PennyMac Financial Services, Inc. Reports Third Quarter 2013 Results

PennyMac Financial Services, Inc. (NYSE: PFSI) today reported net income of $31.4 million for the third quarter of 2013, on revenue of $87.2 million. Net income attributable to PFSI common stockholders was $5.2 million, or $0.28 per diluted share.

Third Quarter Highlights
  • Total net revenue of $87.2 million, down 18 percent from the prior quarter
  • Mortgage Banking revenue of $72.9 million, down 25 percent from the prior quarter
  • Investment Management revenue of $14.3 million, up 6 percent from the prior quarter
  • Total loan production activity of $8.0 billion in unpaid principal balance (UPB), down 11 percent from the prior quarter
  • Servicing portfolio reached $52.9 billion in UPB, up 19 percent from June 30, 2013
  • Net assets under management reached $2.1 billion, up 14 percent from June 30, 2013

Recent Activity Since the End of the Quarter
  • Acquired $10.3 billion in UPB of Fannie Mae mortgage servicing rights (MSRs), with co-investment by PennyMac Mortgage Investment Trust (NYSE: PMT) in the excess servicing spread
  • Entered into a letter of intent with a third party to acquire $10.8 billion in UPB of Ginnie Mae MSRs and expected to enter into an agreement with PMT relating to the sale of the excess servicing spread associated with this portfolio 1

“The third quarter was challenging for the mortgage industry, and the decline in origination volumes and reduced margins had a significant impact on PennyMac Financial’s loan production businesses,” said Chairman and Chief Executive Officer Stanford L. Kurland. “The decline in loan production was offset by growth in PennyMac Financial’s loan servicing and investment management businesses. We reduced expenses, while remaining focused on executing against the initiatives that we believe will drive long-term growth. I am particularly optimistic about the bulk MSR acquisitions which are expected to increase earnings and add scale to our loan servicing business, drive retail lending opportunities, and provide co-investment opportunities with PMT.”

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