Pennymac Financial Services, Inc. · NYSE:PFSI

Pennymac Financial Services — Q4 2013 Earnings Presentation

21 slides from Pennymac Financial Services's earnings presentation, Feb 5, 2014

  1. Slide 1: Fourth Quarter 2013 Earnings Report

    Fourth Quarter 2013 Earnings Report

  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: Fourth Quarter Highlights

    Fourth Quarter Highlights  Pretax income of $41.7 million; diluted earnings per common share of $0.32 – Total net revenue of $90.4 million, up 4% from 3Q13 – Expenses totaled $48.7 million, down 7% from 3Q13  Loan production totaled $6.0 billion in unpaid principal balance (UPB), down 25% from 3Q1

  4. Slide 4: Substantial Opportunity in the U.S. Mortgage Markets for Non-Banks

    Substantial Opportunity in the U.S. Mortgage Markets for Non-Banks  Mortgage markets remain large components U.S. Origination of U.S. financial services 2010 Market(4) 2013 – $10 trillion in mortgage debt outstanding 8% 13% (servicing) at year-end 16% – $1.2 trillion in originations forecast for 20

  5. Slide 5: PFSI Has Developed in a Sustainable Manner for Long-Term Growth

    PFSI Has Developed in a Sustainable Manner for Long-Term Growth  Organic growth with a focus on the • PFSI completed initial public offering quality of our operations • Opened additional servicing facility in Fort Worth  Culture of building management, • Servicing UPB reaches $78 billion processes

  6. Slide 6: PFSI's Full Range of Capabilities for Mortgage Banking and Investment Management

    PFSI’s Full Range of Capabilities for Mortgage Banking and Investment Management  Correspondent acquisitions  Consumer marketing Loan Production  Counterparty review and management  Consumer direct lending  Loan fulfillment systems and operations   Underwriting  Appraisal review Credit  Loa

  7. Slide 7: PFSI's Revenues Continue to Grow Steadily and Diversify

    PFSI’s Revenues Continue to Grow Steadily and Diversify ($ in millions) Total Net Revenue $500 • Total net revenue grew 46% in 2013, in $400 $387 spite of volatile markets • Loan Servicing and Investment 37% Management revenues, which are $300 $265 mostly recurring fees, grew to more than one third

  8. Slide 8: Market Environment and Outlook

    Market Environment and Outlook Mortgage  Increased interest rates result in a smaller mortgage origination market; $1.2 trillion in originations forecast Originations for 2014, >60% expected to be purchase money(1) and Housing  Home purchase demand aided by improving U.S. employment and economic o

  9. Slide 9: Growth Trends Across PennyMac Financial's Businesses

    Growth Trends Across PennyMac Financial’s Businesses Mortgage Banking Loan Production UPB(1)  Origination market remains challenged by ($ in billions) (For the quarterly period) higher rates; PennyMac gained market share $12 $10.2 throughout the year in correspondent and retail $8.8 $8.9  In corre

  10. Slide 10: PennyMac Financial's Businesses – Correspondent Lending

    PennyMac Financial’s Businesses – Correspondent Lending Operational Highlights  Correspondent acquisitions by PMT in 4Q13 totaled $5.8 billion – 58% government-insured loans (gain on mortgage loans to PFSI); 42% fulfillment activity for PMT (fee revenue to PFSI)  Smaller declines in government-ins

  11. Slide 11: PennyMac Financial's Businesses – Retail Lending

    PennyMac Financial’s Businesses – Retail Lending Operational Highlights  Retail originations totaled $211 million in 4Q13, down 26% from 3Q13 – Non-portfolio originations comprised 51% of total retail originations – Smaller decline in portfolio-sourced originations (15% Q/Q), due to a growing servi

  12. Slide 12: PennyMac Financial's Businesses – Loan Servicing

    PennyMac Financial’s Businesses – Loan Servicing Operational Highlights  Servicing portfolio totaled $78.2 billion in UPB at quarter-end, up 48% from 3Q13 – Prime servicing and subservicing net growth of $25.5 billion in UPB from September 30, 2013  Bulk MSR acquisitions completed during 4Q13, add

  13. Slide 13: PennyMac Financial's Businesses – Investment Management

    PennyMac Financial’s Businesses – Investment Management Operational Highlights  Net assets under management totaled $2.0 billion, down 1% from September 30, 2013, largely due to a shift in dividend declarations by PMT in 4Q13  Investment management revenues were $14.7 million, an increase of 3% fr

  14. Slide 14: Fourth Quarter Financial Review

    Fourth Quarter Financial Review  Diluted earnings per common share of $0.32  Net income of $37.3 million, up 19% from 3Q13 – Net income attributable to PFSI shareholders of $6.4 million  Total net revenue of $90.4 million, up 4% from 3Q13 Business Segment Results  Mortgage Banking segment pretax

  15. Slide 15: Mortgage Banking Segment Results

    Mortgage Banking Segment Results Unaudited – ($ in thousands) Quarter ended Quarter ended December 31, 2013 September 30, 2013 Revenues Net gains on mortgage loans held for sale at fair value $ 29,453 $ 25,949 Loan origination fees 5,315 6,280 Fulfillment fees from PennyMac Mortgage Investment Trust

  16. Slide 16: Mortgage Banking Segment – Trends in Production-Related Revenue

    Mortgage Banking Segment – Trends in Production-Related Revenue Quarter ended Quarter ended December 31, 2013 September 30, 2013 ($ in thousands) Net gains on mortgage loans $29,453 $25,949 (1) As % of IRLCs 0.76% 0.63% Loan origination fees $5,315 $6,280 As % of PFSI fundings 0.15% 0.15% Fulfillmen

  17. Slide 17: Mortgage Banking Segment – Trends in Servicing-Related Revenue

    Mortgage Banking Segment – Trends in Servicing-Related Revenue Net Loan Servicing Fees Quarter ended ($ in thousands) December 31, 2013 Servicing Fee Roll-forward Servicing fees (1) $ 43,588 ($ in thousands) Effect of MSRs: Amortization (6,538) Servicing fees for 3Q13 $ 29,562 Provision for impairme

  18. Slide 18: Investment Management Segment Results

    Investment Management Segment Results Unaudited – ($ in thousands) Quarter ended Quarter ended December 31, 2013 September 30, 2013 Revenues Management fees: From PennyMac Mortgage Investment Trust $ 8,924 $ 8,539 From Investment Funds 2,031 2,001 10,955 10,540 Carried Interest from Investment Funds

  19. Slide 19: Mortgage Servicing Rights (MSR) Asset Valuation

    Mortgage Servicing Rights (MSR) Asset Valuation Lower of Fair value not Fair value subject  PFSI carries most of its December 31, 2013 amortized cost or subject to excess to excess originated MSRs at the ($ in millions) fair value servicing spread servicing spread lower of amortized cost or UPB $22

  20. Slide 20: Appendix

    Appendix Financial Services, Inc.

  21. Slide 21: Fundings and Locks by Product

    Fundings and Locks by Product ($ in millions) 4Q12 1Q13 2Q13 3Q13 4Q13 Correspondent Acquisitions Conventional $ 6,526 $ 4,779 $ 4,216 $ 3,608 $ 2,419 Government 3,485 3,739 4,262 3,992 3,340 Jumbo 2 8 107 74 14 Total $ 10,013 $ 8,526 $ 8,586 $ 7,674 $ 5,773 Correspondent Locks Conventional $ 7,003

PennyMac Financial Services — Q4 2013 Earnings Presentation on 6ix