8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) ofthe Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 3, 2018

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.)

3043 Townsgate Road, Westlake Village, California	91361
(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:

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

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

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

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

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02    Results of Operations and Financial Condition.

On May 3, 2018,  PennyMac Financial Services, Inc. (the “Company”) issued a press release announcing its financial results for the fiscal quarter ended March 31, 2018.  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 3, 2018 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 3, 2018, issued by PennyMac Financial Services, Inc. pertaining to its financial results for the fiscal quarter ended March 31, 2018.
99.2	Slide Presentation for use beginning on May 3, 2018 in connection with a recorded presentation of financial results for the fiscal quarter ended March 31, 2018.

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release, dated May 3, 2018, issued by PennyMac Financial Services, Inc. pertaining to its financial results for the fiscal quarter ended March 31, 2018.
99.2	Slide Presentation for use beginning on May 3, 2018 in connection with a recorded presentation of financial results for the fiscal quarter ended March 31, 2018.

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  4, 2018	/s/ Andrew S. Chang
	Andrew S. Chang Senior Managing Director and Chief Financial Officer

EX-99.1

Exhibit 99.1

	Media	Investors
	Stephen Hagey	Christopher Oltmann
	(805) 530-5817	(818) 264-4907

PennyMac Financial Services, Inc. Reports

First Quarter 2018  Results

Westlake Village, CA, May 3,  2018  – PennyMac Financial Services, Inc. (NYSE: PFSI) today reported net income of $66.9 million for the first quarter of 2018, on revenue of $238.2 million.  Net income attributable to PFSI common stockholders was  $16.6 million,  or $0.67 per diluted share.  Book value per share increased to $20.74, from $19.95 at December 31, 2017.

First Quarter 2018  Highlights

     Pretax income was $73.0 million, down from $121.8 million in the prior quarter; the prior quarter’s results included a $32.0 million benefit related to remeasurement of tax-related items that did not recur

o    First quarter results reflect higher mortgage rates which drove an increased earnings contribution from the servicing segment and a decrease from the production segment driven by lower production margins

     Production segment pretax income was  $17.2 million, down 69 percent from the prior quarter and 64 percent from the first quarter of 2017

o    Total loan acquisitions and originations were  $14.3 billion in unpaid principal balance (UPB), down 16 percent from the prior quarter and 4 percent from the first quarter of 2017

o    Correspondent government and direct lending interest rate lock commitments (IRLCs) totaled $10.9 billion in UPB,  down 8 percent from the prior quarter and 2 percent from the first quarter of 2017

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     Servicing segment pretax income was  $54.9 million,  up 71 percent from the prior quarter and 309 percent from the first quarter of 2017

o    Servicing segment pretax income excluding valuation-related changes was $36.3 million, up 29 percent from the prior quarter and 63 percent from the first quarter of 20171

o    Completed previously announced acquisition of a bulk portfolio of Ginnie Mae and conventional conforming mortgage servicing rights (MSRs) with UPB of $3.2 billion

o    Servicing portfolio grew to $255.3 billion in UPB, up 4 percent from December 31, 2017, and 26 percent from March 31, 2017

     Investment Management segment pretax income was  $1.0 million,  down from $1.5 million in the prior quarter and $1.1 million in the first quarter of 2017

o    Net assets under management were $1.5 billion,  down 2 percent from
December 31, 2017, and 1 percent from March 31, 2017

     Issued $650 million of 5-year term notes at attractive rates under Ginnie Mae MSR financing structure, refinancing $400 million of 3-year term notes issued in February 2017

“We had good results in a challenging market environment,” said President and CEO David Spector.  “Our earnings were driven by strong performance in our servicing segment.  We expect this segment to continue to be a larger contributor to PennyMac Financial’s earnings and to benefit from higher interest rates and the continued growth of our loan servicing portfolio.  The earnings contribution of our production segment decreased significantly, driven by heightened competition among originators and aggregators as market participants lowered margins to fill their existing operational capacity.  Another influencing factor was our desire to deploy capital into additional investments in mortgage servicing rights.”

1  Excludes changes in the fair value of MSRs, the ESS liability, and gains (losses) on hedging which were $127.8 million, $(6.9) million, and $(103.6) million, respectively, and a $1.3 million reversal of provision for credit losses on active loans in the first quarter of 2018.

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

	Quarter ended March 31, 2018
	Mortgage Banking						Investment
	Production		Servicing		Total		Management		Total
	(in thousands)
Revenue
Net gains on mortgage loans held for sale at fair value	$	36,198	$	35,216	$	71,414	$	—	$	71,414
Loan origination fees		24,563		—		24,563		—		24,563
Fulfillment fees from PMT		11,944		—		11,944		—		11,944
Net servicing fees		—		116,789		116,789		—		116,789
Management fees		—		—		—		5,775		5,775
Carried Interest from Investment Funds		—		—		—		(180)		(180)
Net interest income (expense):
Interest income		14,248		28,367		42,615		—		42,615
Interest expense		2,102		34,627		36,729		16		36,745
		12,146		(6,260)		5,886		(16)		5,870
Other		316		395		711		1,315		2,026
Total net revenue		85,167		146,140		231,307		6,894		238,201
Expenses		67,997		91,265		159,262		5,943		165,205
Pretax income	$	17,170	$	54,875	$	72,045	$	951	$	72,996

Production Segment

Production includes the correspondent acquisition of newly originated government-insured mortgage loans for PennyMac Financial’s own account, fulfillment services on behalf of PennyMac Mortgage Investment Trust (NYSE: PMT) and direct lending through the consumer direct and broker direct channels.

PennyMac Financial’s loan production activity for the quarter totaled $14.3 billion in UPB, of which $10.1 billion in UPB was for its own account, and $4.2 billion in UPB was fee-based fulfillment activity for PMT.  Correspondent government and direct lending IRLCs totaled $10.9  billion in UPB.

Production segment pretax income was $17.2 million, a decrease of 69 percent from the prior quarter and 64 percent from the first quarter of 2017.  Production revenue totaled $85.2 million, a  decrease of 35 percent from the prior quarter and 23 percent from the first quarter of 2017.  The quarter-over-quarter change resulted from  a  $32.5 million decrease in net gains on mortgage loans held for sale,  driven by lower margins from higher mortgage rates and heightened competition among industry participants.

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The components of net gains on mortgage loans held for sale are detailed in the following table:

	Quarter ended
	March 31, 2018		December 31, 2017		March 31, 2017
	(in thousands)
Receipt of MSRs in loan sale transactions	$	141,873	$	143,904	$	132,143
Mortgage servicing rights recapture payable to PennyMac Mortgage Investment Trust		(1,425)		(1,553)		(1,695)
Provision for representations and warranties, net		(379)		(381)		(530)
Cash investment (1)		(63,594)		(69,001)		(57,574)
Fair value changes of pipeline, inventory and hedges		(5,061)		25,652		14,612
Net gains on mortgage loans held for sale	$	71,414	$	98,621	$	86,956
Net gains on mortgage loans held for sale by segment:
Production	$	36,198	$	68,716	$	62,837
Servicing	$	35,216	$	29,905	$	24,119

(1)  Net of cash hedge expense

PennyMac Financial performs fulfillment services for conventional conforming loans acquired by PMT in its correspondent production business.  These services include, but are not limited to:  marketing;  relationship management;  the approval of correspondent sellers and the ongoing monitoring of their performance;  reviewing loan data, documentation and appraisals to assess loan quality and risk;  pricing;  hedging and activities related to the subsequent sale and securitization of loans in the secondary mortgage markets for PMT.  Fees earned from the fulfillment of correspondent loans on behalf of PMT totaled $11.9 million in the first quarter, down 38 percent  from the prior quarter and 28 percent from the first quarter of 2017.  The decrease in fulfillment fee revenue was driven by lower acquisition volumes by PMT and a  reduction in the weighted average fulfillment fee,  reflective of the more competitive market environment.  For the first quarter, the weighted average fulfillment fee rate was 28 basis points, down from 33 basis points in the prior quarter.

Production segment expenses were $68.0 million, a 10 percent decrease from the prior quarter and a 9 percent increase from the first quarter of 2017.  The quarter-over-quarter decrease was primarily driven by reductions in incentive-based compensation and corporate overhead, which is allocated across segments based upon their relative profitability.

Servicing Segment

Servicing includes income from owned MSRs, subservicing and special servicing activities.  Servicing segment pretax income was $54.9 million compared with $32.0 million in the prior quarter and $13.4 million in the first quarter of 2017.  Servicing segment revenues totaled $146.1 million, an increase of 13 percent from the prior quarter and 64 percent from the first quarter of 2017.  The quarter-over-quarter increase was primarily due to an increase in net loan servicing fees,  driven by MSR fair value gains resulting from the sharp rise in interest rates

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during the first quarter, net of hedge results,  and an elevated level of revenue related to the reperformance of government-insured and guaranteed loans bought out of Ginnie Mae pools in prior periods.

Net loan servicing fees totaled $116.8 million and included $160.7 million in servicing fees reduced by $61.2 million in realization of MSR cash flows.  Valuation-related gains totaled $17.3 million, which includes MSR fair value gains of $127.8 million,  associated hedging losses of $103.6 million and changes in fair value of the excess servicing spread (ESS) liability resulting in a $6.9 million loss.  The MSR fair value gains resulted from expectations for lower prepayment activity in the future due to higher mortgage rates.  Before January 1, 2018, PennyMac Financial carried the majority of its MSRs at the lower of amortized cost or fair value. Beginning January 1, 2018, the Company elected to account for all MSRs at fair value prospectively.

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

	Quarter ended
	March 31, 2018		December 31, 2017		March 31, 2017
	(in thousands)
Servicing fees (1)	$	160,673	$	162,008	$	129,315
Effect of MSRs:
Amortization and realization of cash flows		(61,176)		(66,891)		(48,460)
Change in fair value and provision for/reversal of impairment of MSRs carried at lower of amortized cost or fair value		127,806		28,029		12,701
Change in fair value of excess servicing spread financing		(6,921)		4,593		2,773
Hedging gains (losses)		(103,593)		(20,837)		(22,166)
Total amortization, impairment and change in fair value of MSRs		(43,884)		(55,106)		(55,152)
Net loan servicing fees	$	116,789	$	106,902	$	74,163

(1)  Includes contractually-specified servicing fees

Servicing segment revenue also included $35.2 million in net gains on mortgage loans held for sale from the securitization of reperforming government-insured and guaranteed loans, compared with  $29.9 million in the prior quarter and $24.1 million in the first quarter of 2017.  These loans were previously purchased out of Ginnie Mae securitizations as early buyout loans (EBO) and brought back to performing status through PennyMac Financial’s successful servicing efforts, primarily with the use of loan modifications.  Net interest expense totaled $6.3 million, a decrease of 24 percent from the prior quarter and 36 percent from the first quarter of 2017.  Interest income increased by $3.8 million from the prior quarter, driven by growth in capitalized interest resulting from higher modifications of EBO loans during the quarter.  Interest expense increased by $1.8 million from the prior quarter, driven by the accelerated recognition of costs related to the refinancing of MSR-backed term notes.

Servicing segment expenses totaled $91.3 million,  a  6 percent decrease from the prior quarter and a  21 percent increase from the first quarter of 2017.  The quarter-over-quarter decrease was driven by a reduction in

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expenses related to the buyout of defaulted government loans from securitizations and a reversal in the provision for credit losses from improved loan performance.

The total servicing portfolio reached $255.3 billion in UPB at March 31, 2018, an increase of 4 percent from the prior quarter end and 26 percent from a year earlier.  Servicing portfolio growth during the quarter was driven by the Company’s loan production activities, supplemented by a  $3.2 billion UPB bulk portfolio acquisition.  Of the total servicing portfolio, prime servicing was $254.4 billion in UPB and special servicing was $0.9 billion in UPB.  PennyMac Financial subservices and conducts special servicing for $77.5 billion in UPB, an increase of 3 percent from December 31, 2017.  PennyMac Financial’s owned MSR portfolio grew to $173.5 billion in UPB, an increase of 4 percent from the prior quarter end.

The table below details PennyMac Financial’s servicing portfolio UPB:

	March 31, 2018		December 31, 2017		March 31, 2017
			(in thousands)
Loans serviced at period end:
Prime servicing:
Owned
Mortgage servicing rights
Originated	$	125,643,312	$	119,673,403	$	97,505,384
Acquisitions		47,843,853		46,575,834		37,843,903
		173,487,165		166,249,237		135,349,287
Mortgage servicing liabilities		1,766,722		1,620,609		1,900,493
Mortgage loans held for sale		2,512,546		2,998,377		2,180,760
		177,766,433		170,868,223		139,430,540
Subserviced for Advised Entities		76,636,300		73,651,608		61,144,328
Total prime servicing		254,402,733		244,519,831		200,574,868
Special servicing:
Subserviced for Advised Entities		903,138		1,328,660		2,308,468
Total special servicing		903,138		1,328,660		2,308,468
Total loans serviced	$	255,305,871	$	245,848,491	$	202,883,336
Mortgage loans serviced:
Owned
Mortgage servicing rights	$	173,487,165	$	166,249,237	$	135,349,287
Mortgage servicing liabilities		1,766,722		1,620,609		1,900,493
Mortgage loans held for sale		2,512,546		2,998,377		2,180,760
		177,766,433		170,868,223		139,430,540
Subserviced		77,539,438		74,980,268		63,452,796
Total mortgage loans serviced	$	255,305,871	$	245,848,491	$	202,883,336

Investment Management Segment

PennyMac Financial manages PMT and two private Investment Funds for which it earns base management fees and may earn incentive compensation.  Net assets under management were $1.5 billion as of March 31,  2018,  down 2 percent from December 31, 2017, and 1 percent from March 31, 2017.

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Pretax income for the Investment Management segment was $1.0  million, compared with $1.5 million in the prior quarter and $1.1 million in the first quarter of 2017.  Management fees, which include base management fees from PMT and the private Investment Funds,  decreased 4 percent from the prior quarter and increased 7 percent from the first quarter of 2017.  No incentive fee was paid by PMT during the quarter, consistent with the prior quarter and the first quarter of 2017.

The following table presents a breakdown of management fees and carried interest:

	Quarter ended
	March 31, 2018		December 31, 2017		March 31, 2017
	(in thousands)
Management fees:
PennyMac Mortgage Investment Trust
Base	$	5,696	$	5,900	$	5,008
Performance incentive		—		—		—
		5,696		5,900		5,008
Investment Funds		79		88		366
Total management fees		5,775		5,988		5,374
Carried Interest		(180)		5		(128)
Total management fees and Carried Interest	$	5,595	$	5,993	$	5,246
Net assets of Advised Entities:
PennyMac Mortgage Investment Trust	$	1,542,258	$	1,544,585	$	1,458,590
Investment Funds		2,668		29,329		97,551
	$	1,544,926	$	1,573,914	$	1,556,141

Investment Management segment expenses totaled $5.9 million, an increase of 34 percent from the prior quarter  and 39 percent from the first quarter of 2017,  primarily due to a change in accounting for expenses reimbursed by PMT under the Company’s management agreement with PMT.  Beginning January 1, 2018, PennyMac Financial is required to include such expense reimbursements in its net revenue and the expenses reimbursed in its expenses.  Previously, PennyMac Financial accounted for such reimbursements as reductions to its expenses.

Consolidated Expenses

Total expenses for the first quarter were $165.2 million, a 7 percent decrease from the prior quarter and a  16 percent increase from the first quarter of 2017.  The quarter-over-quarter decrease was driven by lower total expenses in the production and servicing segments.

***

Executive Chairman Stanford L. Kurland concluded, “The mortgage origination market is in a period of significant transition, with interest rates increasing meaningfully from the end of last year, resulting in a reduction of refinancing volumes.  As the market continues to normalize, we believe PennyMac Financial is positioned to perform well as a result of our comprehensive mortgage banking platform and leading production and servicing businesses.  We continue to pursue opportunities that are expected to help us grow.  These include

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growth in our consumer direct channel and our recently launched broker channel.  We also are focused on the expansion of our product menu to better serve our customers and drive additional volume, including a re-emphasis on jumbo loans and developing loan products to help borrowers access home equity.  Technology is the foundation for these initiatives.  We are investing in technology to drive greater efficiencies, while at the same time focusing on continually improving interaction with our customers to ensure the successful execution of our growth strategies and our ability to deliver strong profitability into the future.”

Management’s slide presentation will be available in the Investor Relations section of the Company’s website at www.ir.pennymacfinancial.com beginning at 1:30 p.m. (Pacific Daylight Time) on Thursday,  May 3,  2018.

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. mortgage loans and the management of investments related to the U.S. 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.ir.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: the continually changing federal, state and local laws and regulations applicable to the highly regulated industry in which we operate; lawsuits or governmental actions that may result from any noncompliance with the laws and regulations applicable to our businesses; the mortgage lending and servicing-related regulations promulgated by the Consumer Financial Protection Bureau and its enforcement of these regulations; our dependence on U.S. government‑sponsored entities and changes in 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 the Company’s businesses, to which our bank competitors are not subject;

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foreclosure delays and changes in foreclosure practices; certain banking regulations that may limit our business activities; our dependence on the multifamily and commercial real estate sectors for future originations of commercial mortgage loans and other commercial real estate related loans; changes in macroeconomic and U.S. real estate market conditions; difficulties inherent in growing loan production volume; difficulties inherent in adjusting the size of our operations to reflect changes in business levels; purchase opportunities for mortgage servicing rights and our success in winning bids; changes in prevailing interest rates; increases in loan delinquencies and defaults; our reliance on PennyMac Mortgage Investment Trust (NYSE: PMT) as a significant source of financing for, and revenue related to, our mortgage banking business; any required additional capital and liquidity to support business growth that may not be available on acceptable terms, if at all; our obligation to indemnify third‑party purchasers or repurchase loans if loans that we originate, acquire, service or assist in the fulfillment of, fail to meet certain criteria or characteristics or under other circumstances; our obligation to indemnify PMT and the Investment Funds if its services fail to meet certain criteria or characteristics or under other circumstances; decreases in the returns on the assets that we select and manage for our clients, and our resulting management and incentive fees; the extensive amount of  regulation applicable to our investment management segment; conflicts of interest in allocating our services and investment opportunities among us and our advised entities; the effect of public opinion on our reputation; our recent growth; our ability to effectively identify, manage, monitor and mitigate financial risks; our initiation of new business activities or investment strategies or expansion of existing business activities or investment strategies; our ability to detect misconduct and fraud; our ability to mitigate cybersecurity risks and cyber incidents; our exposure to risks of loss with real estate investments resulting from adverse weather conditions and man-made or natural disasters; and our organizational structure and certain requirements in our charter documents.  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, 2018		December 31, 2017		March 31,  2017
	(in thousands, except share amounts)
ASSETS
Cash	$	137,863	$	37,725	$	72,767
Short-term investments at fair value		105,890		170,080		116,334
Mortgage loans held for sale at fair value		2,584,236		3,099,103		2,277,751
Derivative assets		89,469		78,179		82,001
Servicing advances, net		284,145		318,066		317,513
Carried Interest due from Investment Funds		538		8,552		70,778
Investment in PennyMac Mortgage Investment Trust at fair value		1,352		1,205		1,331
Mortgage servicing rights		2,354,489		2,119,588		1,725,061
Real estate acquired in settlement of loans		2,338		2,447		1,014
Furniture, fixtures, equipment and building improvements, net		30,172		29,453		31,568
Capitalized software, net		28,919		25,729		15,453
Financing receivable from PennyMac Mortgage Investment Trust		142,938		144,128		150,000
Receivable from Investment Funds		460		417		998
Receivable from PennyMac Mortgage Investment Trust		27,356		27,119		20,756
Loans eligible for repurchase		1,018,488		1,208,195		318,378
Other		94,238		98,107		49,674
Total assets	$	6,902,891	$	7,368,093	$	5,251,377
LIABILITIES
Assets sold under agreements to repurchase	$	1,814,282	$	2,381,538	$	2,034,808
Mortgage loan participation and sale agreements		510,443		527,395		241,638
Notes payable		1,140,022		891,505		436,725
Obligations under capital lease		16,435		20,971		31,178
Excess servicing spread financing payable  to PennyMac Mortgage Investment Trust at fair value		236,002		236,534		277,484
Derivative liabilities		4,476		5,796		15,873
Mortgage servicing liabilities at fair value		12,063		14,120		15,994
Accounts payable and accrued expenses		113,046		106,716		108,489
Payable to Investment Funds		26		2,427		18,356
Payable to PennyMac Mortgage Investment Trust		117,987		136,998		164,743
Payable to exchanged Private National Mortgage Acceptance Company, LLC unitholders under tax receivable agreement		46,037		44,011		78,712
Income taxes payable		58,956		52,160		31,968
Liability for loans eligible for repurchase		1,018,488		1,208,195		318,378
Liability for losses under representations and warranties		20,429		20,053		19,436
Total liabilities		5,108,692		5,648,419		3,793,782
STOCKHOLDERS' EQUITY
Class A common stockauthorized 200,000,000 shares of $0.0001 par value; issued and outstanding, 24,277,768, 23,529,970 and 22,917,545 shares, respectively		2		2		2
Class B common stockauthorized 1,000 shares of $0.0001 par value; issued and outstanding, 45, 46 and 49 shares, respectively		—		—		—
Additional paid-in capital		221,495		204,103		191,514
Retained earnings		282,114		265,306		175,428
Total stockholders' equity attributable to PennyMac Financial Services, Inc. common stockholders		503,611		469,411		366,944
Noncontrolling interests in Private National Mortgage Acceptance Company, LLC		1,290,588		1,250,263		1,090,651
Total stockholders' equity		1,794,199		1,719,674		1,457,595
Total liabilities and stockholders’ equity	$	6,902,891	$	7,368,093	$	5,251,377

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PENNYMAC FINANCIAL SERVICES, INC.

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

	Quarter ended
	March 31,  2018		December 31,  2017		March 31,  2017
	(in thousands, except earnings per share)
Revenue
Net gains on mortgage loans held for sale at fair value	$	71,414	$	98,621	$	86,956
Mortgage loan origination fees		24,563		30,267		25,574
Fulfillment fees from PennyMac Mortgage Investment Trust		11,944		19,175		16,570
Net mortgage loan servicing fees:
Mortgage loan servicing fees
From non-affiliates		135,483		130,617		106,467
From PennyMac Mortgage Investment Trust		11,019		11,077		10,486
From Investment Funds		—		6		496
Ancillary and other fees		14,171		20,308		11,866
		160,673		162,008		129,315
Amortization, impairment and change in estimated fair value of mortgage servicing rights and excess servicing spread		(43,884)		(55,106)		(55,152)
Net mortgage loan servicing fees		116,789		106,902		74,163
Management fees:
From PennyMac Mortgage Investment Trust		5,696		5,900		5,008
From Investment Funds		79		88		366
		5,775		5,988		5,374
Carried Interest from Investment Funds		(180)		5		(128)
Net interest income (expense):
Interest income		42,615		39,905		23,859
Interest expense		36,745		35,677		29,474
		5,870		4,228		(5,615)
Change in fair value of investment in and dividends received from PennyMac Mortgage Investment Trust		182		(63)		139
Results of real estate acquired in settlement of loans		(28)		(43)		(25)
Revaluation of payable to exchanged Private National Mortgage Acceptance Company, LLC unitholders under tax receivable agreement		—		32,940		—
Other		1,872		614		1,465
Total net revenue		238,201		298,634		204,473
Expenses
Compensation		102,013		97,097		85,240
Servicing		26,299		41,183		26,843
Technology		14,620		13,993		11,356
Occupancy and equipment		6,377		5,675		5,319
Loan origination		2,115		5,599		4,133
Professional services		5,738		4,868		3,818
Marketing		2,161		2,524		1,736
Other		5,882		5,922		3,996
Total expenses		165,205		176,861		142,441
Income before provision for income taxes		72,996		121,773		62,032
Provision for (benefit from) income taxes		6,070		(2,125)		7,646
Net income		66,926		123,898		54,386
Less: Net income attributable to noncontrolling interest		50,307		61,580		43,507
Net income attributable to PennyMac Financial Services, Inc. common stockholders	$	16,619	$	62,318	$	10,879
Earnings per share
Basic	$	0.70	$	2.67	$	0.48
Diluted	$	0.67	$	2.44	$	0.47
Weighted-average common shares outstanding
Basic		23,832		23,354		22,619
Diluted		79,461		25,565		77,143

11

EX-99.2

Exhibit 99.2

Exhibit 99.2 First Quarter 2018 Earnings Report

Forward-Looking Statements 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 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: the continually changing federal, state and local laws and regulations applicable to the highly regulated industry in which we operate; lawsuits or governmental actions that may result from any noncompliance with the laws and regulations applicable to our businesses; the mortgage lending and servicing-related regulations promulgated by the Consumer Financial Protection Bureau and its enforcement of these regulations; our dependence on U.S. government-sponsored entities and changes in 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 the Company’s 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; our dependence on the multifamily and commercial real estate sectors for future originations of commercial mortgage loans and other commercial real estate related loans; changes in macroeconomic and U.S. real estate market conditions; difficulties inherent in growing loan production volume; difficulties inherent in adjusting the size of our operations to reflect changes in business levels; purchase opportunities for mortgage servicing rights and our success in winning bids; changes in prevailing interest rates; increases in loan delinquencies and defaults; our reliance on PennyMac Mortgage Investment Trust (NYSE: PMT) as a significant source of financing for, and revenue related to, our mortgage banking business; any required additional capital and liquidity to support business growth that may not be available on acceptable terms, if at all; our obligation to indemnify third-party purchasers or repurchase loans if loans that we originate, acquire, service or assist in the fulfillment of, fail to meet certain criteria or characteristics or under other circumstances; our obligation to indemnify PMT and the Investment Funds if its services fail to meet certain criteria or characteristics or under other circumstances; decreases in the returns on the assets that we select and manage for our clients, and our resulting management and incentive fees; the extensive amount of regulation applicable to our investment management segment; conflicts of interest in allocating our services and investment opportunities among us and our advised entities; the effect of public opinion on our reputation; our recent growth; our ability to effectively identify, manage, monitor and mitigate financial risks; our initiation of new business activities or expansion of existing business activities; our ability to detect misconduct and fraud; and our ability to mitigate cybersecurity risks and cyber incidents. 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. 2

First Quarter Highlights  Pretax income was $73.0 million; diluted earnings per share were $0.67 – First quarter results reflect increased earnings contribution from the servicing segment driven by higher mortgage rates and a decrease from the production segment driven by lower margins – Book value per share increased to $20.74 from $19.95 at December 31, 2017 and from $16.01 at March 31, 2017 Production segment pretax income was $17.2 million, down 69% from 4Q17 and 64% from 1Q17 – Total acquisition and origination volume was $14.3 billion in unpaid principal balance (UPB), down 16% from 4Q17 and 4% from 1Q17 – Total correspondent government and direct lending locks were $10.9 billion in UPB, down 8% from 4Q17 and 2% from 1Q17 Servicing segment pretax income was $54.9 million, up 71% from 4Q17 and 309% from 1Q17 – Servicing portfolio grew to $255.3 billion in UPB, up 4% from December 31, 2017 and 26% from March 31, 2017 – Pretax income excluding valuation-related items was $36.3 million, up 29% from 4Q17 and 63% from 1Q17 – Valuation-related items include a $127.8 million increase in mortgage servicing rights (MSR) values, partially offset by $103.6 million in associated hedging losses and a $6.9 million loss due to the change in fair value of the excess servicing spread (ESS) liability Investment Management segment pretax income was $1.0 million, down from $1.5 million in 4Q17 and $1.1 million in 1Q17 – Net assets under management (AUM) were $1.5 billion, down 2% from December 31, 2017 and 1% from March 31, 2017 Issued $650 million of 5-year term notes at attractive rates under our Ginnie Mae MSR financing structure, refinancing $400 million of 3-year term notes issued in February 2017        3

Current Market Environment Average 30-year fixed rate mortgage(1)  Significant volatility in financial markets during 1Q18, with interest rates increasing sharply 5.0% 4.44% – Mortgage rates increased 45 basis points to 4.44% at quarter end(1) Total mortgage originations were down 21% Q/Q driven by a decline in refinance activity(2) o Prepayment activity at multi-year low levels(3) Contributed to heightened competition among mortgage originators and aggregators 4.5% – 4.0% 3.5% – 3.0%  Home sales growth remains a positive driver for the mortgage market despite higher interest rates and housing supply constraints Growth in non-mortgage consumer debt and home price appreciation create demand for loan products to access home equity Mortgage delinquencies increased modestly from a year ago(4) – Excluding the impact of hurricanes, mortgage performance improved from the same period a year ago Home Sales(5) (in millions) +6%  8 6.5 6.3 6.2 6.0 6  4 2 0 2016 2017 2018E 2019E 2020E Existing Home Sales New Home Sales (1) Freddie Mac Primary Mortgage Market Survey. 4.58% as of 4/26/18 (2) Inside Mortgage Finance (as of 4/27/2018) (3) Fannie Mae Housing Forecast (as of 4/10/2018) (4) Black Knight Financial Services – total U.S. loan delinquency rate 30 day+ delinquent but not in foreclosure was 3.73% as of 3/31/18, compared to 3.61% at 3/31/17 (5) Actual results from National Association of Realtors and the Census Bureau – seasonally adjusted. Forecast estimates are from the Mortgage Bankers Association (forecast as of 4/24/18) 4 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 6.7 3.99%

Outlook for PennyMac Financial in the Current Environment  The mortgage origination market is in a period of significant transition – Interest rates have increased meaningfully from the end of 2017, reducing origination volumes, in particular refinance loans Competition among originators and aggregators is intense, as market participants lower margins to fill their existing operational capacity Over time, we expect the market will normalize as capacity adjusts to the smaller market; we are beginning to see some originators reduce headcount and other firms exit the mortgage business – –  As a market leader, we believe that PennyMac Financial is well positioned for success in a challenging production market – – We have economies of scale and capital advantages that many other firms lack We are investing capital in additional MSRs at attractive returns through our production activities supplemented by MSR acquisitions We maintain disciplined focus on expense control throughout our business; we have built a leading, low-cost correspondent aggregator and have a highly variable cost structure in consumer direct The majority of our production is oriented toward purchase-money loans, which are expected to grow this year Results from our large servicing business benefit from a growing portfolio and higher interest rates In addition to existing growth initiatives in correspondent and consumer direct, newer growth initiatives include broker direct, non-delegated correspondent and the increased emphasis on jumbo loans – – – – 5

Trends in PennyMac Financial’s Businesses Correspondent Production(1) Loan Servicing(1) Market Share Market Share 2.40% 12% 10% 8% 6% 4% 2% 2.5% 2.31% 10.95% 2.0% 1.64% 1.5% 1.0% 0.5% 0% 0.0% 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18E 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18E Consumer Direct Production(1) Investment Management Market Share AUM (billions) 0.80% $2.0 0.55% 0.60% $1.5 0.40% $1.0 0.20% $0.5 $0.0 0.00% 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18E (1) Source: Inside Mortgage Finance and company estimates. Inside Mortgage Finance estimates total 1Q18 origination market of $375 billion. Correspondent production share estimate is based on PFSI and PMT acquisition volume of $13.1 billion divided by $124 billion for the correspondent market (estimated to be 33% of total origination market). Consumer direct production share is based on PFSI originations of $1.27 billion divided by $210 billion for the retail market (estimated to be 56% of total origination market). Loan servicing market share is based on PFSI’s servicing UPB of $255.3 billion divided by an estimated $10.6 trillion in mortgage debt outstanding as of March 31, 2018. 6 0.62% 0.60% 0.47% $1.62$1.56$1.57 $1.54 1.89% 10.00% 10.54% 7.94%

Production Segment Highlights – Correspondent Channel  Correspondent acquisitions by PMT in 1Q18 totaled $13.1 billion, down 15% Q/Q and 6% Y/Y – 68% government loans; 32% conventional loans – 7% Q/Q decline in government acquisitions, and down 5% Y/Y – 28% Q/Q decline in conventional conforming acquisitions, and down 9% Y/Y Correspondent Volume and Mix (UPB in billions) $20 $16 $14.5 $13.6 $12 $8  Correspondent lock volume of $13.6 billion, down 14% Q/Q and 6% Y/Y; government locks totaled $9.2 billion, down 4% Q/Q and 1% Y/Y – Volume decline from the prior quarter resulted from higher mortgage rates and seasonal factors $4 $0 1Q17 ■ Government loans(1) 4Q17 ■ Conventional loans for PMT(2) 1Q18 ■ Total Locks(3)  Decrease in revenue margin reflects heightened competition and PFSI’s strategy to deploy capital in additional MSR investments Increased our emphasis on a prime jumbo offering to better serve our customers and drive additional volume April correspondent acquisitions totaled $4.7 billion; locks totaled $5.6 billion    (1) For government-insured and guaranteed loans, PFSI earns income from holding and selling or securitizing the loans (2) For conventional loans, PFSI earns a fulfillment fee from PMT rather than income from holding and selling or securitizing the loans (3) Includes locks related to PMT loan acquisitions, including conventional loans for which PFSI earns a fulfillment fee upon loan funding (4) Includes net gains on mortgage loans held for sale, loan origination fees and net interest income for government-insured correspondent loans; lock volume adjusted for expected fallout, which was 4% in 4Q17 for government-insured correspondent locks (5) Based on funding volumes of loans subject to fulfillment fee. The fulfillment fee rate is reflective of the more competitive market environment. 7 Selected Operational Metrics 4Q17 Correspondent seller relationships 613 Purchase-money loans, as a % of total acquisitions 76% 1Q18 615 77% Key Financial Metrics 4Q17 Revenue per fallout-adjusted government lock(4) 54 bps Weighted average fulfillment fee(5) 33 bps 1Q18 45 bps 28 bps $15.9 $5.9 $4.6 $4.2 $9.5 $9.3 $8.8

Production Segment Highlights – Consumer Direct Channel  Consumer direct production volume of $1.3 billion in 1Q18, down 23% Q/Q and up 22% Y/Y April consumer direct originations totaled $291 million; locks totaled $556 million – $668 million committed pipeline at April 30, 2018(1) Rate and term refinance opportunities in the servicing portfolio have declined as interest rates increased Launched new consumer direct portal in April – Expected to help drive further non-portfolio and purchase-money origination volume growth – Provides access to technology with increased functionality and designed to drive a more seamless customer experience Product emphasis continues to evolve – Focus on continued growth in conventional, FHA and VA refinance and purchase-money loans – Also increased our emphasis on a prime jumbo offering – Continued process enhancements to improve workflow and efficiency Consumer Direct Production Volume (UPB in billions) $2.0  $1.5  $1.0  $0.5 $0.0 1Q17 4Q17 1Q18 ■ Portfolio-sourced fundings ■ Non-portfolio fundings ■ Committed pipeline(1)  370 $777 Revenue per fallout-adjusted consumer direct lock (bps) Committed pipeline ($ in millions) (1) Commitments to originate mortgage loans at specified terms at period end (2) Includes net gains on mortgage loans held for sale, loan origination fees and net interest income; lock volume adjusted for expected fallout, which was 34% in 1Q18 for consumer direct locks (3) As of December 31, 2017 and March 31, 2018 8 Consumer Direct Metrics 4Q17 (2) (3) 1Q18 326 $566 $1.6 $1.0 $0.8 $1.3 $0.7

Production Segment Highlights – Broker Direct Channel Feedback on POWER portal and approval process has been favorable  Client engagement model and value proposition that resonates with the broker community  Portal and brand awareness is growing Broker channel is an attractive growth opportunity  Access to an additional 10% of the $1.7 trillion origination market Leverages our proven ability to profitably produce high volumes of loans Official launch in January – somewhat tempered by rising rates during a seasonally slow period for the mortgage market    (1) As of April 23, 2018 9 Channel Development  Focus on expanding the platform features and additions to the product menu include: – Messaging and loan status tracking functionality – Further automation of broker disclosures – Jumbo loans – Adjustable rate products 204 broker customers currently approved(1)

Servicing Segment Highlights  Servicing portfolio totaled $255.3 billion in UPB at the end of the first quarter, up 4% from 4Q17 and 26% from 1Q17 Successfully completed a previously announced bulk MSR acquisition totaling $3.2 billion in UPB Mortgages 60 days or more past due were 2.9%, down from 3.5% at prior quarter-end, driven by improved performance of hurricane-impacted loans Growth in completed modifications driven by hurricane-impacted loans Continued to successfully implement servicing system enhancement modules Loan Servicing Portfolio Composition (UPB in billions) $300 $250 $200 $150 $100 $50 $0  1Q17 4Q17 1Q18 ■ Special  ■ Prime owned■ Prime subserviced Net Portfolio Growth (UPB in billions) $3.2 $255.3 $15.1 (4) At 12/31/17 Runoff Additions from loan production(5) MSR acquisition At 3/31/18 Customers registered for the website 81% 84% (1) Represents PMT’s MSRs (2) Early buyouts of delinquent loans from Ginnie Mae pools during the period (3) Percent of serviced and subserviced loans that have registered on PennyMacUSA.com (4) Also includes loans servicing released in connection with recent asset sales by PMT and the Investment Funds 10 (1) (5) Includes consumer direct production, government correspondent acquisitions, and conventional conforming and jumbo loan acquisitions subserviced for PMT $245.8($8.9) Selected Operational Metrics 4Q171Q18 Loans serviced (in thousands) 1,248 1,279 60+ day delinquency rate 3.5% 2.9% Actual CPR - owned portfolio 15.9% 11.8% Actual CPR - sub-serviced(1) 10.4% 8.2% UPB of completed modifications ($ in millions) $380 $542 EBO transactions ($ in millions)(2) $1,103 $631 Electronic payments (% of portfolio) 85% 86% (3) $245.8$255.3 $202.9

Investment Management Segment Highlights  Net assets under management were $1.5 billion, down modestly from December 31, 2017 PMT continued to transition capital from distressed whole loans toward MSRs and credit risk transfer on its correspondent production Increased our emphasis on jumbo loans, which creates potential new investments for PMT in the future After quarter end, PMT issued secured term notes in an aggregate principal amount of $450 million from its Fannie MSR financing structure, PMT ISSUER TRUST – FMSR Investment Management AUM ($ in billions)  $1.80 $1.20  $0.60  $0.00 1Q17 4Q17 1Q18 PMT Investment Funds – This transaction significantly strengthens PMT’s liquidity profile by providing long-term financing from a broad group of institutional investors at attractive economic terms 11 $1.6$1.6$1.5 $0.10 $1.5 $0.03 $1.5 $1.5

Hedging Approach Continues to Moderate the Volatility of PFSI’s Results MSR Valuation Changes and Offsets ($ in millions)  PFSI seeks to moderate the impact of interest rate changes through a comprehensive hedge strategy that also considers production-related income MSR value change Change in value of hedges and ESS liability Production pretax income  In 1Q18, MSR fair value increased due to a sharp rise in mortgage rates during the quarter, resulting in expectations for lower prepayment activity in the future $127.8 $17.2  Partially offset by associated hedging losses, and a rate-driven increase in the value of the ESS liability ($16.2) ($19.4) ($110.5) 1Q17 4Q17 1Q18 12 $47.5$55.3 $28.0 $12.7

Servicing Profitability Excluding Valuation-Related Changes 1Q17 4Q17 1Q18 basis points(1) basis points(1) basis points(1) $ in millions $ in millions $ in millions Operating revenue Amortization and realization of MSR cash flows EBO-related revenue(2) Servicing expenses: Operating expenses Credit losses and provisions for defaulted loans EBO transaction-related expense $ 134.9 (48.5) 28.1 27.2 (9.8) 5.7 $ 176.1 (66.9) 38.6 28.9 (11.0) 6.4 $ 174.5 (61.2) 48.2 27.8 (9.7) 7.7 (57.7) (12.4) (8.1) (11.6) (2.5) (1.6) (67.7) (15.0) (13.3) (11.1) (2.5) (2.2) (76.6) (14.3) (7.6) (12.2) (2.3) (1.2) Financing expenses: Interest on ESS Interest to third parties (4.6) (9.5) (0.9) (1.9) (3.9) (19.6) (0.6) (3.2) (3.9) (22.8) (0.6) (3.6) Pretax income excluding valuation-related changes $ 22.3 4.5 $ 28.2 4.6 $ 36.3 5.8 Valuation-related changes(3) MSR fair value(4) ESS liability fair value Hedging derivatives losses Provision for credit losses on active loans(5) Servicing segment pretax income 12.7 2.8 (22.2) 28.0 4.6 (20.8) 127.8 (6.9) (103.6) $ (2.2) $ (8.0) $ 1.3 $ 13.4 $ 32.0 $ 54.9  Pretax income excluding valuation-related changes increased significantly, driven by elevated levels of EBO-related revenue primarily due to reperformance of loans bought out in prior periods and reduced realization of MSR cash flows due to higher mortgage rates Modest decrease in operating revenue due to elevated levels of ancillary income in 4Q17 Operating expense increase driven by certain seasonally higher levels of expenses and an increase in corporate overhead, which is allocated across segments based upon their relative profitability    (1) Of average portfolio UPB, annualized (2) Comprised of net gains on mortgage loans held for sale at fair value and net interest income related to EBO loans (3) Changes in fair value do not include realization of MSR cash flows, which are included in amortization and realization of MSR cash flows above (4) Includes fair value changes and provision for impairment (5) Considered in the assessment of MSR fair value changes 13

Appendix

Overview of PennyMac Financial’s Businesses Loan Production Loan Servicing Investment Management • Servicing for owned MSRs and subservicing for Advised Entities Major loan servicer for Fannie Mae, Freddie Mac and Ginnie Mae Industry-leading capabilities in special servicing Organic growth results from loan production, supplemented by MSR acquisitions and PMT investment activity • External manager of PennyMac Mortgage Investment Trust (NYSE: PMT), which is focused on investing in mortgage-related assets: • Correspondent aggregation of newly originated loans from third-party sellers – PFSI earns gains on government-insured loans – Fulfillment fees for PMT’s conventional loans Consumer direct origination of conventional and government-insured loans Broker direct origination launched in 2018 • – – – GSE credit risk transfers MSRs and ESS Investments in prime non-Agency MBS and ABS Distressed whole loans Multifamily loans and securitization interests • • • – – • • Synergistic partnership with PMT • Complex and highly regulated mortgage industry requires effective governance, compliance and operating systems Operating platform has been developed organically and is highly scalable Commitment to strong corporate governance, compliance and risk management since inception PFSI is well positioned for continued growth in this market and regulatory environment • • • 15

PennyMac Financial is in a Unique Position Among Mortgage Specialists 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 Industry-leading platform built organically – not through acquisitions •Disciplined, sustainable growth for more than 10 years •Focused on building and testing processes and systems before large transaction volumes Strong governance and compliance culture • Led by distinguished board which includes eight 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 • Over 3,000 employees • Highly experienced management team – 120 senior-most executives have, on average, 25 years of relevant industry experience 16

Opportunity in MSR Acquisitions Why Are MSR Sales Occurring? Which MSR Transactions Are Attractive? How Do MSRs Come to Market? • Intermittent large bulk portfolio sales ($10+ billion in UPB) • 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 representation and warranty liability for PFSI • Large servicers may sell MSRs due to continuing operational pressures, higher regulatory capital requirements for banks (treatment under Basel III) and a re-focus on core customers/businesses Independent mortgage banks sell MSRs from time to time due to a need for capital – Require considerable coordination with selling institutions and Agencies • • Mini-bulk sales (typically $500 million to $5 billion in UPB) Flow/co-issue MSR transactions (monthly commitments, typically $20-$100 million in UPB) – Alternative delivery method typically from larger independent originators • • • PFSI is uniquely positioned to be a 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 sustain servicing portfolio growth plans Potential co-investment opportunity for PMT in the ESS 17

PFSI’s Mortgage Servicing Rights Investments in Partnership with PMT  PMT has co-invested in Agency MSRs acquired from third-party sellers by PFSI; presently only related to certain Ginnie Mae MSRs PMT acquires the right to receive the ESS cash flows over the life of the underlying loans PFSI owns the MSRs and services the loans    Acquired by PFSI from Third-Party Seller(1) Acquired by PMT from PFSI(1) Excess Servicing Spread(2) Interest income from a portion of the contractual servicing fee – Realized yield dependent on prepayment speeds and recapture Base MSR  Income from a portion of the contractual servicing fee Also entitled to ancillary income Bears expenses of performing loan servicing activities Required to advance certain payments largely for delinquent loans      Example transaction: actual transaction details may vary materially (1) The contractual servicer and MSR owner is PennyMac Loan Services, LLC, an indirect controlled subsidiary of PennyMac Financial Services, Inc. (2) Subject and subordinate to Agency rights (under the related servicer or issuer guide) and, as applicable, to PFSI’s pledge of MSRs under a note payable; does not change the contractual servicing fee paid by the Agency to the servicer. 18 Base MSR (e.g., 12.5bp) MSR Asset (e.g., 25bp servicing fee) Excess Servicing Spread (e.g., 12.5bp)

MSR Asset Valuation Fair value not subject to excess servicing spread Fair value subject to excess servicing spread liability Total March 31, 2018 Unaudited ($ in millions) UPB $147,876 $25,611 $173,487 Prepayment speed assumption (CPR) 8.7% 9.9% 8.9% Fair value of MSR $2,010.9 $343.6 $2,354.5 Related excess servicing spread liability - $236.0 - Note: Figures may not sum exactly due to rounding 19 As a multiple of servicing fee4.383.934.31 Weighted average servicing fee rate0.31%0.34%0.32% Weighted average coupon3.80%4.17%3.85%

Acquisitions and Originations by Product Unaudited ($ in millions) Correspondent Acquisitions Conventional Government Jumbo Total 1Q17 2Q17 3Q17 4Q17 1Q18 $ 4,632 9,280 - $ 5,918 10,392 - $ 6,530 10,873 - $ 5,891 9,505 - $ 4,226 8,830 - $ 13,912 $ 16,310 $ 17,403 $ 15,396 $ 13,056 Consumer Direct Originations Conventional Government Jumbo Total Broker Direct Originations Conventional Government Jumbo Total $ 305 730 - $ 414 855 - $ 513 1,008 - $ 646 996 - $ 708 559 - $ 1,035 $ 1,268 $ 1,522 $ 1,642 $ 1,266 $ - - - $ - - - $ - - - $ - - - $ 4 3 - $ - $ - $ - $ - $ 7 Total acquisitions/originations $ 14,947 $ 17,579 $ 18,925 $ 17,038 $ 14,329 UPB of loans fulfilled for PMT $ 4,632 $ 5,918 $ 6,530 $ 5,891 $ 4,226 Note: Figures may not sum exactly due to rounding 20

Interest Rate Locks by Product Unaudited ($ in millions) Correspondent Locks Conventional Government Jumbo Total 1Q17 2Q17 3Q17 4Q17 1Q18 $ 5,184 9,292 - $ 7,022 11,209 - $ 6,356 10,999 - $ 6,293 9,571 - $ 4,392 9,162 13 $ 14,476 $ 18,231 $ 17,356 $ 15,864 $ 13,567 Consumer Direct Locks Conventional Government Jumbo Total $ 669 1,145 - $ 805 1,476 - $ 845 1,387 - $ 947 1,261 - $ 1,080 573 8 $ 1,814 $ 2,280 $ 2,232 $ 2,209 $ 1,661 Broker Direct Locks Conventional Government Jumbo Total $ - - - $ - - - $ - - - $ - - - $ 15 20 - $ - $ - $ - $ - $ 35 Total locks $ 16,290 $ 20,511 $ 19,588 $ 18,073 $ 15,263 Note: Figures may not sum exactly due to rounding 21

Credit Characteristics by Acquisition / Origination Period Correspondent Consumer Direct 22 WA FICO 1Q17 2Q17 3Q17 4Q17 Government-insured 687 690 692 695 Conventional 737 740 741 738 1Q18 697 738 WA FICO 1Q17 2Q17 3Q17 4Q17 Government-insured 696 694 693 693 Conventional 752 753 749 745 1Q18 697 744