Brian Fiorino's questions to PennyMac Financial Services Inc (PFSI) leadership • Q3 2024
Question
Brian Fiorino asked for a view on custodial balance earnings and how a potential decline in short-term rates could impact servicing profitability and overall ROE expectations for next year.
Answer
Daniel Perotti (executive) explained that while a decline in short-term rates would reduce earnings on custodial balances, the impact would be largely offset. He cited two offsetting factors: lower interest expense on the company's floating-rate debt and a corresponding reduction in the amortization charge within the 'realization of servicing cash flows' line item.