Attached files
| file | filename |
|---|---|
| EX-99.2 - SLIDE PRESENTATION - PNMAC Holdings, Inc. | pfsi_8k-ex9902.htm |
| 8-K - CURRENT REPORT - PNMAC Holdings, Inc. | pfsi_8k.htm |
Exhibit 99.1
Investors and Media
Christopher Oltmann
(818) 264-4907
PennyMac Financial Services, Inc. Reports
First Quarter 2016 Results
Moorpark, CA, May 5, 2016 – PennyMac Financial Services, Inc. (NYSE: PFSI) today reported net income of $26.5 million for the first quarter 2016, on revenue of $143.4 million. Net income attributable to PFSI common stockholders was $5.2 million, or $0.23 per diluted share. Book value per share increased to $12.59, up from $12.32 at December 31, 2015.
First Quarter 2016 Highlights
| · | Pretax income of $30.1 million, down 61 percent from the prior quarter |
| o | Results adversely impacted by non-cash valuation losses on mortgage servicing rights (MSRs) of $125.9 million, partially offset by gains from hedges and excess servicing spread (ESS) liability totaling $78.2 million, driven by a significant decline in mortgage rates |
| o | Excluding net MSR-related valuation changes, pretax income was $77.8 million |
| · | Production segment pretax income of $68.4 million, up 36 percent from the prior quarter |
| o | Total loan production activity of $10.9 billion in unpaid principal balance (UPB), down 2 percent from the prior quarter |
| o | Strong growth in consumer direct channel with $1.2 billion in UPB of originations, up 17 percent from the prior quarter, and $2.2 billion in UPB of interest rate locks, up 23 percent from the prior quarter |
| · | Servicing segment pretax loss of $39.5 million, versus pretax income of $27.9 million in the prior quarter |
| o | Servicing portfolio reached $164.9 billion in UPB, up 3 percent from December 31, 2015, due to loan production activities |
| · | Investment Management segment pretax income of $1.1 million, up 74 percent from the prior quarter |
| o | Net assets under management were approximately $1.6 billion, down 6 percent from December 31, 2015, driven by PennyMac Mortgage Investment Trust’s (PMT) repurchase of its common shares of beneficial interest and the anticipated return of capital to investors in the private Investment Funds |
“The mortgage banking business is inherently sensitive to changes in interest rates, and PennyMac Financial has in place a comprehensive risk management approach designed to moderate the immediate impact of interest rate changes while taking into consideration the company-wide effect on revenue opportunities over time. Interest rates declined during the first quarter which drove a significant value reduction in our MSRs, even after the offset from our interest rate risk management strategies,” said Chairman and Chief Executive Officer Stanford L. Kurland. “That said, PennyMac Financial’s underlying operating results and growth trends remain solid. Mortgage production activity is strong, particularly in our consumer direct channel which is delivering higher volumes and margins. With interest rates remaining low, we continue to experience increased volumes of applications and loans in process, which we expect to drive higher production income in future periods to further offset the first quarter impact on our mortgage servicing asset.”
| 1 |
The following table presents the contribution of PennyMac Financial’s Production, Servicing and Investment Management segments to pretax income:
| Quarter ended March 31, 2016 | ||||||||||||||||||||
| Mortgage Banking | Investment | |||||||||||||||||||
| Production | Servicing | Total | Management | Total | ||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| Revenue | ||||||||||||||||||||
| Net gains on mortgage loans held for sale at fair value | $ | 78,214 | $ | 13,310 | $ | 91,524 | $ | – | $ | 91,524 | ||||||||||
| Loan origination fees | 22,434 | – | 22,434 | – | 22,434 | |||||||||||||||
| Fulfillment fees from PMT | 12,935 | – | 12,935 | – | 12,935 | |||||||||||||||
| Net servicing fees | – | 17,519 | 17,519 | – | 17,519 | |||||||||||||||
| Management fees | – | – | – | 5,912 | 5,912 | |||||||||||||||
| Carried Interest from Investment Funds | – | – | – | 593 | 593 | |||||||||||||||
| Net interest income (expense): | ||||||||||||||||||||
| Interest income | 8,377 | 5,151 | 13,528 | – | 13,528 | |||||||||||||||
| Interest expense | 4,883 | 16,144 | 21,027 | 9 | 21,036 | |||||||||||||||
| 3,494 | (10,993 | ) | (7,499 | ) | (9 | ) | (7,508 | ) | ||||||||||||
| Other | 239 | (232 | ) | 7 | (64 | ) | (57 | ) | ||||||||||||
| Total net revenue | 117,316 | 19,604 | 136,920 | 6,432 | 143,352 | |||||||||||||||
| Expenses | 48,908 | 59,066 | 107,974 | 5,288 | 113,262 | |||||||||||||||
| Income (loss) before provision for income taxes and non-segment activities | 68,408 | (39,462 | ) | 28,946 | 1,144 | 30,090 | ||||||||||||||
| Non-segment activities (1) | – | – | – | – | 49 | |||||||||||||||
| Income (loss) before provision for income taxes | $ | 68,408 | $ | (39,462 | ) | $ | 28,946 | $ | 1,144 | $ | 30,139 | |||||||||
(1) Relates to parent Company interest expense eliminated in consolidation
| 2 |
Production Segment
Production includes the correspondent acquisition of newly originated mortgage loans for PennyMac Financial’s own account, fulfillment services on behalf of PMT, and consumer direct lending.
PennyMac Financial’s loan production totaled $10.9 billion in UPB, of which $7.6 billion in UPB was for its own account, and $3.3 billion was fee-based fulfillment activity for PMT. Interest rate lock commitments (IRLCs) on correspondent government-insured and consumer direct loans totaled $8.7 billion in UPB.
Production segment pretax income was $68.4 million, an increase of 36 percent from the fourth quarter 2015. Production revenue totaled $117.3 million, an increase of 12 percent from the fourth quarter, primarily resulting from a 19 percent quarter-over-quarter increase in net gains on mortgage loans held for sale, driven by a significant increase in originations and lock volumes in the consumer direct channel, which tends to have substantially higher margins than the correspondent channel.
The components of net gains on mortgage loans held for sale are detailed in the following table:
| Quarter ended | ||||||||||||
| March 31, 2016 | December 31, 2015 | March 31, 2015 | ||||||||||
| (in thousands) | ||||||||||||
| MSR value | $ | 95,373 | $ | 112,196 | $ | 67,028 | ||||||
| Mortgage servicing rights recapture payable to PennyMac Mortgage Investment Trust | (1,951 | ) | (1,993 | ) | (1,289 | ) | ||||||
| Provision for representations and warranties | (2,082 | ) | (1,978 | ) | (1,495 | ) | ||||||
| Cash investment (1) | (51,140 | ) | (7,885 | ) | (15,599 | ) | ||||||
| Fair value changes of pipeline, inventory and hedges | 51,324 | (21,604 | ) | 26,733 | ||||||||
| Net gains on mortgage loans held for sale | $ | 91,524 | $ | 78,736 | $ | 75,378 | ||||||
| Net gains (loss) on mortgage loans held for sale by segment: | ||||||||||||
| Production | $ | 78,214 | $ | 65,893 | $ | 76,979 | ||||||
| Servicing | $ | 13,310 | $ | 12,843 | $ | (1,601 | ) | |||||
(1) Includes cash hedge expense
PennyMac Financial performs fulfillment services for conventional conforming and jumbo loans acquired by PMT in its correspondent production business. These services include, but are not limited to: marketing; relationship management; the approval of correspondent sellers and the ongoing monitoring of their performance; review of loan data, documentation and appraisals to assess loan quality and risk; pricing; hedging and activities related to the subsequent sale and securitization of loans in the secondary mortgage markets for PMT. Fees earned from fulfillment of correspondent loans on behalf of PMT totaled $12.9 million in the first quarter, unchanged from the fourth quarter 2015. Fulfillment fee revenue was driven by a 6 percent quarter-over-quarter reduction in conventional conforming loan acquisitions, offset by an increase in the average fulfillment fee rate to 40 basis points, from 37 basis points in the fourth quarter. The weighted average fulfillment fee includes contractual discretionary reductions in the fulfillment fee to facilitate the successful completion of certain loan transactions by PMT.
Production segment expenses were $48.9 million, a 10 percent decrease from the fourth quarter 2015, primarily driven by reductions in direct and allocated discretionary and equity-based compensation resulting from the Company’s overall financial results.
| 3 |
Servicing Segment
Servicing includes income from owned MSRs, in addition to subservicing and special servicing activities. The Servicing segment posted a pretax loss of $39.5 million in the first quarter, versus pretax income of $27.9 million in the fourth quarter 2015. Servicing segment revenues in the first quarter totaled $19.6 million, a 75 percent decrease from the fourth quarter, primarily due to a 77 percent reduction in net loan servicing fees.
Net loan servicing fees totaled $17.5 million for the quarter and included $114.9 million in servicing fees reduced by $49.7 million of amortization and realization of MSR cash flows. Net loan servicing fees also included $125.9 million of fair value losses and impairment provisioning related to MSRs, partially offset by $58.7 million of related hedging gains and $19.4 million of gains due to the change in fair value of the ESS financing. MSR fair value losses and impairment provisioning in the first quarter resulted from expectations for higher future prepayment activity due to the significant decline in mortgage rates during the quarter. PennyMac Financial extinguished a portion of the ESS financing related to Fannie Mae and Freddie Mac MSRs in February; as a result, ESS financing outstanding at March 31, 2016 only relates to Ginnie Mae MSRs.
The following table presents a breakdown of net loan servicing fees:
| Quarter ended | ||||||||||||
| March 31, 2016 | December 31, 2015 | March 31, 2015 | ||||||||||
| (in thousands) | ||||||||||||
| Servicing fees (1) | $ | 114,933 | $ | 112,699 | $ | 72,924 | ||||||
| Effect of MSRs: | ||||||||||||
| Amortization and realization of cash flows | (49,696 | ) | (47,403 | ) | (24,104 | ) | ||||||
| Change in fair value and (provision for) reversal of impairment of MSRs carried at lower of amortized cost or fair value | (125,887 | ) | 45,513 | (46,701 | ) | |||||||
| Change in fair value of excess servicing spread financing | 19,449 | (6,864 | ) | 7,536 | ||||||||
| Hedging gains (losses) | 58,720 | (26,976 | ) | 17,121 | ||||||||
| Total amortization, impairment and change in fair value of MSRs | (97,414 | ) | (35,730 | ) | (46,148 | ) | ||||||
| Net loan servicing fees | $ | 17,519 | $ | 76,969 | $ | 26,776 | ||||||
(1) Includes contractually-specified servicing fees
Servicing segment revenue also included $13.3 million in net gains on mortgage loans held for sale at fair value in the first quarter resulting from the securitization of reperforming government-insured loans, versus $12.8 million in the fourth quarter 2015. These loans were previously purchased out of Ginnie Mae securitizations and brought back to performing status through PennyMac Financial’s successful servicing efforts, primarily with the use of loan modifications.
Servicing segment expenses totaled $59.1 million, a 17 percent increase from the fourth quarter, as a result of increased credit loss provisioning and expenses related to the early buyout of loans from seasoned Ginnie Mae pools.
The total servicing portfolio reached $164.9 billion in UPB at March 31, 2016, an increase of 3 percent from the prior quarter end. Of the total servicing portfolio, prime servicing was $161.3 billion in UPB and special servicing was $3.6 billion in UPB. PennyMac Financial subservices and services under contract $49.6 billion in UPB, an increase of 4 percent from December 31, 2015, primarily due to new correspondent acquisitions by PMT. PennyMac Financial’s MSR portfolio grew to $112.8 billion in UPB, an increase of 2 percent over the prior quarter, primarily resulting from the acquisition of government-insured loans in correspondent production and from consumer direct lending activities.
| 4 |
The table below details PennyMac Financial’s servicing portfolio UPB:
| March 31, 2016 | December 31, 2015 | March 31, 2015 | ||||||||||
| (in thousands) | ||||||||||||
| Loans serviced at period end: | ||||||||||||
| Prime servicing: | ||||||||||||
| Owned | ||||||||||||
| Mortgage servicing rights | ||||||||||||
| Originated | $ | 64,485,308 | $ | 59,880,349 | $ | 39,203,101 | ||||||
| Acquisitions | 48,351,570 | 50,722,355 | 32,782,888 | |||||||||
| 112,836,878 | 110,602,704 | 71,985,989 | ||||||||||
| Mortgage servicing liabilities | 926,756 | 806,897 | 421,452 | |||||||||
| Mortgage loans held for sale | 1,561,006 | 1,052,485 | 1,288,744 | |||||||||
| 115,324,640 | 112,462,086 | 73,696,185 | ||||||||||
| Subserviced for Advised Entities | 45,940,082 | 43,963,378 | 37,138,595 | |||||||||
| Total prime servicing | 161,264,722 | 156,425,464 | 110,834,780 | |||||||||
| Special servicing: | ||||||||||||
| Subserviced for Advised Entities | 3,641,873 | 3,847,254 | 4,403,831 | |||||||||
| Total special servicing | 3,641,873 | 3,847,254 | 4,403,831 | |||||||||
| Total loans serviced | $ | 164,906,595 | $ | 160,272,718 | $ | 115,238,611 | ||||||
| Mortgage loans serviced: | ||||||||||||
| Owned | ||||||||||||
| Mortgage servicing rights | $ | 112,836,878 | $ | 110,602,704 | $ | 71,985,989 | ||||||
| Mortgage servicing liabilities | 926,756 | 806,897 | 421,452 | |||||||||
| Mortgage loans held for sale | 1,561,006 | 1,052,485 | 1,288,744 | |||||||||
| 115,324,640 | 112,462,086 | 73,696,185 | ||||||||||
| Subserviced | 49,581,955 | 47,810,632 | 41,542,426 | |||||||||
| Total mortgage loans serviced | $ | 164,906,595 | $ | 160,272,718 | $ | 115,238,611 | ||||||
| 5 |
Investment Management Segment
PennyMac Financial manages PMT and the private Investment Funds, for which it earns base management fees and may earn incentive compensation. Net assets under management were approximately $1.6 billion as of March 31, 2016, down 6 percent from December 31, 2015, primarily due to PMT’s share repurchase program and the planned return of capital to investors in the private Investment Funds.
Pretax income for the Investment Management segment was $1.1 million, an increase of $488 thousand from the fourth quarter 2015. Management fees, which include base management fees from PMT and the private investment funds and any earned incentive fees from PMT, decreased 7 percent from the prior quarter, primarily due to the reduced net assets under management. Carried interest from the private investment funds increased to $593 thousand, compared to a $270 thousand decrease in the prior quarter resulting from improved performance in the private Investment Funds.
The following table presents a breakdown of management fees and carried interest:
| Quarter ended | ||||||||||||
| March 31, 2016 | December 31, 2015 | March 31, 2015 | ||||||||||
| (in thousands) | ||||||||||||
| Management fees: | ||||||||||||
| PennyMac Mortgage Investment Trust | ||||||||||||
| Base | $ | 5,352 | $ | 5,670 | $ | 5,730 | ||||||
| Performance incentive | – | – | 1,273 | |||||||||
| 5,352 | 5,670 | 7,003 | ||||||||||
| Investment Funds | 560 | 659 | 1,486 | |||||||||
| Total management fees | 5,912 | 6,329 | 8,489 | |||||||||
| Carried Interest | 593 | (270 | ) | 1,233 | ||||||||
| Total management fees and Carried Interest | $ | 6,505 | $ | 6,059 | $ | 9,722 | ||||||
| Net assets of Advised Entities: | ||||||||||||
| PennyMac Mortgage Investment Trust | $ | 1,414,503 | $ | 1,496,112 | $ | 1,542,159 | ||||||
| Investment Funds | 207,706 | 231,744 | 413,155 | |||||||||
| $ | 1,622,209 | $ | 1,727,856 | $ | 1,955,314 | |||||||
Investment Management segment expenses totaled $5.3 million, a 4 percent decrease from the fourth quarter 2015.
| 6 |
Consolidated Expenses
Total expenses for the first quarter were $113.3 million, a 3 percent increase from the fourth quarter. The increase in total expenses primarily resulted from increased credit loss provisioning and expenses related to the early buyout of loans from seasoned Ginnie Mae pools.
Mr. Kurland concluded, “While significant interest rate volatility such as that seen in the first quarter can adversely impact near-term results, we are pleased with our underlying profitability and the ongoing growth of our businesses. For example, our consumer direct production channel continues to scale, a result of the investments we have made in our operational infrastructure, and is delivering increasingly meaningful contributions to PennyMac Financial’s earnings. In particular, we believe that we are poised to capitalize on the opportunities presented by the current low interest rate environment to continue growing the company and delivering strong returns on equity for our shareholders.”
Management’s slide presentation will be available in the Investor Relations section of the Company’s website at www.ir.pennymacfinancial.com beginning at 1:30 p.m. (Pacific Standard Time) on Thursday, May 5, 2016.
About PennyMac Financial Services, Inc.
PennyMac Financial Services, Inc. is a specialty financial services firm with a comprehensive mortgage platform and integrated business focused on the production and servicing of U.S. mortgage loans and the management of investments related to the U.S. mortgage market. PennyMac Financial Services, Inc. trades on the New York Stock Exchange under the symbol “PFSI.” Additional information about PennyMac Financial Services, Inc. is available at www.ir.pennymacfinancial.com.
This press release 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 results, future operations, business plans and investment strategies, as well as industry and market conditions, all of which are subject to change. Words like “believe,” “expect,” “anticipate,” “promise,” “plan,” and other expressions or words of similar meanings, as well as future or conditional verbs such as “will,” “would,” “should,” “could,” or “may” are generally intended to identify forward-looking statements. Actual results and operations for any future period may vary materially from those projected herein and from past results discussed herein. Factors which could cause actual results to differ materially from historical results or those anticipated include, but are not limited to: : the continually changing federal, state and local laws and regulations applicable to the highly regulated industry in which we operate; lawsuits or governmental actions that may result from any noncompliance with the laws and regulations applicable to our businesses; the mortgage lending and servicing-related regulations promulgated by the Consumer Financial Protection Bureau and its enforcement of these regulations; our dependence on U.S. government-sponsored entities and changes in their current roles or their guarantees or guidelines; changes to government mortgage modification programs; the licensing and operational requirements of states and other jurisdictions applicable to the Company’s businesses, to which our bank competitors are not subject; foreclosure delays and changes in foreclosure practices; certain banking regulations that may limit our business activities; our dependence on the multifamily and commercial real estate sectors for future originations of commercial mortgage loans and other commercial real estate related loans; changes in macroeconomic and U.S. real estate market conditions; difficulties inherent in growing loan production volume; difficulties inherent in adjusting the size of our operations to reflect changes in business levels; purchase opportunities for mortgage servicing rights and our success in winning bids; changes in prevailing interest rates; increases in loan delinquencies and defaults; our reliance on PennyMac Mortgage Investment Trust (NYSE: PMT) as a significant source of financing for, and revenue related to, our mortgage banking business; any required additional capital and liquidity to support business growth that may not be available on acceptable terms, if at all; our obligation to indemnify third-party purchasers or repurchase loans if loans that we originate, acquire, service or assist in the fulfillment of, fail to meet certain criteria or characteristics or under other circumstances; our obligation to indemnify PMT and the Investment Funds if its services fail to meet certain criteria or characteristics or under other circumstances; decreases in the returns on the assets that we select and manage for our clients, and our resulting management and incentive fees; the extensive amount of regulation applicable to our investment management segment; conflicts of interest in allocating our services and investment opportunities among us and our advised entities; the effect of public opinion on our reputation; our recent growth; our ability to effectively identify, manage, monitor and mitigate financial risks; our initiation of new business activities or expansion of existing business activities; our ability to detect misconduct and fraud; and our ability to mitigate cybersecurity risks and cyber incidents. You should not place undue reliance on any forward-looking statement and should consider all of the uncertainties and risks described above, as well as those more fully discussed in reports and other documents filed by the Company with the Securities and Exchange Commission from time to time. The Company undertakes no obligation to publicly update or revise any forward-looking statements or any other information contained herein, and the statements made in this press release are current as of the date of this release only.
| 7 |
PENNYMAC FINANCIAL SERVICES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
| March
31, 2016 | December
31, 2015 | March
31, 2015 | ||||||||||
| (in thousands, except share) | ||||||||||||
| ASSETS | ||||||||||||
| Cash | $ | 116,560 | $ | 105,472 | $ | 82,032 | ||||||
| Short-term investments at fair value | 28,264 | 46,319 | 30,275 | |||||||||
| Mortgage loans held for sale at fair value | 1,653,963 | 1,101,204 | 1,353,944 | |||||||||
| Derivative assets | 90,054 | 50,280 | 242,397 | |||||||||
| Servicing advances, net | 284,140 | 299,354 | 61,064 | |||||||||
| Carried Interest due from Investment Funds | 70,519 | 69,926 | 68,531 | |||||||||
| Investment in PennyMac Mortgage Investment Trust at fair value | 1,023 | 1,145 | 1,597 | |||||||||
| Mortgage servicing rights | 1,337,082 | 1,411,935 | 790,411 | |||||||||
| Real estate acquired in settlement of loans | 2,320 | – | – | |||||||||
| Furniture, fixtures, equipment and building improvements, net | 23,855 | 16,311 | 11,118 | |||||||||
| Note receivable from PennyMac Mortgage Investment Trust secured | 150,000 | 150,000 | – | |||||||||
| Receivable from Investment Funds | 1,119 | 1,316 | 2,488 | |||||||||
| Receivable from PennyMac Mortgage Investment Trust | 17,647 | 18,965 | 18,719 | |||||||||
| Capitalized software, net | 4,323 | 3,025 | 559 | |||||||||
| Deferred tax asset | 14,637 | 18,378 | 42,141 | |||||||||
| Loans eligible for repurchase | 139,009 | 166,070 | 112,201 | |||||||||
| Other | 46,748 | 45,594 | 40,524 | |||||||||
| Total assets | $ | 3,981,263 | $ | 3,505,294 | $ | 2,858,001 | ||||||
| LIABILITIES | ||||||||||||
| Assets sold under agreements to repurchase | $ | 1,658,578 | $ | 1,166,731 | $ | 992,187 | ||||||
| Mortgage loan participation and sale agreements | 246,636 | 234,872 | 190,762 | |||||||||
| Notes payable | 127,693 | 61,136 | 134,665 | |||||||||
| Obligations under capital lease | 12,070 | 13,579 | – | |||||||||
| Excess servicing spread financing at fair value | 321,976 | 412,425 | 222,309 | |||||||||
| Derivative liabilities | 9,915 | 9,083 | 10,903 | |||||||||
| Mortgage servicing liabilities at fair value | 6,747 | 1,399 | 6,529 | |||||||||
| Accounts payable and accrued expenses | 87,005 | 89,915 | 86,945 | |||||||||
| Payable to Investment Funds | 28,843 | 30,429 | 32,011 | |||||||||
| Payable to PennyMac Mortgage Investment Trust | 153,094 | 162,379 | 130,870 | |||||||||
| Payable to exchanged Private National Mortgage Acceptance Company, LLC unitholders under tax receivable agreement | 74,275 | 74,315 | 71,094 | |||||||||
| Liability for loans eligible for repurchase | 139,009 | 166,070 | 112,201 | |||||||||
| Liability for losses under representations and warranties | 22,209 | 20,611 | 14,689 | |||||||||
| Total liabilities | 2,888,050 | 2,442,944 | 2,005,165 | |||||||||
| STOCKHOLDERS' EQUITY | ||||||||||||
| Class A common stock¾authorized 200,000,000 shares of $0.0001 par value; issued and outstanding, 22,047,491, 21,990,831 and 21,577,686 shares, respectively | 2 | 2 | 2 | |||||||||
| Class B common stock¾authorized 1,000 shares of $0.0001 par value; issued and outstanding, 50, 51 and 54 shares, respectively | – | – | – | |||||||||
| Additional paid-in capital | 174,005 | 172,354 | 164,656 | |||||||||
| Retained earnings | 103,645 | 98,470 | 60,270 | |||||||||
| Total stockholders' equity attributable to PennyMac Financial Services, Inc. common stockholders | 277,652 | 270,826 | 224,928 | |||||||||
| Noncontrolling interests in Private National Mortgage Acceptance Company, LLC | 815,561 | 791,524 | 627,908 | |||||||||
| Total stockholders' equity | 1,093,213 | 1,062,350 | 852,836 | |||||||||
| Total liabilities and stockholders’ equity | $ | 3,981,263 | $ | 3,505,294 | $ | 2,858,001 | ||||||
| 8 |
PENNYMAC FINANCIAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
| Quarter ended | ||||||||||||
| March
31, 2016 | December
31, 2015 | March
31, 2015 | ||||||||||
| (in thousands, except per share data) | ||||||||||||
| Revenue | ||||||||||||
| Net gains on mortgage loans held for sale at fair value | $ | 91,524 | $ | 78,736 | $ | 75,378 | ||||||
| Loan origination fees | 22,434 | 20,969 | 16,682 | |||||||||
| Fulfillment fees from PennyMac Mortgage Investment Trust | 12,935 | 12,855 | 12,866 | |||||||||
| Net servicing fees: | ||||||||||||
| Loan servicing fees | ||||||||||||
| From non-affiliates | 91,327 | 90,081 | 50,101 | |||||||||
| From PennyMac Mortgage Investment Trust | 11,453 | 11,880 | 10,670 | |||||||||
| From Investment Funds | 701 | 720 | 968 | |||||||||
| Ancillary and other fees | 11,452 | 10,018 | 11,185 | |||||||||
| 114,933 | 112,699 | 72,924 | ||||||||||
| Amortization, impairment and change in estimated fair value of mortgage servicing rights | (97,414 | ) | (35,730 | ) | (46,148 | ) | ||||||
| Net servicing fees | 17,519 | 76,969 | 26,776 | |||||||||
| Management fees: | ||||||||||||
| From PennyMac Mortgage Investment Trust | 5,352 | 5,670 | 7,003 | |||||||||
| From Investment Funds | 560 | 659 | 1,486 | |||||||||
| 5,912 | 6,329 | 8,489 | ||||||||||
| Carried Interest from Investment Funds | 593 | (270 | ) | 1,233 | ||||||||
| Net interest expense: | ||||||||||||
| Interest income | 13,529 | 11,985 | 8,933 | |||||||||
| Interest expense | 20,987 | 19,415 | 11,829 | |||||||||
| (7,458 | ) | (7,430 | ) | (2,896 | ) | |||||||
| Change in fair value of investment in and dividends received from PennyMac Mortgage Investment Trust | (86 | ) | 65 | 107 | ||||||||
| Other | 28 | (984 | ) | 1,679 | ||||||||
| Total net revenue | 143,401 | 187,239 | 140,314 | |||||||||
| Expenses | ||||||||||||
| Compensation | 68,298 | 71,566 | 58,144 | |||||||||
| Servicing | 20,887 | 12,979 | 9,735 | |||||||||
| Technology | 6,847 | 7,059 | 4,938 | |||||||||
| Professional services | 3,733 | 4,763 | 2,833 | |||||||||
| Loan origination | 4,186 | 4,583 | 4,351 | |||||||||
| Other | 9,311 | 9,056 | 7,075 | |||||||||
| Total expenses | 113,262 | 110,006 | 87,076 | |||||||||
| Income before provision for income taxes | 30,139 | 77,233 | 53,238 | |||||||||
| Provision for income taxes | 3,596 | 8,327 | 6,114 | |||||||||
| Net income | 26,543 | 68,906 | 47,124 | |||||||||
| Less: Net income attributable to noncontrolling interest | 21,368 | 56,135 | 38,096 | |||||||||
| Net income attributable to PennyMac Financial Services, Inc. common stockholders | $ | 5,175 | $ | 12,771 | $ | 9,028 | ||||||
| Earnings per share | ||||||||||||
| Basic | $ | 0.24 | $ | 0.58 | $ | 0.42 | ||||||
| Diluted | $ | 0.23 | $ | 0.58 | $ | 0.42 | ||||||
| Weighted-average common shares outstanding | ||||||||||||
| Basic | 22,006 | 21,912 | 21,593 | |||||||||
| Diluted | 76,194 | 76,132 | 76,050 | |||||||||
###
| 9 |