Pennymac Financial Services, Inc. · NYSE:PFSI
Pennymac Financial Services — Q2 2013 Earnings Presentation
18 slides from Pennymac Financial Services's earnings presentation, Aug 8, 2013
Slide 1: Second Quarter 2013 Earnings Report
Second Quarter 2013 Earnings Report
Slide 2: Forward Looking Statements
Draft Forward Looking Statements 4/27/13 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
Slide 3: PennyMac Is a Leading Non-Bank Residential Mortgage Specialist
PennyMac Is a Leading Non-Bank Residential Mortgage Specialist Specialized mortgage platform for the post-financial crisis market – Legacy-free operations developed organically that are highly scalable to support continued growth Largest non-bank correspondent lender in the U.S. in 1Q13 (4th overall
Slide 4: PFSI Has a Unique Business Model With Diverse Revenue Sources
PFSI Has a Unique Business Model With Diverse Revenue Sources Gain on mortgage loans: Retail lending and government-insured correspondent acquisitions Loan Production Fulfillment fees from PMT’s correspondent acquisitions Loan origination fees Significant Servicing fees on owned MSRs portions of Loa
Slide 5: Market Outlook
Market Outlook Increased mortgage rates have significantly reduced refinance activity since early May Mortgage Total mortgage originations forecast to decline from ~$1 trillion in 1H13 to $500 - $700 billion in 2H13(1) Rates and Housing Affordability remains near all-time highs despite higher mortga
Slide 6: Rising Rates Present Challenges, But PFSI Remains Well Positioned
Rising Rates Present Challenges, But PFSI Remains Well Positioned Industry forecasts for the second half of 2013 2013 Origination Estimates(1) show origination volumes declining by an average UPB ($ in millions) of 36% compared to the first half of the year $1,200 36% Average Decline $1,000 – Purcha
Slide 7: Continuing Growth Across PFSI’s Businesses
Continuing Growth Across PFSI’s Businesses Mortgage Banking Loan Production UPB(1) ($ in billions) $12 $10.2 In correspondent lending, $8.8 $8.9 disciplined growth through specific $8 $6.5 initiatives to increase market share Loan Production $3.5 $4 In retail lending, continue to build out infrastru
Slide 8: PennyMac’s Businesses – Correspondent Lending
PennyMac’s Businesses – Correspondent Lending Operational Highlights $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
Slide 9: PennyMac’s Businesses – Retail Lending
PennyMac’s Businesses – Retail Lending Operational Highlights 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 Imp
Slide 10: PennyMac’s Businesses – Loan Servicing
PennyMac’s Businesses – Loan Servicing 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 – PMT’s distressed loan acquisitions also added to special servic
Slide 11: PennyMac’s Businesses – Investment Management
PennyMac’s Businesses – Investment Management Operational Highlights While net assets under management remained at $1.8bn, revenues declined slightly to $13.5 million in the second quarter – Incentive fees and carried interest were $6.7 million (driven by performance of Advised Entities) PMT issued
Slide 12: Financial Results
Financial Results 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 $110.8 million Strong results from both business segmen
Slide 13: Income Statement
Income Statement Quarter Ended Quarter Ended Revenue June 30, 2013(1) March 31, 2013 ($ in thousands) Net gains on mortgage loans held for sale at fair value $ 42,654 $ 39,957 Loan origination fees 6,312 5,668 Fulfillment fees from PennyMac Mortgage Investment Trust 22,054 28,244 Net servicing incom
Slide 14: Pretax Income by Operating Segment
Pretax Income by Operating Segment Quarter Ended June 30, 2013 Mortgage Investment Banking Management Revenues: ($ in thousands) Net gains on mortgage loans held for sale at fair value $ 42,654 $ - Loan origination fees 6,312 - Fulfillment fees from PMT 22,054 - Net servicing fees 22,069 - Managemen
Slide 15: Balance Sheet
Balance Sheet Quarter Ended Quarter Ended June 30, 2013 March 31, 2013 AssetsAssets Assets ($ in thousands) Assets Cash $ 38,468 $ 56,135 Short-term investments, at fair value 156,148 72,664 Mortgage loans held for sale at fair value 656,341 203,661 Servicing advances 94,791 96,587 Receivable from P
Slide 16: Mortgage Servicing Right (MSR) Asset Valuation
Mortgage Servicing Right (MSR) Asset Valuation Lower of amortized cost or Fair Value Quarter Ended June 30, 2013 fair value • PFSI accounts for most of its UPB ($in millions) $16,295 $2,483 originated MSRs under the lower of amortized cost or fair value Weighted average note rate 3.52% 5.29% method
Slide 17: Appendix
Appendix Financial Services, Inc.
Slide 18: Reconciliation of Full Quarter Equivalent EPS to GAAP EPS for the Post-IPO Period
Reconciliation of Full Quarter Equivalent EPS to GAAP EPS for the Post-IPO Period For the quarter ended June 30, 2013 Adjustments for full quarter allocation of earnings and ($ in thousands) As presented income t ax to PFSI Full quarter equivalent Income before provision for income taxes $ 50,229 $
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