: Continuing Growth Across PFSI's Businesses
Continuing Growth Across PFSI’s Businesses 6 Loan Production Loan Servicing Mortgage Banking Investment Management In correspondent lending, disciplined growth through specific initiatives to increase market share In retail lending, continue to build out infrastructure to support additional growth O
Slide 8: PennyMac's Businesses – Correspondent Lending
7 (UPB in billions) $8.6bn in total correspondent acquisitions by PMT in Q2 2013 50% government-insured loans (gain on mortgage loans) 50% fulfillment for PMT (fee revenue) Increased the number of approved correspondent sellers to 220 from 179 at the end of 1Q13 Growing contribution from recently in
Slide 9: PennyMac's Businesses – Retail Lending
Retail origination volumes increased 29% Q/Q to $343 million Majority continues to be portfolio-sourced originations, e.g. refinance, purchase loans from distressed portfolio Consumer direct originations (non-portfolio) up 93% Q/Q Improvements in non-portfolio lead response times and processing effi
Slide 10: PennyMac's Businesses – Loan Servicing
9 PennyMac’s Businesses – Loan Servicing Loan Servicing Portfolio UPB as of 6/30/13 Growth Opportunities Operational Highlights Servicing portfolio grew to $44.4bn in UPB at quarter-end, up 22% Q/Q $8 billion in organic growth of new prime servicing and subservicing from loan production activities P
Slide 11: PennyMac's Businesses – Investment Management
10 ($ in millions) PennyMac’s Businesses – Investment Management Investment Management Revenues Growth Opportunities Operational Highlights Continued need to raise capital in PMT to support ongoing investment growth: Continued acquisitions of distressed whole loan investments MSR investments through
Slide 12: Financial Results
Financial Results 11 Diluted earnings per share of $0.22 for the post-IPO period from May 9 to June 30, 2013 Full-quarter equivalent diluted earnings per share of $0.38 Second Quarter Results: Pretax income of $50.2 million on total net revenue of $110.8 million Strong results from both business seg
Slide 13: Consolidated Statement of Income
Net gains on mortgage loans held for sale at fair value Loan origination fees Fulfillment fees from PennyMac Mortgage Investment Trust Net servicing income: Loan servicing fees From non-affiliates From PennyMac Mortgage Investment Trust From Investment Funds Mortgage servicing rebate to Investment F
Slide 14: Pretax Income by Operating Segment
Pretax Income by Operating Segment 13 Revenues: Net gains on mortgage loans held for sale at fair value Loan origination fees Fulfillment fees from PMT Net servicing fees Management fees Carried Interest from Investment Funds Interest Other Expenses: Compensation Interest Other Pretax income Segment
Slide 15: Balance Sheet
Assets $ 38,468 156,148 656,341 94,791 16,725 37,177 55,322 23,070 176,668 26,070 $ 1,280,780 $ 500,427 47,209 36,328 52,729 54,313 27,445 6,185 724,636 $ 1 - 90,159 2,793 92,953 - 463,191 556,144 $ 1,280,780 Balance Sheet 14 Assets Cash Short-term investments, at fair value Mortgage loans held for
Slide 16: Mortgage Servicing Right (MSR) Asset Valuation
Mortgage Servicing Right (MSR) Asset Valuation 15 UPB ($in millions) Weighted average note rate Prepayment speed assumption (CPR) Weighted average servicing fee rate Fair value As multiple of servicing fee Carrying value Fair value in excess of accounting value Quarter Ended June 30, 2013 Lower of a
Slide 17: Appendix
Appendix (annymac Financial Services, Inc.
Slide 18: Reconciliation of Full Quarter Equivalent EPS to GAAP EPS for the Post-IPO Period
Reconciliation of Full Quarter Equivalent EPS to GAAP EPS for the Post-IPO Period 17 Income before provision for income taxes 50,229 $ 50,229 $ Provision for income taxes (2,038) (1,514) $ (3,552) Net income 48,191 (1,514) 46,677 Less: Net income attributable to noncontrolling interest (45,398) 3,62
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