Exhibit 99.1
| Media | Investors |
| Stephen Hagey | Christopher Oltmann |
| (805) 530-5817 | (818) 264-4907 |
PennyMac Financial Services, Inc. Reports
Third Quarter 2016 Results
Westlake Village, CA, November 3, 2016 – PennyMac Financial Services, Inc. (NYSE: PFSI) today reported net income of $122.3 million for the third quarter of 2016, on revenue of $291.4 million. Net income attributable to PFSI common stockholders was $23.7 million, or $1.06 per diluted share. Book value per share increased to $14.41, up from $13.28 at June 30, 2016.
Third Quarter Highlights
· | Pretax income of $139.3 million, up 65 percent from the prior quarter and the highest level on record for PennyMac Financial, driven by continued momentum in correspondent and consumer direct production |
· | Production segment pretax income of $149.8 million, up 43 percent from the prior quarter |
o | Total loan production activity of $20.6 billion in unpaid principal balance (UPB), up 28 percent from the prior quarter |
o | Record production volumes for both correspondent and consumer direct channels; $18.9 billion in UPB of correspondent production and $1.7 billion in UPB of consumer direct originations, up 30 percent and 12 percent from the prior quarter, respectively |
· | Servicing segment pretax loss of $10.7 million, versus a pretax loss of $21.0 million in the prior quarter |
o | Results included non-cash valuation losses on mortgage servicing rights (MSRs) of $39.0 million; gains from hedges and excess servicing spread (ESS) liability totaled $23.1 million |
1
o | Servicing segment pretax income excluding fair value changes was $5.1 million, down 73 percent from the prior quarter1 |
o | Servicing portfolio reached $182.1 billion in UPB, up 6 percent from June 30, 2016 |
o | Completed the previously announced acquisition and transfer of approximately $1 billion in UPB of MSRs related to defaulted government loans from a large bank2 |
· | Investment Management segment pretax income of $0.2 million compared with pretax income of $0.7 million in the prior quarter |
o | Net assets under management were approximately $1.6 billion, down modestly from June 30, 2016, driven by PennyMac Mortgage Investment Trust’s (PMT) repurchase of its common shares of beneficial interest |
“PennyMac Financial’s continuing strong financial performance reflects our operational foundation and our ability to capture the significant opportunities in the U.S. mortgage market,” said Chairman and Chief Executive Officer Stanford L. Kurland. “We have once again achieved record quarterly earnings driven by record production volumes in each of PennyMac Financial’s correspondent and consumer direct channels. We have been able to capitalize on the strong origination market and the unique ability of our platform to scale up quickly and efficiently to generate strong volumes amid continuing low interest rates. PennyMac Financial’s leading position in mortgage banking and our best-in-class operating platform make us well-positioned to continue to capitalize on the opportunities we see.”
(1) Excludes changes in the fair value of MSRs, the ESS liability, and gains/(losses) on hedging derivatives which were $(39.0) million, $4.1 million, and $19.0 million, respectively, in the third quarter.
(2) Approximately $600 million in UPB acquired and transferred during the quarter and $400 million in UPB after quarter end.
2
The following table presents the contribution of PennyMac Financial’s Production, Servicing and Investment Management segments to pretax income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Quarter ended September 30, 2016 |
| |||||||||||||
|
| Mortgage Banking |
| Investment |
|
|
| |||||||||
|
| Production |
| Servicing |
| Total |
| Management |
| Total |
| |||||
|
| (in thousands) |
| |||||||||||||
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gains on mortgage loans held for sale at fair value |
| $ | 166,506 |
| $ | 15,615 |
| $ | 182,121 |
| $ | — |
| $ | 364,242 |
|
Loan origination fees |
|
| 34,621 |
|
| — |
|
| 34,621 |
|
| — |
|
| 34,621 |
|
Fulfillment fees from PMT |
|
| 27,255 |
|
| — |
|
| 27,255 |
|
| — |
|
| 27,255 |
|
Net servicing fees |
|
| — |
|
| 45,864 |
|
| 45,864 |
|
| — |
|
| 45,864 |
|
Management fees |
|
| — |
|
| — |
|
| — |
|
| 5,521 |
|
| 5,521 |
|
Carried Interest from Investment Funds |
|
| — |
|
| — |
|
| — |
|
| 107 |
|
| 107 |
|
Net interest income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
| 13,013 |
|
| 9,696 |
|
| 22,709 |
|
| — |
|
| 22,709 |
|
Interest expense |
|
| 9,323 |
|
| 18,182 |
|
| 27,505 |
|
| 11 |
|
| 27,516 |
|
|
|
| 3,690 |
|
| (8,486) |
|
| (4,796) |
|
| (11) |
|
| (4,807) |
|
Other |
|
| 508 |
|
| 205 |
|
| 713 |
|
| — |
|
| 713 |
|
Total net revenue |
|
| 232,580 |
|
| 53,198 |
|
| 285,778 |
|
| 5,617 |
|
| 291,395 |
|
Expenses |
|
| 82,767 |
|
| 63,937 |
|
| 146,704 |
|
| 5,413 |
|
| 152,117 |
|
Income (loss) before provision for income taxes and non-segment activities |
|
| 149,813 |
|
| (10,739) |
|
| 139,074 |
|
| 204 |
|
| 139,278 |
|
Non-segment activities (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| — |
|
Pre-tax income (loss) |
| $ | 149,813 |
| $ | (10,739) |
| $ | 139,074 |
| $ | 204 |
| $ | 139,278 |
|
(1) Relates to parent Company interest expense eliminated in consolidation.
Production Segment
Production includes the correspondent acquisition of newly originated government-insured mortgage loans for PennyMac Financial’s own account, fulfillment services on behalf of PMT, and consumer direct lending.
PennyMac Financial’s loan production activity totaled $20.6 billion in UPB, of which $13.3 billion in UPB was for its own account, and $7.3 billion was fee-based fulfillment activity for PMT. Interest rate lock commitments (IRLCs) on correspondent government-insured and consumer direct loans totaled $16.3 billion in UPB.
3
Production segment pretax income was $149.8 million, an increase of 43 percent from the second quarter. Production revenue totaled $232.6 million, an increase of 37 percent from the second quarter, primarily resulting from a 44 percent quarter-over-quarter increase in net gains on mortgage loans held for sale, driven by strong margins and significant increases in production and lock volumes in both the correspondent and consumer direct channels. Net gains on mortgage loans held for sale during the quarter included a $6.6 million benefit from a revision of previously recorded provision for representations and warranties due to a change in estimate. PennyMac Financial’s production and lock volume increases reflect low mortgage rates during the quarter and strong consumer demand for mortgage loans; market share gains in the correspondent channel demonstrating the ability of the Company’s operating platform to effectively scale in response to the market opportunity; and investments in increased loan fulfillment capacity for the consumer direct channel.
The components of net gains on mortgage loans held for sale are detailed in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
| Quarter ended |
| |||||||
|
| September 30, |
| June 30, |
| September 30, |
| |||
|
| 2016 |
| 2016 |
| 2015 |
| |||
|
| (in thousands) |
| |||||||
| $ | 143,960 |
| $ | 132,472 |
| $ | 153,338 |
| |
Mortgage servicing rights recapture payable to PennyMac Mortgage Investment Trust |
|
| (1,690) |
|
| (1,915) |
|
| (3,098) |
|
Provision for representations and warranties, net |
|
| 5,796 |
|
| (2,286) |
|
| (2,292) |
|
Cash investment (1) |
|
| 26,855 |
|
| (56,763) |
|
| (85,426) |
|
Fair value changes of pipeline, inventory and hedges |
|
| 7,200 |
|
| 58,695 |
|
| 20,124 |
|
Net gains on mortgage loans held for sale |
| $ | 182,121 |
| $ | 130,203 |
| $ | 82,646 |
|
|
|
|
|
|
|
|
|
|
|
|
Net gains on mortgage loans held for sale by segment: |
|
|
|
|
|
|
|
|
|
|
Production |
| $ | 166,506 |
| $ | 115,894 |
| $ | 81,005 |
|
Servicing |
| $ | 15,615 |
| $ | 14,309 |
| $ | 1,641 |
|
(1) Net of 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
4
limited to: marketing; relationship management; the approval of correspondent sellers and the ongoing monitoring of their performance; reviewing 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 $27.3 million in the third quarter, up 43 percent from $19.1 million in the second quarter. Fulfillment fee revenue was driven by a 40 percent quarter-over-quarter increase in conventional conforming loan acquisitions. The average fulfillment fee rate during the third quarter was 38 basis points, up slightly from 37 basis points in the second quarter.
Production segment expenses were $82.8 million, a 27 percent increase from the second quarter, driven by higher direct expenses related to increased production volumes and incentive compensation resulting from the Company’s overall financial results.
Servicing Segment
Servicing includes income from owned MSRs, in addition to subservicing and special servicing activities. The Servicing segment posted a pretax loss of $10.7 million in the third quarter compared to a pretax loss of $21.0 million in the second quarter. Servicing segment revenues in the third quarter totaled $53.2 million, a 66 percent increase from the second quarter, primarily due to a 73 percent increase in net loan servicing fees.
Net loan servicing fees totaled $45.9 million for the third quarter and included $122.6 million in servicing fees reduced by $60.8 million of amortization and realization of MSR cash flows. Net loan servicing fees also included $39.0 million of fair value losses and impairment provisioning related to MSRs, driven by increased discount rates on Ginnie Mae MSRs reflecting reduced bank participation and higher capital costs for other market participants. In addition, net loan servicing fees included $19.0 million in hedging gains and $4.1 million in gains due to the change in fair value of the ESS liability.
5
The following table presents a breakdown of net loan servicing fees:
|
|
|
|
|
|
|
|
|
|
|
|
| Quarter ended |
| |||||||
|
| September 30, |
| June 30, |
| September 30, |
| |||
|
| 2016 |
| 2016 |
| 2015 |
| |||
|
| (in thousands) |
| |||||||
| $ | 122,587 |
| $ | 120,738 |
| $ | 106,052 |
| |
Effect of MSRs: |
|
|
|
|
|
|
|
|
|
|
Amortization and realization of cash flows |
|
| (60,847) |
|
| (54,126) |
|
| (41,594) |
|
Change in fair value and (provision for) impairment of MSRs carried at lower of amortized cost or fair value |
|
| (39,009) |
|
| (122,433) |
|
| (47,926) |
|
Change in fair value of excess servicing spread financing |
|
| 4,107 |
|
| 17,428 |
|
| 10,271 |
|
Hedging gains |
|
| 19,026 |
|
| 64,948 |
|
| 30,455 |
|
Total amortization, impairment and change in fair value of MSRs |
|
| (76,723) |
|
| (94,183) |
|
| (48,794) |
|
Net loan servicing fees |
| $ | 45,864 |
| $ | 26,555 |
| $ | 57,258 |
|
(1) Includes contractually-specified servicing fees
Servicing segment revenue also included $15.6 million in net gains on mortgage loans held for sale in the third quarter resulting from the securitization of reperforming government-insured loans, versus $14.3 million in the second quarter. 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 $63.9 million, a 20 percent increase from the second quarter, primarily due to higher expenses from early buyout transactions which are expected to be offset by benefits in future periods.
The total servicing portfolio reached $182.1 billion in UPB at September 30, 2016, an increase of 6 percent from the prior quarter end. Of the total servicing portfolio, prime servicing was $179.2 billion in UPB and special servicing was $2.9 billion in UPB. PennyMac Financial subservices and conducts special servicing for $56.1 billion in UPB, an increase of 8 percent from June 30, 2016, primarily due to new correspondent conventional loan acquisitions by PMT. PennyMac Financial’s MSR portfolio grew to $121.3 billion in UPB, an increase of 4 percent over
6
the prior quarter, resulting from the acquisition of government-insured mortgage loans in its correspondent channel and production activities in its consumer direct origination channel.
The table below details PennyMac Financial’s servicing portfolio UPB:
|
|
|
|
|
|
|
|
|
| |
|
| September 30, |
| June 30, |
| September 30, |
| |||
|
| 2016 |
| 2016 |
| 2015 |
| |||
|
| (in thousands) |
| |||||||
Loans serviced at period end: |
|
|
|
|
|
|
|
|
|
|
Prime servicing: |
|
|
|
|
|
|
|
|
|
|
Owned |
|
|
|
|
|
|
|
|
|
|
Mortgage servicing rights |
|
|
|
|
|
|
|
|
|
|
Originated |
| $ | 78,732,061 |
| $ | 71,436,178 |
| $ | 54,259,297 |
|
Acquisitions |
|
| 42,580,927 |
|
| 45,600,625 |
|
| 52,717,209 |
|
|
|
| 121,312,988 |
|
| 117,036,803 |
|
| 106,976,506 |
|
Mortgage servicing liabilities |
|
| 1,717,859 |
|
| 751,193 |
|
| 957,113 |
|
Mortgage loans held for sale |
|
| 2,945,465 |
|
| 1,971,903 |
|
| 1,602,692 |
|
|
|
| 125,976,312 |
|
| 119,759,899 |
|
| 109,536,311 |
|
Subserviced for Advised Entities |
|
| 53,247,024 |
|
| 48,894,531 |
|
| 41,303,357 |
|
Total prime servicing |
|
| 179,223,336 |
|
| 168,654,430 |
|
| 150,839,668 |
|
Special servicing: |
|
|
|
|
|
|
|
|
|
|
Subserviced for Advised Entities |
|
| 2,853,307 |
|
| 3,064,105 |
|
| 3,990,744 |
|
Total special servicing |
|
| 2,853,307 |
|
| 3,064,105 |
|
| 3,990,744 |
|
Total loans serviced |
| $ | 182,076,643 |
| $ | 171,718,535 |
| $ | 154,830,412 |
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage loans serviced: |
|
|
|
|
|
|
|
|
|
|
Owned |
|
|
|
|
|
|
|
|
|
|
Mortgage servicing rights |
| $ | 121,312,988 |
| $ | 117,036,803 |
| $ | 106,976,506 |
|
Mortgage servicing liabilities |
|
| 1,717,859 |
|
| 751,193 |
|
| 957,113 |
|
Mortgage loans held for sale |
|
| 2,945,465 |
|
| 1,971,903 |
|
| 1,602,692 |
|
|
|
| 125,976,312 |
|
| 119,759,899 |
|
| 109,536,311 |
|
Subserviced |
|
| 56,100,331 |
|
| 51,958,636 |
|
| 45,294,101 |
|
Total mortgage loans serviced |
| $ | 182,076,643 |
| $ | 171,718,535 |
| $ | 154,830,412 |
|
Investment Management Segment
PennyMac Financial manages PMT and two 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 September 30, 2016, down less than 1 percent from June 30, 2016, primarily driven by PMT’s repurchases of its common shares.
7
Pretax income for the Investment Management segment was $0.2 million compared with pretax income of $0.7 million in the second quarter. Management fees, which include base management fees from PMT and the private Investment Funds, as well as any earned incentive fees from PMT, decreased 4 percent from the prior quarter, primarily due to the reduction in net assets under management. Carried interest from the private Investment Funds decreased to $107,000, compared with $244,000 in the second quarter, resulting from reduced performance of the private Investment Funds.
The following table presents a breakdown of management fees and carried interest:
|
|
|
|
|
|
|
|
|
|
|
|
| Quarter ended |
| |||||||
|
| September 30, |
| June 30, |
| September 30, |
| |||
|
| 2016 |
| 2016 |
| 2015 |
| |||
|
| (in thousands) |
| |||||||
Management fees: |
|
|
|
|
|
|
|
|
|
|
PennyMac Mortgage Investment Trust |
|
|
|
|
|
|
|
|
|
|
Base |
| $ | 5,025 |
| $ | 5,199 |
| $ | 5,742 |
|
Performance incentive |
|
| — |
|
| — |
|
| — |
|
|
|
| 5,025 |
|
| 5,199 |
|
| 5,742 |
|
Investment Funds |
|
| 496 |
|
| 531 |
|
| 714 |
|
Total management fees |
|
| 5,521 |
|
| 5,730 |
|
| 6,456 |
|
Carried Interest |
|
| 107 |
|
| 244 |
|
| 1,483 |
|
Total management fees and Carried Interest |
| $ | 5,628 |
| $ | 5,974 |
| $ | 7,939 |
|
|
|
|
|
|
|
|
|
|
|
|
Net assets of Advised Entities: |
|
|
|
|
|
|
|
|
|
|
PennyMac Mortgage Investment Trust |
| $ | 1,354,918 |
| $ | 1,360,826 |
| $ | 1,513,505 |
|
Investment Funds |
|
| 201,802 |
|
| 201,490 |
|
| 238,349 |
|
|
| $ | 1,556,720 |
| $ | 1,562,316 |
| $ | 1,751,854 |
|
Investment Management segment expenses totaled $5.4 million, a 2 percent increase from the second quarter.
Consolidated Expenses
Total expenses for the third quarter were $152.1 million, a 23 percent increase from the second quarter. The increase in total expenses was largely due to an increase in compensation expenses driven by higher incentive compensation and an increase in servicing expenses related to higher early buyout volumes of defaulted government loans.
8
Mr. Kurland concluded, “PennyMac Financial’s outstanding financial performance and leadership in the mortgage markets reflect the strong organization and unique platform we have built. We expect interest rates to begin to rise incrementally from historically low rates, and current industry estimates point to the likelihood of a somewhat smaller U.S. mortgage market next year from lower refinance activity. Nonetheless, we expect the demand for home purchases to remain strong and continued opportunities for us in the mortgage market. We are confident that further investments in our operational systems and financial capacity will support the ongoing growth of our business. At the same time, we expect our servicing assets to generate higher returns as interest rates rise. Taken together, we believe our platform, focus on risk management, and compliance and governance culture will help ensure the long-term success of PennyMac Financial.”
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 Daylight Time) on Thursday, November 3, 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
9
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.
10
PENNYMAC FINANCIAL SERVICES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
| September 30, |
| June 30, |
| September 30, |
| |||
|
| 2016 |
| 2016 |
| 2015 |
| |||
|
| (in thousands, except share amounts) |
| |||||||
ASSETS |
|
|
|
|
|
|
|
|
|
|
Cash |
| $ | 94,727 |
| $ | 143,715 |
| $ | 47,415 |
|
Short-term investments at fair value |
|
| 58,749 |
|
| 41,063 |
|
| 24,766 |
|
Mortgage loans held for sale at fair value |
|
| 3,127,377 |
|
| 2,097,138 |
|
| 1,696,980 |
|
Derivative assets |
|
| 135,777 |
|
| 124,542 |
|
| 53,569 |
|
Servicing advances, net |
|
| 306,150 |
|
| 296,581 |
|
| 252,172 |
|
Carried Interest due from Investment Funds |
|
| 70,870 |
|
| 70,763 |
|
| 70,196 |
|
Investment in PennyMac Mortgage Investment Trust at fair value |
|
| 1,169 |
|
| 1,217 |
|
| 1,160 |
|
Mortgage servicing rights |
|
| 1,337,674 |
|
| 1,290,928 |
|
| 1,307,392 |
|
Real estate acquired in settlement of loans |
|
| 1,996 |
|
| 1,394 |
|
| — |
|
Furniture, fixtures, equipment and building improvements, net |
|
| 29,121 |
|
| 27,851 |
|
| 14,107 |
|
Note receivable from PennyMac Mortgage Investment Trust |
|
| 150,000 |
|
| 150,000 |
|
| 150,000 |
|
Receivable from Investment Funds |
|
| 1,596 |
|
| 1,288 |
|
| 1,542 |
|
Receivable from PennyMac Mortgage Investment Trust |
|
| 14,747 |
|
| 22,054 |
|
| 17,220 |
|
Capitalized software, net |
|
| 8,361 |
|
| 6,209 |
|
| 2,035 |
|
Deferred tax asset |
|
| — |
|
| 4,878 |
|
| 25,878 |
|
Loans eligible for repurchase |
|
| 197,819 |
|
| 286,048 |
|
| 97,455 |
|
Other |
|
| 60,061 |
|
| 50,651 |
|
| 53,435 |
|
Total assets |
| $ | 5,596,194 |
| $ | 4,616,320 |
| $ | 3,815,322 |
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
Assets sold under agreements to repurchase |
| $ | 2,491,366 |
| $ | 1,591,798 |
| $ | 1,286,411 |
|
Mortgage loan participation and sale agreements |
|
| 782,913 |
|
| 737,176 |
|
| 247,410 |
|
Notes payable |
|
| 110,619 |
|
| 114,235 |
|
| 406,990 |
|
Obligations under capital lease |
|
| 20,700 |
|
| 22,886 |
|
| — |
|
Excess servicing spread financing payable to PennyMac Mortgage Investment Trust at fair value |
|
| 280,367 |
|
| 294,551 |
|
| 418,573 |
|
Derivative liabilities |
|
| 4,426 |
|
| 3,734 |
|
| 4,632 |
|
Mortgage servicing liabilities at fair value |
|
| 13,045 |
|
| 4,681 |
|
| 10,724 |
|
Accounts payable and accrued expenses |
|
| 106,684 |
|
| 102,310 |
|
| 85,530 |
|
Payable to Investment Funds |
|
| 27,265 |
|
| 28,209 |
|
| 30,211 |
|
Payable to PennyMac Mortgage Investment Trust |
|
| 165,264 |
|
| 160,712 |
|
| 147,326 |
|
Payable to exchanged Private National Mortgage Acceptance Company, LLC unitholders under tax receivable agreement |
|
| 75,434 |
|
| 74,850 |
|
| 72,275 |
|
Income taxes payable |
|
| 11,415 |
|
| — |
|
| — |
|
Liability for loans eligible for repurchase |
|
| 197,819 |
|
| 286,048 |
|
| 97,455 |
|
Liability for losses under representations and warranties |
|
| 18,473 |
|
| 24,277 |
|
| 18,478 |
|
Total liabilities |
|
| 4,305,790 |
|
| 3,445,467 |
|
| 2,826,015 |
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
|
Class A common stock—authorized 200,000,000 shares of $0.0001 par value; issued and outstanding, 22,274,145, 22,189,337 and 21,842,868 shares, respectively |
|
| 2 |
|
| 2 |
|
| 2 |
|
Class B common stock—authorized 1,000 shares of $0.0001 par value; issued and outstanding, 49, 49 and 51 shares, respectively |
|
| — |
|
| — |
|
| — |
|
Additional paid-in capital |
|
| 179,134 |
|
| 176,742 |
|
| 169,297 |
|
Retained earnings |
|
| 141,805 |
|
| 118,120 |
|
| 85,699 |
|
Total stockholders' equity attributable to PennyMac Financial Services, Inc. common stockholders |
|
| 320,941 |
|
| 294,864 |
|
| 254,998 |
|
Noncontrolling interests in Private National Mortgage Acceptance Company, LLC |
|
| 969,463 |
|
| 875,989 |
|
| 734,309 |
|
Total stockholders' equity |
|
| 1,290,404 |
|
| 1,170,853 |
|
| 989,307 |
|
Total liabilities and stockholders’ equity |
| $ | 5,596,194 |
| $ | 4,616,320 |
| $ | 3,815,322 |
|
11
PENNYMAC FINANCIAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
| Quarter ended |
| |||||||
|
| September 30, |
| June 30, |
| September 30, |
| |||
|
| 2016 |
| 2016 |
| 2015 |
| |||
|
| (in thousands, except earnings per share) |
| |||||||
Revenue |
|
|
|
|
|
|
|
|
|
|
Net gains on mortgage loans held for sale at fair value |
| $ | 182,121 |
| $ | 130,203 |
| $ | 82,646 |
|
Mortgage loan origination fees |
|
| 34,621 |
|
| 28,907 |
|
| 29,448 |
|
Fulfillment fees from PennyMac Mortgage Investment Trust |
|
| 27,255 |
|
| 19,111 |
|
| 17,553 |
|
Net mortgage loan servicing fees: |
|
|
|
|
|
|
|
|
|
|
Loan servicing fees |
|
|
|
|
|
|
|
|
|
|
From non-affiliates |
|
| 98,865 |
|
| 92,770 |
|
| 83,424 |
|
From PennyMac Mortgage Investment Trust |
|
| 11,039 |
|
| 16,427 |
|
| 11,736 |
|
From Investment Funds |
|
| 770 |
|
| 723 |
|
| 796 |
|
Ancillary and other fees |
|
| 11,913 |
|
| 10,818 |
|
| 10,096 |
|
|
|
| 122,587 |
|
| 120,738 |
|
| 106,052 |
|
Amortization, impairment and change in estimated fair value of mortgage servicing rights and excess servicing spread |
|
| (76,723) |
|
| (94,183) |
|
| (48,794) |
|
Net mortgage loan servicing fees |
|
| 45,864 |
|
| 26,555 |
|
| 57,258 |
|
Management fees: |
|
|
|
|
|
|
|
|
|
|
From PennyMac Mortgage Investment Trust |
|
| 5,025 |
|
| 5,199 |
|
| 5,742 |
|
From Investment Funds |
|
| 496 |
|
| 531 |
|
| 714 |
|
|
|
| 5,521 |
|
| 5,730 |
|
| 6,456 |
|
Carried Interest from Investment Funds |
|
| 107 |
|
| 244 |
|
| 1,483 |
|
Net interest expense: |
|
|
|
|
|
|
|
|
|
|
Interest income |
|
| 22,709 |
|
| 20,554 |
|
| 15,053 |
|
Interest expense |
|
| 27,516 |
|
| 25,466 |
|
| 20,944 |
|
|
|
| (4,807) |
|
| (4,912) |
|
| (5,891) |
|
Change in fair value of investment in and dividends received from PennyMac Mortgage Investment Trust |
|
| (13) |
|
| 229 |
|
| (158) |
|
Results of real estate acquired in settlement of loans |
|
| 42 |
|
| 393 |
|
| — |
|
Other |
|
| 684 |
|
| 1,346 |
|
| 410 |
|
Total net revenue |
|
| 291,395 |
|
| 207,806 |
|
| 189,205 |
|
Expenses |
|
|
|
|
|
|
|
|
|
|
Compensation |
|
| 96,132 |
|
| 83,147 |
|
| 74,129 |
|
Servicing |
|
| 22,177 |
|
| 13,430 |
|
| 16,770 |
|
Technology |
|
| 9,733 |
|
| 7,733 |
|
| 6,676 |
|
Loan origination |
|
| 6,471 |
|
| 4,910 |
|
| 4,314 |
|
Professional services |
|
| 4,631 |
|
| 4,559 |
|
| 3,803 |
|
Other |
|
| 12,973 |
|
| 9,769 |
|
| 9,590 |
|
Total expenses |
|
| 152,117 |
|
| 123,548 |
|
| 115,282 |
|
Income before provision for income taxes |
|
| 139,278 |
|
| 84,258 |
|
| 73,923 |
|
Provision for income taxes |
|
| 16,976 |
|
| 9,963 |
|
| 8,575 |
|
Net income |
|
| 122,302 |
|
| 74,295 |
|
| 65,348 |
|
Less: Net income attributable to noncontrolling interest |
|
| 98,617 |
|
| 59,820 |
|
| 52,668 |
|
Net income attributable to PennyMac Financial Services, Inc. common stockholders |
| $ | 23,685 |
| $ | 14,475 |
| $ | 12,680 |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share |
|
|
|
|
|
|
|
|
|
|
Basic |
| $ | 1.07 |
| $ | 0.66 |
| $ | 0.58 |
|
Diluted |
| $ | 1.06 |
| $ | 0.65 |
| $ | 0.58 |
|
Weighted-average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
Basic |
|
| 22,217 |
|
| 22,078 |
|
| 21,810 |
|
Diluted |
|
| 76,355 |
|
| 76,280 |
|
| 76,138 |
|
###
12