8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): May 7, 2014

PennyMac Financial Services, Inc.

(Exact name of registrant as specified in its charter)

Delaware	001- 35916	80-0882793
(State or other jurisdiction	(Commission	(IRS Employer
of incorporation)	File Number)	Identification No.)

6101 Condor Drive, Moorpark, California	93021
(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:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

On May 7, 2014, PennyMac Financial Services, Inc. (the “Company”) issued a press release announcing its financial results for the fiscal quarter ended March 31, 2014.  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 7, 2014 and are furnished as Exhibit 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 7, 2014, issued by PennyMac Financial Services, Inc. pertaining to its financial results for the fiscal quarter ended March 31, 2014.
99.2	Slide Presentation for use on May 7, 2014 in connection with a recorded presentation of financial results for the fiscal quarter ended March 31, 2014.

2

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.
Dated: May 7, 2014	/s/ Anne D. McCallion
	Anne D. McCallion
	Chief Financial Officer

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EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release, dated May 7, 2014, issued by PennyMac Financial Services, Inc. pertaining to its financial results for the fiscal quarter ended March 31, 2014.
99.2	Slide Presentation for use on May 7, 2014 in connection with a recorded presentation of financial results for the fiscal quarter ended March 31, 2014.

4

EX-99.1

Exhibit 99.1

Investors and Media

Christopher Oltmann

(818) 746-2046

PennyMac Financial Services, Inc. Reports

First Quarter 2014 Results

Moorpark, CA, May 7, 2014 — PennyMac Financial Services, Inc. (NYSE: PFSI) today reported net income of $43.5 million for the first quarter of 2014, on revenue of $105.5 million. Net income attributable to PFSI common stockholders was $8.0 million, or $0.38 per diluted share.

First Quarter 2014 Highlights

·Pretax income of $49.1 million, up 18 percent from the prior quarter

·Total net revenue of $105.5 million, up 17 percent from the prior quarter

·Production revenue of $52.7 million, up 10 percent from the prior quarter

·Servicing revenue of $40.2 million, up 43 percent from the prior quarter

·Investment Management revenue of $12.5 million, down 13 percent from the prior quarter

·Total loan production activity of $5.1 billion in unpaid principal balance (UPB), down 14 percent from the prior quarter

·Servicing portfolio reached $83.8 billion in UPB, up 7 percent from December 31, 2013

·Net assets under management totaled $2.1 billion, up 4 percent from December 31, 2013

“PennyMac Financial had a strong quarter with increases in revenue and net income, reflecting how the company’s operating platform and business model are well positioned for a more normalized mortgage market,” said Chairman and Chief Executive Officer Stanford L. Kurland.  “We gained market share in correspondent lending, retail lending and loan servicing, and investment management assets continued to grow.  Our ability to profitably grow market share results from thesolid foundation we have built in each of our businesses and the disciplined execution of our strategic initiatives.”

1

We have enhanced the reporting of our mortgage banking activities by dividing them into two segments: Production and Servicing.

The following table presents the contribution of PennyMac Financial’s Production, Servicing and Investment Management segments to pretax income:

	Quarter ended March 31, 2014
	Mortgage banking								Investment
Unaudited (in thousands)	Production		Servicing			Total			management		Total
Revenue:
Net gains on mortgage loans held for sale at fair value	$	34,538	$	—		$	34,538		$	—	$	34,538
Loan origination fees	6,880		—			6,880			—		6,880
Fulfillment fees from PMT	8,902		—			8,902			—		8,902
Net servicing fees	—		43,764			43,764			—		43,764
Management fees	—		—			—			10,109		10,109
Carried Interest from Investment Funds	—		—			—			2,157		2,157
Net interest (expense) income:
Interest income	4,106		—			4,106			4		4,110
Interest expense	2,329		4,057			6,386			—		6,386
	1,777		(4,057		)	(2,280		)	4		(2,276		)
Other	643		519			1,162			256		1,418
	52,740		40,226			92,966			12,526		105,492
Expenses	26,786		23,113			49,899			6,532		56,431
Pretax income	$	25,954	$	17,113		$	43,067		$	5,994	$	49,061

Production Segment

Loan production includes correspondent lending for PennyMac Financial’s own account, fulfillment services on behalf of PennyMac Mortgage Investment Trust (PMT), and retail lending.

PennyMac Financial’s loan production activity totaled $5.1 billion in UPB, of which $3.2 billion in UPB was for its own account, and $1.9 billion was fee-based fulfillment activity for PMT.  Interest rate lock commitments (IRLCs) on correspondent government and retail loans totaled $3.9 billion in UPB.

2

Production segment pretax income totaled $26.0 million, an increase of 14 percent from the fourth quarter, driven by a 17 percent increase in net gains on mortgage loans held for sale from the prior quarter.  The components of net gain on mortgage loans held for sale revenue are detailed in the following table:

	Quarter ended
	March 31, 2014			December 31, 2013			March 31, 2013
	(in thousands)
MSR Value	$	35,616		$	50,630		$	41,603
Provision for representations and warranties	(850		)	(909		)	(1,244		)
(Cash investment) sales proceeds (1)	(5,775		)	(31,686		)	5,798
Fair value changes of pipeline, inventory and hedges	5,547			11,418			(6,200		)
Net gains on mortgage loans held for sale	$	34,538		$	29,453		$	39,957

(1) Net of cash hedge expense.

PennyMac Financial performs fulfillment services for conventional conforming and jumbo loans acquired by PMT in its correspondent lending business.  These services include, but are not limited to: marketing, relationship management, the approval of correspondent sellers and the ongoing monitoring of their performance; reviews of loan data, documentation and appraisals to assess loan quality and risk; and pricing, hedging, and activities related to the subsequent sale and securitization of loans in the secondary mortgage markets for PMT.  Fees earned from fulfillment of correspondent loans on behalf of PMT totaled $8.9 million in the first quarter, compared to $11.1 million in the fourth quarter. The decline was primarily driven by a decrease in the volume of conventional and jumbo correspondent acquisitions by PMT during the first quarter.  The average fulfillment fee earned for the first quarter was 46 basis points.

3

Servicing Segment

Loan servicing includes income from owned servicing rights in addition to subservicing and special servicing activities.  Loan servicing pretax income totaled $17.1 million in the first quarter, anincrease of 94 percent from the prior quarter.  Net loan servicing fees totaled $43.8 million for the quarter, a 43 percent quarter-over-quarter increase, which included a $3.4 million reduction in fair value of mortgage servicing rights (MSRs) carried at fair value and a $0.4 million provision for impairment of MSRs carried at lower of amortized cost or fair value, both driven by expectations for higher prepayment speeds as a result of lower interest rates at quarter end. The MSR valuation adjustments were partially offset by a $4.8 million decrease in the fair value of the excess servicing spread financing liability.

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

	Quarter ended
	March 31, 2014			December 31, 2013			March 31, 2013
	(in thousands)
Servicing fees (1)	$	57,319		$	43,588		$	21,052
Effect of MSRs:
Amortization and realization of cash flows	(14,539		)	(9,026		)	(4,184		)
Change in fair value and (provision for) reversal of impairment of MSRs carried at lower of amortized cost or fair value	(3,377		)	(1,668		)	465
Change in fair value of excess servicing spread financing	4,792			(2,394		)	—
Hedging losses	(431		)	—			(1,291		)
Total amortization, impairment and change in fair value of MSRs	(13,555		)	(13,088		)	(5,010		)
Net loan servicing fees	$	43,764		$	30,500		$	16,042

(1) Includes contractually-specified servicing fees.

Servicing segment expenses increased to $23.1 million as the servicing portfolio continued to grow.

The total servicing portfolio reached $83.8 billion in UPB, an increase of 7 percent from December 31, 2013. Of the total servicing portfolio at March 31, 2014, prime servicing was $78.1 billion in UPB and special servicing was $5.8 billion in UPB.  The Company subservices and services undercontract $33.1 billion in UPB, an increase of 4 percent from December 31, 2013, driven by new correspondent acquisitions and distressed whole loan investments by PMT. PennyMac Financial’s MSR portfolio grew to $50.1 billion in UPB, an increase of 9 percent over the prior quarter, resulting from the acquisition of government-insured loans in correspondent lending, retail lending activities, and the acquisition of MSR portfolios totaling $2.4 billion in UPB.

4

The table below details PennyMac Financial’s servicing portfolio as of March 31, 2014:

	March 31, 2014		December 31, 2013		March 31, 2013
	(in thousands)
Loans serviced at period end:
Prime servicing:
Subserviced for Advised Entities	$	28,182,019	$	26,788,479	$	17,685,194
Owned MSRs—Originations	26,289,208		22,499,847		12,487,986
Owned MSRs—Acquisitions	22,931,100		22,469,179		887,589
Mortgage loans held for sale	660,470		506,540		193,894
Total prime servicing	78,062,797		72,264,045		31,254,663
Special servicing:
Subserviced for Advised Entities	4,871,875		4,844,239		3,700,919
Owned MSRs—Acquisitions	907,981		969,794		1,211,048
Subserviced for non-affiliates	936		89,361		—
Total special servicing	5,780,792		5,903,394		4,911,967
Total loans serviced	$	83,843,589	$	78,167,439	$	36,166,630

Investment Management Segment

PennyMac Financial manages PMT and certain investment funds, for which it earns base management fees and incentive compensation.  Net assets under management were approximately $2.1 billion as of March 31, 2014, an increase of 4 percent from December 31, 2013.  The increase was primarily due to new equity raised by PMT during the quarter to support its continued growth.

Pretax income for the Investment Management segment was $6.0 million, a decline of 41 percent from the fourth quarter.  Management fees, which include base management fees and incentive fees from PMT and management fees from the Investment Funds, declined 8 percent from the prior quarter primarily due to a $0.8 million decline in incentive fee revenue from PMT. Carried interestincome from the Investment Funds declined by $0.9 million, driven by lower gains in their distressed loan investments during the quarter.

5

Expenses

Expenses for the first quarter totaled $56.4 million, a 16 percent increase from the fourth quarter, driven by higher compensation and servicing expenses.  Compensation expenses in the first quarter rose to $42.9 million, a 24 percent quarter-over-quarter increase resulting from higher incentive compensation accruals. Incentive compensation accruals are based on PennyMac Financial’s performance against established targets and are evaluated quarterly. Servicing expenses totaled $3.1 million, up from $2.0 million in the fourth quarter, reflecting the full impact of the bulk MSR portfolio acquisitions completed during the fourth quarter in addition to servicing portfolio growth during the first quarter.

“As demonstrated by our performance in the first quarter and the strategic initiatives we are pursuing, we see many opportunities for PennyMac Financial to grow and outperform, even in a smaller mortgage origination market,” concluded Mr. Kurland. “While we have been successful in growing our mortgage servicing portfolio and platform, our servicing portfolio today represents less than one percent of all residential mortgages outstanding in the U.S. We have significant opportunities across our businesses of correspondent aggregation, consumer-direct lending, loan servicing, and investment management.  Our company is uniquely positioned with the expertise and industry-leading capabilities required to continue growing in a responsible and sustainable manner. We believe that PennyMac Financial is well on the way toward achieving our objective of being the premier mortgage specialist firm in the U.S.”

Management’s slide presentation will be available in the Investor Relations section of the Company’s website at www.PennyMacFinancial.com beginning at 1:30 p.m. (Pacific Daylight Time) on Wednesday, May 7, 2014. We encourage investors to submit questions via email toInvestorRelations@pnmac.com; if any questions are submitted, we will post responses via a document on our website.

6

About PennyMac Financial Services, Inc.

PennyMac Financial Services, Inc. is a specialty financial services firm with a comprehensive mortgage platform and integrated business focused on the production and servicing of U.S. residential mortgage loans and the management of investments related to the U.S. residential mortgage market.  PennyMac Financial Services, Inc. trades on the New York Stock Exchange under the symbol “PFSI.” Additional information about PennyMac Financial Services, Inc. is available at www.PennyMacFinancial.com.

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,” “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 federal, state and local laws and regulations applicable to the highly regulated industry in which we operate; lawsuits or governmental actions if we do not comply with the laws and regulations applicable to our businesses; the creation of the Consumer Financial Protection Bureau, or CFPB, and enforcement of its rules; changes in existing U.S. government-sponsored entities, 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 businesses, to which our bank competitors are not subject; foreclosure delays and changes in foreclosure practices; certain banking regulations that may limit our business activities; changes in macroeconomic and U.S. residential real estate market conditions; difficulties in growing loan production volume; changes in prevailing interest rates; increases in loan delinquencies and defaults; our reliance on PennyMac Mortgage Investment Trust as a significant source of financing for, and revenue related to, our correspondent lending business; availability of required additional capital and liquidity to support business growth; our obligation to indemnify third-party purchasers or repurchase loans that we originate, acquire or assist in with fulfillment; our obligation to indemnify advised entities or investment funds to meet certain criteria or characteristics or under other circumstances; decreases in the historical returns on the assets that we select and manage for our clients, and our resulting managementand incentive fees; regulation applicable to our investment management segment; conflicts of interest in allocating our services and investment opportunities among ourselves and our advised entities; the potential damage to our reputation and adverse impact to our business resulting from ongoing negative publicity; and our rapid growth. 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.

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PENNYMAC FINANCIAL SERVICES, INC.

CONSOLIDATED BALANCE SHEETS

Unaudited	March 31,2014		December 31,2013		March 31,2013
	(in thousands, except share data)
ASSETS
Cash	$	37,376	$	30,639	$	56,135
Short-term investments at fair value	40,957		142,582		72,664
Mortgage loans held for sale at fair value	717,476		531,004		203,661
Servicing advances	171,395		154,328		96,587
Derivative assets	21,677		21,540		27,481
Carried Interest due from Investment Funds	63,299		61,142		52,460
Investment in PennyMac Mortgage Investment Trust at fair value	1,793		1,722		1,942
Mortgage servicing rights	529,128		483,664		146,992
Receivable from Investment Funds	3,062		2,915		3,169
Receivable from PennyMac Mortgage Investment Trust	20,812		18,636		14,748
Furniture, fixtures, equipment and building improvements, net	11,227		9,837		6,253
Capitalized software, net	718		764		866
Deferred tax asset	58,206		63,117		—
Loans eligible for repurchase	62,508		46,663		—
Other	20,911		15,922		10,019
Total assets	$	1,760,545	$	1,584,475	$	692,977
LIABILITIES
Mortgage loans sold under agreements to repurchase	$	567,737	$	471,592	$	180,049
Note payable	48,819		52,154		63,437
Excess servicing spread financing at fair value	151,019		138,723		—
Derivative liabilities	2,155		2,462		2,359
Accounts payable and accrued expenses	49,772		46,387		42,966
Payable to Investment Funds	37,106		36,937		37,766
Payable to PennyMac Mortgage Investment Trust	85,706		81,174		53,909
Payable to exchanged Private National Mortgage Acceptance Company, LLCunitholders under tax receivable agreement	71,671		71,056		—
Liability for loans eligible for repurchase	62,508		46,663		—
Liability for losses under representations and warranties	8,974		8,123		4,748
Total liabilities	1,085,467		955,271		385,234
STOCKHOLDERS’ EQUITY
Class A common stock, par value $0.0001 per share, 200,000,000 sharesauthorized, 20,879,486 shares issued and outstanding	2		2		—
Class B common stock, par value $0.0001 per share, 1,000 shares authorized,61 shares issued and outstanding	—		—		—
Additional paid-in capital	154,112		153,000		—
Retained earnings	22,372		14,400		—
Total stockholders’ equity attributable to PennyMac Financial Services, Inc.common stockholders	176,486		167,402		—
Members’ equity attributable to Private National Mortgage AcceptanceCompany, LLC	—		—		307,743
Noncontrolling interests in Private National Mortgage AcceptanceCompany, LLC	498,592		461,802		—
Total stockholders’ equity	675,078		629,204		307,743
Total liabilities and stockholders’ equity	$	1,760,545	$	1,584,475	$	692,977

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PENNYMAC FINANCIAL SERVICES, INC.

CONSOLIDATED STATEMENTS OF INCOME

	Quarter ended
Unaudited	March 31,2014			December 31,2013			March 31,2013
	(in thousands, except per share data)
Revenue
Net gains on mortgage loans held for sale at fair value	$	34,538		$	29,453		$	39,957
Loan origination fees	6,880			5,315			5,668
Fulfillment fees from PennyMac Mortgage Investment Trust	8,902			11,087			28,244
Net servicing fees:
Loan servicing fees
From non-affiliates	36,100			26,126			9,057
From PennyMac Mortgage Investment Trust	14,591			12,162			7,722
From Investment Funds	1,477			1,574			2,008
Ancillary and other fees	5,151			3,726			2,265
	57,319			43,588			21,052
Amortization, impairment and change in estimatedfair value of mortgage servicing rights	(13,555		)	(13,088		)	(5,010		)
Net servicing fees	43,764			30,500			16,042
Management fees:
From PennyMac Mortgage Investment Trust	8,074			8,924			6,492
From Investment Funds	2,035			2,031			1,914
	10,109			10,955			8,406
Carried Interest from Investment Funds	2,157			3,008			4,737
Net interest expense:
Interest income	4,110			4,322			1,742
Interest expense	6,386			4,987			3,330
	(2,276		)	(665		)	(1,588		)
Change in fair value of investment in and dividendsreceived from PennyMac Mortgage Investment Trust	115			109			88
Other	1,303			658			814
Total net revenue	105,492			90,420			102,368
Expenses
Compensation	42,886			34,711			35,681
Loan origination	1,417			2,118			2,507
Servicing	3,090			1,956			1,531
Technology	2,823			3,002			1,586
Professional services	2,199			2,705			2,288
Other	4,016			4,241			3,482
Total expenses	56,431			48,733			47,075
Income before provision for income taxes	49,061			41,687			55,293
Provision for income taxes	5,523			4,430			—
Net income	43,538			37,257			55,293
Less: Net income attributable to noncontrolling interest	35,566			30,847			—
Net income attributable to PennyMac Financial Services, Inc.common stockholders	$	7,972		$	6,410		$	55,293
Earnings per common share
Basic	$	0.38		$	0.33
Diluted	$	0.38		$	0.32
Weighted-average common shares outstanding
Basic	20,866			19,324
Diluted	75,952			75,922

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PENNYMAC FINANCIAL SERVICES, INC.

SEGMENT PRETAX INCOME

	Quarter ended March 31, 2014
	Mortgage banking								Investment
Unaudited (in thousands)	Production		Servicing			Total			management		Total
Revenue:
Net gains on mortgage loans held for sale at fair value	$	34,538	$	—		$	34,538		$	—	$	34,538
Loan origination fees	6,880		—			6,880			—		6,880
Fulfillment fees from PMT	8,902		—			8,902			—		8,902
Net servicing fees	—		43,764			43,764			—		43,764
Management fees	—		—			—			10,109		10,109
Carried Interest from Investment Funds	—		—			—			2,157		2,157
Net interest (expense) income:						—					—
Interest income	4,106		—			4,106			4		4,110
Interest expense	2,329		4,057			6,386			—		6,386
	1,777		(4,057		)	(2,280		)	4		(2,276		)
Other	643		519			1,162			256		1,418
	52,740		40,226			92,966			12,526		105,492
Expenses	26,786		23,113			49,899			6,532		56,431
Pretax income	$	25,954	$	17,113		$	43,067		$	5,994	$	49,061

	Quarter ended December 31, 2013
	Mortgage banking								Investment
Unaudited (in thousands)	Production		Servicing			Total			management		Total
Revenue:
Net gains on mortgage loans held for sale at fair value	$	29,453	$	—		$	29,453		$	—	$	29,453
Loan origination fees	5,315		—			5,315			—		5,315
Fulfillment fees from PMT	11,087		—			11,087			—		11,087
Net servicing fees	—		30,500			30,500			—		30,500
Management fees	—		—			—			10,955		10,955
Carried Interest from Investment Funds	—		—			—			3,008		3,008
Net interest (expense) income:						—					—
Interest income	4,314		—			4,314			8		4,322
Interest expense	2,612		2,375			4,987			—		4,987
	1,702		(2,375		)	(673		)	8		(665		)
Other	226		67			293			474		767
	47,783		28,192			75,975			14,445		90,420
Expenses	24,998		19,393			44,391			4,342		48,733
Pretax income	$	22,785	$	8,799		$	31,584		$	10,103	$	41,687

###

10

EX-99.2

Exhibit 99.2

First Quarter 2014 Earnings Report

Forward-Looking Statements 2 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, 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,” “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, from past results discussed herein, or from illustrative examples provided herein. Factors which could cause actual results to differ materially from historical results or those anticipated include, but are not limited to: changes in federal, state and local laws and regulations applicable to the highly regulated industry in which we operate; lawsuits or governmental actions if we do not comply with the laws and regulations applicable to our businesses; the creation of the Consumer Financial Protection Bureau, or CFPB, and enforcement of its rules; changes in existing U.S. government-sponsored entities, 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 businesses, to which our bank competitors are not subject; foreclosure delays and changes in foreclosure practices; certain banking regulations that may limit our business activities; changes in macroeconomic and U.S. residential real estate market conditions; difficulties in growing loan production volume; changes in prevailing interest rates; increases in loan delinquencies and defaults; our reliance on PennyMac Mortgage Investment Trust as a significant source of financing for, and revenue related to, our correspondent lending business; availability of required additional capital and liquidity to support business growth; our obligation to indemnify third-party purchasers or repurchase loans that we originate, acquire or assist in with fulfillment; our obligation to indemnify advised entities or investment funds to meet certain criteria or characteristics or under other circumstances; decreases in the historical returns on the assets that we select and manage for our clients, and our resulting management and incentive fees; regulation applicable to our investment management segment; conflicts of interest in allocating our services and investment opportunities among ourselves and our advised entities; the potential damage to our reputation and adverse impact to our business resulting from ongoing negative publicity; and our rapid growth. 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 presentation are current as of the date of this presentation only.

First Quarter Highlights 3 Pretax income of $49.1 million; diluted earnings per common share of $0.38 – Total net revenue of $105.5 million, up 17% from 4Q13 – Expenses totaled $56.4 million, up 16% from 4Q13 Loan production totaled $5.1 billion in UPB(1); market share gains continued as the U.S. mortgage origination market declined by 23% Q/Q(2) – Correspondent loan acquisitions were $4.8 billion, down 16% from 4Q13 – Retail originations were $314 million, up 49% from 4Q13, driven by strong recapture from recently acquired MSR portfolios Servicing portfolio reached $83.8 billion in UPB, up 7% from December 31, 2013 – Completed mini-bulk and flow transactions during the quarter totaling $2.4 billion in UPB, comprised entirely of Agency MSRs – Opportunistic sale of non-core private-label MSRs; transaction to settle in Q2(3) – After quarter end, agreed to mini-bulk and flow acquisitions of Agency MSRs totaling $3.7 billion in UPB to settle in Q2(3) Net assets under management increased to $2.1 billion – PMT increased its equity base through new issuances during the quarter PFSI float increased by 47% with the previously anticipated sale of shares by Fidelity Investments Charitable Gift Fund in March (1) Includes $1.9 billion of fee-based fulfillment activity for PMT (2) Source: Inside Mortgage Finance and company estimates (3) These pending transactions are subject to the negotiation and execution of definitive documentation, continuing due diligence, and customary closing conditions. There can be no assurance that the committed amounts will ultimately be sold/acquired or that the transactions will be completed.

PennyMac Financial’s Objective: To Be the Premier U.S. Mortgage Specialist Firm Strategic Mission PennyMac will achieve leadership distinction in its core businesses: Retail production Correspondent production Loan servicing Investment management Demonstrated over time through: Return on equity and earnings growth Compliance and quality ratings Recognition and loyalty among customers, employees, business partners, investors, and other stakeholders 4

5 PennyMac Financial Is in a Unique Position Among Mortgage Specialists Industry-leading platform built organically – not through acquisitions • Not distracted by legacy/regulatory issues • Disciplined, sustainable growth for more than 6 years • Focused on building and testing processes and systems before large transaction volumes Distinctive expertise and full range of capabilities across mortgage banking and investment management Loan production, e.g., loan fulfillment systems and operations, correspondent counterparty review and management Credit, e.g., loan program development, underwriting and quality control Capital markets, e.g., pooling and securitization, hedging/interest rate risk management Servicing, e.g., customer service, default management, investor accounting Corporate functions, e.g., enterprise risk management, internal audit, treasury, finance and accounting, legal, IT infrastructure and development • Over 1,400 employees • Highly experienced management team – 60 senior-most executives have on average 23 years of relevant industry experience Strong governance and compliance culture • Led by distinguished board which includes seven independent Directors • Robust management governance structure with 10 committees that oversee key risks and controls • External oversight by regulators, business partners and other third parties Desired structure in place to compete effectively as a non-bank • Synergistic partnership with PMT, a leading residential mortgage REIT and long-term investment vehicle • Provides access to efficient capital and reduces balance sheet constraints on growth

Current Market Environment and Outlook 6 Environmental Trends Impact and Outlook • Interest rates and mortgage rates remain low, although expected to rise with continued Fed tapering • Continued modest improvements in U.S. employment and overall economic outlook • Home purchase demand is strengthening • Rate of home price appreciation slowing versus 2013 growth • Mortgage origination market is smaller due to reductions in refinance activity and limited non- Agency products – Continue to expect $1.2 trillion origination market for 2014, versus $1.9 trillion in 2013 • Significant changes in GSEs’ role unlikely in the near term, even with new FHFA director and proposed reform legislation (Johnson-Crapo) • Origination market remains competitive due to market contraction – Originators selling MSRs and/or loans servicingreleased to aggregators to reduce their capital investment • Non-Agency originations and securitizations remain limited, but outlook improving – Spread tightening improves the potential for PMT to compete with bank balance sheets for jumbo loans – Potential for new products to satisfy currently unmet consumer needs (prime non-QM loans) • Mini-bulk and flow MSR sales expected to continue; intermittent large bulk opportunities • Expect continued supply of distressed whole loans to come to market; PMT remains a selective buyer at its targeted returns

Opportunity for PFSI and PMT in MSR Acquisitions 7 Why Are MSR Sales Occurring? How Do MSRs Come to Market? • Large banks are selling MSRs due to continuing operational pressures, higher regulatory capital requirements (treatment under Basel III) and a re-focus on core customers/businesses • Independent mortgage banks are selling MSRs due to the abrupt market contraction, operational losses, and a need for capital • Intermittent large bulk portfolio sales ($10+ billion in UPB) – Require considerable coordination with selling institutions and Agencies • Mini-bulk sales (typically $500 million to $5 billion in UPB) – Increased activity as originators sell MSRs retained in 2012 and 2013 • Flow/co-issue MSR transactions (monthly commitments, typically $20-100 million in UPB) – Alternative delivery method typically from larger independent originators What MSR Transactions Are Attractive? • GSE and Ginnie Mae servicing in which PFSI has distinctive expertise • MSRs sold and operational servicing transferred to PFSI (not subserviced by a third party) • Measurable rep and warranty liability for PFSI PFSI is uniquely positioned to be the successful acquirer of MSRs • Proven track record of complex MSR and distressed loan transfers • Operational platform that addresses the demands of the Agencies, regulators, and financing partners • Physical capacity in place to service $200 billion in UPB • Co-investment opportunity for PMT in the excess servicing spread

6.28% 7.34% 0% 2% 4% 6% 8% 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 Growth Continues in Each of PennyMac Financial’s Businesses Correspondent Lending(1) Market Share 0.12% 0.22% 0.00% 0.05% 0.10% 0.15% 0.20% 0.25% 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 Market Share Retail Lending(1) $2.03 $2.10 $0.0 $0.5 $1.0 $1.5 $2.0 $2.5 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 0.79% 0.85% 0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 Loan Servicing(1) Market Share Investment Management AUM (billions) 8 (1) Source: Inside Mortgage Finance and company estimates; 1Q14 origination market of $235 billion as reported by Inside Mortgage Finance; market share estimates assume 28%, or $66 billion, of total volume aggregated through the correspondent channel, and 60%, or $141 billion, originated through the retail channel; servicing market share based on projected increase in mortgage debt outstanding to $9.88 trillion.

9 Growth Initiatives in PennyMac Financial’s Businesses Correspondent Lending Building momentum behind initiatives to add new sellers and deepen relationships through relevant services (e.g., best efforts deliveries) . 271 approved sellers at quarter-end, up from 229 at December 31, 2013 . Targeting a total seller base of 350 relationships by year end Expand on strong position in governmentinsured loans (FHA, VA, USDA) – specialist market with fewer competitors than conventional loans Originators are delivering fewer loans servicingretained to the GSEs – trend that favors correspondent aggregators Continue to fill out the product menu (e.g., in prime non-Agency loans) Retail Lending Portfolio-sourced recapture activity resulting from the growing servicing portfolio Refinance activity remains a significant portion of the origination market – focus on underserved borrowers (e.g., smaller balance loans) Continued development of the consumer direct platform for the purchase-money market – Growing the Business Development Officer (BDO) initiative to develop institutional relationships with local/regional Realtors and builders for our national call center platform – Initiatives such the Approved Buyer Certificate (ABC), which is a significant advancement over existing “pre-approvals” and improves closing timelines

10 Growth Initiatives in PennyMac Financial’s Businesses (cont’d) Loan Servicing Ongoing organic growth in the prime owned and subservicing portfolios . Results from the retail and correspondent loan production activities Mini-bulk and flow MSR acquisitions to supplement organic growth Expect intermittent larger bulk MSR acquisitions Economic value of servicing varies depending on interest rates – expect prime servicing to produce more value with higher interest rates Drive operational efficiency with increasing economies of scale Investment Management Opportunities to raise capital for residential mortgage-related investments, including newly emerging opportunities, are substantial Investment opportunities for PennyMacmanaged entities include: – Distressed whole loans – MSRs resulting from correspondent aggregation – Excess servicing spread (ESS) on MSRs – Retained interests from jumbo securitizations – Agency and non-Agency MBS – Risk-sharing on GSE loans – Prime non-QM loans

$3.7 $4.3 $4.0 $3.3 $2.9 $4.8 $4.3 $3.7 $2.4 $1.9 $8.1 $10.0 $6.7 $6.0 $5.5 $0 $2 $4 $6 $8 $10 $12 1Q13 2Q13 3Q13 4Q13 1Q14 11 (UPB in billions) Correspondent acquisitions by PMT in 1Q14 totaled $4.8 billion – 60% government-insured loans (gain on mortgage loans to PFSI); – 40% fulfillment activity for PMT (fee revenue to PFSI) PMT has gained market share to become #3 ranked correspondent lender in 1Q14(1) April correspondent acquisitions totaled $2.2 billion; locks totaled $2.5 billion Government-insured volumes reflect the specialized nature of the product and PennyMac’s strong competitive position – Purchase-money originations comprised 90% of government-insured acquisitions Quarterly Highlights – Correspondent Lending (1) Source: Inside Mortgage Finance and company estimates (2) Includes loans acquired by PMT, for which PFSI earns a fulfillment fee (3) Government-insured correspondent acquisitions as a percentage of total government originations as reported by Inside Mortgage Finance Correspondent Volume and Mix Operational Highlights Share of the Government-Insured Market(3) 3.6% 4.0% 4.4% 5.2% 5.7% 0.0% 2.5% 5.0% 7.5% 1Q13 2Q13 3Q13 4Q13 1Q14 ¦ Government-insured loans ¦ Fulfillment activity for PMT ¦ Locks(2)

$267 $345 $283 $211 $314 $0 $100 $200 $300 $400 1Q13 2Q13 3Q13 4Q13 1Q14 Portfolio-sourced Non-portfolio 12 (UPB in millions) Retail originations totaled $314 million in 1Q14, up 49% from 4Q13 driven by strong recapture volume from recent MSR acquisitions – Resources shifted to capitalize on the portfoliodriven opportunity – Recapture rate of 49% in 1Q14 on the legacy Ginnie Mae MSR portfolio acquired last quarter – Recapture sharing totaling $1.9 million paid to PMT Continued development of initiatives to drive purchase-money business, e.g., Business Development Officers (BDOs) – Key management hires for BDO initiative – Prudently adding BDOs in select regions Quarterly Highlights – Retail Lending Retail Origination Volume Operational Highlights

$36.2 $44.4 $52.9 $78.2 $83.8 $0 $20 $40 $60 $80 $100 1Q13 2Q13 3Q13 4Q13 1Q14 Special Prime subserviced Prime owned 13 (UPB in billions) Servicing portfolio totaled $83.8 billion in UPB at quarter-end, up 7% from 4Q13 – Prime servicing and subservicing net growth of $5.8 billion in UPB from December 31, 2013 Mini-bulk and flow MSR acquisitions totaled $2.4 billion in UPB during 1Q14 – Co-investment by PMT in ESS totaled $21 million – Continued development of the Fort Worth, TX servicing facility – capabilities now mirror most of those in Moorpark, CA and provide additional scalability for the servicing platform Quarterly Highlights – Loan Servicing Loan Servicing Portfolio Composition Operational Highlights

$13.6 $13.6 $13.5 $14.4 $12.5 $0 $3 $6 $9 $12 $15 1Q13 2Q13 3Q13 4Q13 1Q14 Carried interest & incentive fees Base management fees & other revenue 14 ($ in millions) Investment management revenues were $12.5 million, down 13% from 4Q13 – Incentive fees from PMT and carried interest from the Opportunity Funds declined 23% and 28% quarter-over-quarter, respectively Net assets under management totaled $2.1 billion, up 4% from December 31, 2013 – Aided by $80 million in equity raised by PMT during the quarter to support its growth Quarterly Highlights – Investment Management Investment Management Revenues Operational Highlights

First Quarter Financial Review 15 Diluted earnings per common share of $0.38 Pretax income of $49.1 million, up 18% from 4Q13 Total net revenue of $105.5 million, up 17% from 4Q13 Total expenses of $56.4 million, up 16% from 4Q13 Business Segment Results Total pretax income from mortgage banking activities of $43.1 million, up 36% from 4Q13 Production segment pretax income totaled $26.0 million, up 14% from 4Q13 o Government-insured correspondent locks increased 5% Q/Q reflecting PennyMac’s strong competitive position Servicing segment pretax income totaled $17.1 million, up 94% from 4Q13 o Higher servicing fees partially offset by MSR valuation adjustments resulting from a decline in interest rates during the quarter and increased amortization resulting from a growing investment in MSRs Investment Management segment pretax income of $6.0 million, down 41% from 4Q13

Net gains on mortgage loans held for sale at fair value 34,538 $ 29,453 $ Loan origination fees 6,880 5,315 Fulfillment fees from PennyMac Mortgage Investment Trust 8,902 11,087 Net interest income 1,777 1,702 Other 643 226 52,740 47,783 26,786 24,998 Pretax income 25,954 $ 22,785 $ Net gains on mortgage loans 34,538 $ 29,453 $ As % of IRLCs 0.89% 0.76% Loan origination fees 6,880 $ 5,315 $ As % of PFSI fundings 0.21% 0.15% Fulfillment fees from PMT 8,902 $ 11,087 $ Average fulfillment fee 46 bps 46 bps Production Segment Metrics Unaudited ($ in thousands) Expenses Production Segment Unaudited ($ in thousands) Revenue Quarter ended March 31, 2014 Quarter ended December 31, 2013 Quarter ended March 31, 2014 Quarter ended December 31, 2013 16 Mortgage Banking – Production Segment Results (1) Fulfillment fees paid by PMT divided by volume of loans fulfilled for PMT (1)

($ in thousands) S($ in thousands) Servicing fees(1) 57,319 $ Servicing fees for 4Q13 43,588 $ Effect of MSRs: Increase due to: Amortization and realization of cash flows (14,539) $ Volume 12,268 Change in fair value and (privision for) reversal of impairment of MSRs Rate(2) 1,463 carried at lower of amortized cost or fair value (3,377) Total change 13,731 Change in fair value of excess servicing spread financing 4,792 Servicing fees for 1Q14 57,319 $ Hedging losses (431) Total amortization, impairment and change in fair value of MSRs (13,555) Net loan servicing fees 43,764 $ Net Loan Servicing Fees Servicing Fee Roll-forward Quarter ended March 31, 2014 Mortgage Banking – Servicing Segment Results (1) Includes contractually-specified servicing fees. (2) The increase in servicing fees attributable to rate is due to the higher average servicing fees associated with government-insured loans and distressed loans subserviced for PMT, both of which increased during the quarter. 17 Revenue Net servicing fees 43,764 $ 30,500 $ Net interest expense (4,057) (2,375) Other 519 67 40,226 28,192 Expenses 23,113 19,393 Pretax income 17,113 $ 8,799 $ Servicing Segment Unaudited ($ in thousands) Quarter ended March 31, 2014 Quarter ended December 31, 2013

UPB $24,665 $3,198 $22,246 Weighted average coupon 3.70% 5.13% 4.40% Prepayment speed assumption (CPR) 8.1% 10.0% 10.5% Weighted average servicing fee rate 0.29% 0.36% 0.32% Fair value of MSR $291.6 $36.5 $210.5 As a multiple of servicing fee 4.10 3.17 2.95 Carrying value of MSR $282.1 $36.5 $210.5 Related excess servicing spread liability - - ($151.0) Fair value in excess of carrying value $9.4 March 31, 2014 ($ in millions) Lower of amortized cost or fair value Fair value not subject to excess servicing spread Fair value subject to excess servicing spread Mortgage Servicing Rights (MSR) Asset Valuation 18 PFSI carries most of its originated MSRs at the lower of amortized cost or fair value – MSRs where the note rate on the underlying loan is equal to or less than 4.5% – Fair value of the MSRs in excess of their carrying value decreased, due to a decline in interest rates quarter-over-quarter and increased expectations for prepayments Note: Figures may not sum exactly due to rounding

Unaudited ($ in thousands) Management fees: From PennyMac Mortgage Investment Trust 8,074 $ 8,924 $ From Investment Funds 2,035 2,031 10,109 10,955 Carried Interest from Investment Funds 2,157 3,008 Net interest income 4 8 Other 256 474 12,526 14,445 6,532 4,342 Pretax income 5,994 $ 10,103 $ Expenses Investment Management Segment Revenue Quarter ended March 31, 2014 Quarter ended December 31, 2013 Investment Management Segment Results 19

Appendix

($ in millions) Correspondent Acquisitions Conventional 4,779 $ 4,216 $ 3,608 $ 2,419 $ 1,907 $ Government 3,739 4,262 3,992 3,340 2,913 Jumbo 8 107 74 14 13 Total 8,526 $ 8,586 $ 7,674 $ 5,773 $ 4,833 $ Correspondent Locks Conventional 4,251 $ 5,069 $ 2,923 $ 2,532 $ 2,163 $ Government 3,778 4,739 3,718 3,455 3,282 Jumbo 101 158 22 20 66 Total 8,129 $ 9,966 $ 6,662 $ 6,008 $ 5,512 $ Retail Originations Conventional 159 $ 255 $ 235 $ 169 $ 56 $ Government 106 85 44 41 258 Jumbo 2 5 4 - - Total 267 $ 345 $ 283 $ 211 $ 314 $ Retail Locks Conventional 353 $ 457 $ 354 $ 273 $ 122 $ Government 161 117 59 130 464 Jumbo 11 23 4 2 1 Total 525 $ 597 $ 417 $ 405 $ 587 $ Total acquisitions/originations 8,793 $ 8,930 $ 7,957 $ 5,984 $ 5,147 $ Total locks 8,654 $ 10,563 $ 7,079 $ 6,413 $ 6,099 $ 1Q13 2Q13 3Q13 4Q13 1Q14 Acquisitions, Originations, and Locks by Product 21 Note: Figures may not sum exactly due to rounding