8-K
PennyMac Financial Services, Inc. (PFSI)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of theSecurities Exchange Act of 1934
Date of Report (Date of earliest eventreported): May 5, 2022
PennyMac Financial Services, Inc.
(formerly known as New PennyMac FinancialServices, Inc.)
(Exact name of registrant as specified in its charter)
| Delaware | 001-38727 | 83-1098934 |
|---|---|---|
| (State or other jurisdiction<br><br>of incorporation) | (Commission<br><br>File Number) | (IRS Employer<br><br>Identification No.) |
| 3043 Townsgate Road, Westlake Village, California | 91361 | |
| --- | --- | |
| (Address of principal executive offices) | (Zip Code) |
(818) 224-7442
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written<br>communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ¨ | Soliciting<br>material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ¨ | Pre-commencement<br>communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ¨ | Pre-commencement<br>communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, $0.0001 par value | PFSI | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 2.02 Results of Operations and FinancialCondition.
On May 5, 2022, PennyMac Financial Services, Inc. (the “Company”) issued a press release announcing its financial results for the fiscal quarter ended March 31, 2022. A copy of the press release and the slide presentation used in connection with the Company’s recorded presentation of financial results were made available on May 5, 2022 and are furnished as Exhibits 99.1 and Exhibit 99.2, respectively.
The information in Item 2.02 of this report, including the exhibits hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of Section 18, nor shall it be deemed incorporated by reference into any disclosure document relating to the Company, except to the extent, if any, expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description |
|---|---|
| 99.1 | Press Release, dated May 5, 2022, issued by PennyMac Financial Services, Inc. pertaining to its financial results for the fiscal quarter ended March 31, 2022. |
| 99.2 | Slide Presentation for use beginning on May 5, 2022 in connection with a recorded presentation of financial results for the fiscal quarter ended March 31, 2022. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| PENNYMAC FINANCIAL SERVICES, INC. | |
|---|---|
| Date: May 5, 2022 | /s/ Daniel S. Perotti |
| Daniel S. Perotti | |
| Senior Managing Director and Chief Financial Officer |
Exhibit 99.1
PennyMac Financial Services, Inc. Reports
First Quarter 2022 Results
WESTLAKE VILLAGE, Calif. – May 5, 2022 – PennyMac Financial Services, Inc. (NYSE: PFSI) today reported net income of $173.6 million for the first quarter of 2022, or $2.94 per share on a diluted basis, on revenue of $657.5 million. Book value per share increased to $62.19 from $60.11 at December 31, 2021.
PFSI’s Board of Directors declared a first quarter cash dividend of $0.20 per share, payable on May 27, 2022, to common stockholders of record as of May 17, 2022.
First Quarter 2022 Highlights
| · | Pretax income was $234.5 million, essentially unchanged from the prior quarter<br>and down 54 percent from the first quarter of 2021 |
|---|---|
| o | Repurchased 2.3 million shares of PFSI’s common stock at a cost of $141.4 million; also repurchased an additional 905 thousand<br>shares in April at a cost of $44.0 million |
| --- | --- |
| · | Production segment pretax income of $9.3 million, down from $106.5 million<br>in the prior quarter and down from $362.9 million in the first quarter of 2021 due to lower volumes and margins resulting from a transitioning<br>mortgage market |
| --- | --- |
| o | Consumer direct interest rate lock commitments (IRLCs) were $9.1 billion in unpaid principal balance (UPB), down 36 percent from the<br>prior quarter and 32 percent from the first quarter of 2021 |
| --- | --- |
| o | Broker direct IRLCs were $3.5 billion in UPB, down 9 percent from the prior quarter and 38 percent from the first quarter of 2021 |
| --- | --- |
| o | Government correspondent IRLCs totaled $12.5 billion in UPB, down 20 percent from the prior quarter and 27 percent from<br>the first quarter of 2021 |
| --- | --- |
| o | Total loan acquisitions and originations, including those fulfilled for PennyMac Mortgage Investment Trust (NYSE: PMT), were $33.3 billion<br>in UPB, down 29 percent from the prior quarter and 50 percent from the first quarter of 2021 |
| --- | --- |
| o | Correspondent acquisitions of conventional loans fulfilled for PMT were $9.8 billion in UPB, down 43 percent from the prior quarter<br>and 71 percent from the first quarter of 2021 |
| --- | --- |
1
| · | Servicing segment pretax income was $225.2 million, up from $126.1 million<br>in the prior quarter and $141.7 million in the first quarter of 2021 |
|---|---|
| o | Pretax income excluding valuation-related items was $86.0 million, down 61 percent from the prior quarter primarily driven by decreased<br>EBO loan-related revenue |
| --- | --- |
| o | Valuation items included: |
| --- | --- |
| – | $324.1 million in mortgage servicing rights (MSR) fair value gains partially offset by $217.9 million in fair value decreases from<br>hedging results |
| --- | --- |
| · | Net impact on pretax income related to these items was $106.2 million, or<br>$1.32 in earnings per share |
| --- | --- |
| – | $32.9 million of reversals related to provisions for losses on active loans |
| --- | --- |
| o | Servicing portfolio grew to $518.8 billion in UPB, up 2 percent from December 31, 2021 and 16 percent from March 31, 2021,<br>driven by production volumes which more than offset prepayment activity |
| --- | --- |
| · | Investment Management segment pretax income was $0.1 million, down from $1.5<br>million in the prior quarter and from $1.4 million in the first quarter of 2021 |
| --- | --- |
| o | Net assets under management (AUM) were $2.2 billion, down 6 percent from December 31, 2021, and 5 percent from March 31,<br>2021 |
| --- | --- |
“PFSI reported solid first quarter financial results, producing an annualized return on equity of 20 percent and demonstrating the strength of our balanced business model against a backdrop of rapid and significant increases in mortgage rates,” said Chairman and Chief Executive Officer David Spector. “Our earnings were driven by strong contributions from our large and growing servicing portfolio with 2.2 million customers and nearly $520 billion in unpaid principal balance. However, the unprecedented increase in mortgage rates resulted in lower overall industry origination volumes and left originators and aggregators who still hold excess operational capacity competing for a much smaller population of loans. This transitioning mortgage origination market contributed to the reduced financial performance in our production business.”
Mr. Spector continued, “We remain committed to driving further efficiencies across the platform while actively aligning our expense base with the expected lower levels of activity. As a public company for nearly nine years, PennyMac Financial has a long history of demonstrating success while managing through varying interest rate environments. I believe our scaled and comprehensive platform, including our commitment to enterprise risk management, and new initiatives across our business will enable us to navigate this challenging mortgage market.”
2
The following table presents the contributions of PennyMac Financial’s segments to pretax income:
| Quarter ended March 31, 2022 | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Mortgage Banking | Investment | ||||||||||||
| Production | Servicing | Total | Management | Total | |||||||||
| (in thousands) | |||||||||||||
| Revenue | |||||||||||||
| Net gains on loans held for sale at fair value | $ | 221,610 | $ | 76,849 | $ | 298,459 | $ | - | $ | 298,459 | |||
| Loan origination fees | 67,858 | - | 67,858 | - | 67,858 | ||||||||
| Fulfillment fees from PMT | 16,754 | - | 16,754 | - | 16,754 | ||||||||
| Net loan servicing fees | - | 286,309 | 286,309 | - | 286,309 | ||||||||
| Management fees | - | - | - | 8,117 | 8,117 | ||||||||
| Net interest expense: | |||||||||||||
| Interest income | 30,941 | 22,941 | 53,882 | - | 53,882 | ||||||||
| Interest expense | 27,059 | 50,248 | 77,307 | - | 77,307 | ||||||||
| 3,882 | (27,307 | ) | (23,425 | ) | - | (23,425 | ) | ||||||
| Other | 785 | 616 | 1,401 | 2,031 | 3,432 | ||||||||
| Total net revenue | 310,889 | 336,467 | 647,356 | 10,148 | 657,504 | ||||||||
| Expenses | 301,619 | 111,314 | 412,933 | 10,051 | 422,984 | ||||||||
| Pretax income | $ | 9,270 | $ | 225,153 | $ | 234,423 | $ | 97 | $ | 234,520 |
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 $33.3 billion in UPB, $23.5 billion of which was for its own account, and $9.8 billion of which was fee-based fulfillment activity for PMT. Correspondent government and direct lending IRLCs totaled $25.1 billion in UPB, down 25 percent from the prior quarter and 30 percent from the first quarter of 2021.
Production segment pretax income was $9.3 million, down from $106.5 million in the prior quarter and $362.9 million in the first quarter of 2021, and reflect lower volumes and margins as a result of the significant reduction in the size of the overall origination market as mortgage rates rose rapidly over the quarter. Additionally, production expenses and capacity levels remain elevated in relation to production levels given the rapid transition in the market and are actively being managed to better align to the anticipated market size. Production segment revenue totaled $310.9 million, down 27 percent from the prior quarter and 54 percent from the first quarter of 2021. The quarter-over-quarter decrease was driven by a $93.2 million decrease in net gains on loans held for sale primarily driven by the smaller market and lower margins.
3
The components of net gains on loans held for sale are detailed in the following table:
| Quarter ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| March 31,<br> 2022 | December 31,<br> 2021 | March 31,<br> 2021 | |||||||
| (in thousands) | |||||||||
| Receipt of MSRs and recognition of MSLs in loan sale transactions | $ | 616,302 | $ | 467,141 | $ | 463,571 | |||
| Mortgage servicing rights recapture payable to PennyMac Mortgage Investment Trust | (9,652 | ) | (12,701 | ) | (14,248 | ) | |||
| Provision of liability for representations and warranties, net | (885 | ) | (315 | ) | (6,368 | ) | |||
| Cash gain ^(1)^ | (54,134 | ) | 37,537 | 818,937 | |||||
| Fair value changes of pipeline, inventory and hedges | (253,172 | ) | 8,996 | (507,551 | ) | ||||
| Net gains on mortgage loans held for sale | $ | 298,459 | $ | 500,658 | $ | 754,341 | |||
| Net gains on mortgage loans held for sale by segment: | |||||||||
| Production | $ | 221,610 | $ | 314,826 | $ | 515,963 | |||
| Servicing | $ | 76,849 | $ | 185,832 | $ | 238,378 |
^(1)^ Net of cash hedging results
Loan origination fees for the quarter totaled $67.9 million, down 23 percent from the prior quarter and 35 percent from the first quarter of 2021, driven by lower production volumes.
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 $16.8 million in the first quarter, down 17 percent from the prior quarter and 72 percent from the first quarter of 2021. The decrease from the prior quarter was driven by lower conventional acquisition volumes, partially offset by a higher weighted average fulfillment fee.
Net interest income totaled $3.9 million, down from $4.3 million in the prior quarter. Interest income in the first quarter totaled $30.9 million, down from $40.0 million in the prior quarter, and interest expense totaled $27.1 million, down from $35.7 million in the prior quarter, due to a lower balance of loans held-for-sale during the quarter.
4
Production segment expenses were $301.6 million, down 6 percent from the prior quarter and 3 percent from the first quarter of 2021. PennyMac Financial is actively aligning its capacity and related expenses to the smaller projected origination market size that is expected to result from rising mortgage rates.
Servicing Segment
The Servicing segment includes income from owned MSRs, subservicing and special servicing activities. Servicing segment pretax income was $225.2 million, up from $126.1 million in the prior quarter and $141.7 million in the first quarter of 2021. Servicing segment net revenues totaled $336.5 million, up from $255.7 million in the prior quarter and $262.2 million in the first quarter of 2021. The quarter-over-quarter increase was primarily driven by a $191.6 million increase in net loan servicing fees partially offset by a $109.0 million reduction in gains on loans held for sale related to EBO activity.
Revenue from net loan servicing fees totaled $286.3 million, up from $94.7 million in the prior quarter primarily driven by net valuation related gains. Revenue from loan servicing fees included $291.3 million in servicing fees, reduced by $111.2 million from the realization of MSR cash flows. Net valuation-related gains totaled $106.2 million, and included MSR fair value gains of $324.1 million and hedging losses of $217.9 million primarily driven by increasing interest rates during the period.
5
The following table presents a breakdown of net loan servicing fees:
| Quarter ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| March 31,<br> 2022 | December 31,<br> 2021 | March 31,<br> 2021 | |||||||
| (in thousands) | |||||||||
| Loan servicing fees ^(1)^ | $ | 291,258 | $ | 287,888 | $ | 259,445 | |||
| Changes in fair value of MSRs and MSLs resulting from: | |||||||||
| Realization of cash flows | (111,155 | ) | (97,025 | ) | (82,663 | ) | |||
| Change in fair value inputs | 324,066 | (58,407 | ) | 306,126 | |||||
| Change in fair value of excess servicing spread financing | - | - | (1,037 | ) | |||||
| Hedging losses | (217,860 | ) | (37,723 | ) | (442,151 | ) | |||
| Net change in fair value of MSRs and MSLs | (4,949 | ) | (193,155 | ) | (219,725 | ) | |||
| Net loan servicing fees | $ | 286,309 | $ | 94,733 | $ | 39,720 |
^(1)^ Includes contractually-specified servicing fees
Servicing segment revenue included $76.8 million in net gains on loans held for sale related to reperforming government-insured and guaranteed loans purchased out of Ginnie Mae securitizations, or early buy out loans (EBOs). These gains were down from $185.8 million in the prior quarter and $238.4 million in the first quarter of 2021. These EBOs are previously delinquent loans that were 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 $27.3 million, versus net interest expense of $25.2 million in the prior quarter and $17.1 million in the first quarter of 2021. Interest income was $22.9 million, down from $28.9 million in the prior quarter driven by a decrease in average EBO balances held for sale. Interest expense was $50.2 million, down from $54.1 million in the prior quarter driven by a decrease in average balances of financing for EBO loans.
Servicing segment expenses totaled $111.3 million, down 14% from the prior quarter due to a $28.6 million decrease in the reversal of provision for credit losses.
The total servicing portfolio grew to $518.8 billion in UPB at March 31, 2022, an increase of 2 percent from December 31, 2021 and 16 percent from March 31, 2021. PennyMac Financial subservices or conducts special servicing for $222.9 billion in UPB, up slightly from December 31, 2021 and up 18 percent from March 31, 2021. PennyMac Financial’s owned MSR portfolio grew to $295.9 billion in UPB, an increase of 3 percent from December 31, 2021 and 14 percent from March 31, 2021.
6
The table below details PennyMac Financial’s servicing portfolio UPB:
| March 31,<br> 2022 | December 31,<br> 2021 | March 31,<br> 2021 | ||||
|---|---|---|---|---|---|---|
| (in thousands) | ||||||
| Prime servicing: | ||||||
| Owned | ||||||
| Mortgage servicing rights and liabilities | ||||||
| Originated | $ | 268,886,759 | $ | 254,524,015 | $ | 211,289,054 |
| Acquisitions | 21,911,132 | 23,861,358 | 36,252,669 | |||
| 290,797,891 | 278,385,373 | 247,541,723 | ||||
| Loans held for sale | 5,125,298 | 9,430,766 | 12,959,016 | |||
| 295,923,189 | 287,816,139 | 260,500,739 | ||||
| Subserviced for PMT | 222,864,324 | 221,864,120 | 188,279,019 | |||
| Total prime servicing | 518,787,513 | 509,680,259 | 448,779,758 | |||
| Special servicing - subserviced for PMT | 23,047 | 28,022 | 45,143 | |||
| Total loans serviced | $ | 518,810,560 | $ | 509,708,281 | $ | 448,824,901 |
Investment Management Segment
PennyMac Financial manages PMT for which it earns base management fees and may earn incentive compensation. Net AUM were $2.2 billion as of March 31, 2022, down 6 percent from December 31, 2021 and 6 percent from March 31, 2021.
Pretax income for the Investment Management segment was $0.1 million, down from $1.5 million in the prior quarter and $1.4 million in the first quarter of 2021. Base management fees from PMT were $8.1 million, down from $8.9 million in the prior quarter and $8.4 million in the first quarter of 2021. No performance incentive fees were earned in the periods presented.
7
The following table presents a breakdown of management fees:
| Quarter ended | ||||||
|---|---|---|---|---|---|---|
| March 31,<br> 2022 | December 31,<br> 2021 | March 31,<br> 2021 | ||||
| (in thousands) | ||||||
| Management fees: | ||||||
| Base | $ | 8,117 | $ | 8,919 | $ | 8,449 |
| Performance incentive (adjustment) | - | - | - | |||
| Total management fees | $ | 8,117 | $ | 8,919 | $ | 8,449 |
| Net assets of PennyMac Mortgage Investment Trust | $ | 2,221,938 | $ | 2,367,518 | $ | 2,357,143 |
Investment Management segment expenses totaled $10.1 million, up 13 percent from the prior quarter and 22 percent from the first quarter of 2021.
Consolidated Expenses
Total expenses were $423.0 million, down 8 percent from the prior quarter and 4 percent from the first quarter of 2021. The quarter-over-quarter decrease was driven by the lower production and servicing expenses noted above.
***
Management’s slide presentation will be available in the Investor Relations section of the Company’s website at ir.pennymacfinancial.com after the market closes on Thursday, May 5, 2022.
-
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 6,000 people across the country. For the twelve months ended March 31, 2022, PennyMac Financial’s production of newly originated loans totaled $201 billion in unpaid principal balance, making it the third largest mortgage lender in the nation. As of March 31, 2022, PennyMac Financial serviced loans totaling $519 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 ir.pennymacfinancial.com.
| Media | Investors |
|---|---|
| Kristyn Clark | Kevin Chamberlain |
| kristyn.clark@pennymac.com | Isaac Garden |
| (805) 395-9943 | PFSI_IR@pennymac.com |
| (818) 224-7028 |
8
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: changes in prevailing interest rates; 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 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 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 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 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 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.
9
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.
10
PENNYMAC FINANCIAL SERVICES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
| December 31,<br> 2021 | March 31,<br> 2021 | ||||
|---|---|---|---|---|---|
| ASSETS | |||||
| Cash | 489,799 | $ | 340,069 | $ | 441,870 |
| Short-term investments at fair value | 78,006 | 6,873 | 24,850 | ||
| Loans held for sale at fair value | 5,119,234 | 9,742,483 | 13,385,789 | ||
| Derivative assets | 225,071 | 333,695 | 530,852 | ||
| Servicing advances, net | 616,874 | 702,160 | 550,150 | ||
| Mortgage servicing rights at fair value | 4,707,039 | 3,878,078 | 3,268,910 | ||
| Operating lease right-of-use assets | 85,262 | 89,040 | 74,795 | ||
| Investment in PennyMac Mortgage Investment Trust at fair value | 1,267 | 1,300 | 1,470 | ||
| Receivable from PennyMac Mortgage Investment Trust | 27,722 | 40,091 | 68,644 | ||
| Loans eligible for repurchase | 2,721,574 | 3,026,207 | 12,312,393 | ||
| Other | 546,054 | 616,616 | 638,257 | ||
| Total assets | 14,617,902 | $ | 18,776,612 | $ | 31,297,980 |
| LIABILITIES | |||||
| Assets sold under agreements to repurchase | 3,333,444 | $ | 7,292,735 | $ | 10,848,477 |
| Mortgage loan participation and sale agreements | 494,396 | 479,845 | 518,747 | ||
| Obligations under capital lease | 1,396 | 3,489 | 10,468 | ||
| Notes payable secured by mortgage servicing assets | 1,298,067 | 1,297,622 | 1,296,285 | ||
| Unsecured senior notes | 1,777,132 | 1,776,219 | 1,288,198 | ||
| Derivative liabilities | 90,837 | 22,606 | 68,557 | ||
| Mortgage servicing liabilities at fair value | 2,564 | 2,816 | 46,026 | ||
| Accounts payable and accrued expenses | 371,908 | 359,413 | 355,429 | ||
| Operating lease liabilities | 106,316 | 110,003 | 96,069 | ||
| Payable to PennyMac Mortgage Investment Trust | 159,468 | 228,019 | 164,469 | ||
| Payable to exchanged Private National Mortgage Acceptance Company, LLC unitholders under tax receivable agreement | 30,530 | 30,530 | 35,165 | ||
| Income taxes payable | 745,873 | 685,262 | 751,855 | ||
| Liability for loans eligible for repurchase | 2,721,574 | 3,026,207 | 12,312,393 | ||
| Liability for losses under representations and warranties | 42,794 | 43,521 | 38,428 | ||
| Total liabilities | 11,176,299 | 15,358,287 | 27,830,566 | ||
| STOCKHOLDERS' EQUITY | |||||
| Common stock—authorized 200,000,000 shares of 0.0001 par value; issued and outstanding 55,341,627, 56,867,202, and 66,961,401 shares, respectively | 6 | 6 | 7 | ||
| Additional paid-in capital | - | 125,396 | 762,585 | ||
| Retained earnings | 3,441,597 | 3,292,923 | 2,704,822 | ||
| Total stockholders' equity | 3,441,603 | 3,418,325 | 3,467,414 | ||
| Total liabilities and stockholders’ equity | 14,617,902 | $ | 18,776,612 | $ | 31,297,980 |
All values are in US Dollars.
11
PENNYMAC FINANCIAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
| Quarter ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| March 31,<br> 2022 | December 31,<br> 2021 | March 31,<br> 2021 | |||||||
| (in thousands, except earnings per share) | |||||||||
| Revenue | |||||||||
| Net gains on loans held for sale at fair value | $ | 298,459 | $ | 500,658 | $ | 754,341 | |||
| Loan origination fees | 67,858 | 88,245 | 104,037 | ||||||
| Fulfillment fees from PennyMac Mortgage Investment Trust | 16,754 | 20,150 | 60,835 | ||||||
| Net loan servicing fees: | |||||||||
| Loan servicing fees | 291,258 | 287,888 | 259,445 | ||||||
| Change in fair value of mortgage servicing rights, mortgage servicing liabilities and excess servicing spread financing | 212,911 | (155,432 | ) | 222,426 | |||||
| Hedging results | (217,860 | ) | (37,723 | ) | (442,151 | ) | |||
| Net loan servicing fees | 286,309 | 94,733 | 39,720 | ||||||
| Net interest expense: | |||||||||
| Interest income | 53,882 | 68,979 | 82,081 | ||||||
| Interest expense | 77,307 | 89,844 | 107,713 | ||||||
| (23,425 | ) | (20,865 | ) | (25,632 | ) | ||||
| Management fees from PennyMac Mortgage Investment Trust | 8,117 | 8,919 | 8,449 | ||||||
| Other | 3,432 | 1,971 | 2,936 | ||||||
| Total net revenue | 657,504 | 693,811 | 944,686 | ||||||
| Expenses | |||||||||
| Compensation | 245,547 | 226,723 | 258,829 | ||||||
| Loan origination | 75,333 | 86,789 | 87,392 | ||||||
| Technology | 34,786 | 41,112 | 33,672 | ||||||
| Marketing and advertising | 22,403 | 16,568 | 6,665 | ||||||
| Professional services | 20,103 | 31,734 | 13,286 | ||||||
| Occupancy and equipment | 9,469 | 8,354 | 9,038 | ||||||
| Servicing | (1,246 | ) | 31,470 | 19,183 | |||||
| Other | 16,589 | 16,950 | 10,613 | ||||||
| Total expenses | 422,984 | 459,700 | 438,678 | ||||||
| Income before provision for income taxes | 234,520 | 234,111 | 506,008 | ||||||
| Provision for income taxes | 60,927 | 61,028 | 129,140 | ||||||
| Net income | $ | 173,593 | $ | 173,083 | $ | 376,868 | |||
| Earnings per share | |||||||||
| Basic | $ | 3.11 | $ | 2.97 | $ | 5.45 | |||
| Diluted | $ | 2.94 | $ | 2.79 | $ | 5.15 | |||
| Weighted-average common shares outstanding | |||||||||
| Basic | 55,831 | 58,247 | 69,113 | ||||||
| Diluted | 59,129 | 61,944 | 73,117 | ||||||
| Dividend declared per share | $ | 0.20 | $ | 0.20 | $ | 0.20 |
12
Exhibit 99.2
| 1Q22 EARNINGS REPORT<br>PennyMac Financial Services, Inc.<br>May 2022<br>REVIEW |
|---|
| 2<br>This presentation contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, regarding management’s beliefs, estimates,<br>projections and assumptions with respect to, among other things, our financial results, future operations, business plans and investment strategies, as well as industry and market conditions, all of<br>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<br>“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<br>herein and from past results discussed herein. These forward-looking statements include, but are not limited to, statements regarding the future impact of interest rates and the COVID- 19 pandemic<br>on our business; future loan origination, servicing and production; future loan delinquencies, forbearances and servicing advances; future early buyout activity and other business and financial<br>expectations. Factors which could cause actual results to differ materially from historical results or those anticipated include, but are not limited to: changes in prevailing interest rates; our exposure<br>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<br>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<br>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<br>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<br>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;<br>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<br>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<br>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;<br>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<br>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<br>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<br>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<br>reputation; 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<br>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<br>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<br>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<br>update or revise any forward-looking statements or any other information contained herein, and the statements made in this presentation are current as of the date of this presentation only.<br>This presentation contains financial information calculated other than in accordance with U.S. generally accepted accounting principles (“GAAP”), such as pretax income excluding valuation-related<br>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<br>limitations as an analytical tool and should not be viewed as a substitute for financial information determined in accordance with GAAP.<br>FORWARD-LOOKING STATEMENTS |
| --- |
| FIRST QUARTER HIGHLIGHTS<br>3<br>PRODUCTION<br>INVESTMENT<br>MANAGEMENT<br>Net<br>income<br>$174mm<br>1Q22 Results<br>Diluted<br>EPS(1)<br>$2.94<br>Return on<br>equity<br>20%<br>Book value<br>per share<br>$62.19<br>Capital Return<br>Shares<br>repurchased<br>2.3mm<br>Dividend per<br>common share<br>$0.20<br>Pretax income<br>$9mm<br>Consumer<br>direct lock<br>volume<br>$9.1bn<br>Government<br>correspondent<br>lock volume<br>$12.5bn<br>Broker direct<br>lock volume<br>$3.5bn<br>Total loan<br>acquisitions<br>and<br>originations(2)<br>$33.3bn<br>Pretax income<br>$0.1mm<br>Assets under<br>management<br>$2.2bn<br>Revenue<br>$10.1mm<br>Note: All figures are for 1Q22 or as of 3/31/22<br>(1) EPS = earnings per share. MSR = mortgage servicing rights. UPB = unpaid principal balance<br>(2) Includes volume fulfilled or subserviced for PennyMac Mortgage Investment Trust (NYSE: PMT)<br>(3) Excludes $324.1 million in MSR fair value increases, $217.9 million in hedging losses and a $32.9 million reversal related to provisions for losses on active loans. See slide 13 for additional details.<br>SERVICING Pretax income<br>$225mm<br>MSR(1) fair value<br>changes and<br>hedging results<br>$106mm<br>Pretax income<br>excluding<br>valuation-<br>related items(3)<br>$86mm<br>MSR fair value<br>changes and<br>hedging<br>impact to EPS<br>$1.32<br>Total servicing<br>portfolio<br>UPB(1)(2)<br>$519bn |
| --- |
| 4<br>ORIGINATION MARKET HAS DECLINED MEANINGFULLY<br>U.S. Mortgage Origination Market(1)<br>($ in trillions)<br>Mortgage Rates Have Rapidly Increased<br>• Economic forecasts for 2022 total originations range from $2.6 trillion to $3.1 trillion, reflecting a substantial decline from 2021’s all-time<br>record<br>‒ Excess industry capacity established in recent years is starting to be right-sized<br>• Purchase origination market expected to comprise the majority of volume for the next few years<br>‒ Pennymac has historically over-indexed the purchase money market and was the largest producer of purchase-money loans in the U.S. in<br>2021(4)<br>(1) Actual originations: Inside Mortgage Finance. Forecast originations: Average of Mortgage Bankers Association (4/13/22), Fannie Mae (4/11/22), and Freddie Mac (4/18/22) forecasts.<br>(2) Freddie Mac Primary Mortgage Market Survey. 5.10% as of 4/28/22.<br>(3) Bloomberg: Difference between Freddie Mac Primary Mortgage Market Survey and the 30-Year Fannie Mae or Freddie Mac Par Coupon (MTGEFNCL) Index.<br>(4) Inside Mortgage Finance. Pennymac collectively refers to PFSI and PMT, a mortgage real estate investment trust listed on the New York Stock Exchange.<br>(2) (3)<br>$1.5 $1.8 $1.9 $1.9<br>$2.6<br>$2.7<br>$0.9 $0.6<br>$4.1<br>$4.4<br>$2.8 $2.5<br>2020 2021 2022E 2023E<br>Purchase Refinance<br>0.0%<br>1.0%<br>2.0%<br>3.0%<br>4.0%<br>5.0%<br>Average 30-year fixed rate mortgage Primary/secondary spread |
| --- |
| 5<br>• $1.1 billion in revenue from servicing and sub-servicing fees in 2021<br>• Higher short-term rates expected to drive increased interest income<br>• Cloud-based servicing system built for Pennymac’s unique needs<br>• Operational and cost efficiencies, as well as increased flexibility<br>• Low-cost lead generation for consumer-direct channel<br>• Data-based analytics and insights from servicing system<br>• Loss mitigation expertise to assist consumers and minimize losses<br>• Enhanced by flexible and proprietary servicing technology<br>• Offering homeowners insurance to servicing customers through joint venture<br>• Evaluating additional partnerships and revenue opportunities<br>BENEFITS AND POTENTIAL VALUE FROM PENNYMAC’S LARGE AND GROWING<br>SERVICING PORTFOLIO<br>SERVICING<br>PORTFOLIO<br>Recurring<br>Cash Flows<br>Proprietary<br>Technology<br>Low-Cost<br>Marketing<br>Loss Mitigation<br>Ancillary<br>Products and<br>Services<br>2.2M<br>customers<br>$519B<br>unpaid principal balance |
| --- |
| 13%<br>22%<br>61%<br>29%<br>20%<br>2018 2019 2020 2021 1Q22<br>2.4x<br>3.0x<br>3.6x<br>3.2x<br>2.0x<br>12/31/18 12/31/19 12/31/20 12/31/21 3/31/22 6<br>STRONG BALANCE SHEET, CAPITAL MANAGEMENT AND BOOK VALUE GROWTH<br>Book Value Per Share of PFSI<br>Return on Equity (ROE) • Balanced business model with leadership positions in production<br>and servicing drive profitability across different market<br>environments<br>• Actively aligning expenses with lower levels of activity, while<br>continuing to drive efficiencies<br>– Current expense reduction activity will not be fully reflected in PFSI’s<br>financial results for 1-2 quarters<br>• Track record of successful capital management over 9 years as a<br>publicly traded company<br>– Retained earnings continue to drive book value growth<br>– Quarterly cash dividend of $0.20<br>– Capital remains available for share repurchases; accretive to book<br>value at current price levels<br>• Unique expertise and well-developed risk management<br>infrastructure<br>– Strong balance sheet and equity base with low leverage versus peers<br>– Leader in capital markets and interest rate risk management<br>As we align expenses to lower expected levels of activity and<br>industry capacity adjusts to the contracting mortgage market,<br>ROE is projected to trend lower before returning to its pre-COVID<br>range over time<br>Total Debt-to-Equity<br>$21.34<br>$26.26<br>$47.80<br>$60.11 $62.19<br>12/31/18 12/31/19 12/31/20 12/31/21 3/31/22 |
| --- |
| 7<br>PENNYMAC FINANCIAL’S ROBUST RISK MANAGEMENT DISCIPLINES ARE<br>ALIGNED WITH RECENT FHFA PROPOSALS<br>If adopted as proposed, PFSI would be able to meet these requirements without raising additional capital<br>The FHFA re-proposed eligibility standards for<br>non-bank, Agency seller/servicers<br>• Tightened liquidity, net worth and leverage<br>requirements for originators and servicers<br>• Additional requirements for large non-banks<br>‒ Liquidity buffer<br>‒ Capital and liquidity plans<br>‒ Third-party ratings<br>PFSI is well-positioned to meet these<br>requirements given its long-standing<br>commitment to enterprise risk management<br>• Historically operated with low leverage<br>• Strong liquidity and capital planning disciplines<br>‒ Includes successful hedging of interest rate risk;<br>mitigates liquidity and capital volatility<br>‒ Robust reserves maintained for stress environments<br>‒ $3.1 billion(1) in available liquidity at March 31, 2022<br>• Risk management disciplines fully integrated<br>throughout the organization<br>(1) Available liquidity is unrestricted cash on hand and amounts that can be immediately borrowed on facilities with pledged collateral |
| --- |
| 2.8%<br>3.4% 3.7%<br>4.1% 4.1%<br>12/31/18 12/31/19 12/31/20 12/31/21 3/31/22<br>0.5%<br>0.7%<br>0.9%<br>1.6% 1.7%<br>2018 2019 2020 2021 1Q22 LTM<br>PENNYMAC’S MARKET SHARE OVER TIME ACROSS ITS BUSINESSES<br>8<br>Loan Servicing Market Share(1) Correspondent Production Market Share(1)<br>Consumer Direct Market Share(1) Broker Direct Market Share(1)<br>Note: All figures are for PFSI and include volume fulfilled or subserviced for PMT<br>(1) Historical market share estimates based on Inside Mortgage Finance. Inside Mortgage Finance estimates $3.9 billion in total origination volume for 1Q22 LTM. For 1Q22, LTM, we estimate the correspondent channel represented 23% of the overall origination<br>market, retail represented 61%, and broker represented 16%. Loan servicing market share is based on PFSI’s servicing portfolio UPB of $519 billion divided by an estimated $12.6 trillion in mortgage debt outstanding.<br>Market share trends in correspondent and broker direct reflect Pennymac’s discipline in the rapidly<br>transitioning origination market<br>11.8%<br>15.3%<br>17.7% 16.7% 15.8%<br>2018 2019 2020 2021 1Q22 LTM<br>0.3%<br>1.2%<br>2.1%<br>2.4% 2.2%<br>2018 2019 2020 2021 1Q22 LTM |
| --- |
| PRODUCTION SEGMENT HIGHLIGHTS – VOLUME BY CHANNEL<br>9<br>Consumer Direct<br>(UPB in billions)<br>Broker Direct<br>(UPB in billions)<br>April 2022 April 2022 April 2022<br>Note: Figures may not sum due to rounding<br>(1) For government-insured loans, PFSI earns income from holding and selling or securitizing the loans<br>(2) For conventional and jumbo loans, PFSI earns a fulfillment fee from PMT rather than income from holding and selling or securitizing the loans<br>(3) Includes locks related to PMT loan acquisitions, including conventional loans for which PFSI earns a fulfillment fee<br>(4) Commitments to originate mortgage loans at specified terms at period end<br>(1)<br>(2)<br>(3)<br>$6.0 $4.3 $3.7<br>$4.6 $6.3<br>$4.6<br>$10.7 $10.6<br>$8.2<br>$13.4 $14.2<br>$9.1<br>1Q21 4Q21 1Q22<br>Government loans<br>Conventional loans<br>Total locks<br>Correspondent<br>(UPB in billions)<br>$1.2 $0.9 $0.6<br>$4.0<br>$2.8<br>$2.0<br>$5.1<br>$3.7<br>$2.5<br>$5.7<br>$3.9<br>$3.5<br>1Q21 4Q21 1Q22<br>Government loans<br>Conventional loans<br>Total locks<br>$17.4 $15.7 $12.7<br>$33.8<br>$17.2<br>$9.8<br>$51.2<br>$32.8<br>$22.5<br>$51.1<br>$30.3<br>$22.7<br>1Q21 4Q21 1Q22<br>Government loans<br>Conventional loans for PMT<br>Total locks<br>Locks:<br>(UPB in billions)<br>$7.5 Locks:<br>(UPB in billions)<br>$1.6 Locks:<br>(UPB in billions)<br>$0.7<br>Acquisitions:<br>(UPB in billions)<br>$6.5 Originations:<br>(UPB in billions)<br>$1.8 Originations:<br>(UPB in billions)<br>$0.8<br>Committed pipeline(4):<br>(UPB in billions)<br>$1.9 Committed pipeline(4):<br>(UPB in billions)<br>$0.9 |
| --- |
| 10 (1) Expected revenue net of direct origination costs at time of lock<br>(2) Reflects timing of revenue and loan origination expense recognition, hedging, pricing & execution changes, and other items<br>DRIVERS OF PRODUCTION SEGMENT RESULTS<br>• Production revenue margins were lower driven by the direct lending channels – revenue per fallout adjusted lock for<br>PFSI’s own account was 102 basis points in 1Q22, down from 113 basis points in 4Q21<br>• Production expenses remain elevated given the decline in the size of the overall origination market due to the rapid and<br>substantial increase in mortgage rates<br>‒ Actively adjusting expense levels to better align with lower expected production volumes in 2022<br>Fallout<br>Adjusted<br>Locks<br>Margin /<br>Fulfillment<br>Fee (bps)(1)<br>Revenue<br>Contribution<br>(net of Loan<br>origination<br>expense)<br>% of<br>Production<br>Revenue<br>Fallout<br>Adjusted<br>Locks<br>Margin /<br>Fulfillment<br>Fee (bps)(1)<br>Revenue<br>Contribution<br>(net of Loan<br>origination<br>expense)<br>% of<br>Production<br>Revenue<br>Fallout<br>Adjusted<br>Locks<br>Margin /<br>Fulfillment<br>Fee (bps)(1)<br>Revenue<br>Contribution<br>(net of Loan<br>origination<br>expense)<br>% of<br>Production<br>Revenue<br>Government Correspondent 16,073 $ 37 60.1 $ 10% 15,059 $ 24 36.3 $ 11% 12,145 $ 23 28.2 $ 12%<br>Consumer Direct 9,362 477 446.3 76% 10,070 336 338.7 99% 6,471 297 192.3 82%<br>Broker Direct 4,413 140 61.6 11% 3,155 68 21.4 6% 2,863 62 17.8 8%<br>Other(2) n/a n/a (43.4) -7% n/a n/a (75.6) -22% n/a n/a (19.5) -8%<br>Total PFSI account revenues<br> (net of Loan origination expense)<br>29,849 $ 176 524.7 $ 90% 28,284 $ 113 320.8 $ 94% 21,479 $ 102 218.8 $ 93%<br>PMT Conventional Correspondent 31,626 19 60.8 10% 13,991 14 20.2 6% 9,720 17 16.8 7%<br>Total Production revenues<br> (net of Loan origination expense)<br>95 585.5 $ 100% 81 340.9 $ 100% 76 235.6 $ 100%<br>Production expenses<br> (less Loan origination expense)<br>36 222.6 $ 38% 55 234.4 $ 69% 73 226.3 $ 96%<br>Production segment<br> pretax income<br>59 362.9 $ 62% 25 106.5 $ 31% 3 9.3 $ 4%<br>1Q21<br>61,475 $<br>1Q22<br>31,199 $<br>4Q21<br>42,275 $ |
| --- |
| PRODUCTION SEGMENT HIGHLIGHTS – BUSINESS TRENDS BY CHANNEL<br>11<br>• Pennymac remains the largest<br>correspondent aggregator in the U.S. with<br>765 correspondent sellers<br>• Purchase volume in 1Q22 was 69% of<br>acquisitions, up from 66% in 4Q21<br>• Lower fulfillment fees Q/Q driven by<br>decline in conventional acquisition volumes<br>‒ Impacted by significant levels of<br>competition for conventional loans,<br>including from the GSEs<br>• Correspondent volume drives servicing<br>portfolio growth while generating additional<br>leads for consumer direct<br>• Continued success in the channel driven by:<br>‒ Opportunity to serve customers in our large<br>and growing servicing portfolio<br>‒ Purchase lock volume in 1Q22 was $791<br>million, up slightly from $784 million in 4Q21<br>and up from $514 million in 1Q21<br>‒ New Customer Acquisition interest rate lock<br>commitments in 1Q22 totaled $1.3 billion,<br>down from $1.9 billion in 4Q21 and down<br>from $1.5 billion in 1Q21<br>• Focused on meeting the changing needs of<br>the 2.2 million customers in our servicing<br>portfolio in a higher interest rate<br>environment<br>• Funding volumes were down from 4Q21<br>consistent with the overall market<br>• Approved brokers totaled 2,210 at March<br>31, 2022, or approximately 15% of the total<br>population of brokers<br>‒ Large opportunity with approximately 15,000<br>brokers and non-delegated sellers active in<br>the market<br>• The channel remains competitive with<br>margins that declined further from 4Q21<br>levels<br>• Remain optimistic for market share growth<br>over the long term supported by significant<br>investments in technology and the<br>introduction of new products<br>CORRESPONDENT CONSUMER DIRECT BROKER DIRECT<br>Multi-channel approach provides flexibility and has proven to be a competitive advantage, supporting profitability and<br>pricing discipline while driving growth of the servicing portfolio |
| --- |
| $448.8<br>$509.7 $518.8<br>3/31/21 12/31/21 3/31/22<br>Prime owned Prime subserviced and other<br>$509.7 $518.8 ($24.2) $33.3<br>At 12/31/21 Runoff Additions from<br>loan production<br>At 3/31/22<br>SERVICING SEGMENT HIGHLIGHTS<br>12<br>• Servicing portfolio totaled $518.8 billion in UPB at March 31,<br>2022, up 2% Q/Q and 16% Y/Y<br>• Production volumes more than offset prepayment activity,<br>leading to continued portfolio growth<br>• Decrease in delinquency rates as borrowers continue to<br>emerge from forbearance plans<br>• Decrease in EBO loan volume and modifications as a result<br>of lower delinquency levels and a smaller population of loans<br>eligible to be bought out<br>Loan Servicing Portfolio Composition<br>(UPB in billions)<br>Net Portfolio Growth<br>(UPB in billions)<br>(1) Owned portfolio is predominantly government-insured and guaranteed loans under the FHA (44%), VA (30%), and USDA (11%) programs. Delinquency data based on loan count (i.e., not UPB). CPR = Conditional Prepayment Rate.<br>(2) Represents PMT’s MSRs. Excludes distressed loan investments.<br>(3) UPB of completed modifications includes loss mitigation efforts associated with partial claims programs<br>(4) Early buyouts of delinquent loans from Ginnie Mae pools during the period<br>(5) Also includes loans sold with servicing released in connection with any asset sales by PMT<br>(6) Includes consumer and broker direct production, government correspondent acquisitions, and conventional conforming and jumbo loan acquisitions subserviced for PMT<br>(5)<br>(6)<br>4Q21 1Q22<br>Loans serviced (in thousands) 2,147 2,167<br>60+ day delinquency rate - owned portfolio(1) 4.7% 3.9%<br>60+ day delinquency rate - sub-serviced portfolio(2) 0.9% 0.7%<br>Actual CPR - owned portfolio(1) 23.4% 17.1%<br>Actual CPR - sub-serviced(2) 19.8% 13.0%<br>UPB of completed modifications ($ in millions)(3) $6,168 $5,096<br>EBO loan volume ($ in millions)(4) $3,663 $2,092<br>Selected Operational Metrics |
| --- |
| SERVICING PROFITABILITY EXCLUDING VALUATION-RELATED CHANGES<br>13<br>(1) Of average portfolio UPB, annualized<br>(2) Comprised of net gains on mortgage loans held for sale at fair value and interest income related to EBO loans<br>(3) Consists of interest shortfall and recording and release fees<br>(4) Changes in fair value do not include realization of MSR cash flows<br>(5) Considered in the assessment of MSR fair value changes<br>• Operating revenue was essentially unchanged; operating expenses as a percentage of average servicing portfolio UPB increased from 4Q21 due to<br>seasonal impacts but declined from 1Q21<br>• Realization of MSR cash flows increased driven by higher average MSR values during the quarter<br>• EBO loan-related revenue decreased $111 million driven by lower volumes and redelivery gains due to higher interest rates<br>• Payoff-related expense from prepayments decreased $6.2 million<br>$ in millions<br>basis<br>points(1) $ in millions<br>basis<br>points(1) $ in millions<br>basis<br>points(1)<br>Operating revenue 266.7 $ 24.4 296.6 $ 23.6 296.1 $ 23.0<br>Realization of MSR cash flows (82.7) (7.6) (97.0) (7.7) (111.2) (8.6)<br>EBO loan-related revenue(2) 283.7 25.9 206.0 16.4 95.0 7.4<br>Servicing expenses:<br>Operating expenses (109.5) (10.0) (106.6) (8.5) (120.4) (9.4)<br>Payoff-related expense(3) (43.7) (4.0) (33.0) (2.6) (26.8) (2.1)<br>Losses and provisions for defaulted loans (9.4) (0.9) (13.6) (1.1) (13.5) (1.0)<br>EBO loan transaction-related expense (8.0) (0.7) (3.9) (0.3) (2.1) (0.2)<br>Financing expenses:<br>Interest on ESS (1.3) (0.1) - - - -<br>Interest to third parties (37.4) (3.4) (30.6) (2.4) (31.2) (2.4)<br>Pretax income excluding valuation-related changes 258.4 $ 23.6 217.9 $ 17.3 86.0 $ 6.7<br>Valuation-related changes<br>MSR fair value(4) 306.1 (58.4) 324.1<br>ESS liability fair value (1.0) - -<br>Hedging derivatives gains (losses) (442.2) (37.7) (217.9)<br>Provision for losses on active loans(5) 20.4 4.3 32.9<br>Servicing segment pretax income 141.7 $ 126.1 $ 225.2 $<br>Average servicing portfolio UPB 437,826 $ 503,176 $ 514,077 $<br>1Q22 1Q21 4Q21 |
| --- |
| ($559)<br>($1,110)<br>($68)<br>$324 $405<br>$943<br>($476)<br>($218)<br>$528<br>$1,964<br>$1,044<br>$9<br>2019 2020 2021 1Q22<br>MSR fair value change before recognition of realization of cash flows<br>Hedging and other gains (losses)<br>Production pretax income<br>14<br>HEDGING APPROACH MODERATES THE VOLATILITY OF PFSI’S RESULTS OVER TIME<br>MSR Valuation Changes and Offsets<br>($ in millions) • PFSI seeks to moderate the impact of interest rate changes<br>on the fair value of its MSR asset through a comprehensive<br>hedge strategy that also considers production-related<br>income<br>• In 1Q22, MSR fair value increased significantly(1) :<br>– Driven by higher mortgage rates, resulting in expectations for<br>lower prepayment activity in the future<br>• Partially offset by hedging and other losses<br>– Primarily driven by higher interest rates<br>(1) Before recognition of realization of cash flows |
| --- |
| INVESTMENT MANAGEMENT SEGMENT HIGHLIGHTS<br>15<br>• Net AUM as of March 31, 2022 were $2.2 billion, down 6% from December 31, 2021 and 6% from March 31, 2021<br>‒ Decrease in AUM primarily due to PMT’s net loss in 1Q22<br>• Investment Management segment revenues were $10.1 million, down 3% from 4Q21 and up 6% from 1Q21<br>Investment Management AUM<br>($ in billions)<br>Investment Management Revenues<br>($ in millions)<br>$2.4 $2.4 $2.2<br>3/31/21 12/31/21 3/31/22<br>$9.6<br>$10.5 $10.1<br>1Q21 4Q21 1Q22<br>Base management fees & other revenue |
| --- |
| APPENDIX |
| --- |
| 17<br>PENNYMAC IS AN ESTABLISHED LEADER IN THE U.S. MORTGAGE MARKET WITH<br>SUBSTANTIAL LONG-TERM GROWTH POTENTIAL<br>$519 billion outstanding<br>IN<br>SERVICING(2)<br>YEARS FOR PFSI AS A<br>PUBLIC COMPANY 8 14 YEARS OF<br>OPERATIONS<br>PMT #3<br>• CORRESPONDENT<br>PRODUCTION<br>• CONSUMER DIRECT<br>• BROKER DIRECT<br>IN PRODUCTION(1)<br>IS A LEADING<br>RESIDENTIAL<br>MORTGAGE<br>REIT #6<br>Note: All figures are for PFSI and include volume fulfilled or subserviced for PMT. All figures are as of 3/31/22 unless otherwise noted.<br>(1) Inside Mortgage Finance for the 12 months ended 3/31/22.<br>(2) Inside Mortgage Finance as of December 31, 2021.<br>$2.2 billion in assets<br>under management<br>12-year track record<br>2+ million customers<br>$201 billion LTM 1Q22 |
| --- |
| OVERVIEW OF PENNYMAC FINANCIAL’S BUSINESSES<br>18<br>LOAN PRODUCTION<br>Correspondent aggregation of newly<br>originated loans from third-party sellers<br>- PFSI earns gains on delegated<br>government-insured and non-delegated<br>loans<br>- Fulfillment fees for PMT’s delegated<br>conventional loans<br>Consumer direct origination of<br>conventional and government-insured<br>loans<br>Broker direct origination launched in 2018<br>LOAN SERVICING<br>Servicing for owned MSRs and<br>subservicing for MSRs owned by PMT<br>Major loan servicer for Fannie Mae,<br>Freddie Mac and Ginnie Mae<br>Industry-leading capabilities in special<br>servicing<br>Organic growth results from loan<br>production, supplemented by MSR<br>acquisitions and PMT investment activity<br>INVESTMENT MANAGEMENT<br>External manager of PMT, which invests in<br>mortgage-related assets:<br>- GSE credit risk transfer investments<br>- MSR investments<br>- Investments in prime non-agency MBS and<br>asset-backed securities<br>Synergistic partnership with PMT<br>Complex and highly regulated mortgage industry requires effective governance, compliance and operating systems<br>Operating platform has been developed organically and is highly scalable<br>Commitment to strong corporate governance, compliance and risk management since inception<br>PFSI is well-positioned to navigate the current market and regulatory environment |
| --- |
| 19<br>PFSI’S BALANCED BUSINESS MODEL IS A FLYWHEEL<br>• Diversified business through correspondent,<br>consumer direct and broker direct channels<br>• Correspondent and broker direct channels<br>in particular allow PFSI to access<br>purchase-money volume<br>• Lacks the fixed overhead of the traditional, retail<br>origination model<br>• Recurring fee income business captured over the<br>life of the loan<br>• With higher interest rates, expected life of the<br>loan increases resulting in a more valuable MSR<br>asset<br>• Creates a natural hedge to production income<br>Customer base of over 2 million<br>drives leads for consumer direct<br>Large volumes of production grow servicing portfolio<br>Loan Production<br>3rd largest in the U.S.(1)<br>Loan Servicing<br>6th largest in the U.S.(2)<br>In both businesses, scale and efficiency are critical for success<br>Note: All figures are for PFSI and include volume fulfilled or subserviced for PMT.<br>(1) Inside Mortgage Finance for the 12 months ended 3/31/22<br>(2) Inside Mortgage Finance as of December 31, 2021 |
| --- |
| 11% 19% 20% 22% 26%<br>13% 22%<br>61%<br>29% 20%<br>2013 2014 2015 2016 2017 2018 2019 2020 2021 1Q22<br>PFSI's Annualized Return on Average Common Stockholders' Equity (ROE)<br>1Q22<br>$1.8 $1.3 $1.7 $2.1 $1.8 $1.6 $2.3<br>$4.1 $4.4<br>$2.8<br>2013 2014 2015 2016 2017 2018 2019 2020 2021 2022E<br>U.S. Origination Market (in trillions)<br>0.0%<br>1.0%<br>2.0%<br>3.0%<br>4.0%<br>10-Year Treasury Yield<br>20<br>PFSI’S TRACK RECORD ACROSS VARIOUS MARKET ENVIRONMENTS IS UNIQUE AMONG<br>INDEPENDENT MORTGAGE BANKS<br>Proven ability to<br>generate attractive<br>ROEs…<br>…across different<br>market environments…<br>…with a strong<br>orientation towards<br>purchase money<br>mortgages.<br>(1) Represents partial year. Initial Public Offering was May 8, 2013.<br>(2) Inside Mortgage Finance<br>(3) Bloomberg<br>(4) Inside Mortgage Finance for historical data. Industry purchase mix for 1Q22 represents the average of Mortgage Bankers Association (4/13/22), Fannie Mae (4/11/22), and Freddie Mac (4/18/22) estimates.<br>(1)<br>(2) (3)<br>(4)<br>Average: 25%<br>48%<br>75% 64% 61% 73% 80%<br>63%<br>40% 45% 52%<br>40%<br>58% 53% 49% 63% 71%<br>54%<br>36% 42% 52%<br>2013 2014 2015 2016 2017 2018 2019 2020 2021 1Q22<br>PFSI Purchase Mix Industry Purchase Mix |
| --- |
| PENNYMAC HAS DEVELOPED IN A SUSTAINABLE MANNER FOR<br>LONG-TERM SUCCESS<br>21<br>2008 2009 2010 2011 2012<br>2013 2014 2015 2016 2017<br>2018 2019 2020 2021<br>Operations launched; de novo<br>build of legacy-free mortgage<br>servicer<br>Raised $500 million of capital<br>in private opportunity funds<br>PMT formed in an initial public<br>offering raising $320 million<br>Correspondent group<br>established with a focus on<br>operations development and<br>process design<br>Added servicing leadership<br>for prime portfolio and to<br>drive scalable growth<br>Correspondent system<br>launches<br>Expanded infrastructure<br>with flagship operations<br>facility in Moorpark, CA<br>Correspondent leadership<br>team expands<br>Expanded infrastructure<br>in Tampa, FL<br>Became largest non-bank<br>correspondent<br>aggregator<br>PFSI completed initial<br>public offering<br>Expanded infrastructure in<br>Fort Worth, TX<br>Continued organic growth<br>and servicing portfolio UPB<br>reaches $100 billion(1)<br>PFSI stockholders’ equity<br>surpasses $1 billion<br>Substantial growth in<br>PFSI’s consumer direct<br>capacity<br>PFSI issued MSR-<br>backed term notes<br>PFSI launched broker-<br>direct lending channel<br>PFSI completes corporate<br>reorganization<br>Achieved position as the<br>largest correspondent<br>aggregator in the U.S.<br>PFSI launched proprietary,<br>cloud-based Servicing<br>Systems Environment (SSE)<br>Record production volumes<br>across all channels; nearly<br>$200 billion in UPB(1)<br>PFSI issued inaugural $650<br>million of unsecured Senior<br>Notes<br>PFSI issued an additional<br>$1.15 billion of<br>unsecured Senior Notes<br>Servicing portfolio<br>surpasses 2 million<br>customers(1)<br>(1) All figures are for PFSI and include volume fulfilled or subserviced for PMT<br>• Disciplined growth to address the demands of the GSEs, Agencies, regulators and our financing partners<br>‒ Since inception, PennyMac has focused on building and testing processes and systems before adding significant transaction volumes<br>• Highly experienced management team has created a robust corporate governance system centered on compliance, risk management and quality control<br>2022<br>Launched “Greatness Lives<br>Here” brand marketing<br>campaign celebrating home<br>as the foundation for<br>achieving life’s aspirations |
| --- |
| 0.0%<br>1.0%<br>2.0%<br>3.0%<br>4.0%<br>1.51%<br>2.0%<br>2.5%<br>3.0%<br>3.5%<br>4.0%<br>4.5%<br>5.0%<br>CURRENT MARKET ENVIRONMENT AND MACROECONOMIC TRENDS<br>22<br>Macroeconomic Metrics(3) Footnotes<br>(1) Freddie Mac Primary Mortgage Market Survey. 5.10% as of 4/28/22<br>(2) U.S. Department of the Treasury. 2.82% as of 4/28/22<br>(3) 10-year Treasury bond yield and 2/10 year Treasury yield spread: Bloomberg.<br>Average 30-year fixed rate mortgage: Freddie Mac Primary Mortgage Market Survey.<br>Average secondary mortgage rate: 30-Year FNCL Par Coupon Index (MTGEFNCL),<br>Bloomberg.<br>U.S. home price appreciation: S&P CoreLogic Case-Shiller U.S. National Home Price<br>NSA Index (SPCSUSA). Data is as of 2/28/22.<br>Residential mortgage originations are for the quarterly period ended. Source: Inside<br>Mortgage Finance.<br>3/31/21 6/30/21 9/30/21 12/31/21 3/31/22<br>10-year Treasury<br> bond yield 1.7% 1.5% 1.5% 1.5% 2.3%<br>2/10 year Treasury<br> yield spread 1.6% 1.2% 1.2% 0.8% 0.0%<br>30-year fixed rate<br> mortgage 3.2% 3.0% 3.0% 3.1% 4.7%<br>Secondary mortgage<br> rate 2.0% 1.9% 2.0% 2.1% 3.5%<br>U.S. home price appreciation<br> (Y/Y % change) 13.3% 18.7% 19.7% 18.8% 19.8%<br>Residential mortgage<br> originations (in billions) $1,230 $1,125 $1,090 $995 $725<br>Average 30-year fixed rate mortgage(1) 10-year Treasury Bond Yield(2)<br>2.34%<br>4.67%<br>3.11% |
| --- |
| 23<br>MSR ASSET VALUATION<br>(1) Weighted average<br>Mortgage<br>Servicing Rights<br>Pool UPB $290,760<br>Coupon(1) 3.2%<br>Servicing fee/spread(1) 0.35%<br>Prepayment speed assumption (CPR)(1) 8.9%<br>Fair value $4,707.0<br>As a multiple of servicing fee 4.68<br>March 31, 2022<br>Unaudited ($ in millions) |
| --- |
| 1.3% 1.5%<br>0.3%<br>0.4%<br>0.0% 0.1%<br>0.7%<br>0.6%<br>12/31/21 Re-<br>performing<br>Active<br>Loss<br>Mitigation<br>Paid-<br>in-full<br>30+ DQ<br>not in<br>forbearance<br>Extended New<br>forbearances<br>3/31/22<br>TRENDS IN DELINQUENCIES, FORBEARANCE AND LOSS MITIGATION<br>24<br>30+ Day Delinquency Rate and Forbearance Trend(1)<br>Forbearance Outcomes(2)<br>• Overall mortgage delinquency rates have returned to pre-pandemic<br>levels; however, delinquency rates of seriously delinquent loans (90+<br>days) remain elevated<br>• In PFSI’s predominately government MSR portfolio, approximately<br>275,000 borrowers have been enrolled in a forbearance plan related to<br>COVID-19 since the enactment of the CARES Act<br>– Through March 31, approximately 257,000 borrowers have exited or are in<br>the process of exiting their forbearance plan including those borrowers that<br>have paid-in-full<br>• Servicing advances outstanding decreased to approximately $525 million<br>at March 31, 2022 from $564 million at December 31, 2021<br>– No P&I advances are outstanding, as prepayment activity continues to<br>sufficiently cover remittance obligations<br>• Of the 0.3% reduction in forbearance related to re-performance<br>– 0.1% were forbearances that remained current or went delinquent and<br>subsequently became current<br>– 0.2% were FHA Partial Claims or completed modifications<br>Note: Figures may not sum due to rounding<br>(1) Owned MSR portfolio. Delinquency and forbearance data based on loan count (i.e. not UPB). As of 3/31/22, 30+ day delinquency units<br>amounted to 81,282, forbearance units amounted to 18,013, total portfolio units were 1,348,421, and portfolio UPB was $296 billion.<br>(2) Forbearance outcomes based on loan count as a percentage of beginning period loans in forbearance<br>Beginning period forbearance Ending period forbearance<br>6.4%<br>12.4%<br>10.1%<br>7.8% 6.3% 4.9%<br>3.2%<br>1.5% 1.3%<br>7.2%<br>15.1% 14.1% 12.6%<br>10.2%<br>9.0% 8.3% 7.0% 6.0%<br>3/31/20 6/30/20 9/30/20 12/31/20 3/31/21 6/30/21 9/30/21 12/31/21 3/31/22<br>Forbearance Rate 30+ Day Delinquency Rate |
| --- |
| ACQUISITIONS AND ORIGINATIONS BY PRODUCT<br>25<br>First Lien Acquisitions/Originations<br>Note: Figures may not sum exactly due to rounding<br>Unaudited ($ in millions) 1Q21 2Q21 3Q21 4Q21 1Q22<br>Correspondent Acquisitions<br>Conventional Conforming 33,762 $ 30,479 $ 28,605 $ 17,157 $ 9,769 $<br>Government 17,440 16,175 15,375 15,651 12,730<br>Total 51,202 $ 46,654 $ 43,980 $ 32,808 $ 22,500 $<br>Consumer Direct Originations<br>Conventional Conforming 4,634 $ 5,012 $ 6,200 $ 6,311 $ 4,553 $<br>Government 6,023 5,661 4,932 4,289 3,669<br>Total 10,657 $ 10,672 $ 11,131 $ 10,600 $ 8,222 $<br>Broker Direct Originations<br>Conventional Conforming 3,959 $ 3,246 $ 3,086 $ 2,823 $ 1,979 $<br>Government 1,158 728 902 860 560<br>Jumbo - - - - 2<br>Total 5,117 $ 3,974 $ 3,988 $ 3,684 $ 2,541 $<br>Total acquisitions/originations 66,976 $ 61,300 $ 59,099 $ 47,092 $ 33,262 $<br>UPB of loans fulfilled for PMT<br> (included in correspondent acquisitions) 33,762 $ 30,479 $ 28,605 $ 17,157 $ 9,769 $ |
| --- |
| INTEREST RATE LOCKS BY PRODUCT<br>26<br>Note: Figures may not sum exactly due to rounding<br>First Lien Locks<br>Unaudited ($ in millions) 1Q21 2Q21 3Q21 4Q21 1Q22<br>Correspondent Locks<br>Conventional Conforming 33,998 $ 30,332 $ 29,411 $ 14,717 $ 10,194 $<br>Government 17,064 15,657 16,230 15,544 12,487<br>Total 51,062 $ 45,990 $ 45,641 $ 30,261 $ 22,682 $<br>Consumer Direct Locks<br>Conventional Conforming 6,337 $ 7,486 $ 9,625 $ 8,264 $ 5,242 $<br>Government 7,047 6,621 6,701 5,937 3,861<br>Jumbo - - - - 8<br>Total 13,384 $ 14,108 $ 16,326 $ 14,200 $ 9,112 $<br>Broker Direct Locks<br>Conventional Conforming 4,634 $ 3,387 $ 3,745 $ 2,884 $ 2,732 $<br>Government 1,036 1,119 1,131 984 784<br>Jumbo - - - - 10<br>Total 5,671 $ 4,506 $ 4,876 $ 3,867 $ 3,527 $<br>Total locks 70,117 $ 64,604 $ 66,843 $ 48,329 $ 35,320 $ |
| --- |
| 1Q21 2Q21 3Q21 4Q21 1Q22 1Q21 2Q21 3Q21 4Q21 1Q22<br>Government-insured 707 702 700 693 691 Government-insured 37 42 42 42 43<br>Conventional 761 757 755 750 750 Conventional 34 34 35 36 36<br>1Q21 2Q21 3Q21 4Q21 1Q22 1Q21 2Q21 3Q21 4Q21 1Q22<br>Government-insured 719 708 706 704 708 Government-insured 39 39 40 40 40<br>Conventional 757 748 744 742 738 Conventional 32 33 33 34 35<br>1Q21 2Q21 3Q21 4Q21 1Q22 1Q21 2Q21 3Q21 4Q21 1Q22<br>Government-insured 743 726 731 720 702 Government-insured 43 43 42 44 43<br>Conventional 767 760 760 755 754 Conventional 33 34 34 35 36<br>Weighted Average FICO Weighted Average DTI<br>Weighted Average FICO Weighted Average DTI<br>Weighted Average FICO Weighted Average DTI<br>CREDIT CHARACTERISTICS BY ACQUISITION/ORIGINATION PERIOD<br>27<br>Correspondent<br>Consumer Direct<br>Broker Direct |
| --- |
| ADJUSTED EBITDA<br>28<br>($ in millions) 1Q21 4Q21 1Q22<br>Net income 376.9 $ 173.1 $ 173.6 $<br>Provision for income taxes 129.1 61.0 60.9<br>Income before provisions for income taxes 506.0 234.1 234.5<br>Depreciation and amortization 7.6 6.9 7.0<br>(Increase) decrease in fair value of MSRs and MSLs due to changes in<br>valuation inputs used in the valuation model (306.1) 58.4 (324.1)<br>Increase (decrease) in fair value of ESS payable to PennyMac<br>Mortgage Investment Trust 1.0 - -<br>Hedging losses (gains) associated with MSRs 442.2 37.7 217.9<br>Stock-based compensation 10.9 9.1 9.3<br>Interest expense on corporate debt and capital base 12.7 24.0 23.4<br>Adjusted EBITDA 674.3 $ 370.3 $ 168.0 $ |
| --- |