PFSI - Earnings call transcript Q3 2024 | PennyMac Financial Services, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon, and welcome to PennyMac Financial Services, Inc.'s Third Quarter 2024 Earnings Call.

Additional earnings materials, including presentation slides that will be referred to in this call are available on PennyMac Financial's website at pfsi.pennymac.com.

Before we begin, let me remind you that this call may contain forward-looking statements that are subject to certain risks identified on Slide 2 of the earnings presentation. that could cause the company's actual results to differ materially as well as non-GAAP measures that have been reconciled to their GAAP equivalent in the earnings materials.

Now I'd like to introduce David Spector, PennyMac Financial's Chairman and Chief Executive Officer; and Dan Perotti, PennyMac Financial's Chief Financial Officer. ahead. go Please

David Spector

on Good participating operator. reported thank to annualized you income Thank our afternoon, third for return an for in $XX PFSI of quarter everyone X%. of you, million and equity earnings net call.

value impact an annualized PFSI the of Excluding changes, ROE XX%. produced fair of operating

At servicing tripled payments Our the many help opportunity nearly quarter same portfolio their lower mortgage from the our monthly lower segment refinancing. Production income mortgage our as by to customers last pretax rates us time, in provided servicing nearing with our and for as now driving continues $XXX portfolio well principal billion feeds revenue balance nearly to consumer in direct and cash increased customers as low-cost unpaid flow lending contributions X.X division. million providing grow

current $X.X originations market. and both for forecast to purchase from their expectations reflecting in the trillion XXXX, rates levels. third-party of to mortgage continue refinance volumes. current decline origination total estimates growth in driving Turning

demonstrated balanced foundation with we for As a of mortgage business as servicing both continued and production company model in growth leadership the an our strong performance interest direction of and industry-leading have enables financial regardless and rates. diversified

rights retain production have producers mortgage when industry X all Because the and rates, we future largest in on large of positioned and of loan the recent loans the the would in we we and stand higher been rates entered mortgage recently periods, servicing uniquely refinance nearly are the at in a with from mortgages growing portfolio who decline. of into benefit a borrowers interest

our while loan them from future needs. customer XX% lots large in service and results up doubling their suited earnings flywheel last products offering nearly base, to outstanding demonstrate strong to growing Direct our quarter home with the and providing the best nearly Our Consumer potential of originations

rate our our which is unpaid of other above was recapture can see X a you of X loans portfolio our XX% and technology balance, earnings $XXX of in this in more insured principal of billion and improved or was of ahead historic conventional billion September of which a a $XXX the loans at XX, slide, presentation, The government approximately X%, process Slide opportunity $XX than have as as improvements. loans. ongoing ago On which result in from and significantly rates, billion enhancements our years as indicated refinance by highlighted guaranteed

these improving given higher expect our investments, to We a low and in investment brand guaranteed insurer streamlined rates marketing see more relative government Notably, targeted loans rates nature continue the to conventional programs. and given refinance with for combined our multiyear we loans strategy. the recapture increased use of recapture efficient cost

offering was emphasis at cash our borrowers while given mortgage our to a to our second rates product obtaining mortgage a this product increased, lien retaining a with prevailing strong customers out homes rate cost rates. introduce the enable we first close-end equity second also to in XXXX, rapidly In their our low the their lien on We mortgages. acted significant went a for believe access doing borrowers mortgage when quickly refinance lien advantage versus importance providing

for to on second end retaining the them. our of the customers success lien our commitment program of both the include the section in X well doing bars to right light impact adjust as The rates recapture closed our as the highlighting refinance charts our thing

on our due higher custodial continue higher this And continues we operating core Our period, balances rates. significant interest contribution from in growing placement results. servicing to fees to large realize rate the anchor short-term and to portfolio

flexibility incorporate for efficiencies. drive this which intelligence emerging team proprietary regulatory to to adjust Additionally, operational a system, has and tremendous changes artificial technologies the management done servicing and enhancing our new job including has rapidly

look the drive for portfolio to with in expect additional down providing gain a future. strong continue expenses, as profitability level to leverage opportunities the base and to of we operating We grows us as

believe operating the volumes we highest performance markets. while that also total, various growing quality an standards, platform in at handle industry built have delivering we unmatched is the mortgage strong loans to of across In able large

the Our ability and market increased opportunity the achieved. we investments have to significant technology, in swiftly operational production ongoing ultimately our the enhancements scale we react have reflects to loan in and the made

competitors. given PFSI of structure stands the growth sets apart cost portfolio from stronger continued efficient than higher and the our our servicing us ever that

in in With In delivering we the growth channel operating returns the the share growing market to expect equity opportunities results high and financial leadership origination on provided strong capitalize the low best on XXs in are in direct we in market. total, teens industry to correspondent position lending, continue with the positioned by in the to XXXX. annualized

now Dan, quarter review will over who turn third performance. I drivers the it PFSI's will to financial of

Daniel Perotti

per ROE $X.XX points the income reported approximately PFSI's Directors on the of of in $X.XX $XX for annualized prior fair Thank consistent declared quarter common net quarter third of a was quarter million of net the during range in hedges rates quarter. of and X.X% from $XXX million to results per you, These a significant impact negative value as The X.X%. these yield share XX-year treasury X%. a exhibited with David. PFSI of $X.XX. included on an dividend diluted of the share, of high items third earnings during per declines volatility XX of MSRs third or interest share quarter. The Board share declined earnings low basis

our income in increase volumes due production the Pretax for largest channels, in account, $XX $XX own Total balance, prior all fee-based billion $XX to quarter. segment. $XXX for was the with direct. prior unpaid fulfillment quarter PFSI's acquisition volumes up higher consumer million, billion was were the $X up was origination across from PMT. XX% principal billion Turning million to and and from in activity

points quarter billion dominant points, retain correspondent basis XX% with to XX approximately we in quarter. due up in correspondent $XX the from production, third quarter margins $XX in total from to PennyMac were Correspondent XX% of a competitive position prior basis conventional participants. its the XX the pricing fourth third In in from decrease up expect from certain XX% to in quarter. quarter PMT channel lending less prior acquisitions channel maintained the third the in the quarter, total billion, of

and Broker with quarter strong brokers Direct, up were in In this from strong number X,XXX top the from channel expect PennyMac remained increasingly to leaders. as we X%. continue quarter Locks XX% a market over to in business see diversification was The originations up share and we as last growing number look down channel XX% channel the as us do business approved the were continued from prior up last and their growth continue normalized end to near quarter to Broker at and margins year, slightly of strength brokers were partners. but trends levels. and same position for time we alternative in

another mortgage net have the across we levels. fourth from volumes segment second an Consumer And quarter, higher balance Direct, David in all liens. October prior XX%. increased with in earlier. versus strong and expense up from quarter the Production some though of expenses Activity up from origination In of direct normal increase in primarily expect driven Production refinance consumer increased we loans remains the due in increased, contribution the our impact quarter. Higher of originations refinance a were from channels volumes, percentage XX% the lock as lower in were rates expect end loan down third by our were prior volumes line closed XX% in and quarter given to channel. were seasonality, mentioned channel Margins volumes

The of to segment $XX Turning Servicing a pretax recorded servicing. loss million.

changes and deposits on quarter. last in quarter. up portfolio $X.X second average or million, Custodial from Loan average $XXX unchanged prior primarily PFSI's from owned and averaged custodial to valuation-related to PFSI's $X.X basis nonrecurring was from managed points the increased growth up in servicing income fees Excluding due higher of portfolio. UPB, in third the quarter, funds balances. earnings quarter, items, pretax in due portfolio billion other income servicing X.X were the balances own for billion and

lower million and $XXX Realization MSR and PFSI's the but due million million rates average low approximately prior by fair of prepayment decreased The were X.X end. costs flows to due higher portfolio volatility to servicing of rates. points lower basis increased significantly hedge quarter mortgage $XXX by from interest $XX remained of from market elevated expectations the due driven UPB. at value includes gains Operating slightly prior inverted curve. increased MSR cash the Hedging rate interest yield to quarter expenses

declines. Excluding of XX% hedging hedge MSR gains costs, fair offset value

as quarter, to significantly mentioned. which the on through We interest considers that this fair also a the comprehensive strategy income, hedging changes of MSRs up rate was value versus moderate quarter of last production-related seek our impact David

were in The of assets income segment quarter, of million, was effective Investment resulting $X.X on amounts facilities where we essentially liquidity, We tax which the unchanged tax during total with for the billion $XX end from collateral quarter to of have an Provision $XXX,XXX cash contributed income available management Management the ended rate and prior expense pretax to draw includes and the pledged. quarter. under XX.X%.

it open now up questions. We'll Operator? for

Operator

from Doug UBS. with first Your Harter Instructions] comes [Operator question

Douglas Harter

bit couple Fed little rates share lock started could consumer in up? weeks the past direct you're volume terms as and as you what Hoping post in seeing have a backing of of the

David Spector

from we clearly, of were we've and highs month look, I mean, off seen a ago. come it its where

direct where we obviously, function, of really the you, quarter, look estimation, themselves. And Direct X% from seeing share as say, by last rates. both I above I react little down said percent. we market direct to lending I'm our It's well. which in think the a as it's would and is businesses, markets up in consumer that, see and Broker that that Well, higher that quarter, able think X% third ago. a see can gains XX%, our I'm having look, year share you I channel, to they probably, in nice what the XX-ish business a I a present continue we're broker tell could being by encouraged as at to

the see seeing rates seize side, a without going that some the good really bit opportunity saying refinance a On rates We're to increasing able to slowdown highs. of Direct the when it themselves. to Consumer goes still presented activity, really we from were that but on you're with

Douglas Harter

as kind of volumes management of ability that volumes up just I how along you are through meet ramped if your kind about lines, And capacity? today? to then And guess of that off, capacity plays those from could if kind talk

David Spector

get the to to [ increase it's the just really look we're natural expensive the to the versus 'XX decline. capacity this grow to the year, Look, most market. say, 'XX, our alternatives can portfolio. we spent the with hedging made upside Suffice decision we -- Earlier really to necessarily the when we going tight. MSR, ] continuing by running it's we're capacity least Yes. capacity that WIP not And on in and path rates it given take and in the the expensive do the opportunity in least the economic movements growth

But going to manage volatility said, we're a I as solution company. the more to to bit and so straightforward and hedging the And running excess we you do. very servicing, to look it's at, a need for of be able little what capacity. cost be

Daniel Perotti

that other portfolio have we with of have number still equity lever is do loans embedded. that our a we The in significant

talked portfolio a more when lien then we're there's refinances And first redirect decline, opportunity and our towards again, we've officers back as as there. we previously, so rates are about loans. focused them capacity, lot increase lien in interest opportunities loan still of of can our the as And growing second on rates

Operator

Your Crispin with comes question Love Piper of line next from the Sandler.

Crispin Love

third to presentation quarter, for near-term estimates rates what's in the ROEs you through expected outlook you bit recent low then year to high speak just really bit teens move And have side? And a a be just your Can in XXs. to strong from the little higher in as the the discuss ROE for following ROE origination XXXX, expected you can implied weeks? in backed First, XXXX? with then up states the

Daniel Perotti

Sure.

we ROE high operating with we're rates. the fourth think you mid operating somewhat see toward back the happen ROEs to if So as in our And the the to quarter, be as up quarter, going prior prior we implied dependent to teens. is I on you what look third looking moving the saw in there

of levels, at in ROEs type same even rate So we year. we we believe than saw higher the what achieve can earlier or slightly the these

in ROEs, we today, of production seen of the mid-teens. range -- should really there say, low implied achieved or us should XXs The sort the seeing outlook we level we're similar third back obviously an that the cited to level in we see expect year for we've that levels XXXX, that I maybe a -- higher ROEs a operating XXXX. the production in market above what's level covers quarter. we go the the seen rates there saw that Given bit high be we operating earlier would to slightly or teens, or higher, of ROEs to somewhat range, the to increase if say, in is And we on see the similar still in that little what in of drive what see in low if the we've if lower the end -- or rates I we're we towards that. low the to that would teens the

forecast we've as bit a cited and $X.X at a from rates is bit billion, seen If more $X.X David embedded that bit a that activity drive participants we in refinance that the trillion us would mortgage see higher, market. up. do industry other lower

was So or really X.X saw here X the the lower X third that's in what months would note, really of similar months to quarter only the probably rates the one in impact for third fell which of months. we X the generally of speaking, quarter, I

that saw we interest a think that higher would sustained us of So rate XXs if we bit in a more drive range. lower environment,

Crispin Love

it's on Great. on I around XXXX, made comment And up the XXXX. trillion probably guess, but forecast trillion industry I $X.X then $X.X following there, in just just more believe in importantly, one you right

recent in be believe you one. case? just might that the said wanted I double still might apologies click earlier, little those said if You a be that Do quarters ambitious. you on to have that that but

Daniel Perotti

to it interest in going the lot a think XXXX. exactly of down I to are comes what rates be

a lower in range what we speaking, did then if interest we bit think range. ranges to size. expect don't it at generally high, saw market trillion, would interest that we little if unreasonable, sustaining trillion come a we the see we'd of bit meaningfully or rates lower, I a experienced down that happens but at definitely little a overall rates have during that rates the a in or achievable to higher that think probably does market rates. little is see level similar $X.X But be is think would around what I and quarter, be we bit a bounced $X.X with If that, third

either business case, higher sort before, we lower, operating in indication we've as about that the say as ROE. interest the well whether perform of would I model, built talked rates or are given I gave balanced to our with are

built as higher that higher allow our the business have in production side well -- really when income to higher by longer, production year. rates we've will as side larger rates over rates perform do the the mortgage decline. meantime, servicing past loans well of greater at of a eventually stay in either exhibited to we the as a to generated income us meaningful environment. that are We -- inventory ultimately our significant do even for And lead build earnings up If from

with we way, what really trillion the interest we So outlook the discussed a trillion slightly could great the year. end in mid on market as a for next ranging happens we think company. to $X from depending below But I lower $X probably either up see previously, have rates

Operator

Bose Your next George question line with from the of comes KBW.

Bose George

this MSR recently. back that you've been Actually, The quarter, hedge. I targeting covered to mean, MSR higher wanted to pretty historically, levels close to it mark, was but go I the hedge XX%. your level

this relative to So the performance discuss expectations? just your can quarter you hedge

Daniel Perotti

The before from cited, about the what value with MSR. I terms Bose. in The covered costs. MSR That of hedge in in hedge targeting. we the were as XX% insulating the the Sure, change change overall was line

didn't we than earnings call higher lot that. XX%, the said for lower I targeting think quarter, really, further the rates down Fed financing well its slightly during when a down meaning curve, a short very long until What as as quarter quarter. end inversion was see the of did we moved that during the the in of pretty the the given volatility level significant interest down -- the the lowered the rates we of or XX%, on the and the XX%, from we so rate see quarter, quarter coverage going rates yield go target last to

through quarter. I quarter. over flowed So volatility covering, and think, implied exceeded X% A see that the basis was covered, I over mentioned years our range costs points during of XX the XXX We normal during think, basis did in hedge that XXX X% option costs. to I lot

through so versus adjust are move looking as our how our periods, the hedge to at And we we we we coverage. overall how next several continue cost

As we very fourth rates short move the deinvert we've somewhat. -- seen of we've that long rates, seen rates into quarter,

hedge seen we're our continuing still costs our target coverage to of normal We've into overall come XX%. down around back range, and

And the think, a story those the was but have recently at come quarter. seen protection back targeted, as operated cost a as for long have it seen here hedge than of a fourth level we short, similar higher costs would protection, expected into overall the so in we've we range or

Bose George

related question. Okay. Great. And actually, just then a

target those So costs come the that ROE. for time? essentially GAAP your -- line your -- operating as we ROEs in your should you assume be should GAAP just ROEs are down, targeted will your Is X about be the talked that same hedge over

Daniel Perotti

of in interest hedge, where range. the talked of the get the interest the goes X% -- as somewhat other And hedge to seen rate actually instances X% different We've factors we way. paid environment. it's we've about, it that speaking, on costs and we factors to Generally there different had rates, dependent

fairly closely. probably we periods probably hedge converge time, longer there those is cost amount that some may expect time. of be There generally exists over would of to over So

generally ROE fairly GAAP could ROE. those So should lower slightly be operating the than be speaking, But close. X

Operator

from Michael with of Wells Kaye line question Fargo. next comes Your the

Michael Kaye

Has any anything note thoughts? that we just higher borrowers refi had refi for where boom to more surprised rate you that X.X with example, that the months, mini likely

David Spector

example, -- our look, loans, of, I'll get I se. encouraged the to we don't on borrowers I saw quarter and I call -- was the and us seen. in think surprised think thing the traffic quarter by in I center, don't per I for to that tell ago, had executing amount increase $XX million. a you, that just the ability block surprised is thought in anything refinances locks were take was the jumbo the think activity the really impressive flywheel for I that, me way, year really a We in we've inbound our

This production XX% seeing I back. as total we're stepping was $X were they quarter, think billion. banks of And broker -- we're

we're to that starting interesting. to driving take think, gains share really I was to So -- thought was And also, that see in broker. that place that me what's I speaks the

consumer that, of the speaks to I holding to think tripling and bit. are the really the to of large, by kind of in power me, And a nice going kind flywheel. I margins it's production of check direct think up and

we And is account as holes team so the is of as we of that production get of front. talk produce this profitability, up, to to think a take have about the delivered we on about to into often engine the we X and levels going and that's asset opened that the high hedging that things

good it for was very thought quarter I us. So a

Michael Kaye

that? previously happen know the the opportunity? I remarks. give QX, about talked to update think expecting deals that don't Do subservicing about prepared heard some excited I happen a you still if Any in update. in wondering to I expect was and anything you to subservicing I you just

David Spector

we do, do. We

to diligence interest it is getting customers the We're take I I But or of, things. a to of a We we're by the word's clients. out of or month It's say, report terms X -- getting technology. And in getting the lot that to in to discussions out year-end. because things or look, X close Nothing a lot have to a line. that them. in really going larger onboard smaller with think are in of yet there expect few X would of finish terms

reduction quarter, XXX see of program, VAS that seeing negative expenses the we close seems ] introduced which [ there $XXX able $X servicing we're one, we're totaling had then to to mark Number a you loans as sell last UPB in BA a million back the on every million. and to really in the like we quarter,

the we the And people with what and yet. getting ones And so it see do -- of shows And power program. too think were the way, look, that really the I it we're many subservicing think I we're with first technology. inquiry I just to some don't But technology. are able good by opportunity. others inbound think out into VAS the the the out

X and the end we'll the So to hopeful able we'll inked, have that customers look, I'm of to X be that by smaller then grow year, or continue business.

Operator

from line with comes Mark DeVries Your of next question the Deutsche Bank.

Mark DeVries

year-over-year. us You as nice just about natural you some could in Direct. a share signing up could XX% signed up what run we to ramping rate? of signed ones between just of kind in other is And other someone of any you've was highlighted, out also future to getting point think approved of a you been expect like to kind help recently through Broker sense brokers talk there? the on And maybe kind had hoping gains there lag you've the and size share the gains is brokers presentation, full of

David Spector

great job really have making in -- doing and that a And are case are we're an after is our understanding alternative X another doing exclusive on who brokers the one the X basis. that look, at need you minimum. a team going second a they Look, numbers

got opportunity. technology. that we've coming in provide will spent in the time great support And our be We've out final years And The developing over QX. of piece so lot we're a that X brokers. tech able to last

growth as expecting our pretty sales in adding existing is don't a there continue as to team good be force pace, pretty markers share too a myself Our I've on far want way. per about putting the in we're to in share past, I here understands meaningful of who do out have to basis. vocal brokers at been and and ahead large by a I that volumes the quarter-by-quarter

But option, second we jumbo meaningful. is second I brokers that providing product fact is have launched the We've the think that strong end into broker channel. need execution closed a the fact that that consistent And I not I at tech in our look X just versus we tech. our tech by in if organizations the #X the X well-run And very as that's and slots. better, good, think provided are

So I am in channel. highly encouraged seeing by what I'm that

Mark DeVries

then, Got commentary quarter could you I fourth segment. it. And the think Dan, I hoping some I provided repeat the that? -- clarify, missed you was you on Could just forward-looking for production

Daniel Perotti

terms a still in high for purchasing with volume We're in over didn't give we to in probably anything terms left lag seeing production the we what loans. But loans to of bit terms amount rest quarter, the third be segment. go. little positive sort some effects rates overall of still of overall expect say quarter quarter since We lot tends of for So and from that -- of refinanced that -- availability teens the for in total that's specific production to be to correspondent with production. overall, that certain in the that the of guidance did our of carrying a I the operating closed range a on on depending happens of for

the quarter. quarter. the seen saw expect rates and we've and the as on same still depending production the to that backup But meaningful levels income be might strong not third in in we what do we be So fourth at

Operator

next comes the Your Ma Barclays. Terry from of question line with

Terry Ma

about Can X held last next basis kind the So sustainable about at up? delinquencies your even is margins into that continue of servicing tick steady year as talk maybe you kind just points quarters. of how to

Daniel Perotti

Sure.

similar that So into over a do the overall, quarters last expect to several ability we I maintain the level as to it XXXX. margin, moving maintain and think we're we've shown at

our in last of portfolio. time increase ability contribute get I expense combination proprietary we could driven you time side that's servicing down to and the that reduction shown -- flip through and including pick over the few to -- the that bit that scale we continue a the As of XX% costs our we up those operating of our that terms SSE, see by as drive expense extent over years. both in do through we've operating is our growing our servicing that somewhat delinquencies think to efficiency And servicing then over enhancements the platform, that

So I the of even that we we necessarily think enhancements efficiency offsets meaningful uptick really a a expecting those delinquencies in we're not combination see expecting in to from see extent do say of or we uptick and on and the -- I not year, continued those an potentially next bit delinquency factors depending what we're should see next year.

the down continue absent we that, absent to to So able costs through year. an as uptick, next we be move we'd think drive

Terry Ma

talk your and And the competitive you the quarter also channel correspondent margins up few that well it. on third share last seen Can about pressures you've pretty mentioned have quarters. in of spite quarter? in some in held production, then in the for market you've fourth the early in just what and Got of maybe

David Spector

in -- look, that, irrational there's would some I pricing. a in point, size the we ago, do quarter, that managed think can up scale I We've of margins can as it well a way. the as given look, And obviously grow continue profitability meaningful this and share. last to share I a period your Look, amount stay up of to to in on we say -- were that pretty QX. decent to want continue strong. we've a maintaining think we from focused much margins to market, We're keep to were share. We flat year

knows bid I in that going out we're the to But the every going market the day. there. be We're think to be market that consistent

in less we're base bit still getting and really at -- back by increase large, correspondent pricing, share correspondent Q-over-Q in we're locks -- I'm that. we a But strongly -- and I to if our run XX% our still we're XX% in to pleased back little than to XXX. seller fall in think -- closer below so And with and fundings we're irrational there above that and may that there. holding see the in is up But and again, were close we

And so in have we it's that industry-leading an still powerhouse correspondent.

Operator

Trevor the comes question from next of with Your JMP. Cranston Citizens line

Trevor Cranston

couple chart operating that where forward, say a a the of the pretty on efficiencies can few you little do expenses out improvement of on comes we're the there at you improvement at guess on the lower a to would think on you been side? board last as of some level and point Slide servicing servicing starts as years bit? over realistically get How new expense look Or X, I next consistent think the you technology the years. the board? Looking over there's much

Daniel Perotti

Sure.

achieve set So to that continued the set in and floor as still that we're do expense going is a room necessarily, want but think continue well could and we operating but both at combination of We over there's meaningful a we metric progress run down through way. don't a a lot to think that to a increased may -- lot we left operating pretty there as looking to at past which we of want substantial, don't significant servicing to runway, really in clip we efficiencies. what think on is terms scale specific of that amount of it of a efficiencies continuing yes, a years, seen few quite drive be not to the we've

through can next over at We that be several that as we there's operating meaningful that move down to next continue a time. X but could move in way That's achieved further year, least reduction going be not periods. the all expense in metric to we believe

Operator

Your line Sommers Derek next comes from of with question the Jefferies.

Derek Sommers

think that the attributed the variable you remarks, gap at your the of market production continues volume-related to plugging in expenses, channel. looking I consumer Broker expenses Just And channel Direct we should direct there, as gain share? prepared kind to how of about think kind increase or the

Daniel Perotti

around we've -- the points, guess expenses what broker sort variable Our in of previously it the of terms midrange on think the way in overall the about mid of mid-range digits. is or basis double say, -- to disclosed is really I side

scale that get So to should we -- we from that meaningful as increase, channel. continue

expense are we the that's side. As David on probably mentioned, variable

We our platform are to there. continuing overall grow

as on that meaningful way And so you up in standpoint, sort we're the in as variable from But to expect. share additional would a it we're to as all resources grow realized as would be we what of may channel. continuing bringing that's ramp a see pure not

Derek Sommers

on volume reversion we of to of to to mix Direct filter Consumer kind expectations, expect to of then lien kind are a And kind of over from XQ? going back product it. do more second mix? you XQ Or the see Got

Daniel Perotti

rates If back expect second higher, of we reversion would more bit a lien a to stay a of mix.

back higher volatility So of the the channel shift dips refinances strategy able between refinances. decrease. rate to the second those liens see as a and rotating in bit it refinances as our rate the is products of rates toggle first maintain toward rates, when environment really being in be rates a then a between our dependent. more interest bit lien and and part If interest would decrease or we will that's or rate lien by and capacity -- we first see we And discussed,

Operator

Your next question comes of Eric from BTIG. Hagen with the line

Fiorino of comes with [ Brian Your the from question Wedbush. line next ]

Unknown Analyst

Great.

some that we get have something one expectations could quarter. year? to of ROE short-term quick how decline business be does trends on the for I impact me. there's your on into custodial earnings. a into probably And know declines factor on just fourth in if one next I that rates. for do next how servicing in that an seasonal see year, steeper Is part profitability? thoughts wanted view your balance Just that the going to

Daniel Perotti

repeat Brian, that? could you

Unknown Analyst

Yes.

earnings see the in balance servicing Just impact of terms bigger could on that in short-term profitability do we next if how year? a custodial views decline rates

Daniel Perotti

Sure.

and see you sort it some our there, has impact. rate of So would next that see that and an to the that terms somewhat offsetting short-term rates earnings we custodial in also short-term what on the can we which is that would driven see earning somewhat extent a we've balances floating reduction well, the see impact this as which decline in generally see rates. we We year debt of by driven expense in quarter or been of

into relating our aspect to flow. to other is take of servicing The realization cash account

any what of the that asset that's off project flows in amortization servicing we realization our out cash at line, sort cash our should So part of the flows of period, what fall flows when given really for look into and servicing line.

And cash any so short-term of lower realization be lower flows. period, yield flow our to since terms of that realized we maintaining result flow amount of least in projected are given what lower over cash time would drive at a given projecting in cash which has lower would recently forward in a the a rates curve

the the those X we say. should would to So custodial expect offset I lower balances, balances custodial impacts, earnings lower on or

Operator

Sienna from Barclays. Your comes line question the with [ of ] Chu next

Unknown Analyst

It year. and remains just next by sequential gives cited what the and I increase forward kind question, basis in a Ginnie basis ] delinquencies don't [ of within going you you rates recent points XX Mae in increased you more expected prior formation Can meaningful in confidence originations points delinquencies levels delinquencies elevated? FHA know mentioned drove of in what for stay comment on on USDA looks it that if on uptick and like XX that portfolios. you expect sequentially a you delinquency

David Spector

because lot I with very, combined where the would increase that, in rates state or I the in call in the would Fridays on to does I gives I to X me get continue noise are month servicing. days say, lack think supply those delinquency me, month what a in terms many think in the And there paid and other a the of month has profitability low are with, at say business continued one, -- very would remain by the levels. that people in that, of the delinquency of how the to given Friday. Or marketplace, many the confidence economy, delinquency large, do great that how a example, we end? around for every of

get -- Fannie, homes find with amount USDA, of borrowers VA, borrowers we do for to in programs ultimate until tremendous their Freddie, the forbearance feet. on who back goal that by keep offered think really their can I they themselves struggling, there FHA, are a

think are do learned homes. servicing opportunity every that the lessons great provide case, give issues financial who of marketplace, given great In be dispositions the into the that's crisis the to not clearly supply their lower go help for that's the continue I foreclosure. of borrowers we costs in in orderly expected to which want will borrowers X the to event to stay

of think rate And also by in mortgages low large, stories. one the so And the fact great there's marketplace. and I so then lien it's first many the

the the slim we're given alternatives what below the borrowers if and alternatives. mortgages pretty for seeing So rental are X%, in markets they are

terms of is think in staying homes do. they top want their at in list I what to probably their that the of

monthly, these that and I expect large, by So think that at but see I quarterly, run we'll some levels. they'll low continue gyrations historically to

Unknown Analyst

Great. we for X/X% but And think X the low are fairly one current. in refinancing last me. How then October coupon, they're mean I should about those bond XXXX. now

think about going forward? we So costs financing should how

David Spector

Sure.

that maturity year we've mentioned, next X later X/X% in the got you for as So the bond year.

are that next is it through coupon. as will there a looking issue be be we to good bond. debt we're refinance to and to As if mentioned, But at you see opportunities moving the few attractive able pretty through quarters, XXXX

the $X.X available billion example, in of we available, it. on And of amounts liquidity capacity have, to a necessarily against do we have We as we our to amount rush for secured lines remarks, significant and not are which so available drawn refinance on. a capacity really committed our be prepared mentioned in MSRs, including

an we to to but -- don't extent lines that between be to maturity to the we an those do attractive to on refinance expectation retire to our is debt the don't would the it we opportunity refinance, we have that opportunity issue issue that's If So or that before issue. ability opportunity draw able an and see see maturity. if at now then, to the

Operator

for no have questions now over to I'll it back We further time. Spector at Mr. turn remarks. this closing

David Spector

to us I'd like everyone you. thank on for today Well, this thank call. joining

thank have Relations you questions. our us. And again, any you will always, be your for and as availability department, to please contact joining those Investor additional to answer free questions, If feel at we

Operator

This disconnect. now concludes today's call. conference you and for you Thank may participation, your

PennyMac Financial Services (PFSI) 22 Oct 242024 Q3 Earnings call transcript