Note 24—Subsequent Events

Management has evaluated all events and transactions through the date the Company issued these consolidated financial statements. During this period:

On November 1, 2018, the Company completed a reorganization (the “Reorganization) by which it changed its equity structure to a single class of common stock held by all stockholders, as opposed to the two classes of common stock, Class A and Class B, that were in place as of September 30, 2018. Pursuant to the Reorganization, New PennyMac Financial Services, Inc. (“New PFSI”) become a holding corporation, which subsequently changed its name to “PennyMac Financial Services, Inc.” while PFSI changed its name to “PNMAC Holdings, Inc.”.

As a result of the Reorganization:

Each outstanding share of Class A common stock of PFSI was converted on a one-for-one basis into shares of New PFSI common stock.

Each outstanding share of Class B common stock of PFSI was cancelled for no consideration.

Each Class A unit of PennyMac held by a PennyMac Class A unit holder was contributed to PFSI and exchanged on a one-for-one basis for shares of New PFSI common stock.

New PFSI assumed PFSI’s existing equity incentive plan—including all performance share awards, restricted share awards, restricted stock units and other incentive awards covering shares of PFSI’s Class A common stock, whether vested or not vested, that were outstanding at the effective time of the Reorganization.

New PFSI reserved the same number of shares of its common stock as was reserved by the Company before the effective time of the reorganization, and the terms and conditions that were in effect immediately before the reorganization under each outstanding incentive award assumed by New PFSI continue in full force and effect after the reorganization, except that the shares of Class A common stock reserved under PFSI’s plans and issuable under each such award will be replaced by shares of common stock of New PFSI.

PFSI’s existing directors and executive officers hold the same positions with New PFSI.

New PFSI replaced PFSI as the publicly-held entity and, through its subsidiaries, conducts all of the operations previously conducted by PFSI.

The Reorganization is intended to be treated as an integrated transaction that qualifies as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code and/or a transfer described in Section 351(a) of the Internal Revenue Code.

After the completion of the Reorganization, PFSI became a consolidated subsidiary of New PFSI and is considered the predecessor of New PFSI for accounting purposes. Accordingly, PFSI’s consolidated financial statements will be New PFSI’s historical financial statements.

On November 1, 2018, New PFSI, through its subsidiary, PennyMac (the “Borrower”), entered into amendments (the "Amendments") to that certain (i) amended and restated credit agreement, dated as of November 18, 2016, by and among the Borrower, the lenders that are parties thereto and Credit Suisse AG, as administrative agent and collateral agent, and Credit Suisse Securities (USA) LLC, as sole bookrunner and sole lead arranger (the “Credit Agreement”); and (ii) amended and restated collateral and guaranty agreement, dated as of November 18, 2016, by and among the Borrower, as grantor, Credit Suisse AG, Cayman Islands Branch, as collateral agent, and PNMAC Holdings, Inc. (formerly known as PennyMac Financial Services, Inc., “Holdings”) and certain of its subsidiaries, PCM, PLS and PNMAC Opportunity Fund Associates, LLC ("Associates"), as guarantors and grantors (“the “Guaranty”). Pursuant to the Credit Agreement, the lenders have agreed to make revolving loans to the Borrower in an amount not to exceed $150 million. Interest on the loans shall accrue at a per annum rate of interest equal to, at the election of the Borrower, either an alternate base rate (as defined in the Credit Agreement) or LIBOR plus the applicable margin. During the existence of certain events of default, interest shall accrue at a higher default rate. The proceeds of the loans are to be used solely for working capital and general corporate purposes of the Borrower and its subsidiaries.

The primary purposes of the Amendments are to (i) extend the maturity date of the Credit Agreement to October 31, 2019; (ii) name the Company as an additional guarantor under the Credit Agreement; and (iii) release Associates from its obligations as a guarantor under the Credit Agreement. Accordingly, the obligations of the Borrower under the Credit Agreement are now guaranteed by New PFSI, Holdings, PCM and PLS, and secured by a grant by each of the referenced grantors of its respective right, title and interest in and to limited and otherwise unencumbered (other than specified permitted encumbrances) specified contract rights, specified deposit accounts, all documents and instruments related to such specified contract rights and specified deposit accounts, and any and all proceeds and products thereof. All other terms and conditions of the Credit Agreement and Guaranty remain the same in all material respects.

On October 29, 2018, the Company, through two of its indirect controlled subsidiaries, PLS and PNMAC, entered into an Amended and Restated Master Repurchase Agreement, by and among Bank of America, N.A., as buyer (“BANA”), as administrative agent, swing line provider, sole lead arranger, sole bookrunner and a buyer, Capital One, National Association, as a buyer, The Bank of New York Mellon, as a buyer, (collectively, the “Syndicated Buyers”), PLS, as seller, and PNMAC, as guarantor (the “Syndicated Repurchase Agreement”). The Syndicated Repurchase Agreement amends and restates the terms of that certain master repurchase agreement, dated as of March 17, 2011, by and among BANA, PLS, and PNMAC. Pursuant to the terms of the Syndicated Repurchase Agreement, PLS may sell to, and later repurchase from, the Syndicated Buyers certain newly originated mortgage loans that are originated by PLS or purchased by it from correspondent sellers through a subsidiary of PMT and, in either case, held by PLS pending sale and/or securitization. The obligations of PLS under the Syndicated Repurchase Agreement are fully guaranteed by PNMAC and the mortgage loans are serviced by PLS. The scheduled termination date of the Syndicated Repurchase Agreement is October 28, 2019.

Each Syndicated Buyer has severally committed to enter into transactions up to such Syndicated Buyer’s committed amount as set forth in the Syndicated Repurchase Agreement, with a maximum aggregate committed principal amount available to PLS for purchases of $500 million.

During October 2018, the Company acquired from two non-affiliate sellers bulk portfolios of Ginnie Mae MSRs with a total UPB of approximately $3.2 billion.

All other agreements to sell assets under agreements to repurchase that matured between September 30, 2018 and the date of this Report were extended or renewed.