PFSI - PennyMac Financial Services Inc. (PFSI) Q4 2023 Earnings Call Transcript
2024-02-01 21:53:14 ET
PennyMac Financial Services, Inc. (PFSI)
Q4 2023 Results Conference Call
February 01, 2024 05:00 PM ET
Company Participants
David Spector - Chairman and Chief Executive Officer
Dan Perotti - Senior Managing Director and Chief Financial Officer
Conference Call Participants
Kevin Barker - Piper Sandler
Michael Kaye - Wells Forgo
Eric Hagen - BTIG
Bose George - KBW
Mark DeVries - Deutsche Bank
Kyle Joseph - Jefferies
Trevor Cranston - JMP Securities
Kevin Barker - Piper Sandler
Presentation
Operator
Good afternoon, and welcome to PennyMac Financial Services, Inc.'s Fourth Quarter and Full Year 2023 Earnings Call. Additional earnings materials, including presentation slides that will be referred to in this call are available on PennyMac Financial's website at pfsi.pennymac.com.
Before we begin, let me remind you that this call may contain forward-looking statements that are subject to certain risks identified on Slide 2 of the earnings presentation that could cause the Company's actual results to differ materially as well as non-GAAP measures that have been reconciled to their GAAP equivalent in the earnings materials.
I'd now like to introduce David Spector; PennyMac Financial's Chairman and Chief Executive Officer; and Dan Perotti; PennyMac's Financial's Chief Financial Officer.
Gentlemen, I'll turn the call over to you.
David Spector
Thank you, operator. Good afternoon, and thank you to everyone for participating in our fourth quarter earnings call. PFSI reported a net loss of $37 million and an annualized return on equity of negative 4% in the fourth quarter. These results included a nonrecurring accrual of $158 million relating to our long-standing arbitration with Black Knight, and $76 million of net fair value declines on MSRs and hedges, given significant interest rate volatility during the quarter.
Excluding the impact of these items, performance was very strong with an annualized operating return on equity of 15% and marking the culmination of another outstanding year for the company and highlighting the strength of our balanced business model.
2023 was one of the more challenging origination markets in recent history, with industry volumes down approximately 40% from 2022, and unit originations at their lowest level since 1990. However, PennyMac through its multichannel production platform generated $69 million of production pretax income and produced nearly $100 billion in UPB of mortgage loans, down only 9% from 2022. This demonstrates both our strong access to the purchase market and our ability to profitably support our customers and business partners....
PennyMac Financial Services, Inc. (PFSI) Q4 2023 Earnings Call Transcript