PennyMac Financial Services(US:PFSI)2021-11-07 13:57Financial Data and Key Metrics Changes - For Q3 2021, the company reported a net loss attributable to common shareholders of $43.9 million or $0.45 per common share, primarily due to fair value decline and interest rate sensitive strategies [3] - Book value per share decreased to $19.79 from $20.77 at the end of the prior quarter [4] - The company paid a common dividend of $0.47 per share [4] Business Line Data and Key Metrics Changes - Total correspondent acquisition volume was $44 billion, down 6% from the prior quarter and down 1% year-over-year [22] - Conventional lock volume was $29.4 billion, down 3% from the prior quarter and down 14% year-over-year [23] - Purchase volume reached a record of nearly $29 billion, up from $27.4 billion in the prior quarter and $21.5 billion in Q3 2020 [23] - The fair value of MSR assets increased to $2.8 billion from $2.6 billion at the end of the prior quarter [25] - The total UPB of loans underlying CRT investments was $35.4 billion, down 14% quarter-over-quarter [26] Market Data and Key Metrics Changes - Current forecasts for 2022 originations are strong at $3 trillion, with purchase originations expected to grow to a record $2 trillion, up 9% from the previous year [13] - Refinance originations are expected to decline to $1.1 trillion [13] - The company expects increased competition and lower margins across the industry due to a smaller origination market [7] Company Strategy and Development Direction - The company aims to capitalize on current and evolving investment opportunities, particularly in purchase money loans and MSRs [7][8] - The management emphasizes the importance of organic asset creation as a competitive advantage [9] - The company is focused on maintaining its leadership position in correspondent production and adapting to regulatory changes [14][15] Management's Comments on Operating Environment and Future Outlook - Management noted that rising interest rates are creating a competitive environment that presents near-term challenges but believes the company is well-positioned for long-term success [40] - The company remains optimistic about its ability to deliver attractive returns despite the current market transition [40] Other Important Information - The company successfully completed the issuance of $250 million in preferred shares [4] - The fair value of PMT's investment in investor loans was approximately $60 million at the end of October [6] Q&A Session Summary Question: What are the expectations for future loan performance? - Management indicated that the market expectation of significant future loss reversals is positive, with potential for additional losses to be reversed as borrowers exit forbearance [30] Question: How is the company addressing the competitive landscape? - The company is focused on maintaining flexibility in loan execution and is positioned to attract correspondent sellers looking to sell whole loans servicing released [16]