PENNYMAC FINANCIAL SERVICES, INC. FILES (8-K) Disclosing Change in Directors or Principal Officers, Other Events, Financial Statements and Exhibits
(Edgar Glimpses Via Acquire Media NewsEdge) Item 5.02 Departure of Directors or Certain Officers; Election of
Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain
(b) Resignation of Director. As previously disclosed, BlackRock
Mortgage Ventures, LLC ("BlackRock") owns in excess of 20% of the equity
interests in PennyMac Financial Services, Inc. (the "Company"). BlackRock is an
affiliate of BlackRock, Inc. ("BRI"), which is deemed to be a non-bank
subsidiary of The PNC Financial Services Group, Inc. ("PNC") as a result of
PNC's ownership interest in BRI. Due to these relationships, the Company is
also deemed to be a non-bank subsidiary of PNC and, therefore, required to
comply with The Depository Institution Management Interlocks Act of 1978 and the
implementing regulations adopted thereunder (collectively, the "Interlocks
Act"). Under the Interlocks Act, no director of the Company may serve at the
same time as either a director or a "senior executive officer" (as defined in 12
CFR 303.101(b)) of a depository institution or a depository holding company that
is not affiliated with the Company and holds assets in excess of $1.5 billion.
One of our directors, John Taylor, serves on the board of directors of an
unaffiliated depository institution with assets in excess of $1.5 billion.
Accordingly, on June 24, 2014, Mr. Taylor informed the Company's Board of
Directors (the "Board") that he would be resigning from the Board, effective
July 1, 2014, in order to ensure the Company's compliance with the Interlocks
Act. Mr. Taylor's decision to resign was not due to any disagreement with the
Company or any matter relating to the Company's operations, policies or
(d) Appointment of Director. On June 24, 2014, the Board elected
Patrick Kinsella to fill the vacancy created by the departure of Mr. Taylor,
effective July 1, 2014. Mr. Kinsella will serve until the Company's 2015 annual
meeting of stockholders and his successor has been duly elected and qualified.
Prior to his retirement as a senior audit partner with KPMG LLP ("KPMG") in
May 2013, Mr. Kinsella spent over 35 years at KPMG serving clients generally
concentrated in the financial services sector, including banks, thrifts,
mortgage companies, automotive finance companies, alternative investment
companies and real estate companies. The Board has determined that Mr. Kinsella
is independent under the current New York Stock Exchange independence
requirements and the Securities and Exchange Commission ("SEC") rules.
Mr. Kinsella will serve on the Board's Related-Party Matters Committee and its
Audit Committee, for which he will serve as Chairman and an "audit committee
financial expert" as that term is defined by the SEC.
In consideration for his services as a director, Mr. Kinsella will be entitled
to receive compensation on the same terms and in the same amounts as the other
independent directors. Accordingly, Mr. Kinsella will receive an annual base
retainer of $65,000, as well as additional annual committee retainers of $10,750
for serving as Chairman of the Audit Committee and $5,750 for serving as a
member of the Related-Party Matters Committee. In connection with his election
to the Board, Mr. Kinsella will receive a one-time equity grant of approximately
$87,000 in restricted stock units under the Company's equity incentive plan.
One-third of such restricted stock units shall vest on each of the first, second
and third anniversaries of the grant date, subject to continued service through
each vesting date. Each such restricted stock unit represents a contingent right
to receive one share of the Company's Class A common stock upon settlement.
In connection with his election, the Company will enter into an indemnification
agreement with Mr. Kinsella in the same form that the Company has entered into
with its other directors. There are no arrangements or understandings pursuant
to which Mr. Kinsella was elected as a director, and there are no related party
transactions between the Company and Mr. Kinsella.
Item 8.01 Other Events.
The Company is also filing this Current Report on Form 8-K to retrospectively
adjust certain prior period amounts to conform with the segment reporting
changes made in connection with changes in the information used by the Company's
chief operating decision maker which resulted in a re-evaluation of how we
identify our operating segments.
On May 15, 2014, the Company filed its Quarterly Report on Form 10-Q for the
quarter ended March 31, 2014 (the "Form 10-Q). As disclosed in the Form 10-Q,
the Company enhanced its segment reporting structure as part of a continuing
development of its internal management reporting. Such development resulted in
changes in the information used by the Company's chief operating decision maker
and a re-evaluation of the new information in relation to the Company's
The rules of the SEC require that when a registrant prepares, on or after the
date a registrant reports an accounting change such as the change noted above, a
new registration, proxy or information statement (or amends a previously filed
registration, proxy, or information statement) that includes or incorporates by
reference financial statements, the registrant must retrospectively adjust the
prior period financial statements included or incorporated by reference in the
registration, proxy or information statement to reflect the accounting change.
Accordingly, the Company is filing this Form 8-K, in part, to retrospectively
adjust the segment information included in the consolidated financial statements
included in the Company's Annual Report on Form 10-K for the year ended
December 31, 2013. These updates have no effect on the Company's previously
reported results of operations, financial position or cash flows. All other
information in the Form 10-K remains unchanged and has not been otherwise
updated for events occurring after December 31, 2013. The retrospectively
adjusted information of Items contained in the Company's 2013 Form 10-K is
presented in Exhibits 99.1, 99.2 and 99.3 to this Current Report on Form 8-K.
As a result of the new reporting used by the chief operating decision maker,
management concluded that its mortgage banking operations should be disclosed as
two segments: loan production and loan servicing. Accordingly, the Company now
reports its business activities in three segments: loan production, loan
servicing and investment management.
To reflect the enhanced segment reporting structure, the information contained
in this Current Report on Form 8-K updates and supersedes the original filing of
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2013 (the "Form 10-K"), as described in Item 9.01. All updates to the Company's
Form 10-K relate solely to the presentation of segment-specific disclosure on a
basis consistent with the current segment reporting structure. The information
in this Current Report on Form 8-K should be read in conjunction with the
Company's Form 10-K, which was filed with the Securities and Exchange Commission
on March 14, 2014.
Item 9.01 Financial Statements and Exhibits.
Exhibit No. Description
23.1 Consent of Deloitte & Touche LLP.
99.1 Updates, where applicable, to Part I - Item 1. Business to conform
to our new segment reporting structure (excluding the Compliance and
Regulatory and Employees sections which were not affected by the new
segment reporting structure).
99.2 Updates, where applicable, to Part II - Item 7. Management's
Discussion and Analysis of Financial Condition and Results of
Operations to conform to our new segment reporting structure
(excluding the Observations on Current Market Condition, Reporting
Metrics and Prospective Trends, Other Factors Influencing Our
Results, Critical Accounting Policies, Balance Sheet Analysis, Cash
Flows, Liquidity and Capital Resources, and Off-Balance Sheet
Arrangements and Aggregate Contractual Obligations sections which
were not affected by the new segment reporting structure).
99.3 Updated Part II - Item 8. Financial Statements and Supplementary
Data (including information incorporated therein by reference from
Part IV) to conform to our new segment reporting structure
(including revisions to Note 26) (excluding the Exhibit List in Item
15 of Part IV which was not affected by the new segment reporting
101** Interactive Data Files Pursuant to Rule 405 of Regulation S-T:
(i) the Consolidated Balance Sheets as of December 31, 2013 and
December 31, 2012, (ii) the Consolidated Statements of Income for
the years ended December 31, 2013, 2012 and 2011, (iii) the
Consolidated Statements of Changes in Members' Equity for the years
ended December 31, 2013, 2012 and 2011, (iv) the Consolidated
Statements of Cash Flows for the years ended December 31, 2013, 2012
and 2011 and (v) the Notes to the Consolidated Financial Statements.
** Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on
Exhibit 101 hereto are deemed not filed or part of a registration statement or
prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, as
amended, are deemed not filed for purposes of Section 18 of the Securities
Exchange Act of 1934, as amended, and are not otherwise subject to liability
under those sections.
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