Pennymac Financial Services, Inc. · NYSE:PFSI
Pennymac Financial Services — Barclays Global Financial Services Conference 2020
17 slides from Pennymac Financial Services's conference presentation, Sep 15, 2020
Slide 1: Barclays Global Financial Services Conference
Barclays Global Financial Services Conference September 15, 2020
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: PFSI Is a Leading Nonbank Residential Mortgage Specialist
PFSI Is a Leading Nonbank Residential Mortgage Specialist 13th year of operations; initial public offering in May 2013 Leading Market Position in the U.S. 3rd largest mortgage producer(1) Largest government-insured producer(1) 8th largest mortgage servicer(1) Largest correspondent producer
Slide 4: PFSI Represents an Attractive Investment Opportunity
PFSI Represents an Attractive Investment Opportunity Track record of strong profitability; profitable Earnings Per Share (EPS) for PFSI(3) every year since 2008(1) Record annual earnings in 2019; Increased liquidity and public float since record earnings in $8.11 corporate reorganization in 2018
Slide 5: PFSI's Success Built Upon Unique Business Model and Risk Management
PFSI’s Success Built Upon Unique Business Model and Risk Management Balanced business model, with established Book Value per Share Since IPO(1) scale in loan production and servicing ‒ Drives profitability across different market $34.26 environments 25% CAGR(2) ‒ Production volumes more weighted t
Slide 6: PFSI's Earnings Growth Driven by Direct Lending and Servicing Scale
PFSI’s Earnings Growth Driven by Direct Lending and Servicing Scale Production Pretax Income Servicing Pretax Income ($ in millions) ($ in millions) $778.2 $172.3 Estimated contribution from direct lending (CDL & BDL) $146.8 $129.2 $103.0 $108.4 $146.5 $527.8 $58.7 $238.5 -$14.8 $87.3 2017 2018 2019
Slide 7: Technology Investments Drive Continued Growth
Technology Investments Drive Continued Growth Production Technology Correspondent Production Consumer Direct P3, PennyMac’s new correspondent lending portal, MAC, our consumer direct portal, allows potential leverages proprietary systems and Ellie Mae’s next borrowers to interact with their loan
Slide 8: Consistent Gains in Market Share Across All Businesses
Consistent Gains in Market Share Across All Businesses Correspondent Production(1) Broker Direct Production(1) 17.0% 1.8% 15.5% 11.9% 10.5% 1.1% 0.3% N/A 2017 2018 2019 1H20 2017 2018 2019 1H20 Consumer Direct Production(1) Loan Servicing(1) 1.0% 3.3% 3.4% 2.7% 0.7% 2.3% 0.5% 0.5% 2017 2018 2019 1H2
Slide 9: Opportunity in the Mortgage Origination Market
Opportunity in the Mortgage Origination Market U.S. Mortgage Origination Market(1) Average 30-year fixed rate mortgage(2) (UPB in billions) 5.0% $3,103 4.5% $2,325 $2,372 4.0% 2.86% 3.5% 3.0% 2.5% 2019 2020E 2021E Purchase Refinance Economic forecasts for total originations in 2020 have increased
Slide 10: Faster Growth Direct Lending Has Outsized Impact on Production Earnings
Faster Growth Direct Lending Has Outsized Impact on Production Earnings Consumer Direct Lending Volume (UPB in billions) While the direct lending channels $5.1 (consumer and broker direct) represented $3.8 $4.0 21% of PFSI’s production volume in $2.7 2.6x 2Q20, they accounted for approximately $2.
Slide 11: Servicing Portfolio Trends and EBO Activity
Servicing Portfolio Trends and EBO Activity Loan Servicing Portfolio Composition Servicing portfolio UPB has grown 5% since (UPB in billions) December 31, 2019 despite elevated $368.7 $388.3 prepayment speeds and disruption in the $299.3 correspondent production market $245.8 At June 30, 2020, $
Slide 12: Third Quarter Trends for PFSI
Third Quarter Trends for PFSI Production volumes remain at elevated levels through August 31st Correspondent acquisitions quarter-to-date totaled $27.8 billion in UPB; locks totaled $35.2 billion Consumer-direct originations quarter-to-date totaled $4.1 billion in UPB; locks totaled $7.1 billion
Slide 13: Appendix
Appendix PennyMac inancia | Services, Inc.
Slide 14: Synergistic Partnership with PMT Is a Key Competitive Advantage
Synergistic Partnership with PMT Is a Key Competitive Advantage (NYSE: PFSI) (NYSE: PMT) Best-in-Class Operating Platform Tax-Efficient Investment Vehicle $2.5 billion of stockholders’ equity(1) $2.2 billion of shareholders’ equity, including $300 million of preferred Leading nonbank residenti
Slide 15: Hedging Approach Continues to Moderate the Volatility of PFSI's Results
Hedging Approach Continues to Moderate the Volatility of PFSI’s Results MSR Valuation Changes and Offsets PFSI seeks to moderate the impact of interest rate changes on the fair value of its MSR ($ in millions) asset through a comprehensive hedge MSR fair value change before recognition of realizat
Slide 16: Owned Portfolio Servicing Trends – COVID Forbearances & EBO Activity
Owned Portfolio Servicing Trends – COVID Forbearances & EBO Activity Forbearance Rate (1) 13.2% 12.4% 11.7% 4.2% 1.9% 1.6% 10.6% 10.1% 8.9% 4/30/2020 6/30/2020 7/31/2020 Delinquent Current 69% of forbearance plans in effect as of April 30th have been extended The percentage of loans in PFSI’s MS
Slide 17: 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
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