Pennymac Financial Services, Inc. · NYSE:PFSI

Pennymac Financial Services — Investor Presentation (November 2019)

22 slides from Pennymac Financial Services's investor presentation, November 2019

  1. Slide 1: November 2019 Investor Presentation

    November 2019 Investor Presentation

  2. 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

  3. Slide 3: PFSI Is a Leading Non-Bank Residential Mortgage Specialist

    PFSI Is a Leading Non-Bank Residential Mortgage Specialist  12th year of operations; initial public offering in May 2013 Leading Market Position in the U.S.  4th largest mortgage producer(1)  Largest government-insured producer(1)  6th largest mortgage servicer(1)  Largest correspondent aggrega

  4. Slide 4: Attractive Returns and Increased Liquidity for PFSI Shares

    Attractive Returns and Increased Liquidity for PFSI Shares Total Annualized Return to Stockholders(1) Daily Average Trading Volume(2) (in thousands of shares) +55.7% Corporate 333 (3) Reorganization 305 148 +22.9% +13.7% 1-Year 3-Years 5-Years 4/30/18 - 10/31/18 11/1/18 - 4/30/19 5/1/19 - 10/31/19 (

  5. Slide 5: PFSI's Earnings Have Driven Strong Book Value Growth

    PFSI’s Earnings Have Driven Strong Book Value Growth Book Value Per Share of PFSI 21% CAGR(1) $24.37 $21.34 $19.95 $15.49 $12.32 $9.92 $8.04 $7.27 6/30/13 12/31/13 12/31/14 12/31/15 12/31/16 12/31/17 12/31/18 9/30/19  Track record of strong profitability; profitable every year since 2008(2)  Retai

  6. Slide 6: PFSI Initiates Quarterly Dividend

    PFSI Initiates Quarterly Dividend  Shareholders’ equity of $1.9 billion as of September 30, 2019  Track record of successful capital management including $15 million of stock Strong Capital repurchases since 2017 Position  Industry-leading Production and Servicing businesses generate significant

  7. Slide 7: Large Opportunity in the U.S. Mortgage Market

    Large Opportunity in the U.S. Mortgage Market U.S. Consumer Debt Outstanding(1) U.S. Mortgage Origination Market(2) ($ in trillions) ($ in billions) $11.0 $2,035 $1,931 $1.2 $1.0 Mortgage debt Auto loan debt Credit card debt 2019 2020 Purchase Refinance  The mortgage market is the largest consumer

  8. Slide 8: PFSI Is a Leader and Growing in Each of Its Business Segments

    PFSI Is a Leader and Growing in Each of Its Business Segments Loan Production Loan Servicing Investment Management  Largest correspondent aggregator  Large and growing servicing  External manager of PMT, a in the U.S. in 3Q19(1) portfolio of over 1.7 million leading residential mortgage REIT cust

  9. Slide 9: Hedging Approach Moderates the Volatility of PFSI's Results

    Hedging Approach Moderates the Volatility of PFSI’s Results MSR Valuation Changes and Offsets  PFSI seeks to moderate the ($ in millions) impact of interest rate changes on the fair value of MSR fair value change before recognition of realization of cash flows its MSR asset through a Hedging and ot

  10. Slide 10: Balance Sheet Strength and Low Leverage Are Key to Our Success

    Balance Sheet Strength and Low Leverage Are Key to Our Success As of September 30, 2019  Strong balance sheet with low leverage ($ in millions) versus competitors $9,303 $9,303 – Debt to equity of 2.9x  Diversified liquidity sources and term debt that finances the largest long-term asset Warehouse

  11. Slide 11: PennyMac's Enterprise Risk Management (ERM) Foundation

    PennyMac’s Enterprise Risk Management (ERM) Foundation  Effective governance, compliance and operating systems are critical ERM Framework Overview  PennyMac has utilized a “three-lines of defense” model to monitor the effectiveness of controls  ERM is a fundamental part of our day-to-day operatin

  12. Slide 12: PFSI's Unique, Synergistic Partnership with PMT

    PFSI’s Unique, Synergistic Partnership with PMT (NYSE: PFSI) (NYSE: PMT) Best-in-Class Operating Platform Tax-Efficient Investment Vehicle  Market Capitalization: $2.4 billion(1)  Market Capitalization: $2.0 billion(1) and $2.2  Over 3,900 employees billion in shareholders’ equity(2)  10-year hi

  13. Slide 13: Substantial Advancements in Technology to Further PFSI's Advantages

    Substantial Advancements in Technology to Further PFSI’s Advantages  Recently completed multi-year initiative, investing over $100 million to develop and implement a proprietary, workflow-driven servicing system with a modern, scalable and flexible Servicing architecture to meet PennyMac’s needs Sy

  14. Slide 14: Dominant Servicing Technology Platform

    Dominant Servicing Technology Platform(1) Mainframe hosted system with “Green screen” emulator interfaces and loan data disbursed across a plurality of code screens (1) Leading platform provider’s screens extracted from a public facing website at https://www.quia.com/sv/759642.html 14

  15. Slide 15: SSE Is a Substantial Advancement for PennyMac's Servicing Capabilities

    SSE Is a Substantial Advancement for PennyMac’s Servicing Capabilities Suite of applications specifically designed for actual operational workflows; associates can conduct most activities on a rich and integrated screen to maximize productivity and streamline training time 15

  16. Slide 16: Key Attributes of PennyMac's Servicing Systems Environment

    Key Attributes of PennyMac’s Servicing Systems Environment Architecture  Modern cloud-based architecture delivered to users through thin-client websites User  Modern point-and-click user navigation with aggregated PennyMac loan content Interface  Real-time processing of financial and other transa

  17. Slide 17: Significant Reduction in Servicing Technology-Related Expenses

    Significant Reduction in Servicing Technology-Related Expenses  Servicing technology-related expenses ($ in millions) 2019E 2020E expected to be approximately $15 million Technology Operations and lower in 2020 $ 42 $ 49 Proprietary Applications Vendor Fees 30 7  Major portion of expense has trans

  18. Slide 18: Trends in PennyMac Financial's Businesses

    Trends in PennyMac Financial’s Businesses Total Production(1) Loan Servicing(1) Market Share Market Share 4.7% 4.1% 3.8% 3.4% 3.2% 2.8% 2.7% 2.2% 2.3% 1.9% 1.7% 1.6% 1.1% 0.8% 2013 2014 2015 2016 2017 2018 9MOS19 12/31/13 12/31/14 12/31/15 12/31/16 12/31/17 12/31/18 9/30/19  Correspondent productio

  19. Slide 19: Drivers of Earnings Growth for PennyMac Financial

    Drivers of Earnings Growth for PennyMac Financial  Correspondent – focus on growth of non-delegated; expanding community bank and credit union Expanding relationships our mortgage  Broker Direct Lending – focus on leveraging technology and access to PennyMac platform to drive growth market  Consu

  20. Slide 20: Significant Growth Continues Across All Business Segments

    Significant Growth Continues Across All Business Segments Production volumes remain at elevated levels  Correspondent acquisitions in October were $14.5 billion in UPB; locks were $14.1 billion in UPB  Consumer-direct originations in October were $1.1 billion in UPB; locks were $1.9 billion in UPB

  21. Slide 21: Appendix

    Appendix PennyMac inancia | Services, Inc.

  22. Slide 22: 3Q19 Servicing Profitability Excluding Valuation-Related Changes

    3Q19 Servicing Profitability Excluding Valuation-Related Changes 3Q18 2Q19 3Q19 basis basis basis $ in millions (1) points $ in millions (1) points $ in millions (1) points Operating revenue $ 198.3 28.5 $ 253.7 30.8 $ 270.8 31.7 Realization of MSR cash flows (71.4) (10.3) (106.8) (13.0) (117.2) (13

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