PennyMac Financial Services, Inc. Reports Fourth Quarter and Full-Year 2022 Results

PennyMac Financial Services, Inc. (NYSE: PFSI) today reported net income of $37.6 million for the fourth quarter of 2022, or $0.71 per share on a diluted basis, on revenue of $340.4 million. Book value per share increased to $69.44 from $68.26 at September 30, 2022.

PFSI’s Board of Directors declared a fourth quarter cash dividend of $0.20 per share, payable on February 24, 2023, to common stockholders of record as of February 14, 2023.

Fourth Quarter 2022 Highlights

  • Net income included non-recurring tax items of $(11.9) million primarily driven by a tax rate increase impacting PFSI’s net deferred tax liability; impact on earnings per share was $(0.22)
  • Pretax income was $67.7 million, down 63 percent from the prior quarter and 71 percent from the fourth quarter of 2021
    • Repurchased 1.1 million shares of PFSI’s common stock at an average price of $46.99 per share for a cost of $51.3 million
  • Production segment pretax loss of $9.0 million, down from pretax income of $38.6 million in the prior quarter and $106.5 million in the fourth quarter of 2021
    • Total loan acquisitions and originations, including those fulfilled for PennyMac Mortgage Investment Trust (NYSE: PMT) were $23.0 billion in unpaid principal balance (UPB), down 12 percent from the prior quarter and 51 percent from the fourth quarter of 2021
    • Consumer direct interest rate lock commitments (IRLCs) were $1.7 billion in UPB, down 56 percent from the prior quarter and 88 percent from the fourth quarter of 2021
    • Broker direct IRLCs were $2.0 billion in UPB, up 8 percent from the prior quarter and down 48 percent from the fourth quarter of 2021
    • Government correspondent IRLCs totaled $10.7 billion in UPB, down 14 percent from the prior quarter and 31 percent from the fourth quarter of 2021
    • Conventional correspondent IRLCs for PFSI’s account totaled $4.7 billion in UPB
    • Correspondent acquisitions of conventional conforming loans fulfilled for PennyMac Mortgage Investment Trust (NYSE: PMT) were $6.8 billion in UPB, down 34 percent from the prior quarter and 61 percent from the fourth quarter of 2021
  • Servicing segment pretax income was $75.6 million, down from $145.3 million in the prior quarter and $126.1 million in the fourth quarter of 2021
    • Pretax income excluding valuation-related items was $79.1 million, up 14 percent from the prior quarter driven by increased earnings on custodial balances and deposits and decreased operating expenses
    • Valuation items included:

      –    $82.6 million in mortgage servicing rights (MSR) fair value gains largely offset by $72.9 million in hedging losses
      • Net impact on pretax income related to these items was $9.7 million, or $0.13 in earnings per share
      • $13.2 million provision for losses on active loans
    • Servicing portfolio grew to $551.7 billion in UPB, up 2 percent from September 30, 2022, driven by production volumes which more than offset prepayment activity
  • Investment Management segment pretax income was $1.2 million, down from $1.6 million in the prior quarter and $1.5 million in the fourth quarter of 2021
    • Net assets under management (AUM) were $2.0 billion, down 3 percent from September 30, 2022, and 17 percent from December 31, 2021

Notable activity after quarter end

  • PFSI exercised its option to extend the maturity for $650 million in term notes secured by Ginnie Mae MSRs originally due in February 2023 for two years

Full-Year 2022 Highlights

  • Net income of $475.5 million, down from $1.0 billion in 2021; return on equity of 14 percent
  • Pretax income of $665.2 million, down from $1.4 billion in 2021
  • Total net revenue of $2.0 billion, down from $3.2 billion in 2021
  • Repurchased approximately 7.8 million shares of PFSI’s common stock, or 14 percent of the total outstanding shares at the beginning of the year, for an approximate cost of $406 million
  • Loan production of $109.0 billion in UPB, a decrease of 54 percent from 2021
    • $22.3 billion in UPB of originations in the direct lending channels, down 63 percent from 2021
  • Servicing portfolio UPB of $551.7 billion at year end, up 8 percent from December 31, 2021
  • Issued $500 million of 5-year term notes secured by Ginnie Mae MSRs

“PennyMac Financial produced strong results in 2022, a year characterized by a rapid and significant increase in mortgage rates,” said Chairman and CEO David Spector. “The 14 percent return on equity achieved in 2022 can be attributed to the resilience and scale of our balanced business model and the decisive actions taken throughout the year to right-size our business for the much smaller origination market. While production activity fell in 2022 our servicing earnings were strong. In fact, the majority of PennyMac Financial’s income in 2022 was generated by our large and growing servicing portfolio, which totaled more than $550 billion in unpaid principal balance at year end, up 8 percent from the prior year. Strong financial performance not only enabled us to continue returning capital to stockholders and investing in innovative mortgage banking technology, but also resulted in solid growth in PFSI’s book value per share, which ended the year up 16 percent from year end 2021.”

Mr. Spector continued, “More than 15 years ago, we founded Pennymac with a vision to help revitalize the mortgage market and become a trusted partner in home ownership. Since then, we have grown responsibly and profitably into one of the largest residential mortgage producers and servicers in the country with an industry-leading correspondent production business and a growing presence in the direct lending channels. Though 2023 is expected to be another challenging year for the mortgage industry, I remain confident in PennyMac Financial’s ability to continue executing given its balanced business model and long history of generating stockholder value through different mortgage market cycles and environments.”

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

   Quarter ended December 31, 2022 
   Mortgage Banking     Investment

Management 
 
   Production     Servicing     Total       Total 
   (in thousands) 
Revenue                    
Net gains on loans held for sale at fair value  

 $

     84,708

 

 

 $

     17,205

 

 

 $

   101,913

 

 $

                -

 

 $

   101,913

Loan origination fees  

 

         28,019

 

 

 

                   -

 

 

 

         28,019

 

 

                   -

 

 

         28,019

Fulfillment fees from PMT   

 

         12,184

 

 

 

                   -

 

 

 

         12,184

 

 

                   -

 

 

         12,184

Net loan servicing fees   

 

                   -

 

 

 

      182,831

 

 

 

      182,831

 

 

                   -

 

 

      182,831

Management fees   

 

                   -

 

 

 

                   -

 

 

 

                   -

 

 

           7,307

 

 

           7,307

Net interest income (expense):                    
Interest income  

 

         42,855

 

 

 

         64,467

 

 

 

      107,322

 

 

                   -

 

 

      107,322

Interest expense  

 

         36,836

 

 

 

         67,192

 

 

 

      104,028

 

 

                   -

 

 

      104,028

 

 

           6,019

 

 

 

         (2,725

)

 

 

           3,294

 

 

                   -

 

 

           3,294

Other  

 

              661

 

 

 

           1,655

 

 

 

           2,316

 

 

           2,582

 

 

           4,898

Total net revenue  

 

      131,591

 

 

 

      198,966

 

 

 

      330,557

 

 

           9,889

 

 

      340,446

Expenses  

 

      140,607

 

 

 

      123,401

 

 

 

      264,008

 

 

           8,709

 

 

      272,717

Income before provision for income taxes   

 $

      (9,016

)

 

 $

     75,565

 

 

 $

     66,549

 

 $

        1,180

 

 $

     67,729

 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 $23.0 billion in UPB, $16.2 billion of which was for its own account, and $6.8 billion of which was fee-based fulfillment activity for PMT. Correspondent locks for PFSI and direct lending IRLCs totaled $19.1 billion in UPB, up 6 percent from the prior quarter and down 43 percent from the fourth quarter of 2021.

Production segment pretax loss was $9.0 million, down from pretax income of $38.6 million in the prior quarter and $106.5 million in the fourth quarter of 2021. Production segment revenue totaled $131.6 million, down 34 percent from the prior quarter and 69 percent from the fourth quarter of 2021. The quarter-over-quarter decrease was driven by a $56.0 million decrease in net gains on loans held for sale primarily as a result of lower volume in the consumer direct lending channel and lower overall margins.

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

  Quarter ended
  December 31,

2022
  September 30,

2022
  December 31,

2021
  (in thousands)
Receipt of MSRs and recognition of MSLs in loan sale transactions  

 $

        358,462

 

 

 $

        345,077

 

 

 $

        467,141

 

Mortgage servicing rights recapture payable to PennyMac Mortgage Investment Trust  

 

                 (512

)

 

 

              (1,648

)

 

 

            (12,701

)

(Provision for) reversal of liability for representations and warranties, net  

 

                 (444

)

 

 

                   118

 

 

 

                 (315

)

Cash (loss) gain (1)  

 

         (340,869

)

 

 

            (16,795

)

 

 

              37,537

 

Fair value changes of pipeline, inventory and hedges  

 

              85,276

 

 

 

         (158,058

)

 

 

                8,996

 

Net gains on mortgage loans held for sale  

 $

        101,913

 

 

 $

        168,694

 

 

 $

        500,658

 

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

 $

          84,708

 

 

 $

        140,683

 

 

 $

        314,826

 

Servicing  

 $

          17,205

 

 

 $

          28,011

 

 

 $

        185,832

 

       
(1) Including cash hedging results      

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 $12.2 million in the fourth quarter, down 34 percent from the prior quarter and 40 percent from the fourth quarter of 2021. The quarter-over-quarter decrease in fulfillment fee revenue was driven by lower conventional acquisition volumes for PMT’s account as PFSI began to acquire certain of the conventional loans sourced by PMT.

Net interest income totaled $6.0 million, up slightly from $5.9 million in the prior quarter. Interest income in the fourth quarter totaled $42.9 million, up from $30.8 million in the prior quarter, and interest expense totaled $36.8 million, up from $25.0 million in the prior quarter, both due to increasing interest rates.

Production segment expenses were $140.6 million, down 13 percent from the prior quarter and 56 percent from the fourth quarter of 2021. The decline from the prior quarter was driven by lower volumes in the direct lending channels and the expense management initiatives announced in prior quarters.

Servicing Segment

The Servicing segment includes income from owned MSRs, subservicing and special servicing activities. Servicing segment pretax income was $75.6 million, down from $145.3 million in the prior quarter and $126.1 million in the fourth quarter of 2021. Servicing segment net revenues totaled $199.0 million, down from $266.5 million in the prior quarter and $255.7 million in the fourth quarter of 2021. The quarter-over-quarter decrease was primarily driven by a $60.9 million decrease in net loan servicing fees and a $10.8 million decrease in net gains on loans held for sale related to early buyout (EBO) activity.

Revenue from net loan servicing fees totaled $182.8 million, down from $243.7 million in the prior quarter primarily driven by lower net valuation related gains and partially offset by increased loan servicing fees due to a larger servicing portfolio. Revenue from loan servicing fees included $321.9 million in servicing fees, reduced by $148.8 million from the realization of MSR cash flows. Net valuation-related gains totaled $9.7 million, and included MSR fair value gains of $82.6 million, and hedging losses of $72.9 million. The hedging losses were largely driven by hedge costs and higher interest rates during the quarter.

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

  Quarter ended
  December 31,

2022
  September 30,

2022
  December 31,

2021
  (in thousands)
Loan servicing fees  

 $

       321,949

 

 

 $

           313,080

 

 

 $

       287,888

 

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

 

        (148,835

)

 

 

             (141,781

)

 

 

           (97,025

)

Change in fair value inputs  

 

             82,587

 

 

 

               237,192

 

 

 

           (58,407

)

Hedging losses   

 

           (72,870

)

 

 

             (164,749

)

 

 

           (37,723

)

Net change in fair value of MSRs and MSLs  

 

        (139,118

)

 

 

               (69,338

)

 

 

        (193,155

)

Net loan servicing fees  

 $

       182,831

 

 

 $

           243,742

 

 

 $

         94,733

 

Servicing segment revenue included $17.2 million in net gains on loans held for sale related to reperforming government-insured and guaranteed loans purchased out of Ginnie Mae securitizations, or EBOs. These gains were down from $28.0 million in the prior quarter and $185.8 million in the fourth quarter of 2021. These EBOs are previously delinquent loans that were brought back to performing status through PennyMac Financial’s successful servicing efforts.

Net interest expense totaled $2.7 million, versus $5.8 million in the prior quarter and $25.2 million in the fourth quarter of 2021. Interest income was $64.5 million, up from $52.2 million in the prior quarter as increased placement fees on custodial balances more than offset the decline in interest income on EBO loans held for sale. Interest expense was $67.2 million, up from $58.0 million in the prior quarter due to higher interest rates.

Servicing segment expenses totaled $123.4 million, up 2 percent from the prior quarter. Servicing segment expenses included $13.2 million in provisions for losses on active loans in the fourth quarter due to higher delinquency rates. The prior quarter included a reversal of the provision of $3.2 million.

The total servicing portfolio grew to $551.7 billion in UPB at December 31, 2022, an increase of 2 percent from September 30, 2022 and 8 percent from December 31, 2021. PennyMac Financial subservices and conducts special servicing for $233.6 billion in UPB, an increase of 1 percent from September 30, 2022 and 5 percent from December 31, 2021. PennyMac Financial’s owned MSR portfolio grew to $318.1 billion in UPB, an increase of 3 percent from September 30, 2022 and 11 percent from December 31, 2021.

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

   December 31,

2022 
   September 30,

2022 
   December 31,

2021 
  (in thousands)
Prime servicing:            
Owned      
Mortgage servicing rights and liabilities            
Originated  

 $

     295,032,674

 

 $

     283,653,037

 

 $

    254,524,015

Acquisitions  

 

           19,568,122

 

 

           20,182,332

 

 

          23,861,358

 

 

         314,600,796

 

 

         303,835,369

 

 

        278,385,373

Loans held for sale  

 

             3,498,214

 

 

             4,287,585

 

 

            9,430,766

 

 

         318,099,010

 

 

         308,122,954

 

 

        287,816,139

Subserviced for PMT  

 

         233,554,875

 

 

         230,959,804

 

 

        221,864,120

Total prime servicing   

 

         551,653,885

 

 

         539,082,758

 

 

        509,680,259

Special servicing - subserviced for PMT  

 

                   20,797

 

 

                   19,015

 

 

                  28,022

Total loans serviced   

 $

     551,674,682

 

 $

     539,101,773

 

 $

    509,708,281

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 December 31, 2022, down 3 percent from September 30, 2022 and 17 percent from December 31, 2021.

Pretax income for the Investment Management segment was $1.2 million, down from $1.6 million in the prior quarter and $1.5 million in the fourth quarter of 2021. Base management fees from PMT were $7.3 million, down from $7.7 million in the prior quarter and $8.9 million in the fourth quarter of 2021 due to the decline in AUM. No performance incentive fees were earned in the fourth quarter.

The following table presents a breakdown of management fees:

  Quarter ended
  December 31,

2022
  September 30,

2022
  December 31,

2021
  (in thousands)
Management fees:            
Base  

 $

            7,307

 

 $

            7,731

 

 $

            8,919

Performance incentive  

 

                        -

 

 

                        -

 

 

                        -

Total management fees   

 $

            7,307

 

 $

            7,731

 

 $

            8,919

             
Net assets of PennyMac Mortgage Investment Trust  

 $

    1,962,815

 

 $

    2,017,331

 

 $

    2,367,518

Investment Management segment expenses totaled $8.7 million, unchanged from the prior quarter and down 2 percent from the fourth quarter of 2021.

Consolidated Expenses

Total expenses were $272.7 million, down 6 percent from the prior quarter and 41 percent from the fourth quarter of 2021. The quarter-over-quarter decrease was primarily driven by lower production volumes in the direct lending channels, expense management activities and a reduction of performance-based compensation accruals.

Taxes

PFSI recorded a provision for tax expense of $30.1 million, resulting in an effective tax rate of 44.4 percent versus 27.1 percent in the prior quarter. The increase in the effective tax rate in the fourth quarter was primarily driven by an increase in the provision tax rate, which increased from 26.5 percent to 26.85 percent for 2022. The increase in tax rate resulted in the repricing of PFSI’s net deferred tax liability, which was the primary driver of a non-recurring tax expense of approximately $11.9 million in the quarter.

Management’s slide presentation will be available in the Investor Relations section of the Company’s website at pfsi.pennymac.com after the market closes on Thursday, February 2, 2023.

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 approximately 4,000 people across the country. In 2022, PennyMac Financial’s production of newly originated loans totaled $109 billion in unpaid principal balance, making it the third largest mortgage lender in the nation. As of December 31, 2022, PennyMac Financial serviced loans totaling $552 billion in unpaid principal balance, making it a top ten 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; declines in real estate or significant changes in U.S. housing prices or activity in the U.S. housing market; 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 and our success in winning bids; our substantial amount of indebtedness; the discontinuation of LIBOR; increases in loan delinquencies, defaults and forbearances; failure to modify, resell or refinance early buyout loans; 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; decreases in 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 adverse weather conditions, man-made or natural disasters, climate change and pandemics such as COVID-19; 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)

       
   December 31,

2022 
   September 30,

2022 
   December 31,

2021 
   (in thousands, except share amounts) 
ASSETS            
Cash   

 $

         1,328,536

 

 $

             1,558,679

 

 $

            340,069

Short-term investments at fair value   

 

                  12,194

 

 

                      36,098

 

 

                    6,873

Loans held for sale at fair value   

 

            3,509,300

 

 

                4,149,726

 

 

            9,742,483

Derivative assets  

 

                  99,003

 

 

                   164,160

 

 

               333,695

Servicing advances, net  

 

               696,753

 

 

                   455,083

 

 

               702,160

Mortgage servicing rights at fair value  

 

            5,953,621

 

 

                5,661,672

 

 

            3,878,078

Operating lease right-of-use assets  

 

                  65,866

 

 

                      72,138

 

 

                  89,040

Investment in PennyMac Mortgage Investment Trust at fair value   

 

                       929

 

 

                           884

 

 

                    1,300

Receivable from PennyMac Mortgage Investment Trust   

 

                  36,372

 

 

                      32,306

 

 

                  40,091

Loans eligible for repurchase  

 

            4,702,103

 

 

                3,757,538

 

 

            3,026,207

Other    

 

               417,907

 

 

                   473,527

 

 

               616,616

Total assets   

 $

       16,822,584

 

 $

           16,361,811

 

 $

       18,776,612

       
LIABILITIES            
Assets sold under agreements to repurchase    

 $

         3,001,283

 

 $

             3,487,335

 

 $

         7,292,735

Mortgage loan participation purchase and sale agreements  

 

               287,592

 

 

                   367,473

 

 

               479,845

Obligations under capital lease  

 

                          -  

 

 

                              -  

 

 

                    3,489

Notes payable secured by mortgage servicing assets  

 

            1,942,646

 

 

                1,793,972

 

 

            1,297,622

Unsecured senior notes  

 

            1,779,920

 

 

                1,778,988

 

 

            1,776,219

Derivative liabilities  

 

                  21,712

 

 

                   125,487

 

 

                  22,606

Mortgage servicing liabilities at fair value  

 

                    2,096

 

 

                        2,214

 

 

                    2,816

Accounts payable and accrued expenses   

 

               262,358

 

 

                   358,187

 

 

               359,413

Operating lease liabilities  

 

                  85,550

 

 

                      92,380

 

 

               110,003

Payable to PennyMac Mortgage Investment Trust    

 

               205,011

 

 

                      87,978

 

 

               228,019

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

 

                  26,099

 

 

                      26,675

 

 

                  30,530

Income taxes payable  

 

            1,002,744

 

 

                   964,307

 

 

               685,262

Liability for loans eligible for repurchase  

 

            4,702,103

 

 

                3,757,538

 

 

            3,026,207

Liability for losses under representations and warranties     

 

                  32,421

 

 

                      37,187

 

 

                  43,521

Total liabilities   

 

    13,351,535

 

 

        12,879,721

 

 

    15,358,287

       
STOCKHOLDERS' EQUITY            
Common stock--authorized 200,000,000 shares of $0.0001 par value; issued and outstanding 49,988,492, 51,011,021, and 56,867,202 shares, respectively  

 

                            5

 

 

                                5

 

 

                            6

Additional paid-in capital  

 

                          -  

 

 

                              -  

 

 

               125,396

Retained earnings   

 

            3,471,044

 

 

                3,482,085

 

 

            3,292,923

Total stockholders' equity  

 

            3,471,049

 

 

                3,482,090

 

 

            3,418,325

Total liabilities and stockholders’ equity   

 $

       16,822,584

 

 $

           16,361,811

 

 $

       18,776,612

PENNYMAC FINANCIAL SERVICES, INC.

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

 
   Quarter ended 
   December 31,

2022 
   September 30,

2022 
   December 31,

2021 
   (in thousands, except per share amounts) 
Revenue            
Net gains on loans held for sale at fair value  

 $

        101,913

 

 

 $

        168,694

 

 

 $

        500,658

 

Loan origination fees   

 

             28,019

 

 

 

             34,037

 

 

 

             88,245

 

Fulfillment fees from PennyMac Mortgage Investment Trust   

 

             12,184

 

 

 

             18,407

 

 

 

             20,150

 

Net loan servicing fees:            
Loan servicing fees  

 

           321,949

 

 

 

           313,080

 

 

 

           287,888

 

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

 

           (66,248

)

 

 

             95,411

 

 

 

         (155,432

)

Mortgage servicing rights hedging results  

 

           (72,870

)

 

 

         (164,749

)

 

 

           (37,723

)

Net loan servicing fees  

 

           182,831

 

 

 

           243,742

 

 

 

             94,733

 

Net interest income:      
Interest income  

 

           107,322

 

 

 

             82,994

 

 

 

             68,979

 

Interest expense  

 

           104,028

 

 

 

             82,965

 

 

 

             89,844

 

   

 

               3,294

 

 

 

                     29

 

 

 

           (20,865

)

Management fees from PennyMac Mortgage Investment Trust   

 

               7,307

 

 

 

               7,731

 

 

 

               8,919

 

Other   

 

               4,898

 

 

 

               3,650

 

 

 

               1,971

 

Total net revenue   

 

           340,446

 

 

 

           476,290

 

 

 

           693,811

 

Expenses            
Compensation   

 

           133,699

 

 

 

           157,793

 

 

 

           226,723

 

Servicing   

 

             37,424

 

 

 

             20,399

 

 

 

             31,470

 

Technology  

 

             34,896

 

 

 

             35,647

 

 

 

             41,112

 

Loan origination   

 

             25,002

 

 

 

             28,356

 

 

 

             86,789

 

Professional services   

 

             16,144

 

 

 

             16,230

 

 

 

             31,734

 

Occupancy and equipment  

 

               9,985

 

 

 

             11,299

 

 

 

               8,354

 

Marketing and advertising  

 

               3,751

 

 

 

               7,601

 

 

 

             16,568

 

Other   

 

             11,816

 

 

 

             13,493

 

 

 

             16,950

 

Total expenses   

 

           272,717

 

 

 

           290,818

 

 

 

           459,700

 

Income before provision for income taxes  

 

             67,729

 

 

 

           185,472

 

 

 

           234,111

 

Provision for income taxes  

 

             30,112

 

 

 

             50,338

 

 

 

             61,028

 

Net income   

 $

          37,617

 

 

 $

        135,134

 

 

 $

        173,083

 

Earnings per share      
Basic  

 $

              0.75

 

 

 $

              2.59

 

 

 $

              2.97

 

Diluted  

 $

              0.71

 

 

 $

              2.46

 

 

 $

              2.79

 

Weighted-average common shares outstanding            
Basic  

 

             50,164

 

 

 

             52,170

 

 

 

58,247

 

Diluted  

 

             53,088

 

 

 

             54,968

 

 

 

61,944

 

Dividend declared per share  

 $

              0.20

 

 

 $

              0.20

 

 

 $

              0.20

 

PENNYMAC FINANCIAL SERVICES, INC.

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

   
 

Year ended December 31,

 

2022

2021

2020

 

(in thousands, except earnings per share)

Revenue            
Net gains on loans held for sale at fair value  

 $

     791,633

 

 $

  2,464,401

 

 $

  2,740,785

 

Loan origination fees   

 

        169,859

 

 

 

        384,154

 

 

 

        285,551

 

Fulfillment fees from PennyMac Mortgage Investment Trust   

 

           67,991

 

 

        178,927

 

 

        222,200

 

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

 

     1,054,828

 

 

 

        875,570

 

 

 

        814,646

 

From PennyMac Mortgage Investment Trust   

 

           81,915

 

 

           80,658

 

 

           67,181

 

Other fees   

 

           91,894

 

 

 

        118,884

 

 

 

        116,464

 

 

 

     1,228,637

 

 

     1,075,112

 

 

        998,291

 

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

 

        354,176

 

 

 

      (416,943

)

 

 

   (1,477,023

)

Hedging results  

 

      (631,484

)

 

      (475,215

)

 

        918,180

 

Net loan servicing fees  

 

        951,329

 

 

 

        182,954

 

 

 

        439,448

 

Net interest expense:  
Interest income  

 

        294,062

 

 

 

        300,169

 

 

 

        247,026

 

Interest expense  

 

        335,427

 

 

        390,699

 

 

        271,551

 

   

 

         (41,365

)

 

 

         (90,530

)

 

 

         (24,525

)

Management fees from PennyMac Mortgage Investment Trust   

 

           31,065

 

 

           37,801

 

 

           34,538

 

Other   

 

           15,243

 

 

 

             9,654

 

 

 

             7,600

 

Total net revenue   

 

     1,985,755

 

 

     3,167,361

 

 

     3,705,597

 

Expenses            
Compensation   

 

        735,231

 

 

        999,802

 

 

        738,569

 

Loan origination   

 

        173,622

 

 

 

        330,788

 

 

 

        219,746

 

Technology  

 

        139,950

 

 

        141,426

 

 

        112,570

 

Professional services   

 

           73,270

 

 

 

           94,283

 

 

 

           64,064

 

Servicing   

 

           59,628

 

 

        109,835

 

 

        256,934

 

Marketing and advertising  

 

           46,762

 

 

 

           44,806

 

 

 

             8,658

 

Occupancy and equipment  

 

           40,124

 

 

           35,810

 

 

           33,357

 

Other   

 

           51,921

 

 

 

           51,428

 

 

 

           31,090

 

Total expenses   

 

     1,320,508

 

 

     1,808,178

 

 

     1,464,988

 

Income before provision for income taxes  

 

        665,247

 

 

 

     1,359,183

 

 

 

     2,240,609

 

Provision for income taxes  

 

        189,740

 

 

        355,693

 

 

        593,725

 

Net income   

 $

     475,507

 

 

 $

  1,003,490

 

 

 $

  1,646,884

 

   
Earnings per share            
Basic  

 $

            8.96

 

 $

          15.73

 

 $

          21.91

 

Diluted  

 $

            8.50

 

 

 $

          14.87

 

 

 $

          20.92

 

Weighted average shares outstanding  
Basic  

 

           53,065

 

 

 

           63,799

 

 

 

           75,161

 

Diluted  

 

           55,950

 

 

           67,471

 

 

           78,728

 

 

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