Pennymac Financial Services, Inc. · NYSE:PFSI
Pennymac Financial Services — Q1 2014 Earnings Presentation
21 slides from Pennymac Financial Services's earnings presentation, May 7, 2014
Slide 1: First Quarter 2014 Earnings Report
First Quarter 2014 Earnings Report
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: First Quarter Highlights
First Quarter Highlights Pretax income of $49.1 million; diluted earnings per common share of $0.38 – Total net revenue of $105.5 million, up 17% from 4Q13 – Expenses totaled $56.4 million, up 16% from 4Q13 Loan production totaled $5.1 billion in UPB(1); market share gains continued as the U.S.
Slide 4: PennyMac Financial's Objective: To Be the Premier U.S. Mortgage Specialist Firm
PennyMac Financial’s Objective: To Be the Premier U.S. Mortgage Specialist Firm Strategic Mission Retail production PennyMac will achieve Correspondent production leadership distinction in Loan servicing its core businesses: Investment management Return on equity and earnings growth Demons
Slide 5: PennyMac Financial Is in a Unique Position Among Mortgage Specialists
PennyMac Financial Is in a Unique Position Among Mortgage Specialists Industry-leading platform built organically – not Distinctive expertise and full range of through acquisitions capabilities across mortgage banking and • Not distracted by legacy/regulatory issues investment management • Disciplin
Slide 6: Current Market Environment and Outlook
Current Market Environment and Outlook Environmental Trends Impact and Outlook • Interest rates and mortgage rates remain low, • Origination market remains competitive due to although expected to rise with continued Fed market contraction tapering – Originators selling MSRs and/or loans servicing- •
Slide 7: Opportunity for PFSI and PMT in MSR Acquisitions
Opportunity for PFSI and PMT in MSR Acquisitions Why Are MSR What MSR Transactions How Do MSRs Come to Market? Sales Occurring? Are Attractive? • Large banks are selling MSRs • Intermittent large bulk portfolio • GSE and Ginnie Mae servicing in due to continuing operational sales ($10+ billion in UP
Slide 8: Growth Continues in Each of PennyMac Financial's Businesses
Growth Continues in Each of PennyMac Financial’s Businesses Correspondent Lending(1) Loan Servicing(1) Market Share Market Share 8% 7.34% 1.0% 6.28% 0.85% 0.79% 6% 0.8% 0.6% 4% 0.4% 2% 0.2% 0% 0.0% 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 Retail Lendi
Slide 9: Growth Initiatives in PennyMac Financial's Businesses
Growth Initiatives in PennyMac Financial’s Businesses Correspondent Lending Retail Lending Building momentum behind initiatives to add Portfolio-sourced recapture activity resulting new sellers and deepen relationships through from the growing servicing portfolio relevant services (e.g., best ef
Slide 10: Growth Initiatives in PennyMac Financial's Businesses (cont'd)
Growth Initiatives in PennyMac Financial’s Businesses (cont’d) Loan Servicing Investment Management Ongoing organic growth in the prime owned and Opportunities to raise capital for residential subservicing portfolios mortgage-related investments, including newly emerging opportunities, are subst
Slide 11: Quarterly Highlights – Correspondent Lending
Quarterly Highlights – Correspondent Lending Operational Highlights Correspondent Volume and Mix (UPB in billions) Correspondent acquisitions by PMT in 1Q14 $12 $10.0 totaled $4.8 billion $10 $8.1 – 60% government-insured loans (gain on $8 $6.7 mortgage loans to PFSI); $6.0 $4.3 $5.5 $6 $4.8 $3.7
Slide 12: Quarterly Highlights – Retail Lending
Quarterly Highlights – Retail Lending Operational Highlights Retail Origination Volume (UPB in millions) Retail originations totaled $314 million in $400 $345 1Q14, up 49% from 4Q13 driven by strong $314 $283 recapture volume from recent MSR $300 $267 acquisitions $211 $200 – Resources shifted to
Slide 13: Quarterly Highlights – Loan Servicing
Quarterly Highlights – Loan Servicing Operational Highlights Loan Servicing Portfolio Composition (UPB in billions) Servicing portfolio totaled $83.8 billion in UPB $100 at quarter-end, up 7% from 4Q13 $78.2 $83.8 $80 – Prime servicing and subservicing net growth of $60 $52.9 $5.8 billion in UPB f
Slide 14: Quarterly Highlights – Investment Management
Quarterly Highlights – Investment Management Operational Highlights Investment Management Revenues ($ in millions) Investment management revenues were $12.5 $15 $14.4 $13.6 $13.6 $13.5 million, down 13% from 4Q13 $12.5 $12 – Incentive fees from PMT and carried interest from the Opportunity Funds d
Slide 15: First Quarter Financial Review
First Quarter Financial Review Diluted earnings per common share of $0.38 Pretax income of $49.1 million, up 18% from 4Q13 Total net revenue of $105.5 million, up 17% from 4Q13 Total expenses of $56.4 million, up 16% from 4Q13 Business Segment Results Total pretax income from mortgage bank
Slide 16: Mortgage Banking – Production Segment Results
Mortgage Banking – Production Segment Results Production Segment Quarter ended Quarter ended March 31, 2014 December 31, 2013 Unaudited ($ in thousands) Revenue Net gains on mortgage loans held for sale at fair value $ 34,538 $ 29,453 Loan origination fees 6,880 5,315 Fulfillment fees from PennyMac
Slide 17: Mortgage Banking – Servicing Segment Results
Mortgage Banking – Servicing Segment Results Servicing Segment Quarter ended Quarter ended March 31, 2014 December 31, 2013 Unaudited ($ in thousands) Revenue Net servicing fees $ 43,764 $ 30,500 Net interest expense (4,057) (2,375) Other 519 67 40,226 28,192 Expenses 23,113 19,393 Pretax income $ 1
Slide 18: 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 March 31, 2014 amortized cost subject to excess to excess ($ in millions) or fair value servicing spread servicing spread originated MSRs at the lower of amortized cost or UPB $24,66
Slide 19: Investment Management Segment Results
Investment Management Segment Results Investment Management Segment Quarter ended Quarter ended March 31, 2014 December 31, 2013 Unaudited ($ in thousands) Revenue Management fees: From PennyMac Mortgage Investment Trust $ 8,074 $ 8,924 From Investment Funds 2,035 2,031 10,109 10,955 Carried Interes
Slide 20: Appendix
Appendix Financial Services, Inc.
Slide 21: Acquisitions, Originations, and Locks by Product
Acquisitions, Originations, and Locks by Product ($ in millions) 1Q13 2Q13 3Q13 4Q13 1Q14 Correspondent Acquisitions Conventional $ 4,779 $ 4,216 $ 3,608 $ 2,419 $ 1,907 Government 3,739 4,262 3,992 3,340 2,913 Jumbo 8 107 74 14 13 Total $ 8,526 $ 8,586 $ 7,674 $ 5,773 $ 4,833 Correspondent Locks Co
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