PennyMac Financial Services, Inc. Reports Fourth Quarter and Full-Year 2021 Results

WESTLAKE VILLAGE, Calif.–(BUSINESS WIRE)–PennyMac Financial Services, Inc. (NYSE: PFSI) today reported net income of $173.1 million for the fourth quarter of 2021, or $2.79 per share on a diluted basis, on revenue of $693.8 million. Book value per share increased to $60.11 from $58.00 at September 30, 2021.

PFSI’s Board of Directors declared a fourth quarter cash dividend of $0.20 per share, payable on February 25, 2022, to common stockholders of record as of February 15, 2022.

Fourth Quarter 2021 Highlights

  • Pretax income was $234.1 million, down 31 percent from the prior quarter and 62 percent from the fourth quarter of 2020

    • Repurchased 3.9 million shares of PFSI’s common stock at a cost of $257.3 million; also repurchased an additional 848 thousand shares in January at a cost of $56.0 million
  • Production segment pretax income of $106.5 million, down 68 percent from the prior quarter and 81 percent from the fourth quarter of 2020 primarily due to lower volumes and margins resulting from a transitioning mortgage market and a return to more normal seasonal trends

    • Consumer direct interest rate lock commitments (IRLCs) were $14.2 billion in unpaid principal balance (UPB), down 13 percent from the prior quarter and up 11 percent from the fourth quarter of 2020
    • Broker direct IRLCs were $3.9 billion in UPB, down 21 percent from the prior quarter and 32 percent from the fourth quarter of 2020
    • Government correspondent IRLCs totaled $15.5 billion in UPB, down 4 percent from the prior quarter and 21 percent from the fourth quarter of 2020
    • Total loan acquisitions and originations, including those fulfilled for PMT, were $47.1 billion in UPB, down 20 percent from the prior quarter and 32 percent from the fourth quarter of 2020
    • Correspondent acquisitions of conventional loans fulfilled for PennyMac Mortgage Investment Trust (NYSE: PMT) were $17.2 billion in UPB, down 40 percent from the prior quarter and 55 percent from the fourth quarter of 2020
  • Servicing segment pretax income was $126.1 million, up from $8.0 million in the prior quarter and $42.0 million in the fourth quarter of 2020

    • Pretax income excluding valuation-related items was $217.9 million, up 47 percent from the prior quarter driven by increased income from loss mitigation activity and higher servicing fees
    • Valuation items included:

      • $58.4 million in MSR fair value declines and $37.7 million in hedging losses

        • Net impact on pretax income related to these items was $(96.1) million, or $(1.15) in earnings per share
        • $4.3 million of reversals related to provisions for losses on active loans
    • Servicing portfolio grew to $509.7 billion in UPB, up 3 percent from September 30, 2021 and 19 percent from December 31, 2020, driven by production volumes which more than offset elevated prepayment activity
  • Investment Management segment pretax income was $1.5 million, up from $1.0 million in the prior quarter and down from $2.6 million in the fourth quarter of 2020

    • Net assets under management (AUM) were $2.4 billion, down 5 percent from September 30, 2021, and up 3 percent from December 31, 2020

Full-Year 2021 Highlights

  • Net income of $1.0 billion, down from a record $1.6 billion in 2020
  • Pretax income of $1.4 billion, down from a record $2.2 billion in 2020
  • Total net revenue of $3.2 billion, down from a record $3.7 billion in 2020
  • Repurchased approximately 15.4 million shares of PFSI’s common stock, or more than 20 percent of the total outstanding at the beginning of the year, for an approximate cost of $958 million
  • Record loan production of $234.5 billion in UPB, an increase of 19 percent from 2020

    • $59.8 billion in UPB of originations in the direct lending channels, up 68 percent from 2020
  • Servicing portfolio UPB of $509.7 billion at year end, up 19 percent from December 31, 2020
  • Issued $1.15 billion of long-term senior unsecured notes

“PennyMac Financial’s results in the fourth quarter demonstrate the earnings power of our balanced mortgage banking model, with pretax income from our servicing business exceeding that from our production business,” said Chairman and CEO David Spector. “The strong fourth quarter also culminated another year of outstanding operational performance for the company. In fact, Pennymac’s total production for the year, including acquisitions made by PMT, was a record $234 billion in unpaid principal balance, up nearly 20 percent from the prior year. These production volumes led to servicing portfolio growth of 19 percent despite elevated prepayment activity throughout the year, and we ended 2021 with a servicing portfolio of approximately $510 billion in unpaid principal balance with more than 2.1 million customers. 2021 was also a year of exceptional financial performance, as PennyMac Financial delivered a return on equity of 29 percent and returned more than $1 billion in capital to stockholders through repurchases and cash dividends.”

Mr. Spector continued, “Market share in our most profitable channel, consumer direct, has increased meaningfully since last year, which will improve the long-term earnings profile of our production business over time. Our newly evolved brand and marketing focus along with deployment of transformational technologies in our direct lending channels are key components of multi-year investments to achieve our medium-term goals. At the same time, as the market is transitioning to a higher rate environment with elevated levels of competition, we will remain disciplined, taking advantage of our operational scale, while staying focused on profitability and shareholder returns.”

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

Quarter ended December 31, 2021
Mortgage Banking Investment
Management
Production Servicing Total Total
(in thousands)
Revenue
Net gains on loans held for sale at fair value

$

314,826

$

185,832

 

$

500,658

 

$

 

$

500,658

 

Loan origination fees

 

88,245

 

 

 

88,245

 

 

 

 

88,245

 

Fulfillment fees from PMT

 

20,150

 

 

 

20,150

 

 

 

 

20,150

 

Net loan servicing fees

 

 

94,733

 

 

94,733

 

 

 

 

94,733

 

Management fees

 

 

 

 

 

 

8,919

 

 

8,919

 

Net interest expense:
Interest income

 

40,038

 

28,941

 

 

68,979

 

 

 

 

68,979

 

Interest expense

 

35,741

 

54,101

 

 

89,842

 

 

2

 

 

89,844

 

 

4,297

 

(25,160

)

 

(20,863

)

 

(2

)

 

(20,865

)

Other

 

178

 

250

 

 

428

 

 

1,543

 

 

1,971

 

Total net revenue

 

427,696

 

255,655

 

 

683,351

 

 

10,460

 

 

693,811

 

Expenses

 

321,188

 

129,599

 

 

450,787

 

 

8,913

 

 

459,700

 

Pretax income

$

106,508

$

126,056

 

$

232,564

 

$

1,547

 

$

234,111

 

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 $47.1 billion in UPB, $29.9 billion of which was for its own account, and $17.2 billion of which was fee-based fulfillment activity for PMT. Correspondent government and direct lending IRLCs totaled $33.6 billion in UPB, down 10 percent from the prior quarter and 12 percent from the fourth quarter of 2020.

Production segment pretax income was $106.5 million, down 68 percent from the prior quarter and 81 percent from the fourth quarter of 2020 primarily due to lower volumes and margins resulting from a transitioning mortgage market and a return to more normal seasonal trends. Production segment revenue totaled $427.7 million, down 33 percent from the prior quarter and 48 percent from the fourth quarter of 2020. The quarter-over-quarter decrease was driven by a $181.7 million decrease in net gains on loans held for sale primarily as a result of lower margins and lock volumes.

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

Quarter ended
December 31,
2021
September 30,
2021
December 31,
2020
(in thousands)
Receipt of MSRs and recognition of MSLs in
loan sale transactions

$

467,141

 

$

398,665

 

$

367,501

 

Mortgage servicing rights recapture payable to
PennyMac Mortgage Investment Trust

 

(12,701

)

 

(12,976

)

 

(11,868

)

Provision of liability for representations
and warranties, net

 

(315

)

 

(2,206

)

 

(4,667

)

Cash gain (1)

 

37,537

 

 

126,053

 

 

459,887

 

Fair value changes of pipeline, inventory and hedges

 

8,996

 

 

117,218

 

 

48,208

 

Net gains on mortgage loans held for sale

$

500,658

 

$

626,754

 

$

859,061

 

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

$

314,826

 

$

496,568

 

$

659,915

 

Servicing

$

185,832

 

$

130,186

 

$

199,146

 

(1) Net of cash hedging results

Loan origination fees for the quarter totaled $88.2 million, down 7 percent from the prior quarter and 6 percent from the fourth quarter of 2020. The decrease from the prior quarter was 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 $20.2 million in the fourth quarter, down 54 percent from the prior quarter and 72 percent from the fourth quarter of 2020. The quarter-over-quarter decrease in fulfillment fee revenue was driven by lower conventional acquisition volumes and a decrease in the weighted average fulfillment fee. The weighted average fulfillment fee rate decrease reflects discretionary reductions to facilitate successful loan acquisitions by PMT in a market impacted by significant levels of competition for conventional loans, including from the GSEs.

Net interest income totaled $4.3 million, down from $4.7 million in the prior quarter. Interest income in the fourth quarter totaled $40.0 million, up from $33.3 million in the prior quarter, and interest expense totaled $35.7 million, up from $28.6 million in the prior quarter, due to a higher balance of loans held-for-sale during the quarter.

Production segment expenses were $321.2 million, up 4 percent from the prior quarter driven by our brand and technology initiatives. Production segment expenses were up 28 percent from the fourth quarter of 2020 as a result of higher volumes in the consumer direct channel.

Servicing Segment

The Servicing segment includes income from owned MSRs, subservicing and special servicing activities. Servicing segment pretax income was $126.1 million, up from $8.0 million in the prior quarter and $42.0 million in the fourth quarter of 2020. Servicing segment net revenues totaled $255.7 million, up from $136.8 million in the prior quarter and $207.6 million in the fourth quarter of 2020. The quarter-over-quarter increase was primarily driven by a $55.6 million increase in net gains on loans held for sale and higher net loan servicing fees.

Revenue from net loan servicing fees totaled $94.7 million, up from $33.6 million in the prior quarter primarily driven by lower net valuation related declines and increased loan servicing fees due to a larger servicing portfolio. Revenue from loan servicing fees included $287.9 million in servicing fees, reduced by $97.0 million from the realization of MSR cash flows. Net valuation-related losses totaled $96.1 million, and included MSR fair value declines of $58.4 million, and hedging losses of $37.7 million. The decline in MSR fair value was comprised of $28.1 million in fair value declines due to changes in interest rates, primarily due to a significant flattening of the yield curve and $30.3 million in other valuation declines, primarily due to increases to short-term prepayment projections. The hedging losses were largely driven by elevated hedge costs during the quarter.

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

Quarter ended
December 31,
2021
September 30,
2021
December 31,
2020
(in thousands)
Loan servicing fees (1)

$

287,888

 

$

267,758

 

$

262,740

 

Changes in fair value of MSRs and MSLs resulting from:

 

Realization of cash flows

 

(97,025

)

 

(82,217

)

 

(89,611

)

Change in fair value inputs

 

(58,407

)

 

(65,452

)

 

(44,163

)

Change in fair value of excess servicing spread financing

 

 

 

 

 

6,677

 

Hedging losses

 

(37,723

)

 

(86,459

)

 

(109,147

)

Net change in fair value of MSRs and MSLs

 

(193,155

)

 

(234,128

)

 

(236,244

)

Net loan servicing fees

$

94,733

 

$

33,630

 

$

26,496

 

(1) Includes contractually-specified servicing fees

Servicing segment revenue included $185.8 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 up from $130.2 million in the prior quarter and down from $199.1 million in the fourth quarter of 2020. 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 $25.2 million, versus net interest expense of $27.1 million in the prior quarter and $18.2 million in the fourth quarter of 2020. Interest income was $28.9 million, down from $35.0 million in the prior quarter driven by a decrease in average EBO balances held for sale. Interest expense was $54.1 million, down from $62.1 million in the prior quarter driven by a decrease in average balances of financing for EBO loans.

Servicing segment expenses totaled $129.6 million, essentially unchanged from the prior quarter.

The total servicing portfolio grew to $509.7 billion in UPB at December 31, 2021, an increase of 3 percent from September 30, 2021 and 19 percent from December 31, 2020. PennyMac Financial subservices and conducts special servicing for $221.9 billion in UPB, an increase of 2 percent from September 30, 2021 and 27 percent from December 31, 2020. PennyMac Financial’s owned MSR portfolio grew to $287.8 billion in UPB, an increase of 4 percent from September 30, 2021 and 14 percent from December 31, 2020. Mortgage servicing liabilities decreased substantially from September 30, 2021 due to significant reperformance of previously-delinquent loans sold to third parties.

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

December 31,
2021
September 30,
2021
December 31,
2020
(in thousands)
Prime servicing:
Owned
Mortgage servicing rights and liabilities
Originated

$

254,524,015

$

241,193,600

$

199,655,361

Acquisitions

 

23,861,358

 

26,913,133

 

41,612,940

 

278,385,373

 

268,106,733

 

241,268,301

Loans held for sale

 

9,430,766

 

9,295,126

 

11,063,938

 

287,816,139

 

277,401,859

 

252,332,239

Subserviced for PMT

 

221,864,120

 

217,984,987

 

174,360,317

Total prime servicing

 

509,680,259

 

495,386,846

 

426,692,556

Special servicing – subserviced for PMT

 

28,022

 

28,801

 

58,274

Total loans serviced

$

509,708,281

$

495,415,647

$

426,750,830

 
Loans serviced:
Owned
Mortgage servicing rights and liabilities

$

278,385,373

$

268,106,733

$

241,268,301

Loans held for sale

 

9,430,766

 

9,295,126

 

11,063,938

 

287,816,139

 

277,401,859

 

252,332,239

Subserviced

 

221,892,142

 

218,013,788

 

174,418,591

Total loans serviced

$

509,708,281

$

495,415,647

$

426,750,830

Investment Management Segment

PennyMac Financial manages PMT for which it earns base management fees and may earn incentive compensation. Net AUM were $2.4 billion as of December 31, 2021, down 5 percent from September 30, 2021 and up 3 percent from December 31, 2020.

Pretax income for the Investment Management segment was $1.5 million, up from $1.0 million in the prior quarter and down from $2.6 million in the fourth quarter of 2020. Management fees, which include base management and performance incentive fees from PMT were $8.9 million, up from $8.5 million in the prior quarter and up from $8.7 million in the fourth quarter of 2020. Base management fees were $8.9 million, up from $8.8 million in the prior quarter and $8.7 million in the fourth quarter of 2020.

The following table presents a breakdown of management fees:

Quarter ended
December 31,
2021
September 30,
2021
December 31,
2020
(in thousands)
Management fees:
Base

$

8,919

$

8,778

 

$

8,687

Performance incentive (adjustment)

 

 

(258

)

 

Total management fees

$

8,919

$

8,520

 

$

8,687

 
Net assets of PennyMac Mortgage Investment Trust

$

2,367,518

$

2,479,327

 

$

2,296,859

Investment Management segment expenses totaled $8.9 million, down 2 percent from the prior quarter and up 25 percent from the fourth quarter of 2020.

Consolidated Expenses

Total expenses were $459.7 million, up 3 percent from the prior quarter and up 8 percent from the fourth quarter of 2020. The quarter-over-quarter increase was driven by the increase in production 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, February 3, 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 approximately 6,800 people across the country. In 2021, PennyMac Financial’s production of newly originated loans totaled $234 billion in unpaid principal balance, making it the second largest mortgage lender in the nation. As of December 31, 2021, PennyMac Financial serviced loans totaling $510 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.

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: 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; changes in prevailing interest rates; 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 the Company’s businesses, 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 growing loan production volume; 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 to support business growth including 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 recent growth; our ability to effectively identify, manage, monitor and mitigate financial 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,
2021
September 30,
2021
December 31,
2020
(in thousands, except share amounts)
ASSETS
Cash

$

340,069

$

476,497

$

532,716

Short-term investments at fair value

 

6,873

 

5,046

 

15,217

Loans held for sale at fair value

 

9,742,483

 

9,659,695

 

11,616,400

Assets purchased from PennyMac Mortgage Investment Trust
under agreements to resell pledged to creditors

 

 

 

80,862

Derivative assets

 

333,695

 

429,984

 

711,238

Servicing advances, net

 

702,160

 

522,906

 

579,528

Mortgage servicing rights at fair value

 

3,878,078

 

3,611,120

 

2,581,174

Operating lease right-of-use assets

 

89,040

 

85,266

 

74,934

Investment in PennyMac Mortgage Investment Trust at fair value

 

1,300

 

1,477

 

1,105

Receivable from PennyMac Mortgage Investment Trust

 

40,091

 

49,993

 

87,005

Loans eligible for repurchase

 

3,026,207

 

4,335,378

 

14,625,447

Other

 

616,616

 

567,776

 

692,169

Total assets

$

18,776,612

$

19,745,138

$

31,597,795

 
LIABILITIES
Assets sold under agreements to repurchase

$

7,292,735

$

6,897,157

$

9,654,797

Mortgage loan participation and sale agreements

 

479,845

 

519,784

 

521,477

Obligations under capital lease

 

3,489

 

5,583

 

11,864

Notes payable secured by mortgage servicing assets

 

1,297,622

 

1,297,176

 

1,295,840

Unsecured senior notes

 

1,776,219

 

1,783,230

 

645,820

Excess servicing spread financing payable to PennyMac Mortgage
Investment Trust at fair value

 

 

 

131,750

Derivative liabilities

 

22,606

 

14,204

 

42,638

Mortgage servicing liabilities at fair value

 

2,816

 

47,567

 

45,324

Accounts payable and accrued expenses

 

359,413

 

358,944

 

308,398

Operating lease liabilities

 

110,003

 

105,452

 

94,193

Payable to PennyMac Mortgage Investment Trust

 

228,019

 

138,972

 

140,306

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

 

30,530

 

31,815

 

35,165

Income taxes payable

 

685,262

 

659,768

 

622,700

Liability for loans eligible for repurchase

 

3,026,207

 

4,335,378

 

14,625,447

Liability for losses under representations and warranties

 

43,521

 

45,806

 

32,688

Total liabilities

 

15,358,287

 

16,240,836

 

28,208,407

 
STOCKHOLDERS’ EQUITY
Common stock – authorized 200,000,000 shares of $0.0001 par value; issued and
outstanding 56,867,202, 60,419,578, and 70,905,532 shares,
respectively

 

6

 

6

 

7

Additional paid-in capital

 

125,396

 

372,198

 

1,047,052

Retained earnings

 

3,292,923

 

3,132,098

 

2,342,329

Total stockholders’ equity

 

3,418,325

 

3,504,302

 

3,389,388

Total liabilities and stockholders’ equity

$

18,776,612

$

19,745,138

$

31,597,795

PENNYMAC FINANCIAL SERVICES, INC.

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

Quarter ended
December 31,
2021
September 30,
2021
December 31,
2020
(in thousands, except earnings per share)
Revenue
Net gains on loans held for sale at fair value

$

500,658

 

$

626,754

 

$

859,061

 

Loan origination fees

 

88,245

 

 

94,581

 

 

93,460

 

Fulfillment fees from PennyMac Mortgage Investment Trust

 

20,150

 

 

43,922

 

 

72,606

 

Net loan servicing fees:
Loan servicing fees

 

287,888

 

 

267,758

 

 

262,740

 

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

 

(155,432

)

 

(147,669

)

 

(127,097

)

Hedging results

 

(37,723

)

 

(86,459

)

 

(109,147

)

Net loan servicing fees

 

94,733

 

 

33,630

 

 

26,496

 

Net interest expense:
Interest income

 

68,979

 

 

68,312

 

 

74,192

 

Interest expense

 

89,844

 

 

90,711

 

 

93,653

 

 

(20,865

)

 

(22,399

)

 

(19,461

)

Management fees from PennyMac Mortgage Investment Trust

 

8,919

 

 

8,520

 

 

8,687

 

Other

 

1,971

 

 

1,604

 

 

1,297

 

Total net revenue

 

693,811

 

 

786,612

 

 

1,042,146

 

Expenses
Compensation

 

226,723

 

 

249,183

 

 

187,807

 

Loan origination

 

86,789

 

 

80,932

 

 

69,069

 

Technology

 

41,112

 

 

32,406

 

 

42,594

 

Professional services

 

31,734

 

 

24,429

 

 

19,853

 

Servicing

 

31,470

 

 

27,892

 

 

87,155

 

Marketing and advertising

 

16,568

 

 

11,360

 

 

4,355

 

Occupancy and equipment

 

8,354

 

 

9,389

 

 

8,535

 

Other

 

16,950

 

 

11,472

 

 

5,552

 

Total expenses

 

459,700

 

 

447,063

 

 

424,920

 

Income before provision for income taxes

 

234,111

 

 

339,549

 

 

617,226

 

Provision for income taxes

 

61,028

 

 

90,239

 

 

164,422

 

Net income

$

173,083

 

$

249,310

 

$

452,804

 

Earnings per share
Basic

$

2.97

 

$

4.02

 

$

6.31

 

Diluted

$

2.79

 

$

3.80

 

$

5.97

 

Weighted-average common shares outstanding
Basic

 

58,247

 

 

62,085

 

 

71,793

 

Diluted

 

61,944

 

 

65,653

 

 

75,898

 

Dividend declared per share

$

0.20

 

$

0.20

 

$

0.15

 

PENNYMAC FINANCIAL SERVICES, INC.

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

 
Year ended December 31,

 

2021

 

 

2020

 

 

2019

 

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

$

2,464,401

 

$

2,740,785

 

$

725,528

 

Loan origination fees

 

384,154

 

 

285,551

 

 

174,156

 

Fulfillment fees from PennyMac Mortgage Investment Trust

 

178,927

 

 

222,200

 

 

160,610

 

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

 

875,570

 

 

814,646

 

 

730,165

 

From PennyMac Mortgage Investment Trust

 

80,658

 

 

67,181

 

 

48,797

 

Other fees

 

118,884

 

 

116,464

 

 

98,564

 

 

1,075,112

 

 

998,291

 

 

877,526

 

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

 

(416,943

)

 

(1,477,023

)

 

(979,358

)

Hedging results

 

(475,215

)

 

918,180

 

 

395,497

 

Net loan servicing fees

 

182,954

 

 

439,448

 

 

293,665

 

Net interest (expense) income:
Interest income

 

300,169

 

 

247,026

 

 

288,700

 

Interest expense

 

390,699

 

 

271,551

 

 

211,979

 

 

(90,530

)

 

(24,525

)

 

76,721

 

Management fees from PennyMac Mortgage Investment Trust

 

37,801

 

 

34,538

 

 

36,492

 

Other

 

9,654

 

 

7,600

 

 

10,232

 

Total net revenue

 

3,167,361

 

 

3,705,597

 

 

1,477,404

 

Expenses
Compensation

 

999,802

 

 

738,569

 

 

503,458

 

Loan origination

 

330,788

 

 

219,746

 

 

117,338

 

Technology

 

141,426

 

 

112,570

 

 

67,946

 

Servicing

 

109,835

 

 

256,934

 

 

164,697

 

Professional services

 

94,283

 

 

64,064

 

 

32,859

 

Marketing and advertising

 

44,806

 

 

8,658

 

 

5,165

 

Occupancy and equipment

 

35,810

 

 

33,357

 

 

28,916

 

Other

 

51,428

 

 

31,090

 

 

27,581

 

Total expenses

 

1,808,178

 

 

1,464,988

 

 

947,960

 

Income before provision for income taxes

 

1,359,183

 

 

2,240,609

 

 

529,444

 

Provision for income taxes

 

355,693

 

 

593,725

 

 

136,479

 

Net income

$

1,003,490

 

$

1,646,884

 

$

392,965

 

 
Earnings per share
Basic

$

15.73

 

$

21.91

 

$

5.02

 

Diluted

$

14.87

 

$

20.92

 

$

4.89

 

Weighted average shares outstanding
Basic

 

63,799

 

 

75,161

 

 

78,466

 

Diluted

 

67,471

 

 

78,728

 

 

81,076

 

 

Source

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