SPY389.58+9.22 2.42%
DIA315.59+6.14 1.98%
IXIC13,588.83+396.48 3.01%

Press Release: PennyMac Financial Services, Inc. Reports Fourth Quarter and Full-Year 2020 Results and Increases Quarterly Dividend

· 02/04/2021 16:30
Quarter ended December 31, 2020 ------------------------------------------------------------------- Mortgage Banking ------------------------------------ Investment Production Servicing Total Management Total ------------ --------- ----------- -------------- ------------- (in thousands) Revenue Net gains on loans held for sale at fair value $ 659,915 $199,146 $ 859,061 $ - $ 859,061 Loan origination fees 93,460 - 93,460 - 93,460 Fulfillment fees from PMT 72,606 - 72,606 - 72,606 Net loan servicing fees - 26,496 26,496 - 26,496 Management fees - - - 8,687 8,687 Net interest expense: Interest income 29,765 44,427 74,192 - 74,192 Interest expense 31,036 62,612 93,648 5 93,653 ------- ------- --------- ------ --------- (1,271) (18,185) (19,456) (5) (19,461) Other 212 111 323 974 1,297 ------- ------- --------- ------ --------- Total net revenue 824,922 207,568 1,032,490 9,656 1,042,146 ------- ------- --------- ------ --------- Expenses 252,276 165,547 417,823 7,097 424,920-- Pretax income of $2.2 billion, up 323 percent from the prior year and the highest level on record for PennyMac Financial -- Diluted earnings per share of $20.92, up from $4.89 in 2019 and also a record -- Total net revenue of $3.7 billion, up 151 percent from the prior year -- Repurchased approximately 8.9 million shares of PFSI's common stock, or approximately 11 percent of the total outstanding at the beginning of the year, for an approximate cost of $337 million -- Record loan production of $196.6 billion in UPB, an increase of 67 percent from the prior year -- $36 billion in UPB of originations in the direct lending channels, up 163 percent from 2019 -- Servicing portfolio UPB of $426.8 billion at year end, up 16 percent from December 31, 2019-- Repurchased an additional approximately 1.1 million shares of PFSI's common stock for an approximate cost of $66 million through February 3, 2021-- Pretax income was $617.2 million, down 15 percent from the prior quarter and up 204 percent from the fourth quarter of 2019 -- Strong earnings driven by core production and servicing results partially offset by fair value losses on mortgage servicing rights (MSRs) and associated hedging and other losses -- Repurchased approximately 1.6 million shares of PFSI's common stock for an approximate cost of $89.3 million -- Production segment pretax income was $572.6 million, down 7 percent from the prior quarter and up 182 percent from the fourth quarter of 2019, driven by strong performance across all channels -- Direct lending interest rate lock commitments (IRLCs) were a record $18.6 billion in unpaid principal balance (UPB), up 13 percent from the prior quarter and 158 percent from the fourth quarter of 2019 -- $12.8 billion in UPB of IRLCs in the consumer direct channel; $5.7 billion in UPB of IRLCs in the broker direct channel -- Government correspondent IRLCs totaled $19.7 billion in UPB, down 2 percent from the prior quarter and up 22 percent from the fourth quarter of 2019 -- Total loan acquisitions and originations were a record $69.4 billion in UPB, up 28 percent from the prior quarter and 64 percent from the fourth quarter of 2019 -- Correspondent acquisitions of conventional loans fulfilled for PennyMac Mortgage Investment Trust (NYSE: PMT) were $38.0 billion in UPB, up 39 percent from the prior quarter and 85 percent from the fourth quarter of 2019 -- Servicing segment pretax income was $42.0 million, down from pretax income of $111.7 million in the prior quarter and up from a pretax loss of $5.1 million in the fourth quarter of 2019 -- Pretax income excluding valuation-related items was $234.3 million, up 230 percent from the prior quarter and 499 percent from the fourth quarter of 2019, driven by continued loss mitigation activities related to COVID-19 -- Valuation items included: -- $44.2 million in MSR fair value losses driven by faster-than-expected prepayment speeds and $102.5 million in hedging and other losses; net impact on pretax income related to these items was $(146.6) million and on earnings per share was $(1.42) -- A $45.6 million provision for credit losses on active loans related to COVID-19 -- Servicing portfolio grew to $426.8 billion in UPB, up 6 percent from September 30, 2020 and 16 percent from December 31, 2019, driven by record production volumes offsetting elevated prepayment activity -- Investment Management segment pretax income was $2.6 million, down from $3.3 million in the prior quarter and $5.2 million in the fourth quarter of 2019 -- Net assets under management (AUM) were $2.3 billion, up 1 percent from September 30, 2020WESTLAKE VILLAGE, Calif.--(BUSINESS WIRE)--February 04, 2021--

PennyMac Financial Services, Inc. Reports Fourth Quarter and Full-Year 2020 Results and Increases Quarterly Dividend

Also Announces $500 Million Increase in Stock Repurchase Program

PennyMac Financial Services, Inc. (NYSE: PFSI) today reported net income of $452.8 million for the fourth quarter of 2020, or $5.97 per share on a diluted basis, on revenue of $1.0 billion. Book value per share increased to $47.80 from $41.67 at September 30, 2020.

PFSI's Board of Directors declared a fourth quarter cash dividend of $0.20 per share, a 33 percent increase from the prior quarter, payable on February 25, 2021, to common stockholders of record as of February 12, 2021.

PFSI's Board of Directors also approved an increase to its stock repurchase authorization from $500 million to $1.0 billion of outstanding common stock.

Fourth Quarter 2020 Highlights

Notable activity after quarter-end:

Full-Year 2020 Highlights

"PennyMac Financial delivered another strong quarter," said President and CEO David Spector, "with book value per share increasing 15% on record production levels. PFSI's third quarter momentum carried into the fourth quarter with net income near record levels and producing a return on equity of 56% for the quarter. Our direct lending channels showed incredible growth with consumer direct and broker direct originations growing 27% and 29%, respectively. Our modest market share in both of these channels provides ample room for growth and with foundational investments made in technology and back office fulfillment, we are well positioned to scale those businesses. As we grow our origination business we are organically increasing our servicing portfolio, which ended the year at over $426 billion in unpaid principal balance. This portfolio growth contributed to strong servicing income and, when excluding valuation-related items, resulted in record pretax income for the fourth quarter. All of this while helping thousands of borrowers who were affected by COVID-19 exit successfully from their forbearance plans."

Mr. Spector continued, "The outstanding fourth quarter was the culmination of a remarkable year for PennyMac Financial. Funding nearly $200 billion in unpaid principal balance and ending the year with a servicing portfolio of nearly 2 million customers, 2020 was certainly a record year for PFSI. We also successfully protected our asset values as our disciplined hedging and risk management strategy largely offset the $1 billion write-down on the fair value of the MSR. Additionally, we granted approximately 291 thousand homeowners forbearance plans in 2020 and have helped, or are in the process of helping, approximately 145 thousand borrowers successfully emerge from their forbearance plans. This was all done while the vast majority of our employees were working from home for most of the year. I am incredibly thankful and proud of the over 6,000 PennyMac employees who managed through the challenges of the pandemic to deliver extraordinary results. We believe we are well positioned to continue our success and expect the Company's exceptional financial performance to persist through 2021."

Mr. Spector concluded, "All of us at PennyMac are grateful for the many kind thoughts and tributes we have received since announcing the sad passing of Stan Kurland, our founder and Chairman. While Stan had retired from day-to-day responsibilities at PennyMac, he remained a trusted advisor and dear friend. His leadership helped lay the foundation for PennyMac's long-term success which included building and developing a deep management team that carries on his legacy."

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

(MORE TO FOLLOW) Dow Jones Newswires

February 04, 2021 16:30 ET (21:30 GMT)