February 26, 2021

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PennyMac Financial Services, Inc. Reports Fourth Quarter and Full-Year 2020 Results and Increases Quarterly Dividend

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WESTLAKE VILLAGE, Calif.–(BUSINESS WIRE)–PennyMac Financial Services, Inc. (NYSE: PFSI) today reported net income of $452.8 million for the fourth quarter of 2020, or $5.97 per share on a diluted basis, on revenue of $1.0 billion. Book value per share increased to $47.80 from $41.67 at September 30, 2020.

PFSI’s Board of Directors declared a fourth quarter cash dividend of $0.20 per share, a 33 percent increase from the prior quarter, payable on February 25, 2021, to common stockholders of record as of February 12, 2021.

PFSI’s Board of Directors also approved an increase to its stock repurchase authorization from $500 million to $1.0 billion of outstanding common stock.

Fourth Quarter 2020 Highlights

  • Pretax income was $617.2 million, down 15 percent from the prior quarter and up 204 percent from the fourth quarter of 2019

    • Strong earnings driven by core production and servicing results partially offset by fair value losses on mortgage servicing rights (MSRs) and associated hedging and other losses
    • Repurchased approximately 1.6 million shares of PFSI’s common stock for an approximate cost of $89.3 million
  • Production segment pretax income was $572.6 million, down 7 percent from the prior quarter and up 182 percent from the fourth quarter of 2019, driven by strong performance across all channels

    • Direct lending interest rate lock commitments (IRLCs) were a record $18.6 billion in unpaid principal balance (UPB), up 13 percent from the prior quarter and 158 percent from the fourth quarter of 2019

      – $12.8 billion in UPB of IRLCs in the consumer direct channel; $5.7 billion in UPB of IRLCs in the broker direct channel
    • Government correspondent IRLCs totaled $19.7 billion in UPB, down 2 percent from the prior quarter and up 22 percent from the fourth quarter of 2019
    • Total loan acquisitions and originations were a record $69.4 billion in UPB, up 28 percent from the prior quarter and 64 percent from the fourth quarter of 2019
    • Correspondent acquisitions of conventional loans fulfilled for PennyMac Mortgage Investment Trust (NYSE: PMT) were $38.0 billion in UPB, up 39 percent from the prior quarter and 85 percent from the fourth quarter of 2019
  • Servicing segment pretax income was $42.0 million, down from pretax income of $111.7 million in the prior quarter and up from a pretax loss of $5.1 million in the fourth quarter of 2019

    • Pretax income excluding valuation-related items was $234.3 million, up 230 percent from the prior quarter and 499 percent from the fourth quarter of 2019, driven by continued loss mitigation activities related to COVID-19
    • Valuation items included:

      – $44.2 million in MSR fair value losses driven by faster-than-expected prepayment speeds and $102.5 million in hedging and other losses; net impact on pretax income related to these items was $(146.6) million and on earnings per share was $(1.42)

      – A $45.6 million provision for credit losses on active loans related to COVID-19
    • Servicing portfolio grew to $426.8 billion in UPB, up 6 percent from September 30, 2020 and 16 percent from December 31, 2019, driven by record production volumes offsetting elevated prepayment activity
  • Investment Management segment pretax income was $2.6 million, down from $3.3 million in the prior quarter and $5.2 million in the fourth quarter of 2019

    • Net assets under management (AUM) were $2.3 billion, up 1 percent from September 30, 2020

Notable activity after quarter-end:

  • Repurchased an additional approximately 1.1 million shares of PFSI’s common stock for an approximate cost of $66 million through February 3, 2021

Full-Year 2020 Highlights

  • Pretax income of $2.2 billion, up 323 percent from the prior year and the highest level on record for PennyMac Financial

    • Diluted earnings per share of $20.92, up from $4.89 in 2019 and also a record
  • Total net revenue of $3.7 billion, up 151 percent from the prior year
  • Repurchased approximately 8.9 million shares of PFSI’s common stock, or approximately 11 percent of the total outstanding at the beginning of the year, for an approximate cost of $337 million
  • Record loan production of $196.6 billion in UPB, an increase of 67 percent from the prior year

    • $36 billion in UPB of originations in the direct lending channels, up 163 percent from 2019
  • Servicing portfolio UPB of $426.8 billion at year end, up 16 percent from December 31, 2019

“PennyMac Financial delivered another strong quarter,” said President and CEO David Spector, “with book value per share increasing 15% on record production levels. PFSI’s third quarter momentum carried into the fourth quarter with net income near record levels and producing a return on equity of 56% for the quarter. Our direct lending channels showed incredible growth with consumer direct and broker direct originations growing 27% and 29%, respectively. Our modest market share in both of these channels provides ample room for growth and with foundational investments made in technology and back office fulfillment, we are well positioned to scale those businesses. As we grow our origination business we are organically increasing our servicing portfolio, which ended the year at over $426 billion in unpaid principal balance. This portfolio growth contributed to strong servicing income and, when excluding valuation-related items, resulted in record pretax income for the fourth quarter. All of this while helping thousands of borrowers who were affected by COVID-19 exit successfully from their forbearance plans.”

Mr. Spector continued, “The outstanding fourth quarter was the culmination of a remarkable year for PennyMac Financial. Funding nearly $200 billion in unpaid principal balance and ending the year with a servicing portfolio of nearly 2 million customers, 2020 was certainly a record year for PFSI. We also successfully protected our asset values as our disciplined hedging and risk management strategy largely offset the $1 billion write-down on the fair value of the MSR. Additionally, we granted approximately 291 thousand homeowners forbearance plans in 2020 and have helped, or are in the process of helping, approximately 145 thousand borrowers successfully emerge from their forbearance plans. This was all done while the vast majority of our employees were working from home for most of the year. I am incredibly thankful and proud of the over 6,000 PennyMac employees who managed through the challenges of the pandemic to deliver extraordinary results. We believe we are well positioned to continue our success and expect the Company’s exceptional financial performance to persist through 2021.”

Mr. Spector concluded, “All of us at PennyMac are grateful for the many kind thoughts and tributes we have received since announcing the sad passing of Stan Kurland, our founder and Chairman. While Stan had retired from day-to-day responsibilities at PennyMac, he remained a trusted advisor and dear friend. His leadership helped lay the foundation for PennyMac’s long-term success which included building and developing a deep management team that carries on his legacy.”

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

Quarter ended December 31, 2020
Mortgage Banking Investment
Management
Production Servicing Total Total
(in thousands)
Revenue
Net gains on loans held for sale at fair value

$

659,915

 

$

199,146

 

$

859,061

 

$

 

$

859,061

 

Loan origination fees

 

93,460

 

 

 

 

93,460

 

 

 

 

93,460

 

Fulfillment fees from PMT

 

72,606

 

 

 

 

72,606

 

 

 

 

72,606

 

Net loan servicing fees

 

 

 

26,496

 

 

26,496

 

 

 

 

26,496

 

Management fees

 

 

 

 

 

 

 

8,687

 

 

8,687

 

Net interest expense:
Interest income

 

29,765

 

 

44,427

 

 

74,192

 

 

 

 

74,192

 

Interest expense

 

31,036

 

 

62,612

 

 

93,648

 

 

5

 

 

93,653

 

 

(1,271

)

 

(18,185

)

 

(19,456

)

 

(5

)

 

(19,461

)

Other

 

212

 

 

111

 

 

323

 

 

974

 

 

1,297

 

Total net revenue

 

824,922

 

 

207,568

 

 

1,032,490

 

 

9,656

 

 

1,042,146

 

Expenses

 

252,276

 

 

165,547

 

 

417,823

 

 

7,097

 

 

424,920

 

Pretax income

$

572,646

 

$

42,021

 

$

614,667

 

$

2,559

 

$

617,226

 

Production Segment

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

PennyMac Financial’s loan production activity for the quarter totaled $69.4 billion in UPB, $31.4 billion of which was for its own account, and $38.0 billion of which was fee-based fulfillment activity for PMT. Correspondent government and direct lending IRLCs totaled $38.3 billion in UPB, up 5 percent from the prior quarter and 64 percent from the fourth quarter of 2019.

Production segment pretax income was $572.6 million, down 7 percent from the prior quarter and up 182 percent from the fourth quarter of 2019. Production revenue totaled $824.9 million, down 2 percent from the prior quarter and up 134 percent from the fourth quarter of 2019. The quarter-over-quarter decrease was primarily driven by a $40.9 million decrease in net gains on loans held for sale. The decrease was driven by lower production margins and was offset by a $17.9 million increase in loan origination fees and a $17.8 million increase in fulfillment fees, driven by record volumes across all channels.

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

Quarter ended
December 31,
2020
September 30,
2020
December 31,
2019
(in thousands)
Receipt of MSRs and recognition of MSLs in loan sale transactions

$

367,501

 

$

245,946

 

$

328,182

 

Mortgage servicing rights recapture payable to PennyMac Mortgage Investment Trust

 

(11,868

)

 

(9,776

)

 

(2,624

)

Provision of liability for representations and warranties, net

 

(4,667

)

 

(2,746

)

 

(1,583

)

Cash gain (1)

 

459,887

 

 

533,292

 

 

4,694

 

Fair value changes of pipeline, inventory and hedges

 

48,208

 

 

88,553

 

 

(71,182

)

Net gains on mortgage loans held for sale

$

859,061

 

$

855,269

 

$

257,487

 

Net gains on mortgage loans held for sale by segment:
Production

$

659,915

 

$

700,830

 

$

227,751

 

Servicing

$

199,146

 

$

154,439

 

$

29,736

 

 
(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 $72.6 million in the fourth quarter, up 32 percent from the prior quarter and up 25 percent from the fourth quarter of 2019. The quarter-over-quarter increase in fulfillment fee revenue was driven primarily by a 39 percent increase in acquisition volumes by PMT slightly offset by a decrease in the weighted average fulfillment fee rate to 19 basis points from 20 basis points in the prior quarter.

Net interest expense totaled $1.3 million, down from net interest income of $7.7 million in the prior quarter and net interest income of $2.9 million in the fourth quarter of 2019.

Production segment expenses were $252.3 million, up 12 percent from the prior quarter and 68 percent from the fourth quarter of 2019, as a result of record volumes across all channels.

Servicing Segment

The Servicing segment includes income from owned MSRs, subservicing and special servicing activities. Servicing segment pretax income was $42.0 million, versus pretax income of $111.7 million in the prior quarter and a pretax loss of $5.1 million in the fourth quarter of 2019. Servicing segment net revenues totaled $207.6 million, down 23 percent from the prior quarter and up 65 percent from the fourth quarter of 2019. The quarter-over-quarter decrease was driven by lower net loan servicing fees.

Revenue from net loan servicing fees totaled $26.5 million, down from $132.8 million in the prior quarter, as a result of higher net valuation related losses. Revenue from net loan servicing fees included $262.7 million in servicing fees, reduced by $89.6 million from the realization of MSR cash flows. Net valuation-related losses totaled $146.6 million, and included MSR fair value losses of $44.2 million, and hedging and other losses of $102.5 million.

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

Quarter ended
December 31, 2020 September 30, 2020 December 31, 2019
(in thousands)
Loan servicing fees (1)

$

262,740

 

$

250,368

 

$

234,871

 

Changes in fair value of MSRs and MSLs resulting from:
Realization of cash flows

 

(89,611

)

 

(90,187

)

 

(113,102

)

Change in fair value inputs

 

(44,163

)

 

(37,030

)

 

160,611

 

Change in fair value of excess servicing spread financing

 

6,677

 

 

3,135

 

 

(2,263

)

Hedging (losses) gains

 

(109,147

)

 

6,521

 

 

(192,386

)

Net change in fair value of MSRs and MSLs

 

(236,244

)

 

(117,561

)

 

(147,140

)

Net loan servicing fees

$

26,496

 

$

132,807

 

$

87,731

 

 
(1) Includes contractually-specified servicing fees

Servicing segment revenue included $199.1 million in net gains on loans held for sale related to reperforming government-insured and guaranteed loans, up significantly from $154.4 million in the prior quarter and $29.7 million in the fourth quarter of 2019, as a result of increased loss mitigation activity on loans emerging from forbearance. These previously delinquent loans were purchased out of Ginnie Mae securitizations and brought back to performing status through PennyMac Financial’s successful servicing efforts, primarily through loan modifications or FHA Partial Claims. With respect to the FHA Partial Claims, the reperforming loans must remain current for a minimum of six months to be eligible for resecuritization. Net interest expense totaled $18.2 million, versus net interest expense of $17.9 million in the prior quarter and net interest income of $8.0 million in the fourth quarter of 2019. Interest income was $44.4 million, up from $26.9 million in the prior quarter, driven by the increase in interest received on loans bought out in prior periods. Interest expense was $62.6 million, up from $44.9 million in the prior quarter driven by the financing of increased balances of loans purchased out of Ginnie Mae securitizations.

Servicing segment expenses totaled $165.6 million, up 4 percent from the prior quarter driven by portfolio growth.

The total servicing portfolio grew to $426.8 billion in UPB at December 31, 2020, an increase of 6 percent from September 30, 2020 and 16 percent from December 31, 2019. PennyMac Financial subservices and conducts special servicing for $174.4 billion in UPB, an increase of 11 percent from September 30, 2020 and 29 percent from December 31, 2019. PennyMac Financial’s owned MSR portfolio grew to $252.3 billion in UPB, an increase of 3 percent from September 30, 2020 and 8 percent from December 31, 2019.

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

December 31, 2020 September 30, 2020 December 31, 2019
(in thousands)
Prime servicing:
Owned
Mortgage servicing rights
Originated

$

196,873,590

$

187,134,080

$

166,188,825

Acquisitions

 

41,537,219

 

47,716,917

 

59,598,279

 

238,410,809

 

234,850,997

 

225,787,104

Mortgage servicing liabilities

 

2,857,492

 

1,799,562

 

2,758,454

Loans held for sale

 

11,063,938

 

8,749,673

 

4,724,006

 

252,332,239

 

245,400,232

 

233,269,564

Subserviced for PMT

 

174,360,317

 

156,425,439

 

135,288,944

Total prime servicing

 

426,692,556

 

401,825,671

 

368,558,508

Special servicing – subserviced for PMT

 

58,274

 

71,129

 

125,724

Total loans serviced

$

426,750,830

$

401,896,800

$

368,684,232

 
Loans serviced:
Owned
Mortgage servicing rights

$

238,410,809

$

234,850,997

$

225,787,104

Mortgage servicing liabilities

 

2,857,492

 

1,799,562

 

2,758,454

Loans held for sale

 

11,063,938

 

8,749,673

 

4,724,006

 

252,332,239

 

245,400,232

 

233,269,564

Subserviced

 

174,418,591

 

156,496,568

 

135,414,668

Total loans serviced

$

426,750,830

$

401,896,800

$

368,684,232

Investment Management Segment

PennyMac Financial manages PMT for which it earns base management fees and may earn incentive compensation. Net AUM were $2.3 billion as of December 31, 2020, up 1 percent from September 30, 2020, due to an increase in PMT’s book value primarily driven by the continued recovery in the fair value of its government sponsored enterprise credit risk transfer investments and strong correspondent segment results.

Pretax income for the Investment Management segment was $2.6 million, down from $3.3 million in the prior quarter and $5.2 million in the fourth quarter of 2019. Management fees, which include base management and performance incentive fees from PMT were $8.7 million, up from $8.5 million in the prior quarter and $10.3 million in the fourth quarter of 2019. Base management fees were $8.7 million, up from $8.5 million in the prior quarter and $8.4 million in the fourth quarter of 2019. Performance-based incentive fees were not earned in the fourth quarter and are not expected to be earned in the near-term due to the impact of PMT’s loss in the first quarter of 2020.

The following table presents a breakdown of management fees:

Quarter ended
December 31,
2020
September 30,
2020
December 31,
2019
(in thousands)
Management fees:
PennyMac Mortgage Investment Trust
Base

$

8,687

$

8,508

$

8,441

Performance incentive

 

 

 

1,873

Total management fees

$

8,687

$

8,508

$

10,314

 
Net assets of PennyMac Mortgage Investment Trust

$

2,296,859

$

2,281,266

$

2,450,916

Investment Management segment expenses totaled $7.1 million, up 10 percent from the prior quarter and 8 percent from the fourth quarter of 2019.

Consolidated Expenses

Total expenses were $424.9 million, up 8 percent from the prior quarter and 48 percent from the fourth quarter of 2019, driven by higher volumes of activity in the production segment and higher delinquency-related activity and provisions for credit losses in the servicing segment.

***

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 4, 2021.

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.

Founded in 2008, the company is recognized as a leader in the U.S. residential mortgage industry. For the twelve months ended December 31, 2020, PennyMac Financial’s production of newly originated loans totaled $197 billion in unpaid principal balance, making it the third largest mortgage lender in the nation. As of December 31, 2020, PennyMac Financial serviced loans totaling $427 billion in unpaid principal balance, making it a top ten servicer of loans in the nation.

Additional information about PennyMac Financial Services, Inc. is available at ir.pennymacfinancial.com.

Forward-Looking Statements

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,” “project,” “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: our exposure to risks of loss and disruptions in operations resulting from adverse weather conditions, man-made or natural disasters, climate change and pandemics such as COVID-19; failure to modify, resell or refinance early buyout loans; 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; 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; our substantial amount of indebtedness; 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; maintaining sufficient capital and liquidity to support business growth including compliance with financial covenants; 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 our 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 or expansion of new business activities or strategies; our ability to detect misconduct and fraud; our ability to mitigate cybersecurity risks and cyber incidents; 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.

This press release contains financial information calculated other than in accordance with U.S. generally accepted accounting principles (“GAAP”), such as pretax income excluding valuation items that provide a meaningful perspective on the Company’s business results since the Company utilizes this information to evaluate and manage the business. Non-GAAP disclosure has limitations as an analytical tool and should not be viewed as a substitute for financial information determined in accordance with GAAP.

 

PENNYMAC FINANCIAL SERVICES, INC.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

 
December 31, 2020 September 30, 2020 December 31, 2019
(in thousands, except share amounts)
ASSETS
Cash

$

532,716

$

529,166

$

188,291

Short-term investments at fair value

 

15,217

 

102,136

 

74,611

Loans held for sale at fair value

 

11,616,400

 

9,126,172

 

4,912,953

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

 

80,862

 

86,958

 

107,512

Derivative assets

 

711,238

 

578,254

 

159,686

Servicing advances, net

 

579,528

 

393,654

 

331,169

Mortgage servicing rights

 

2,581,174

 

2,333,821

 

2,926,790

Operating lease right-of-use assets

 

74,934

 

72,133

 

73,090

Investment in PennyMac Mortgage Investment Trust at fair value

 

1,105

 

991

 

1,672

Receivable from PennyMac Mortgage Investment Trust

 

87,005

 

122,478

 

48,159

Loans eligible for repurchase

 

14,625,447

 

17,183,873

 

1,046,527

Other

 

692,169

 

651,229

 

333,557

Total assets

$

31,597,795

$

31,180,865

$

10,204,017

 
LIABILITIES
Assets sold under agreements to repurchase

$

9,654,797

$

7,259,188

$

4,141,053

Mortgage loan participation and sale agreements

 

521,477

 

535,063

 

497,948

Obligations under capital lease

 

11,864

 

13,957

 

20,810

Notes payable secured by mortgage servicing assets

 

1,295,840

 

1,295,143

 

1,294,070

Unsecured senior notes

 

645,820

 

492,358

 

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

 

131,750

 

142,990

 

178,586

Derivative liabilities

 

42,638

 

24,537

 

22,330

Mortgage servicing liabilities at fair value

 

45,324

 

31,698

 

29,140

Operating lease liabilities

 

94,193

 

92,005

 

91,320

Accounts payable and accrued expenses

 

308,398

 

278,403

 

175,273

Payable to PennyMac Mortgage Investment Trust

 

140,306

 

77,136

 

73,280

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

 

35,165

 

35,784

 

46,158

Income taxes payable

 

622,700

 

673,149

 

504,569

Liability for loans eligible for repurchase

 

14,625,447

 

17,183,873

 

1,046,527

Liability for losses under representations and warranties

 

32,688

 

28,504

 

21,446

Total liabilities

 

28,208,407

 

28,163,788

 

8,142,510

 
STOCKHOLDERS’ EQUITY
Common stock—authorized 200,000,000 shares of $0.0001 par value; issued and outstanding 70,905,532, 72,400,490, and 78,515,047 shares, respectively

 

7

 

7

 

8

Additional paid-in capital

 

1,047,052

 

1,116,428

 

1,335,107

Retained earnings

 

2,342,329

 

1,900,642

 

726,392

Total stockholders’ equity

 

3,389,388

 

3,017,077

 

2,061,507

Total liabilities and stockholders’ equity

$

31,597,795

$

31,180,865

$

10,204,017

 

PENNYMAC FINANCIAL SERVICES, INC.

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

 
Quarter ended
December 31,
2020
September 30,
2020
December 31,
2019
(in thousands, except earnings per share)
Revenue
Net gains on loans held for sale at fair value

$

859,061

 

$

855,269

 

$

257,487

 

Loan origination fees

 

93,460

 

 

75,572

 

 

63,868

 

Fulfillment fees from PennyMac Mortgage Investment Trust

 

72,606

 

 

54,839

 

 

58,297

 

Net loan servicing fees:
Loan servicing fees

 

262,740

 

 

250,368

 

 

234,871

 

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

 

(127,097

)

 

(124,082

)

 

45,246

 

Hedging results

 

(109,147

)

 

6,521

 

 

(192,386

)

Net loan servicing fees

 

26,496

 

 

132,807

 

 

87,731

 

Net interest (expense) income:
Interest income

 

74,192

 

 

52,952

 

 

76,015

 

Interest expense

 

93,653

 

 

63,179

 

 

65,132

 

 

(19,461

)

 

(10,227

)

 

10,883

 

Management fees from PennyMac Mortgage Investment Trust

 

8,687

 

 

8,508

 

 

10,314

 

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

 

149

 

 

(288

)

 

39

 

Results of real estate acquired in settlement of loans

 

233

 

 

1,214

 

 

(648

)

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

 

280

 

 

 

 

379

 

Other

 

635

 

 

2,298

 

 

2,025

 

Total net revenue

 

1,042,146

 

 

1,119,992

 

 

490,375

 

Expenses
Compensation

 

187,807

 

 

202,440

 

 

141,009

 

Servicing

 

87,155

 

 

71,110

 

 

57,487

 

Loan origination

 

69,069

 

 

53,752

 

 

44,919

 

Technology

 

42,594

 

 

28,964

 

 

15,515

 

Professional services

 

19,853

 

 

18,307

 

 

10,983

 

Occupancy and equipment

 

8,535

 

 

8,491

 

 

7,841

 

Other

 

9,907

 

 

8,637

 

 

9,255

 

Total expenses

 

424,920

 

 

391,701

 

 

287,009

 

Income before provision for income taxes

 

617,226

 

 

728,291

 

 

203,366

 

Provision for income taxes

 

164,422

 

 

193,131

 

 

50,705

 

Net income

$

452,804

 

$

535,160

 

$

152,661

 

Earnings per share
Basic

$

6.31

 

$

7.39

 

$

1.95

 

Diluted

$

5.97

 

$

7.03

 

$

1.88

 

Weighted-average common shares outstanding
Basic

 

71,793

 

 

72,439

 

 

78,466

 

Diluted

 

75,898

 

 

76,138

 

 

81,076

 

Dividend declared per share

$

0.15

 

$

0.15

 

$

 

 

PENNYMAC FINANCIAL SERVICES, INC.

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

 
 
Year ended December 31,

 

2020

 

 

2019

 

 

2018

 

(in thousands, except earnings per share)
Revenue
Net gains on loans held for sale at fair value

$

2,740,785

 

$

725,528

 

$

249,022

 

Loan origination fees

 

285,551

 

 

174,156

 

 

101,641

 

Fulfillment fees from PennyMac Mortgage Investment Trust

 

222,200

 

 

160,610

 

 

81,350

 

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

 

814,646

 

 

730,165

 

 

585,101

 

From PennyMac Mortgage Investment Trust

 

67,181

 

 

48,797

 

 

42,045

 

Investment funds

 

 

 

 

 

3

 

Other fees

 

116,464

 

 

98,564

 

 

64,133

 

 

998,291

 

 

877,526

 

 

691,282

 

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

 

(1,477,023

)

 

(979,358

)

 

(124,844

)

Hedging results

 

918,180

 

 

395,497

 

 

(121,045

)

Net loan servicing fees

 

439,448

 

 

293,665

 

 

445,393

 

Net interest (expense) income:
Interest income

 

247,026

 

 

288,700

 

 

216,416

 

Interest expense

 

271,551

 

 

211,979

 

 

144,597

 

 

(24,525

)

 

76,721

 

 

71,819

 

Management fees, net:
From PennyMac Mortgage Investment Trust

 

34,538

 

 

36,492

 

 

24,465

 

From Investment Funds

 

 

 

 

 

4

 

 

34,538

 

 

36,492

 

 

24,469

 

Carried Interest from Investment Funds

 

 

 

 

 

(365

)

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

 

(453

)

 

416

 

 

332

 

Results of real estate acquired in settlement of loans

 

1,036

 

 

557

 

 

589

 

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

 

280

 

 

379

 

 

1,126

 

Other

 

6,737

 

 

8,880

 

 

9,253

 

Total net revenue

 

3,705,597

 

 

1,477,404

 

 

984,629

 

Expenses
Compensation

 

738,569

 

 

503,458

 

 

403,270

 

Servicing

 

256,934

 

 

164,697

 

 

137,104

 

Loan origination

 

219,746

 

 

117,338

 

 

27,398

 

Technology

 

112,570

 

 

67,946

 

 

60,103

 

Professional services

 

64,064

 

 

32,859

 

 

27,615

 

Occupancy and equipment

 

33,357

 

 

28,916

 

 

27,152

 

Other

 

39,748

 

 

32,746

 

 

34,290

 

Total expenses

 

1,464,988

 

 

947,960

 

 

716,932

 

Income before provision for income taxes

 

2,240,609

 

 

529,444

 

 

267,697

 

Provision for income taxes

 

593,725

 

 

136,479

 

 

23,254

 

Net income

 

1,646,884

 

 

392,965

 

 

244,443

 

Less: Net income attributable to noncontrolling interest

 

 

 

 

 

156,749

 

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

$

1,646,884

 

$

392,965

 

$

87,694

 

 
Earnings per share
Basic

$

21.91

 

$

5.02

 

$

2.62

 

Diluted

$

20.92

 

$

4.89

 

$

2.59

 

Weighted average shares outstanding
Basic

 

75,161

 

 

78,466

 

 

33,524

 

Diluted

 

78,728

 

 

81,076

 

 

35,322

 

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