PennyMac Financial Services, Inc. Reports First Quarter 2024 Results

Rhea-AI Summary

PennyMac Financial Services, Inc. reported net income of $39.3 million for Q1 2024, with revenue of $305.7 million. Book value per share decreased to $70.13. The company declared a cash dividend of $0.20 per share. Pretax income was $43.9 million. Total loan acquisitions were $21.7 billion. Servicing segment pretax income was $4.9 million. Investment Management segment pretax income was $3.1 million. The company's long track record of profitability and strong capital structure positions it for future growth.

Positive

• PennyMac Financial Services, Inc. reported a net income of $39.3 million for the first quarter of 2024, with revenue reaching $305.7 million.
• Book value per share decreased to $70.13 from $70.52 at the end of 2023.
• The company's Board of Directors declared a first-quarter cash dividend of $0.20 per share, payable on May 24, 2024.
• Pretax income for the quarter was $43.9 million, a significant improvement compared to a pretax loss of $54.2 million in the prior quarter.
• Total loan acquisitions and originations for PennyMac Financial Services, Inc. were $21.7 billion in unpaid principal balance (UPB), representing a decrease of 19 percent from the prior quarter and 5 percent from the first quarter of 2023.
• The Servicing segment reported a pretax income of $4.9 million, a notable improvement from a pretax loss of $95.5 million in the prior quarter.
• The Investment Management segment saw a pretax income of $3.1 million, up from $1.9 million in the prior quarter.
• PennyMac Financial Services, Inc. highlighted its strong operating earnings in the first quarter, with an annualized operating return on equity of 15 percent.
• The company's servicing portfolio grew to $617.4 billion in UPB, driven by production volumes that offset prepayment activity.
• PennyMac Financial Services, Inc. showcased a robust financial performance despite net fair value declines on mortgage servicing rights and hedges impacting results for the quarter.

Negative

• None.

Insights

Financial Analyst

PennyMac Financial Services, Inc.'s reported net income of $39.3 million for Q1 2024 signifies a substantial rebound from the previous quarter's pretax loss of $54.2 million and a modest improvement over Q1 2023's pretax income of $38.1 million. The notable uptick in the Production segment's income, which rose from a pretax loss to a gain of $35.9 million, could be attributed to increased activity in consumer and broker direct channels. However, investors should be cautious of the 19 percent decline in total loan acquisitions and originations from the previous quarter, suggesting potential volatility in production volume.

The Servicing segment's return to profitability, after a significant loss in the previous quarter, is a positive indicator for stability in the company's recurring revenue streams. The increase in the servicing portfolio to $617.4 billion in UPB may be seen as a sign of growing underlying asset value and future revenue potential, especially considering the current higher interest rate environment. However, the decrease in book value per share from $70.52 to $70.13 prompts a closer examination of shareholder value, specifically in terms of earnings dilution and capital management strategies.

Market Analyst

The broader implications of the reported 20 percent increase in broker direct IRLCs and the 31 percent year over year rise suggest a tactical shift towards these channels, which could be a strategic response to the competitive mortgage market landscape. On the flip side, the substantial 73 percent year over year drop in correspondent acquisitions for PMT is striking and indicates a contraction in this segment that investors should monitor for further implications on future earnings.

The Investment Management segment's consistent performance, with pretax income marginally increasing to $3.1 million, reflects a stable management fee income derived from PennyMac Mortgage Investment Trust. This stability is vital during times of market turbulence and provides a predictable income stream. The unchanged net assets under management further reinforce the notion of stability within this segment.

Risk Analyst

From a risk assessment perspective, the mixed results in the different segments of PennyMac's portfolio suggest a balanced but potentially vulnerable position. The $170.0 million in MSR fair value gains, juxtaposed with $294.6 million in hedging declines, illustrate the complex risk landscape that mortgage service providers navigate, particularly in environments of interest rate volatility. The reversal of provisions for losses on active loans to $6.6 million indicates a responsive risk management approach, yet the sensitivity of the company's performance to interest rate fluctuations and market dynamics necessitates continuous scrutiny.

Moreover, investors should consider the nuanced impacts of valuation-related items and non-recurring items on pretax income, which amounted to an impact of $(126.3) million. Such items can obscure the underlying performance and should be examined for their potential to affect future quarters.

WESTLAKE VILLAGE, Calif.--(BUSINESS WIRE)-- PennyMac Financial Services, Inc. (NYSE: PFSI) today reported net income of $39.3 million for the first quarter of 2024, or $0.74 per share on a diluted basis, on revenue of $305.7 million. Book value per share decreased to $70.13 from $70.52 at December 31, 2023.

PFSI’s Board of Directors declared a first quarter cash dividend of $0.20 per share, payable on May 24, 2024, to common stockholders of record as of May 14, 2024.

First Quarter 2024 Highlights

• Pretax income was $43.9 million, compared to a pretax loss of $54.2 million from the prior quarter and pretax income of $38.1 million from the first quarter of 2023
• Production segment pretax income was $35.9 million, down slightly from $39.4 million in the prior quarter and up from a pretax loss of $19.6 million in the first quarter of 2023
  • Total loan acquisitions and originations, including those fulfilled for PennyMac Mortgage Investment Trust (NYSE: PMT), were $21.7 billion in unpaid principal balance (UPB), down 19 percent from the prior quarter and 5 percent from the first quarter of 2023
  • Broker direct interest rate lock commitments (IRLCs) were $3.4 billion in UPB, up 20 percent from the prior quarter and 31 percent from the first quarter of 2023
  • Consumer direct IRLCs were $2.2 billion in UPB, up 35 percent from the prior quarter and down 2 percent from the first quarter of 2023
  • Government correspondent IRLCs totaled $8.5 billion in UPB, down 24 percent from the prior quarter and 18 percent from the first quarter of 2023
  • Conventional correspondent IRLCs for PFSI’s account totaled $8.6 billion in UPB, down 14 percent from the prior quarter and up 128 percent from the first quarter of 2023
  • Correspondent acquisitions of conventional conforming loans fulfilled for PMT were $1.8 billion in UPB, down 29 percent from the prior quarter and 73 percent from the first quarter of 2023
• Servicing segment pretax income was $4.9 million, compared to a pretax loss of $95.5 million in the prior quarter and pretax income of $57.4 million in the first quarter of 2023
  • Pretax income excluding valuation-related items and non-recurring items was $124.7 million, down 14 percent from the prior quarter as higher net loan servicing fees was more than offset by increased recognition of realization of cash flows
  • Valuation-related and non-recurring items included:
    • $170.0 million in mortgage servicing rights (MSR) fair value gains, before recognition of realization of cash flows, more than offset by $294.6 million in hedging declines
    • $1.6 million arbitration accrual
      • Net impact on pretax income related to these items was $(126.3) million, or $(1.74) in diluted earnings per share
    • $6.6 million of reversals of provisions for losses on active loans
  • Servicing portfolio grew to $617.4 billion in UPB, up 2 percent from December 31, 2023, and 9 percent from March 31, 2023 driven by production volumes which more than offset prepayment activity
• Investment Management segment pretax income was $3.1 million, up from $1.9 million in the prior quarter and $0.3 million in the first quarter of 2023
  • Net assets under management (AUM) were $2.0 billion, essentially unchanged from December 31, 2023, and March 31, 2023
• Issued new, 5-year $425 million term notes secured by Ginnie Mae MSR and servicing advances
  • Redeemed $425 million of term notes due August 2025

“PennyMac Financial reported strong operating earnings in the first quarter, with an annualized operating return on equity of 15 percent in what is expected to be the one of the smallest quarterly origination markets of this cycle,” said Chairman and CEO David Spector. “Strong volume increases in our consumer and broker direct channels drove continued profitability in our production segment. Although net fair value declines on MSRs and hedges impacted our results this quarter, our large and growing servicing portfolio continues to anchor our financial performance, contributing meaningfully to revenue and cash earnings in this higher interest rate environment.”

Mr. Spector continued, “Our long track record of profitability and strong capital structure has enabled this management team to continue developing industry-leading mortgage banking technology. Our proprietary servicing system provides both competitive advantages and opportunities for expansion into additional businesses, which we believe has the potential to unlock additional value for our stakeholders over time. PennyMac Financial has developed into one of the premier mortgage banking companies in the country, distinguished by its balanced business model with leading positions in both loan production and servicing, and I believe we are the best-positioned company in the industry for future growth regardless of the path of interest rates.”

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

	Quarter ended March 31, 2024
	Mortgage Banking												Investment Management
	Production				Servicing				Total								Total
	(in thousands)
Revenue
Net gains on loans held for sale at fair value	$	141,431			$	21,010			$	162,441			$	-			$	162,441
Loan origination fees		36,371				-				36,371				-				36,371
Fulfillment fees from PMT		4,016				-				4,016				-				4,016
Net loan servicing fees		-				100,954				100,954				-				100,954
Management fees		-				-				-				7,188				7,188
Net interest expense:
Interest income		63,931				92,411				156,342				84				156,426
Interest expense		61,896				103,873				165,769				-				165,769
		2,035				(11,462	)			(9,427	)			84				(9,343	)
Other		818				1,096				1,914				2,119				4,033
Total net revenue		184,671				111,598				296,269				9,391				305,660
Expenses		148,779				106,662				255,441				6,336				261,777
Income before provision for income taxes	$	35,892			$	4,936			$	40,828			$	3,055			$	43,883

Production Segment

The Production segment includes the correspondent acquisition of newly originated government-insured and certain conventional conforming 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 $21.7 billion in UPB, $19.9 billion of which was for its own account and $1.8 billion of which was fee-based fulfillment activity for PMT. Correspondent locks for PFSI and direct lending IRLCs totaled $22.6 billion in UPB, down 12 percent from the prior quarter and up 20 percent from the first quarter of 2023.

Production segment pretax income was $35.9 million, compared to $39.4 million in the prior quarter and a pretax loss of $19.6 million in the first quarter of 2023. Production segment revenue totaled $184.7 million, up 5 percent from the prior quarter and 52 percent from the first quarter of 2023. The increase from the prior quarter was primarily due to higher net gains on loans held for sale at fair value due to higher volumes in the direct lending channels, and the increase from the first quarter of 2023 was primarily due to higher overall volumes and margins.

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

	Quarter ended
	March 31, 2024				December 31, 2023				March 31, 2023
	(in thousands)
Receipt of MSRs	$	412,520			$	549,965			$	286,533
Mortgage servicing rights recapture payable to PennyMac Mortgage Investment Trust		(353	)			(290	)			(485	)
Provision for representations and warranties, net		(632	)			(1,002	)			(290	)
Cash loss, including cash hedging results		(158,971	)			(606,160	)			(271,524	)
Fair value changes of pipeline, inventory and hedges		(90,123	)			206,252				90,151
Net gains on mortgage loans held for sale	$	162,441			$	148,765			$	104,385
Net gains on mortgage loans held for sale by segment:
Production	$	141,431			$	124,267			$	74,726
Servicing	$	21,010			$	24,498			$	29,659

PennyMac Financial performs fulfillment services for certain 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 $4.0 million in the first quarter, down 19 percent from the prior quarter and 66 percent from the first quarter of 2023. The decrease from the first quarter of 2023 was driven by lower conventional volumes acquired for PMT’s account. PFSI began acquiring certain conventional loans sourced through PMT’s correspondent production business in the fourth quarter of 2022.

Net interest income in the first quarter totaled $2.0 million, down from $8.2 million in the prior quarter. Interest income totaled $63.9 million, down from $73.4 million in the prior quarter, and interest expense totaled $61.9 million, down from $65.2 million in the prior quarter, both primarily due to lower average balance of loans held for sale and the associated financing during the quarter.

Production segment expenses were $148.8 million, up 8 percent from the prior quarter and 5 percent from the first quarter of 2023, both primarily due to higher overall loan volumes in the direct lending channels.

Servicing Segment

The Servicing segment includes income from owned MSRs and subservicing. The total servicing portfolio grew to $617.4 billion in UPB at March 31, 2024, an increase of 2 percent from December 31, 2023, and 9 percent from March 31, 2023. PennyMac Financial’s owned MSR portfolio grew to $386.6 billion in UPB, up 3 percent from December 31, 2023, and 18 percent from March 31, 2023. PennyMac Financial subservices $230.8 billion in UPB for PMT.

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

	March 31, 2024				December 31, 2023				March 31, 2023
	(in thousands)
Prime servicing:
Owned
Mortgage servicing rights and liabilities
Originated	$	364,441,567			$	352,790,614			$	302,265,588
Purchased		17,051,740				17,478,397				19,026,774
		381,493,307				370,269,011				321,292,362
Loans held for sale		5,111,719				4,294,689				6,692,155
		386,605,026				374,563,700				327,984,517
Subserviced for PMT		230,809,585				232,643,144				236,476,714
Total prime servicing		617,414,611				607,206,844				564,461,231
Special servicing - subserviced for PMT		9,427				9,925				13,167
Total loans serviced	$	617,424,038			$	607,216,769			$	564,474,398

Servicing segment pretax income was $4.9 million, compared to a pretax loss $95.5 million in the prior quarter and pretax income of $57.4 million in the first quarter of 2023. Servicing segment pretax loss in the fourth quarter of 2023 included a non-recurring arbitration accrual of $158.4 million. Servicing segment net revenues totaled $111.6 million, down from $175.8 million in the prior quarter and $172.1 million in the first quarter of 2023.

Revenue from net loan servicing fees totaled $101.0 million, down from $162.3 million in the prior quarter and $148.8 million in the first quarter of 2023. Loan servicing fees were $424.2 million, up from $402.5 million in the prior quarter primarily due to growth in PFSI’s owned portfolio, reduced by $198.6 million in realization of cash flows, which was up from the prior quarter due to lower average yields during the quarter. Net valuation related declines totaled $124.7 million, compared to $75.9 million of such declines in the prior quarter. MSR fair value gains, before realization of cash flows, were $170.0 million and hedging losses were $294.6 million; hedges were positioned with increased net exposure to interest rate volatility during the quarter to limit elevated hedge costs. We began purchasing principal-only bonds in the first quarter as hedges against prepayment risk.

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

	Quarter ended
	March 31, 2024				December 31, 2023				March 31, 2023
	(in thousands)
Loan servicing fees	$	424,184			$	402,484			$	338,057
Changes in fair value of MSRs and MSLs resulting from:
Realization of cash flows		(198,564	)			(164,255	)			(146,183	)
Change in fair value inputs		169,979				(370,705	)			(90,264	)
Hedging (losses) gains		(294,645	)			294,787				47,227
Net change in fair value of MSRs and MSLs		(323,230	)			(240,173	)			(189,220	)
Net loan servicing fees	$	100,954			$	162,311			$	148,837

Servicing segment revenue included $21.0 million in net gains on loans held for sale related to early buyout loans (EBOs), down from $24.5 million in the prior quarter and $29.7 million in the first quarter of 2023. These EBOs are previously delinquent loans that were brought back to performing status through PennyMac Financial’s successful servicing efforts.

Net interest expense totaled $11.5 million, compared to $13.7 million in the prior quarter and $6.2 million in the first quarter of 2023. Interest income was $92.4 million, up slightly from $91.6 million in the prior quarter. Interest expense was $103.9 million, down slightly from $105.3 million in the prior quarter.

Servicing segment expenses totaled $106.7 million, down from $271.3 million in the prior quarter which included a non-recurring arbitration accrual of $158.4 million. Excluding the impact of the arbitration accrual in the prior quarter, servicing expenses were down $6.2 million, primarily due to a reversal in the provision for credit losses on active loans.

Investment Management Segment

PennyMac Financial manages PMT for which it earns base management fees and may earn incentive compensation. Net AUM were $2.0 billion as of March 31, 2024, essentially unchanged from December 31, 2023 and March 31, 2023.

Pretax income for the Investment Management segment was $3.1 million, up from $1.9 million in the prior quarter and $0.3 million in the first quarter of 2024. Base management fees from PMT were $7.2 million, essentially unchanged from the prior quarter and first quarter of 2023. No performance incentive fees were earned in the first quarter.

The following table presents a breakdown of management fees:

	Quarter ended
	March 31, 2024				December 31, 2023				March 31, 2023
	(in thousands)
Management fees:
Base	$	7,188			$	7,252			$	7,257
Performance incentive		-				-				-
Total management fees	$	7,188			$	7,252			$	7,257
Net assets of PennyMac Mortgage Investment Trust	$	1,958,914			$	1,957,090			$	1,970,734

Investment Management segment expenses totaled $6.3 million, down 18 percent from the prior quarter and down 29 percent from the first quarter of 2023.

Consolidated Expenses

Total expenses were $261.8 million, down from $416.2 million in the prior quarter, which included a non-recurring arbitration accrual of $158.4 million. Excluding the impact of the arbitration accrual in the prior quarter, total expenses were up $4.0 million, primarily due to increased production segment expenses arising from higher volumes in the direct lending channels.

Taxes and Other

PFSI recorded a provision for tax expense of $4.6 million, resulting in an effective tax rate of 10.4 percent due to the vesting of certain stock-based compensation awards, which positively impacted PFSI’s tax liability.

Book value per share decreased to $70.13 from $70.52 at December 31, 2023 due to the annual issuance of additional common stock related to our equity compensation awards program, which more than offset the increase in retained earnings.

Management’s slide presentation and accompanying material will be available in the Investor Relations section of the Company’s website at pfsi.pennymac.com after the market closes on Wednesday, April 24, 2024. Management will also host a conference call and live audio webcast at 5:00 p.m. Eastern Time to review the Company’s financial results. The webcast can be accessed at pfsi.pennymac.com, and a replay will be available shortly after its conclusion.

About PennyMac Financial Services, Inc.

PennyMac Financial Services, Inc. is a specialty financial services firm 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 and employs over 3,800 people across the country. For the twelve months ended March 31, 2024, PennyMac Financial’s production of newly originated loans totaled $98 billion in unpaid principal balance, making it the second largest mortgage lender in the nation. As of March 31, 2024, PennyMac Financial serviced loans totaling $617 billion in unpaid principal balance, making it a top five mortgage servicer in the nation. Additional information about PennyMac Financial Services, Inc. is available at pfsi.pennymac.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: interest rate changes; changes in real estate values, housing prices and housing sales; 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 business; 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 our business, 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 adjusting the size of our operations to reflect changes in business levels; purchase opportunities for mortgage servicing rights; our substantial amount of indebtedness; increases in loan delinquencies, defaults and forbearances; our reliance on PennyMac Mortgage Investment Trust (NYSE: PMT) as a significant contributor to our mortgage banking business; maintaining sufficient capital and liquidity and 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; investment management and incentive fees; 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 exposure to risks of loss and disruptions in operations resulting from severe weather events, man-made or other natural conditions, climate change and pandemics; our ability to effectively identify, manage and hedge our credit, interest rate, prepayment, liquidity and climate 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.

The Company’s earnings materials contain financial information calculated other than in accordance with U.S. generally accepted accounting principles (“GAAP”), such as pretax income excluding valuation-related 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)
	March 31, 2024				December 31, 2023				March 31, 2023
	(in thousands, except share amounts)
ASSETS
Cash	$	927,394			$	938,371			$	1,497,903
Short-term investment at fair value		69				10,268				3,584
Principal-only stripped mortgage-backed securities at fair value pledged to creditors		524,576				-				-
Loans held for sale at fair value		5,200,350				4,420,691				6,772,423
Derivative assets		108,987				179,079				110,664
Servicing advances, net		499,955				694,038				547,158
Mortgage servicing rights at fair value		7,483,210				7,099,348				6,003,390
Investment in PennyMac Mortgage Investment Trust at fair value		1,101				1,121				925
Receivable from PennyMac Mortgage Investment Trust		30,835				29,262				35,166
Loans eligible for repurchase		4,401,896				4,889,925				4,557,325
Other		623,368				582,460				574,647
Total assets	$	19,801,741			$	18,844,563			$	20,103,185
LIABILITIES
Assets sold under agreements to repurchase	$	5,435,354			$	3,763,956			$	5,764,157
Mortgage loan participation purchase and sale agreements		363,798				446,054				515,358
Notes payable secured by mortgage servicing assets		1,972,020				1,873,415				2,471,930
Unsecured senior notes		2,521,031				2,519,651				1,780,833
Derivative liabilities		40,784				53,275				49,087
Mortgage servicing liabilities at fair value		1,732				1,805				2,011
Accounts payable and accrued expenses		263,338				449,896				300,157
Payable to PennyMac Mortgage Investment Trust		127,993				208,210				142,007
Payable to exchanged Private National Mortgage Acceptance Company, LLC unitholders under tax receivable agreement		26,099				26,099				26,099
Income taxes payable		1,047,337				1,042,886				1,010,928
Liability for loans eligible for repurchase		4,401,896				4,889,925				4,557,325
Liability for losses under representations and warranties		29,976				30,788				31,103
Total liabilities		16,231,358				15,305,960				16,650,995
STOCKHOLDERS' EQUITY
Common stock—authorized 200,000,000 shares of $0.0001 par value; issued and outstanding 50,907,865, 50,178,963, and 50,097,030 shares, respectively		5				5				5
Additional paid-in capital		27,179				24,287				-
Retained earnings		3,543,199				3,514,311				3,452,185
Total stockholders' equity		3,570,383				3,538,603				3,452,190
Total liabilities and stockholders’ equity	$	19,801,741			$	18,844,563			$	20,103,185

PENNYMAC FINANCIAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
	Quarter ended
	March 31, 2024				December 31, 2023				March 31, 2023
	(in thousands, except per share amounts)
Revenues
Net gains on loans held for sale at fair value	$	162,441			$	148,765			$	104,385
Loan origination fees		36,371				38,059				31,390
Fulfillment fees from PennyMac Mortgage Investment Trust		4,016				4,931				11,923
Net loan servicing fees:
Loan servicing fees		424,184				402,484				338,057
Change in fair value of mortgage servicing rights and mortgage servicing liabilities		(28,585	)			(534,960	)			(236,447	)
Mortgage servicing rights hedging results		(294,645	)			294,787				47,227
Net loan servicing fees		100,954				162,311				148,837
Net interest expense:
Interest income		156,426				164,942				128,478
Interest expense		165,769				170,501				131,771
		(9,343	)			(5,559	)			(3,293	)
Management fees from PennyMac Mortgage Investment Trust		7,188				7,252				7,257
Other		4,033				6,180				2,363
Total net revenues		305,660				361,939				302,862
Expenses
Compensation		146,376				135,138				147,935
Technology		35,967				32,870				36,038
Loan origination		30,568				26,879				27,086
Servicing		16,104				28,907				12,632
Professional services		9,262				9,684				21,007
Occupancy and equipment		8,676				8,772				8,820
Marketing and advertising		3,671				4,180				3,241
Legal settlements		1,542				160,025				(4,742	)
Other		9,611				9,714				12,698
Total expenses		261,777				416,169				264,715
Income (loss) before provision for (benefit from) income taxes		43,883				(54,230	)			38,147
Provision for (benefit from) income taxes		4,575				(17,388	)			7,769
Net income (loss)	$	39,308			$	(36,842	)		$	30,378
Earnings (loss) per share
Basic	$	0.78			$	(0.74	)		$	0.61
Diluted	$	0.74			$	(0.74	)		$	0.57
Weighted-average common shares outstanding
Basic		50,547				49,987				50,154
Diluted		53,100				49,987				53,352
Dividend declared per share	$	0.20			$	0.20			$	0.20

PENNYMAC FINANCIAL SERVICES, INC. RECONCILIATION OF
NET INCOME TO OPERATING NET INCOME
	Quarter ended
	March 31, 2024
	(in thousands, except annualized operating return on equity)
Net income	$	39,308
Increase in fair value of MSRs and MSLs due to changes in valuation inputs used in the valuation model		(169,979	)
Hedging losses associated with MSRs		294,645
Non-recurring item - accrual for arbitration result		1,600
Adjustments	$	126,266
Tax impacts of adjustments(1)		33,902
Operating net income	$	131,672
Average stockholders' equity	$	3,552,273
Annualized operating return on equity		15	%

(1)

Assumes a tax rate of 26.85%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240424827926/en/

Media

Lauren Padilla

mediarelations@pennymac.com

805.225.8224

Investors

Kevin Chamberlain

Isaac Garden

PFSI_IR@pennymac.com

818.224.7028

Source: PennyMac Financial Services, Inc.

FAQ

What was PennyMac Financial Services, Inc.'s net income for the first quarter of 2024?

PennyMac Financial Services, Inc. reported a net income of $39.3 million for the first quarter of 2024.

What was the revenue reported by PennyMac Financial Services, Inc. for the first quarter of 2024?

PennyMac Financial Services, Inc. reported revenue of $305.7 million for the first quarter of 2024.

What was the book value per share for PennyMac Financial Services, Inc. at the end of Q1 2024?

The book value per share for PennyMac Financial Services, Inc. decreased to $70.13 from $70.52 at the end of 2023.

What was the total loan acquisitions and originations for PennyMac Financial Services, Inc. in the first quarter of 2024?

Total loan acquisitions and originations for PennyMac Financial Services, Inc. were $21.7 billion in unpaid principal balance (UPB) for the first quarter of 2024.

What was the pretax income for the Servicing segment of PennyMac Financial Services, Inc. in the first quarter of 2024?

The Servicing segment of PennyMac Financial Services, Inc. reported a pretax income of $4.9 million in the first quarter of 2024.