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PennyMac Financial Services Reports First Post-IPO Period

PennyMac Financial Services, Inc. (NYSE: PFSI) today reported net income of $48.2 million for the second quarter of 2013, on revenue of $110.8 million. Net income attributable to PFSI common stockholders reflecting the post-IPO period of May 9 through June 30 is $2.8 million, or $0.22 per diluted share. The full-quarter equivalent earnings per diluted share would have been $0.38.

Quarterly Highlights

  • Total revenue of $110.8 million, up 5 percent from the prior quarter
  • Mortgage Banking revenue of $97.2 million, up 6 percent from the prior quarter
  • Investment Management revenue of $13.5 million, down 3 percent from the prior quarter
  • Total loan production activity of $8.9 billion in unpaid principal balance (UPB), up 2 percent from the prior quarter
  • Servicing portfolio reached $44.4 billion in UPB, up 23 percent from March 31, 2013

“PennyMac Financial is building the leading non-bank mortgage specialist company and continues to demonstrate growth in all of our underlying business drivers,” said Chairman and Chief Executive Officer Stanford L. Kurland. “Our pace of growth in correspondent lending slowed somewhat, due to higher mortgage rates and the resulting origination market conditions. However, we continued to demonstrate significant organic growth in loan servicing, driven by our production activities. Our investment management business continues to contribute management fees and performance-driven incentive fees and is poised for additional growth with many attractive investment opportunities being pursued for PennyMac Mortgage Investment Trust (NYSE: PMT) in particular.”

The following table presents the contribution of PFSI’s Mortgage Banking and Investment Management segments to pretax income:

Quarter ended June 30, 2013

   

Mortgage banking

   

Investment management

    Total
(in thousands)
Revenues:
Net gains on mortgage loans held for sale at fair value $ 42,654 $ - $ 42,654
Loan origination fees 6,312 - 6,312
Fulfillment fees from PMT 22,054 - 22,054
Net servicing income 22,069 - 22,069
Management fees - 10,429 10,429
Carried Interest from Investment Funds - 2,862 2,862
Interest 4,469 5 4,474
Other (320 ) 243 (77 )
Intersegment   -     -   -  
97,238 13,539 110,777
Expenses:
Compensation 39,293 3,046 42,339
Interest   4,200     -   4,200  
Other   13,860     149   14,009  
  57,353     3,195   60,548  
Income before provision for income taxes $ 39,885   $ 10,344 $ 50,229  
Segment assets at period end $ 1,234,766   $ 46,014 $ 1,280,780  
 

Mortgage Banking Segment

PFSI’s Mortgage Banking Segment encompasses loan production, which includes retail lending and correspondent lending both for its own account and on behalf of PMT for which it provides fulfillment services, and loan servicing, which includes owned servicing and subservicing. Mortgage Banking revenues were $97.2 million, an increase of 6 percent from the first quarter, driven by a 38 percent increase in net servicing fees to $22.1 million, as the servicing portfolio grew 23 percent during the quarter. Higher net gains on mortgage loans held for sale and origination fees also contributed to the increase in Mortgage Banking revenues. During the quarter, PFSI’s production activity totaled $8.9 billion, of which $4.3 billion was fee-based fulfillment activities for PMT.

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