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PennyMac Financial Services, Inc. Reports Fourth Quarter and Full-Year 2019 Results

PennyMac Financial Services, Inc. (NYSE: PFSI) today reported net income of $152.7 million for the fourth quarter of 2019, or $1.88 per share on a diluted basis, on revenue of $490.4 million. Book value per share increased to $26.26 from $24.37 at September 30, 2019.

PFSI’s Board of Directors declared a fourth quarter cash dividend of $0.12 per share, payable on February 27, 2020, to common stockholders of record as of February 14, 2020.

Fourth Quarter 2019 Highlights

  • Pretax income was $203.4 million, up 22 percent from the prior quarter and 249 percent from the fourth quarter of 2018
    • Record pretax income and operating earnings1 driven by strong Production segment results and operating performance in the Servicing segment
  • Production segment pretax income was $203.3 million, up 13 percent from the prior quarter and 700 percent from the fourth quarter of 2018, driven by record loan production volumes across all channels
    • Total loan acquisitions and originations were $42.4 billion in unpaid principal balance (UPB), up 22 percent from the prior quarter and 118 percent from the fourth quarter of 2018
    • PFSI’s correspondent interest rate lock commitments (IRLCs) totaled $16.9 billion in UPB, up 1 percent from the prior quarter and 84 percent from the fourth quarter of 20182
    • Direct lending IRLCs were a record $6.5 billion in UPB, up 16 percent from the prior quarter and 235 percent from the fourth quarter of 2018
      • $5.4 billion in UPB of locks in the consumer direct channel; $1.1 billion in UPB of locks in the broker direct channel
    • Correspondent acquisitions of conventional loans fulfilled for PennyMac Mortgage Investment Trust (NYSE: PMT) were $20.5 billion in UPB, up 23 percent from the prior quarter and 126 percent from the fourth quarter of 2018
  • Servicing segment pretax loss was $5.1 million, versus a pretax loss of $18.1 million in the prior quarter and pretax income of $29.3 million in the fourth quarter of 2018
    • Valuation-related items included a $160.6 million gain in the fair value of mortgage servicing rights (MSRs) and $194.6 million in hedging and other losses; net impact on pretax income was $(34.0) million and on earnings per share was $(0.31)
    • Pretax income excluding valuation-related items was $39.1 million, up 55 percent from the prior quarter and down 12 percent from the fourth quarter of 2018
      • Operating expenses decreased by $6.5 million from the prior quarter primarily due to a reduction in vendor expenses following the completion of our Servicing Systems Environment (SSE)
    • The servicing portfolio grew to $368.7 billion in UPB, up 6 percent from September 30, 2019
  • Investment Management segment pretax income was $5.2 million, up from $5.0 million in the prior quarter and $2.5 million in the fourth quarter of 2018
    • Revenue was $11.8 million, essentially unchanged from the prior quarter and up 50 percent from the fourth quarter of 2018
    • Net assets under management (AUM) were $2.5 billion, up 10 percent from September 30, 2019, driven by $215 million in new common equity raised by PMT during the quarter, including $201 million in December

Notable activity after quarter end:

  • Completed the acquisition of a bulk Ginnie Mae MSR portfolio totaling $2.4 billion in UPB

Full-Year 2019 Highlights

  • Pretax income of $529.4 million, up 98 percent from the prior year and the highest level on record for PennyMac Financial
    • Diluted earnings per share of $4.89, up from $2.59 in 2018 and also a record
  • Total net revenue of $1.5 billion, up 50 percent from the prior year
  • Record loan production of $117.6 billion in UPB, an increase of 74 percent from the prior year, which included $9.8 billion in UPB of consumer direct production, an increase of 209 percent from the prior year
  • Servicing portfolio growth of 23 percent
  • Net AUM growth of 56 percent, driven by $830 million in new common equity raised by PMT

"PennyMac Financial delivered outstanding performance across all of its businesses in the fourth quarter and throughout 2019," said President and CEO David Spector. "Book value per share grew 22 percent for the year, driven by record profitability in our Production segment and our ability to successfully hedge the interest rate risk inherent in mortgage servicing rights in a year characterized by significant interest rate volatility. Each of our production channels grew market share this year and substantial growth in our consumer direct lending channel was a major contributor to the Company’s earnings. Further, our industry-leading correspondent channel became the largest aggregator of residential mortgage loans in the U.S., according to Inside Mortgage Finance. Our servicing portfolio also grew more than 20 percent for the year while our technology investments continue to drive greater operating efficiency and better service for our 1.8 million customers. With our maturing, balanced business model, the opportunity to continue capturing market share gains across our businesses and the strong foundation provided by our large and growing servicing portfolio, we expect PFSI to earn a mid-teens return on equity across different market environments; however, we expect PFSI to deliver a higher ROE in 2020."

The following table presents the contributions of PennyMac Financial’s segments to pretax income:

Quarter ended December 31, 2019
Mortgage Banking Investment
Management
Production Servicing Total Total
(in thousands)
Revenue
Net gains on loans held for sale at fair value

$

227,751

$

29,736

 

$

257,487

$

-

 

$

257,487

Loan origination fees

 

63,868

 

-

 

 

63,868

 

-

 

 

63,868

Fulfillment fees from PMT

 

58,297

 

-

 

 

58,297

 

-

 

 

58,297

Net servicing fees

 

-

 

87,731

 

 

87,731

 

-

 

 

87,731

Management fees

 

-

 

-

 

 

-

 

10,314

 

 

10,314

Net interest income (expense):
Interest income

 

26,624

 

49,391

 

 

76,015

 

-

 

 

76,015

Interest expense

 

23,737

 

41,378

 

 

65,115

 

17

 

 

65,132

 

2,887

 

8,013

 

 

10,900

 

(17

)

 

10,883

Other

 

360

 

(21

)

 

339

 

1,456

 

 

1,795

Total net revenue

 

353,163

 

125,459

 

 

478,622

 

11,753

 

 

490,375

Expenses

 

149,863

 

130,586

 

 

280,449

 

6,560

 

 

287,009

Pretax income (loss)

$

203,300

$

(5,127

)

$

198,173

$

5,193

 

$

203,366

Production Segment

Production includes the correspondent acquisition of newly originated government-insured mortgage loans for PennyMac Financial’s own account, the underwriting and acquisition of loans from correspondent sellers on a non-delegated basis, fulfillment services on behalf of PMT and direct lending through the consumer direct and broker direct channels.

PennyMac Financial’s loan production activity for the quarter totaled $42.4 billion in UPB, $21.9 billion of which was for its own account, and $20.5 billion of which was fee-based fulfillment activity for PMT. Correspondent government, non-delegated and direct lending IRLCs totaled $23.4 billion in UPB, up 4 percent from the prior quarter and 110 percent from the fourth quarter of 2018.

Production segment pretax income was $203.3 million, up 13 percent from the prior quarter and 700 percent from the fourth quarter of 2018. Production revenue totaled $353.2 million, up 12 percent from the prior quarter and 229 percent from the fourth quarter of 2018. The quarter-over-quarter increase was driven by a $14.4 million increase in loan origination fees, a $13.1 million increase in fulfillment fees from PMT, and an $11.6 million increase in net gains on loans held for sale.

The components of net gains on loans held for sale are detailed in the following table:

Quarter ended
December 31,
2019
September 30,
2019
December 31,
2018
(in thousands)
Receipt of MSRs in loan sale transactions

$

328,182

 

$

227,256

 

$

141,100

 

Mortgage servicing rights recapture payable to PennyMac Mortgage Investment Trust

 

(2,624

)

 

(1,896

)

 

(1,259

)

Provision for representations and warranties, net

 

(1,583

)

 

(1,333

)

 

(229

)

Cash investment (1)

 

4,694

 

 

(108,408

)

 

(46,260

)

Fair value changes of pipeline, inventory and hedges

 

(71,182

)

 

120,113

 

 

(33,604

)

Net gains on loans held for sale

$

257,487

 

$

235,732

 

$

59,748

 

Net gains on loans held for sale by segment:
Production

$

227,751

 

$

216,132

 

$

36,848

 

Servicing

$

29,736

 

$

19,600

 

$

22,900

 

(1) Net of cash hedging results

PennyMac Financial performs fulfillment services for conventional conforming and jumbo loans acquired by PMT from non-affiliates in its correspondent production business. These services include, but are not limited to, marketing, relationship management, correspondent seller approval and monitoring, loan file review, underwriting, pricing, hedging and activities related to the subsequent sale and securitization of loans in the secondary mortgage markets for PMT.

Fees earned from the fulfillment of correspondent loans on behalf of PMT totaled $58.3 million in the fourth quarter, up 29 percent from the prior quarter and 104 percent from the fourth quarter of 2018. The quarter-over-quarter increase in fulfillment fee revenue was driven primarily by a 23 percent increase in acquisition volumes by PMT and a slight increase in the weighted average fulfillment fee rate to 28 basis points from 27 basis points in the prior quarter.

Net interest income totaled $2.9 million, down from $4.0 million in the prior quarter and $15.3 million in the fourth quarter of 2018. Net interest income in the third quarter of 2019 and the fourth quarter of 2018 included incentives totaling $1.6 million and $12.6 million, respectively, which the Company was entitled to receive under one of its master repurchase agreements to finance mortgage loans that satisfied certain consumer relief characteristics. As expected and previously disclosed, the lender completed the orderly wind down of the incentive program during the quarter ended September 30, 2019 and accordingly, the related master repurchase agreement expired. As a result, there were no consumer relief incentives in the fourth quarter of 2019.

Production segment expenses were $149.9 million, up 10 percent from the prior quarter and 83 percent from the fourth quarter of 2018 as a result of the increase in volumes.

Servicing Segment

Servicing includes income from owned MSRs, subservicing and special servicing activities. Servicing segment pretax loss was $5.1 million, versus a pretax loss of $18.1 million in the prior quarter and pretax income of $29.3 million in the fourth quarter of 2018. Servicing segment revenues totaled $125.5 million, up 15 percent from the prior quarter and down 7 percent from the fourth quarter of 2018. The quarter-over-quarter increase was primarily driven by higher servicing fees related to a larger servicing portfolio and lower net valuation-related losses.

Net loan servicing fees totaled $87.7 million and included $234.9 million in servicing fees reduced by $113.1 million from the realization of MSR cash flows. Net valuation-related losses totaled $34.0 million, and included MSR fair value gains of $160.6 million more than offset by hedging losses of $192.4 million and a $2.3 million change in the fair value of the excess servicing spread liability. The MSR fair value gains primarily resulted from expectations for decreased prepayment activity in the future as a result of higher interest rates in the fourth quarter.

The following table presents a breakdown of net loan servicing fees:

Quarter ended
December 31,
2019
September 30,
2019
December 31,
2018
(in thousands)
Loan servicing fees (1)

$

234,871

 

$

224,949

 

$

194,405

 

Effect of MSRs:
Realization of cash flows

 

(113,102

)

 

(117,220

)

 

(82,250

)

Change in fair value of MSRs

 

160,611

 

 

(295,510

)

 

(67,277

)

Change in fair value of excess servicing spread financing

 

(2,263

)

 

3,864

 

 

526

 

Hedging (losses) gains

 

(192,386

)

 

250,146

 

 

59,808

 

Total change in fair value of MSRs

 

(147,140

)

 

(158,720

)

 

(89,193

)

Net loan servicing fees

$

87,731

 

$

66,229

 

$

105,212

 

(1) Includes contractually-specified servicing fees

Servicing segment revenue also included $29.7 million in net gains on loans held for sale from the securitization of reperforming government-insured and guaranteed loans, compared to $19.6 million in the prior quarter and $22.9 million in the fourth quarter of 2018. These loans were previously purchased out of Ginnie Mae securitizations as early buyout (EBO) loans and brought back to performing status through PennyMac Financial’s successful servicing efforts, primarily with the use of loan modifications. Net interest income totaled $8.0 million, down from $23.1 million in the prior quarter and up from $6.0 million in the fourth quarter of 2018. Interest income decreased by $11.6 million from the prior quarter, primarily driven by lower interest income related to custodial deposit balances, as seasonal tax disbursements reduced balances and earnings rates declined. Interest expense was up $3.4 million from the prior quarter, driven by elevated EBO activity.

Servicing segment expenses totaled $130.6 million, up 2 percent from the prior quarter driven by a larger servicing portfolio partially offset by lower vendor-related fees as a result of the completion of SSE, our proprietary servicing system.

The total servicing portfolio reached $368.7 billion in UPB at December 31, 2019, an increase of 6 percent from September 30, 2019 and 23 percent from December 31, 2018, driven by the Company’s loan production activities. PennyMac Financial subservices and conducts special servicing for $135.4 billion in UPB, an increase of 12 percent from September 30, 2019 and 43 percent from December 31, 2018. PennyMac Financial’s owned MSR portfolio grew to $233.3 billion in UPB, an increase of 2 percent from September 30, 2019 and 14 percent from December 31, 2018.

The table below details PennyMac Financial’s servicing portfolio UPB:

December 31,
2019
September 30,
2019
December 31,
2018
(in thousands)
Prime servicing:
Owned
Mortgage servicing rights
Originated

$

166,188,825

$

157,437,101

$

144,296,544

Acquisitions

 

59,598,279

 

63,778,892

 

56,757,600

 

225,787,104

 

221,215,993

 

201,054,144

Mortgage servicing liabilities

 

2,758,454

 

2,327,687

 

1,160,938

Mortgage loans held for sale

 

4,724,006

 

4,323,252

 

2,420,636

 

233,269,564

 

227,866,932

 

204,635,718

Subserviced for PMT

 

135,288,944

 

120,460,120

 

94,074,625

Total prime servicing

 

368,558,508

 

348,327,052

 

298,710,343

Special servicing:
Subserviced for PMT

 

125,724

 

147,956

 

583,529

Total loans serviced

$

368,684,232

$

348,475,008

$

299,293,872

 
Mortgage loans serviced:
Owned
Mortgage servicing rights

$

225,787,104

$

221,215,993

$

201,054,144

Mortgage servicing liabilities

 

2,758,454

 

2,327,687

 

1,160,938

Mortgage loans held for sale

 

4,724,006

 

4,323,252

 

2,420,636

 

233,269,564

 

227,866,932

 

204,635,718

Subserviced

 

135,414,668

 

120,608,076

 

94,658,154

Total mortgage loans serviced

$

368,684,232

$

348,475,008

$

299,293,872

Investment Management Segment

PennyMac Financial manages PMT for which it earns base management fees and may earn incentive compensation. Net AUM were $2.5 billion as of December 31, 2019, up 10 percent from September 30, 2019 and 56 percent from December 31, 2018. The quarter-over-quarter growth was driven by PMT’s issuance of approximately $215 million of common shares during the quarter.

Pretax income for the Investment Management segment was $5.2 million, up from $5.0 million in the prior quarter and $2.5 million in the fourth quarter of 2018. Management fees, which include base management and performance incentive fees from PMT, increased 2 percent from the prior quarter and 57 percent from the fourth quarter of 2018. Base management fees were $8.4 million, up from $7.9 million in the prior quarter and $5.8 million in the fourth quarter of 2018 as a result of PFSI’s increased AUM. Performance-based incentive fees were $1.9 million, down slightly from $2.2 million in the prior quarter and up from $0.7 million in the fourth quarter of 2018, driven by PMT’s continued strong financial performance.

The following table presents a breakdown of management fees:

Quarter ended
December 31,
2019
September 30,
2019
December 31,
2018
(in thousands)
Management fees:
PennyMac Mortgage Investment Trust
Base

$

8,441

$

7,914

$

5,810

Performance incentive

 

1,873

 

2,184

 

749

Total management fees

$

10,314

$

10,098

$

6,559

 
Net assets of PennyMac Mortgage Investment Trust

$

2,450,916

$

2,219,611

$

1,566,132

Investment Management segment expenses totaled $6.6 million, down 3 percent from the prior quarter and up 22 percent from the fourth quarter of 2018.

Consolidated Expenses

Total expenses were $287.0 million, up 6 percent from the prior quarter and 49 percent from the fourth quarter of 2018. The year-over-year change was primarily driven by higher volumes of activity in the Production segment.

Chairman Stanford L. Kurland concluded, "As I reflect on the past twelve years, I am incredibly proud of the organization we have built and I believe our dedicated employees and the depth of our management team are unmatched in the industry. PennyMac Financial has unique capabilities, including its synergistic partnership with PennyMac Mortgage Investment Trust, the REIT that we manage, as well as our best-in-class operating platform, which have established this Company as a leading mortgage banking enterprise. Our people, platform and governance infrastructure, which includes our focus on risk management, position us well to sustain our competitive advantage in the residential mortgage market across a variety of economic environments. As I relinquish my day-to-day responsibilities but continue my involvement as Chairman of the Board, I am confident that the management team will continue to build on the established foundation in place for future growth, while providing superior, long-term returns to our stockholders."

Management’s slide presentation will be available in the Investor Relations section of the Company’s website at ir.pennymacfinancial.com beginning at 1:30 p.m. (Pacific Time) on Thursday, February 6, 2020.

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. Additional information about PennyMac Financial Services, Inc. is available at 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, the recently completed corporate reorganization, the expected benefits and market and financial impact of the reorganization 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; 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; expected discontinuation of LIBOR; 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 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 investment strategies or expansion of existing business activities or investment strategies; our ability to detect misconduct and fraud; our ability to mitigate cybersecurity risks and cyber incidents; our exposure to risks of loss with real estate investments resulting from adverse weather conditions and man-made or natural disasters; our ability to pay dividends to our stockholders; and our organizational structure and certain requirements in our charter documents. 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.

1 In the fourth quarter of 2017, diluted earnings per share were $2.44, which included a $1.79 contribution from the remeasurement of deferred tax items due to enactment of the Tax Cuts and Jobs Act of 2017
2 Consists of correspondent government and non-delegated IRLCs

PENNYMAC FINANCIAL SERVICES, INC.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

 
December 31,
2019
September 30,
2019
December 31,
2018
(in thousands, except share amounts)
ASSETS
Cash

$

188,291

$

201,268

$

155,289

Short-term investments at fair value

 

74,611

 

90,663

 

117,824

Loans held for sale at fair value

 

4,912,953

 

4,522,971

 

2,521,647

Assets purchased from PennyMac Mortgage Investment Trust under agreements to resell pledged to creditors

 

107,512

 

107,678

 

131,025

Derivative assets

 

159,686

 

232,948

 

96,347

Servicing advances, net

 

344,379

 

271,501

 

313,197

Investment in PennyMac Mortgage Investment Trust at fair value

 

1,672

 

1,667

 

1,397

Mortgage servicing rights

 

2,926,790

 

2,556,253

 

2,820,612

Real estate acquired in settlement of loans

 

20,326

 

20,328

 

2,250

Operating lease right-of-use assets

 

73,090

 

53,384

 

-

Furniture, fixtures, equipment and building improvements, net

 

30,480

 

32,221

 

33,374

Capitalized software, net

 

63,130

 

57,975

 

39,748

Receivable from PennyMac Mortgage Investment Trust

 

48,159

 

39,744

 

33,464

Loans eligible for repurchase

 

1,046,527

 

892,631

 

1,102,840

Other

 

206,411

 

221,967

 

109,559

Total assets

$

10,204,017

$

9,303,199

$

7,478,573

 
LIABILITIES
Assets sold under agreements to repurchase

$

4,141,053

$

3,538,889

$

1,933,859

Mortgage loan participation and sale agreements

 

497,948

 

514,625

 

532,251

Notes payable secured by mortgage servicing rights

 

1,294,070

 

1,293,625

 

1,292,291

Obligations under capital lease

 

20,810

 

23,881

 

6,605

Excess servicing spread financing payable to PennyMac Mortgage Investment Trust at fair value

 

178,586

 

183,141

 

216,110

Derivative liabilities

 

22,330

 

14,035

 

3,064

Operating lease liabilities

 

91,320

 

72,160

 

-

Mortgage servicing liabilities at fair value

 

29,140

 

34,294

 

8,681

Accounts payable and accrued expenses

 

175,273

 

215,379

 

156,212

Payable to PennyMac Mortgage Investment Trust

 

73,280

 

61,862

 

104,631

Payable to exchanged Private National Mortgage Acceptance Company, LLC unitholders under tax receivable agreement

 

46,158

 

46,537

 

46,537

Income taxes payable

 

504,569

 

480,559

 

400,546

Liability for loans eligible for repurchase

 

1,046,527

 

892,631

 

1,102,840

Liability for losses under representations and warranties

 

21,446

 

19,968

 

21,155

Total liabilities

 

8,142,510

 

7,391,586

 

5,824,782

 
STOCKHOLDERS' EQUITY
Common stock—authorized 200,000,000 shares of $0.0001 par value; issued and outstanding 78,515,047, 78,434,556, and 77,480,172 shares, respectively

 

8

 

8

 

8

Additional paid-in capital

 

1,335,107

 

1,328,166

 

1,310,648

Retained earnings

 

726,392

 

583,439

 

343,135

Total stockholders' equity attributable to PennyMac Financial Services, Inc. common stockholders

 

2,061,507

 

1,911,613

 

1,653,791

Total liabilities and stockholders’ equity

$

10,204,017

$

9,303,199

$

7,478,573

 

PENNYMAC FINANCIAL SERVICES, INC.

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

 
Quarter ended
December 31,
2019
September 30,
2019
December 31,
2018
(in thousands, except earnings per share)
Revenue
Net gains on loans held for sale at fair value

$

257,487

 

$

235,732

 

$

59,748

 

Loan origination fees

 

63,868

 

 

49,434

 

 

26,165

 

Fulfillment fees from PennyMac Mortgage Investment Trust

 

58,297

 

 

45,149

 

 

28,591

 

Net loan servicing fees:
Loan servicing fees
From non-affiliates

 

196,655

 

 

185,967

 

 

163,565

 

From PennyMac Mortgage Investment Trust

 

13,695

 

 

12,964

 

 

11,524

 

Other fees

 

24,521

 

 

26,018

 

 

19,316

 

 

234,871

 

 

224,949

 

 

194,405

 

Change in estimated fair value of mortgage servicing rights and excess servicing spread financing

 

(147,140

)

 

(158,720

)

 

(89,193

)

Net loan servicing fees

 

87,731

 

 

66,229

 

 

105,212

 

Net interest income:
Interest income

 

76,015

 

 

83,452

 

 

57,733

 

Interest expense

 

65,132

 

 

56,380

 

 

36,461

 

 

10,883

 

 

27,072

 

 

21,272

 

Management fees from PennyMac Mortgage Investment Trust

 

10,314

 

 

10,098

 

 

6,559

 

Change in fair value of investment in and dividends received from PennyMac Mortgage Investment Trust

 

39

 

 

66

 

 

(87

)

Results of real estate acquired in settlement of loans

 

(648

)

 

188

 

 

410

 

Revaluation of payable to exchange Private National Mortgage Acceptance Company, LLC unitholders under tax receivable agreement

 

379

 

 

-

 

 

1,126

 

Other

 

2,025

 

 

2,379

 

 

2,205

 

Total net revenue

 

490,375

 

 

436,347

 

 

251,201

 

Expenses
Compensation

 

141,009

 

 

141,132

 

 

99,353

 

Servicing

 

57,487

 

 

47,909

 

 

41,518

 

Technology

 

15,515

 

 

20,385

 

 

15,056

 

Loan origination

 

44,919

 

 

34,851

 

 

12,936

 

Occupancy and equipment

 

7,841

 

 

7,257

 

 

7,151

 

Professional services

 

10,983

 

 

9,682

 

 

9,173

 

Other

 

9,255

 

 

8,934

 

 

7,708

 

Total expenses

 

287,009

 

 

270,150

 

 

192,895

 

Income before provision for income taxes

 

203,366

 

 

166,197

 

 

58,306

 

Provision for income taxes

 

50,705

 

 

44,724

 

 

5,346

 

Net income

 

152,661

 

 

121,473

 

 

52,960

 

Less: Net income attributable to noncontrolling interest

 

-

 

 

-

 

 

14,211

 

Net income attributable to PennyMac Financial Services, Inc. common stockholders

$

152,661

 

$

121,473

 

$

38,749

 

 
Earnings per share
Basic

$

1.95

 

$

1.55

 

$

0.65

 

Diluted

$

1.88

 

$

1.51

 

$

0.63

 

Weighted-average common shares outstanding
Basic

 

78,466

 

 

78,361

 

 

59,876

 

Diluted

 

81,076

 

 

80,382

 

 

61,468

 

 

PENNYMAC FINANCIAL SERVICES, INC.

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

  
 

Year ended December 31,

 

2019

 

2018

 

2017

 

(in thousands, except earnings per share)

Revenue  
Net gains on loans held for sale at fair value  

$

725,528

 

$

249,022

 

$

391,804

 

Loan origination fees  

 

174,156

 

 

101,641

 

 

119,202

 

Fulfillment fees from PennyMac Mortgage Investment Trust  

 

160,610

 

 

81,350

 

 

80,359

 

Net loan servicing fees:  
Loan servicing fees:  
From non-affiliates  

 

730,165

 

 

585,101

 

 

475,848

 

From PennyMac Mortgage Investment Trust  

 

48,797

 

 

42,045

 

 

43,064

 

Investment funds  

 

-

 

 

3

 

 

1,461

 

Other fees  

 

98,564

 

 

64,133

 

 

58,924

 

 

 

877,526

 

 

691,282

 

 

579,297

 

Change in estimated fair value of mortgage servicing rights and excess servicing spread financing  

 

(583,861

)

 

(245,889

)

 

(273,238

)

Net loan servicing fees  

 

293,665

 

 

445,393

 

 

306,059

 

Net interest income (expense):  
Interest income  

 

288,700

 

 

216,416

 

 

143,179

 

Interest expense  

 

211,979

 

 

144,597

 

 

144,520

 

 

 

76,721

 

 

71,819

 

 

(1,341

)

Management fees, net:  
From PennyMac Mortgage Investment Trust  

 

36,492

 

 

24,465

 

 

22,584

 

From Investment Funds  

 

-

 

 

4

 

 

1,001

 

 

 

36,492

 

 

24,469

 

 

23,585

 

Carried Interest from Investment Funds  

 

-

 

 

(365

)

 

(1,040

)

Change in fair value of investment in and dividends received from PennyMac Mortgage Investment Trust  

 

416

 

 

332

 

 

118

 

Results of real estate acquired in settlement of loans  

 

557

 

 

589

 

 

94

 

Revaluation of payable to exchange Private National Mortgage Acceptance Company, LLC unitholders under tax receivable agreement  

 

379

 

 

1,126

 

 

32,940

 

Other  

 

8,880

 

 

9,253

 

 

3,683

 

Total net revenue

 

 

1,477,404

 

 

984,629

 

 

955,463

 

Expenses  
Compensation  

 

503,458

 

 

403,270

 

 

358,721

 

Servicing  

 

164,697

 

 

137,104

 

 

117,696

 

Loan origination  

 

117,338

 

 

27,398

 

 

20,429

 

Technology  

 

67,946

 

 

60,103

 

 

52,013

 

Occupancy and equipment  

 

28,916

 

 

27,152

 

 

22,615

 

Professional services  

 

32,859

 

 

27,615

 

 

17,845

 

Other  

 

32,746

 

 

34,290

 

 

30,235

 

Total expenses  

 

947,960

 

 

716,932

 

 

619,554

 

Income before provision for income taxes  

 

529,444

 

 

267,697

 

 

335,909

 

Provision for income taxes  

 

136,479

 

 

23,254

 

 

24,387

 

Net income  

 

392,965

 

 

244,443

 

 

311,522

 

Less: Net income attributable to noncontrolling interest  

 

-

 

 

156,749

 

 

210,765

 

Net income attributable to PennyMac Financial Services, Inc. common stockholders  

$

392,965

 

$

87,694

 

$

100,757

 

  
Earnings per share  
Basic  

$

5.02

 

$

2.62

 

$

4.34

 

Diluted  

$

4.89

 

$

2.59

 

$

4.03

 

Weighted average shares outstanding  
Basic  

 

78,466

 

 

33,524

 

 

23,199

 

Diluted  

 

81,076

 

 

35,322

 

 

24,999

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20200206005858/en/

Contacts

Media
Janis Allen
(805) 330-4899

Investors
Isaac Garden
(818) 264-4907