Earnings Per Common Share

9 Months Ended

Sep. 30, 2013

Earnings Per Common Share

Earnings Per Common Share

Note 5—Earnings Per Common Share

Basic earnings per common share is determined using net income divided by the weighted-average number of common shares outstanding during the period. Diluted earnings per common share is determined by dividing net income attributable to common stockholders by the weighted-average of common shares outstanding, assuming all potentially dilutive common shares were issued.

The Company applies the treasury stock method to determine the dilutive weighted-average common shares represented by the unvested restricted stock units and the exchangeable PennyMac Class A units. The diluted earnings per share calculation assumes the exchange of these PennyMac Class A partnership units for shares of common stock. Accordingly, the numerator is also adjusted to include the earnings allocated to the PennyMac Class A units after taking into account the tax effect of such exchange.

The following table summarizes the basic and diluted earnings per share calculations:

	Quarter ended September 30, 2013		Nine months ended September 30, 2013
	(in thousands, except per share amounts)
Basic earnings per share of common stock:
Net income attributable to common stockholders	$	5,197	$	7,990
Weighted-average shares outstanding	17,958		16,042
Basic earnings per share	$	0.29	$	0.50
Diluted earnings per share of common stock:
Net income	$	5,197	$	7,990
Effect of net income attributable to noncontrolling interest, net of tax	15,685		29,595
Diluted net income attributable to common stockholders	$	20,882	$	37,585
Weighted-average common stock outstanding	17,958		16,042
Dilutive potential exchangeable PennyMac Class A common units to common stock	57,888		59,804
Dilutive potential common stock—issuable under stock-based compensation plans	30		21
Diluted weighted-average common stock outstanding	75,876		75,867
Diluted earnings per share of common stock	$	0.28	$	0.50