Pennymac Financial Services, Inc. · NYSE:PFSI
Pennymac Financial Services — Investor Presentation (September 2021)
19 slides from Pennymac Financial Services's investor presentation, September 2021
Slide 1: Investor Presentation
PENNYMAC FINANCIAL SERVICES, INC. INVESTOR PRESENTATION September 2021
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: PennyMac is an established leader in the U.S. mortgage market with substantial growth potential
PENNYMAC IS AN ESTABLISHED LEADER IN THE U.S. MORTGAGE MARKET WITH SUBSTANTIAL GROWTH POTENTIAL $2.3 billion in assets under management 12-year track record as a residential mortgage REIT $197 billion in 2020 #2 PMT IS A LEADING $487 billion outstanding $167 billion YTD IN PRODUCTION(1) #6 RESIDENTI
Slide 4: PennyMac's balanced business model is scalable and supports long-term growth plans
PENNYMAC’s BALANCED BUSINESS MODEL IS SCALABLE AND SUPPORTS LONG-TERM GROWTH PLANS Where we PennyMac’s Production Market Share(2) Channel Medium- are today(1) Term Goal 5.0% 5.0% 4.9% 4.2% 3.8% 3.4% Correspondent Production #1 #1 2.2% 2.8% #6 #3 2014 2015 2016 2017 2018 2019 2020 1H21 Broker Corresp
Slide 5: PFSI's track record across various market environments is unique among independent mortgage banks
PFSI’S TRACK RECORD ACROSS VARIOUS MARKET ENVIRONMENTS IS UNIQUE AMONG INDEPENDENT MORTGAGE BANKS PFSI's Annualized Return on Average Common Stockholders' Equity (ROE) 61% Proven ability to generate attractive 26% 33% Average: 25% 19% 20% 22% 22% ROEs… 11% 13% (1) 2013 2014 2015 2016 2017 2018 2019
Slide 6: Origination market remains historically strong
ORIGINATION MARKET REMAINS HISTORICALLY STRONG U.S. Mortgage Origination Market(1) Mortgage Rates Remain Historically Low ($ in trillions) 5.0% $4.1 $4.0 4.0% $2.8 3.0% $2.3 $2.6 $2.2 $0.9 2.0% $1.1 $1.7 $1.9 1.0% $1.3 $1.5 0.0% 2019 2020 2021E 2022E Purchase Refinance (2) (3) Average 30-year fixed
Slide 7: PennyMac continues to drive towards its medium-term goals
PENNYMAC CONTINUES TO DRIVE TOWARDS ITS MEDIUM-TERM GOALS Correspondent Market Share(1) Loan Servicing Market Share(1) 17.7% 17.8% 4.0% 3.7% 14.9% 3.4% 11.8% 2.8% 10.5% 2.3% 2017 2018 2019 2020 1H21 12/31/17 12/31/18 12/31/19 12/31/20 6/30/21 Consumer Direct Market Share(1) Broker Direct Market Shar
Slide 8: Direct lending and servicing are driving PFSI's profitability
DIRECT LENDING AND SERVICING ARE DRIVING PFSI’S PROFITABILITY Production Pretax Income Servicing Pretax Income ($ in millions) ($ in millions) $1,964 $543 $433 $262 $147 $173 $607 $528 ($15) 2019 2020 1H21 2019 2020 1H21 (1) Estimated Contribution from Direct Lending (CDL & BDL) Pretax Income Pretax
Slide 9: Production segment trends – volume by channel
PRODUCTION SEGMENT TRENDS – VOLUME BY CHANNEL Correspondent Consumer Direct Broker Direct (UPB in billions) $51.2 (UPB in billions) (UPB in billions) $51.1 $46.7 $13.4 $14.1 $5.1 $5.7 $46.0 $4.5 $37.7 $10.7 $10.7 $4.1 $4.0 $29.9 $33.8 $8.9 $30.5 $4.6 $5.0 $2.6 $4.0 $5.1 $3.2 $18.9 $2.5 $2.1 $17.4 $1
Slide 10: Servicing segment trends
SERVICING SEGMENT TRENDS Selected Operational Metrics Loan Servicing Portfolio Composition 1Q21 2Q21 (UPB in billions) $473.2 Loans serviced (in thousands) 1,998 2,058 $448.8 (1) 60+ day delinquency rate - owned portfolio 8.6% 6.7% $388.3 60+ day delinquency rate - sub-serviced portfolio(2) 2.1% 1.6
Slide 11: Investment management segment highlights
INVESTMENT MANAGEMENT SEGMENT HIGHLIGHTS • Net AUM as of June 30, 2021 were $2.3 billion, down slightly from March 31, 2021, and up 5% from June 30, 2020 • Investment Management segment revenues were $13.5 million, up 41% from 1Q21 and 28% from 2Q20 ‒ PMT’s strong performance over the last four quar
Slide 12: PFSI has developed a strong and sophisticated capital structure over its history
PFSI HAS DEVELOPED A STRONG AND SOPHISTICATED CAPITAL STRUCTURE OVER ITS HISTORY PFSI Warehouse Facilities at June 30, 2021 PFSI Term Financing at June 30, 2021 (in millions) Financing for loan inventory supported by multiple strong bank partners, structured with flexible excess capacity to support
Slide 13: PFSI's prudent financial management with low leverage and risk management expertise
PFSI’s PRUDENT FINANCIAL MANAGEMENT WITH LOW LEVERAGE AND RISK MANAGEMENT EXPERTISE Robust process to monitor and forecast liquidity, hedge results and reserves ensure a strong capital position in stress scenarios. Low Debt-to-Equity Ratio Successful Hedging of Mortgage Servicing Rights • Track reco
Slide 14: PennyMac's extensive risk-governance platform
PENNYMAC’S EXTENSIVE RISK-GOVERNANCE PLATFORM BUILD TO ADDRESS THE EVOLVING MORTGAGE MARKET Risk management disciplines fully integrated throughout the organization are the foundation of PennyMac’s sustained success PFSI & PMT Boards Third Line Internal Audit Management Committees & Enterprise Risk
Slide 15: Appendix
PénnyMac’ APPENDIX »»>
Slide 16: Synergistic relationship provides a competitive advantage for both companies
SYNERGISTIC RELATIONSHIP PROVIDES A COMPETITIVE ADVANTAGE FOR BOTH COMPANIES Mortgage company with industry-leading operations Management Services: and technology PFSI is the external manager of PMT Fulfillment Services: Fee for service Oversight from PFSI performs fulfillment in Offers PFSI access
Slide 17: Drivers of production segment profitability
DRIVERS OF PRODUCTION SEGMENT PROFITABILITY 2Q20 1Q21 2Q21 Revenue Revenue Revenue Fallout Margin / Contribution % of Fallout Margin / Contribution % of Fallout Margin / Contribution % of Adjusted Fulfillment (net of Loan Production Adjusted Fulfillment (net of Loan Production Adjusted Fulfillment (
Slide 18: Trends in delinquencies, forbearance and loss mitigation
TRENDS IN DELINQUENCIES, FORBEARANCE AND LOSS MITIGATION 30+ Day Delinquency Rate and Forbearance Trend(1) • In PFSI’s predominately government MSR portfolio, approximately 249,000 borrowers have been enrolled in a forbearance plan 15.1% related to COVID-19 since the enactment of the CARES Act 14.1%
Slide 19: PFSI's servicing profitability excluding valuation-related changes
PFSI’S SERVICING PROFITABILITY EXCLUDING VALUATION-RELATED CHANGES 2019 2020 1H21 basis basis basis $ in millions points(1) $ in millions points(1) $ in millions points(1) Operating revenue $ 1,022.6 30.6 $ 1,057.4 26.9 $ 531.5 23.0 Realization of MSR cash flows (429.6) (12.9) (392.2) (10.0) (168.3)
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