Pennymac Financial Services, Inc. · NYSE:PFSI
Pennymac Financial Services — Investor Presentation (August 2015)
25 slides from Pennymac Financial Services's investor presentation, August 2015
Slide 1: August 2015 Investor Presentation
August 2015 Investor Presentation
Slide 2: Forward-Looking Statements
Forward-Looking Statements 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 r
Slide 3: Corporate Overview
Corporate Overview PennyMa ac inancia | Services, Inc.
Slide 4: PennyMac Financial's Business Model Is Well Positioned for Growth
PennyMac Financial’s Business Model Is Well Positioned for Growth Loan Production Loan Servicing Investment Management • Correspondent aggregation of • Servicing for owned MSRs • Serve as external manager for newly originated loans from and subservicing for Advised investment vehicles focused on thi
Slide 5: PFSI Has Developed in a Sustainable Manner for Long-Term Growth
PFSI Has Developed in a Sustainable Manner for Long-Term Growth • Disciplined growth to address the demands of the GSEs, Agencies, regulators and our financing partners 2015 - Since inception, PennyMac has focused on building and testing processes and systems before adding • Launched Commercial sign
Slide 6: PFSI Continues to Deliver Strong Earnings and Earnings Growth
PFSI Continues to Deliver Strong Earnings and Earnings Growth Earnings per Share $2.02 $1.73 +22% $1.01 $0.83 $0.82 N/A (1) 2012 2013 2014 2015 YTD 1H14 1H15 Annualized Pretax Income ($ in millions) $256 +20% $128 $196 $172 $107 $118 2012 2013 2014 2015 YTD 1H14 1H15 Annualized (1) Represents partia
Slide 7: Trends in PennyMac Financial's Businesses
Trends in PennyMac Financial’s Businesses Correspondent Production(1) Loan Servicing(1) Market Share Market Share 10% 9.22% 1.5% 1.38% 7.69% 1.17% 8% 1.2% 6% 0.9% 4% 0.6% 2% 0.3% 0% 0.0% 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 Consumer Direct Product
Slide 8: Growth Strategy Enabled by PennyMac Financial's Unique Platform
Growth Strategy Enabled by PennyMac Financial’s Unique Platform Best-in-class mortgage banking platform designed for today’s market and regulatory environment – Operations built and grown organically – not through acquisitions – Highly scalable to support continued growth Largest non-bank corres
Slide 9: Seasoned Leadership and Deep Management Team
Seasoned Leadership and Deep Management Team Years of Mortgage & Name Position Previous Experience Banking Experience President & Chief Operating Officer, Stanford Kurland Chairman & Chief Executive Officer 40 Countrywide Financial Corp. Co-Head of Global Residential Mortgages, David Spector Preside
Slide 10: Governance Structure & Policies
Governance Structure & Policies PennyMac’s Governance Structure provides independent oversight of revenue generating and support areas through quality assurance, quality control, committee oversight, internal audit, and board reporting. E n t it y B o a r d s In t e r n a l A u d it S u b c o m m i
Slide 11: Production Overview
Production Overview PennyMa ac inancia | Services, Inc.
Slide 12: Production Market Opportunity
Production Market Opportunity Purchase Originations Refinance Originations • Purchase originations have historically been • Refinance originations have historically been more stable and have a natural “floor” due to highly cyclical and are projected to decline in the moves/relocations, household for
Slide 13: 2Q15 Highlights – Correspondent Production
2Q15 Highlights – Correspondent Production Operational Highlights Correspondent Volume and Mix Correspondent acquisitions by PMT in 2Q15 totaled $16 (UPB in billions) $11.9 billion $14.4 – 70% government-insured loans; 30% conventional loans $12 July correspondent acquisitions totaled $5.6 billi
Slide 14: PennyMac Is the Largest Non-Bank Correspondent Aggregator
PennyMac Is the Largest Non-Bank Correspondent Aggregator Aggregator $ Well-capitalized firm with many sources of financing Approvals and established $ $ performance for Agencies and other Agencies and investors Sophisticated capital markets other Investors expertise to manage pipeline and Ori
Slide 15: Correspondent Production – Counterparty Management
Correspondent Production – Counterparty Management Upfront Client Approval Process •PennyMac Correspondent Group (“PCG”) selects mortgage companies or banks that have the potential to be a good fit for Agency and/or Jumbo loan acquisitions. Applications are completed by prospective clients and submi
Slide 16: Correspondent Production – Loan Acquisition Process
Correspondent Production – Loan Acquisition Process Prior to • Correspondent lenders process, underwrite and close loans for delivery to PennyMac Delivery • Business rules and the pricing engine prevent lock and delivery if loan is outside of PennyMac’s guidelines Acquisition Process Data Extracti
Slide 17: 2Q15 Highlights – Consumer Direct Production
2Q15 Highlights – Consumer Direct Production Operational Highlights Consumer Direct Production Volume Consumer direct production totaled $1.1 billion (UPB in millions) in 2Q15, up 27% from 1Q15 – Government-insured and guaranteed loans continue $1,200 $1,138 to drive growth $1,000 July consumer
Slide 18: Consumer Direct Production – PennyMac's Strategy and Approach
Consumer Direct Production – PennyMac’s Strategy and Approach Consumer direct lending has significant advantages over the branch-based model: • Direct model has taken over other consumer financial services markets, e.g., banking, brokerage, credit cards, insurance • Refinance market is already shift
Slide 19: Loan Production – Limited GSE Repurchases Since Inception
Loan Production – Limited GSE Repurchases Since Inception • As of June 30, 2015, the outstanding UPB of loans subject to Representations and Warranties was $44.8 billion and the Reserve against these loans was $16.3 million (3.6bps) • Life-to-date losses for PFSI from repurchases totaled $472K Reser
Slide 20: Servicing Overview
Servicing Overview PennyMa ac inancia | Services, Inc.
Slide 21: 2Q15 Highlights – Loan Servicing
2Q15 Highlights – Loan Servicing Operational Highlights Loan Servicing Portfolio Composition (UPB in billions) Servicing portfolio totaled $136.2 billion in UPB at $150 $136 quarter end, up 18% from 1Q15 $115 $120 $106 Bulk and flow MSR acquisitions totaled $94 $100 $15.4 billion in UPB during 2
Slide 22: Loan Servicing Portfolio and Approach to Growth
Loan Servicing Portfolio and Approach to Growth • We have grown our servicing portfolio primarily through organic loan production from our correspondent and consumer direct channels, supplemented by MSR acquisitions and the acquisition of whole loan pools by our Advised Entities Servicing by Investo
Slide 23: Recent Servicing Transfer Experience
Recent Servicing Transfer Experience • Recently completed bulk and co-issue servicing acquisitions, totaling over $41.7 billion in UPB across more than 250,000 loans Seller Type UPB Loan Count Settlement Date Product ($ Millions) Mortgage Bank Bulk 337 1,752 3/2/2014 GNMA Mortgage Bank Bulk 521 2,56
Slide 24: CFPB Complaints vs. Non-Bank Servicers: CFPB Inception – 3/31/15
CFPB Complaints vs. Non-Bank Servicers: CFPB Inception – 3/31/15 Complaints / Loans Serviced Complaints/ NPLs Serviced 1.00% 6.00% 5.27% 5.50% 0.90% 5.00% 0.80% 4.32% 4.50% 0.70% 0.66% 4.00% 0.60% 3.50% 0.50% 2.62% 3.00% 0.43% 0.40% 2.50% 2.00% 0.30% 0.25% 1.35% 1.50% 0.20% 1.00% 0.09% 0.10% 0.50% 0
Slide 25: Opportunity for PFSI and PMT in MSR Acquisitions
Opportunity for PFSI and PMT in MSR Acquisitions Why Are MSR Which MSR Transactions How Do MSRs Come to Market? Sales Occurring? Are Attractive? • Large servicers may sell • Intermittent large bulk portfolio • GSE and Ginnie Mae servicing in MSRs due to continuing sales ($10+ billion in UPB) which P
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