Note 23—Segments

The Company operates in three segments: production, servicing and investment management.

Two of the segments are in the mortgage banking business: production and servicing. The production segment performs mortgage loan origination, acquisition and sale activities. The servicing segment performs servicing of mortgage loans, execution and management of early buyout loan transactions and servicing of mortgage loans sourced and managed by the investment management segment for PMT, including executing the loan resolution strategy identified by the investment management segment relating to distressed mortgage loans.

The investment management segment represents the activities of the Company’s investment manager, which include sourcing, performing diligence, bidding and closing investment asset acquisitions and managing the acquired assets and correspondent production activities for PMT.

Financial performance and results by segment are as follows:


	Quarter ended March 31, 2019
	Mortgage Banking						Investment
	Production		Servicing		Total		Management		Total
	(in thousands)
Revenue: (1)
Net mortgage loan servicing fees	$	—	$	80,571	$	80,571	$	—	$	80,571
Net gains on mortgage loans held for sale at fair value		66,721		18,055		84,776		—		84,776
Mortgage loan origination fees		23,930		—		23,930		—		23,930
Fulfillment fees from PennyMac Mortgage Investment Trust		27,574		—		27,574		—		27,574
Net interest income (expense):
Interest income		14,369		43,964		58,333		—		58,333
Interest expense		3,915		33,621		37,536		7		37,543
		10,454		10,343		20,797		(7)		20,790
Management fees		—		—		—		7,248		7,248
Other		488		765		1,253		1,563		2,816
Total net revenue		129,167		109,734		238,901		8,804		247,705
Expenses		82,161		98,571		180,732		6,682		187,414
Income before provision for income taxes	$	47,006	$	11,163	$	58,169	$	2,122	$	60,291
Segment assets at quarter end	$	2,501,468	$	5,299,813	$	7,801,281	$	17,719	$	7,819,000

(1)

All revenues are from external customers.


	Quarter ended March 31, 2018
	Mortgage Banking						Investment
	Production		Servicing		Total		Management		Total
	(in thousands)
Revenue: (1)
Net mortgage loan servicing fees	$	—	$	116,789	$	116,789	$	—	$	116,789
Net gains on mortgage loans held for sale at fair value		36,198		35,216		71,414		—		71,414
Mortgage loan origination fees		24,563		—		24,563		—		24,563
Fulfillment fees from PennyMac Mortgage Investment Trust		11,944		—		11,944		—		11,944
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
Management fees		—		—		—		5,775		5,775
Carried Interest from Investment Funds		—		—		—		(180)		(180)
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
Income before provision for income taxes	$	17,170	$	54,875	$	72,045	$	951	$	72,996
Segment assets at quarter end (2)	$	2,251,354	$	4,630,946	$	6,882,300	$	11,877	$	6,894,177

(1)

All revenues are from external customers.

(2)

Excludes parent Company assets, which consist of $8.7 million of cash.