PennyMac Financial Services, Inc. (PFSI) CEO David Spector on Q1 2020 Results - Earnings Call Transcript

PennyMac Financial Services, Inc. (NYSE:PFSI) Q1 2020 Earnings Conference Call May 7, 2020 4:30 PM ET

Company Participants

Isaac Garden - Vice President of Investor Relations
David Spector - President and Chief Executive Officer
Doug Jones - Chief Mortgage Banking Officer
Andy Chang - Chief Financial Officer

Isaac Garden

Good afternoon, and welcome to the First Quarter 2020 Earnings Discussion for PennyMac Financial Services, Inc. The slides that accompany this discussion are available on PennyMac Financial's website at ir.pennymacfinancial.com. Before we begin, please take a few moments to read the disclaimer on Slide 2 of the presentation. Thank you.

Now I would like to begin by introducing David Spector, PennyMac Financial's President and Chief Executive Officer, who will review the company's first-quarter 2020 results.

David Spector

Thank you, Isaac. PennyMac Financial reported record earnings in the first quarter, driven by continued strong production results, combined with substantial gains on our interest rate hedge investments, which more than offset fair value losses on mortgage servicing rights. Net income was $306.2 million or diluted earnings per share of $3.73. Book value per share increased to $29.85, up from $26.26 at the end of the prior quarter.

In March, we repurchased approximately 238,000 shares of PFSI's common stock at a cost of $4.1 million and a weighted average price of $17.29 per share. PFSI's Board of Directors declared a cash dividend of $0.12 per share for the first quarter. Production segment pre-tax income was a record $240.1 million, up 18% from the prior quarter and 411% from the first quarter of 2019, driven by record volumes in the direct lending channels and elevated margins across all of our channels. Direct lending locks were a record $9.9 billion in unpaid principal balance, up 38% from the prior quarter and up 229% from the first quarter of 2019.