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Section 1: DEFM14A (DEFM14A)


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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.          )

Filed by the Registrant ý

Filed by a Party other than the Registrant o

Check the appropriate box:

o

 

Preliminary Proxy Statement

o

 

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

ý

 

Definitive Proxy Statement

o

 

Definitive Additional Materials

o

 

Soliciting Material under §240.14a-12

 

PennyMac Financial Services, Inc.

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

ý

 

No fee required.

o

 

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
    (1)   Title of each class of securities to which transaction applies:
        
 
    (2)   Aggregate number of securities to which transaction applies:
        
 
    (3)   Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
        
 
    (4)   Proposed maximum aggregate value of transaction:
        
 
    (5)   Total fee paid:
        
 

o

 

Fee paid previously with preliminary materials.

o

 

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

 

(1)

 

Amount Previously Paid:
        
 
    (2)   Form, Schedule or Registration Statement No.:
        
 
    (3)   Filing Party:
        
 
    (4)   Date Filed:
        
 

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LOGO   PennyMac Financial Services, Inc.
3043 Townsgate Road
Westlake Village, California 91361

September 18, 2018

PROXY STATEMENT/PROSPECTUS
A REORGANIZATION IS PROPOSED—YOUR VOTE IS VERY IMPORTANT

Dear PennyMac Financial Services, Inc. Class A and Class B Common Stockholder:

            You are invited to attend a special meeting of stockholders of PennyMac Financial Services, Inc. ("Existing PennyMac" or the "Company"), to be held at our corporate offices located at 3043 Townsgate Road, Westlake Village, California 91361, on October 24, 2018 at 11:00 a.m. (PDT).

            At the special meeting, Class A and Class B common stockholders will be asked to consider and vote on:

            Adding a new holding company above Existing PennyMac will allow Existing PennyMac to simplify its overall corporate structure and financial reporting by (i) eliminating Existing PennyMac's so-called "Up-C" structure and causing all equityholders to hold all of their equity interests in our business at the same top-level parent entity, which will be New PennyMac, and (ii) transitioning to a single class of common stock held by all stockholders, as opposed to the two classes, Class A and Class B, of common stock of Existing PennyMac that are authorized, issued and outstanding today. We believe that one of the effects of this Reorganization will be to increase our current market capitalization at our parent-level entity, which could enable certain investors (those with investment position limits tied to percentages of a company's market capitalization) to own larger positions in our stock than before, and could also make shares of common stock of New PennyMac eligible to be included in certain stock market indices for which shares of Class A common stock of Existing PennyMac currently are not eligible. Such eligibility, in turn, could mean an increased demand for shares of common stock of New PennyMac, which could assist in our stated goal of seeking to maximize long-term stockholder value.

            In evaluating the Reorganization Proposal, you should consider the following important aspects of the Reorganization:

            Our Board has carefully considered and approved the Reorganization Agreement and believes that it is advisable and in the best interests of our Class A and Class B common stockholders, and unanimously recommends that you vote FOR the Reorganization Proposal.

            Approval of the Reorganization Proposal requires the affirmative vote of a majority of the voting power of all the issued and outstanding shares of common stock of Existing PennyMac, with both the Class A common stock and Class B common stock voting together as a single class (a "Majority").

            If a Majority of votes are not cast in favor of the Reorganization Proposal, we would not likely continue to pursue the Reorganization as currently structured and proposed, Existing PennyMac would remain our top-level parent and publicly-listed entity and our so-called "Up-C" structure would remain in place. The closing of the Reorganization is subject to a number of other conditions in addition to the receipt of sufficient stockholder approval, and no assurance can be given that all such conditions will be satisfied, even if sufficient stockholder approval is received. Our Board can terminate the Reorganization Agreement at any time prior to completion of the Reorganization if the Board determines that, for any reason, the completion of the Reorganization would be inadvisable or not in the best interests of Existing PennyMac or its stockholders.

            The total number of shares of New PennyMac common stock to be issued in the Reorganization will not be known until immediately prior to completing the Reorganization, but is expected to be up to approximately 79.1 million shares of New PennyMac common stock based on, among other factors, the shares of Existing PennyMac Class A common stock currently outstanding, the Class A Units of PNMAC (other than Class A Units held by Existing PennyMac) currently outstanding and the shares of Existing PennyMac Class A common stock that may be issuable pursuant to outstanding equity-based incentive awards of Existing PennyMac prior to the completion of the Reorganization. On August 1, 2018, the last trading day before announcement of the Reorganization Proposal, the closing price per share of our Class A common stock was $19.15.

            At the special meeting, in addition to the Reorganization Proposal (Item 1 on the proxy card), you will be asked to vote on a proposal to approve, if necessary or appropriate, the adjournment of the special meeting, including to solicit additional proxies in favor of the Reorganization Proposal (Item 2 on the proxy card).

            Our Board unanimously recommends that you vote FOR the Adjournment Proposal.

            Your vote is important. Whether or not you plan to attend the special meeting, please vote as soon as possible. To ensure that your shares are represented at the meeting, we recommend that you submit a proxy to vote your shares of Class A common stock and Class B common stock through the Internet by following the instructions set forth on your proxy card. You may also vote by telephone or mail by following the instructions set forth on your proxy card. This way, your shares will be voted even if you are unable to attend the special meeting. This will not, of course, limit your right to attend the special meeting or prevent you from voting in person at the meeting if you wish to do so. If you hold your shares of Class A common stock in "street name" through a broker, bank, custodian, fiduciary or other nominee, you should review the separate notice supplied by that firm to determine whether and how you may vote by mail, telephone or through the Internet. To vote these shares, you must use the appropriate voting instruction form or toll-free telephone number or website address specified on that firm's voting instruction form for beneficial owners.

            The accompanying notice of meeting and this proxy statement/prospectus provide specific information about the special meeting and explain the various proposals. Please read these materials carefully. In particular, you should consider the discussion of risk factors beginning on page 18 before voting on the Reorganization Proposal.

            We appreciate your continued confidence in PennyMac and look forward to seeing you at the meeting.

Sincerely,

GRAPHIC   GRAPHIC

STANFORD L. KURLAND
Executive Chairman

 

DAVID A. SPECTOR
President and Chief Executive Officer

            Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued under this proxy statement/prospectus or passed upon the adequacy or accuracy of this proxy statement/prospectus. Any representation to the contrary is a criminal offense.

            This proxy statement/prospectus is dated September 18, 2018. This proxy statement/prospectus and the related proxy materials are first being mailed to Existing PennyMac Class A and Class B common stockholders on or about September 18, 2018.


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LOGO   PennyMac Financial Services, Inc.
3043 Townsgate Road
Westlake Village, California 91361


NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

To be held on October 24, 2018

To our Class A and Class B Common Stockholders:

        PennyMac Financial Services, Inc., a Delaware corporation ("Existing PennyMac"), will hold a special meeting of stockholders on October 24, 2018 at 11:00 a.m. (PDT) at our corporate offices located at 3043 Townsgate Road, Westlake Village, California 91361 (the "Special Meeting"). Existing PennyMac Class A and Class B common stockholders will act on the following matters at the Special Meeting or any adjournment or postponement of that meeting:

        Our Board of Directors has approved the Reorganization Agreement, declared that it is advisable and determined that it is in the best interests of all our stockholders, and unanimously recommends that all stockholders vote FOR the Reorganization Proposal. In addition, our Board of Directors unanimously recommends that all stockholders vote FOR the Adjournment Proposal.

        Only Class A and Class B common stockholders of record at the close of business on September 7, 2018 (the "Record Date") are entitled to vote at the Special Meeting or any adjournment or postponement of that meeting.

        You can vote in one of several ways:

    By Order of the Board of Directors,

 

 

GRAPHIC

 

 

DEREK W. STARK
Secretary

Westlake Village, California
September 18, 2018


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ADDITIONAL INFORMATION

        This document, which is sometimes referred to as this proxy statement/prospectus, constitutes a proxy statement of PennyMac Financial Services, Inc. with respect to the solicitation of proxies by PennyMac Financial Services, Inc. for the Special Meeting described within and a prospectus of New PennyMac Financial Services, Inc. for the shares of common stock of New PennyMac Financial Services, Inc. to be issued pursuant to the Reorganization Agreement. As permitted under the rules of the U.S. Securities and Exchange Commission (the "SEC"), this proxy statement/prospectus incorporates important business and financial information about PennyMac Financial Services, Inc. that is contained in documents filed with the SEC that are not included in, or delivered with, this proxy statement/prospectus. You may obtain copies of these documents, without charge, from the website maintained by the SEC at www.sec.gov, as well as other sources. See "Where You Can Find Additional Information" on page 79 of this proxy statement/prospectus. You may also obtain copies of these documents, without charge, from PennyMac Financial Services, Inc. by calling us at (818) 224-7442 or writing us at the following address:

PennyMac Financial Services, Inc.
3043 Townsgate Road
Westlake Village, California 91361
Attention: Investor Relations

        In order to ensure timely delivery of the requested documents, requests should be made no later than October 10, 2018, which is 10 business days before the date of the Special Meeting.

        You should rely only on the information contained or incorporated by reference in this proxy statement/prospectus and the registration statement of which this proxy statement/prospectus is a part to vote on the proposals being presented at the Special Meeting. We have not authorized any person to provide you with any information or represent anything about us or the proposals that is not contained in this proxy statement/prospectus or the registration statement of which this proxy statement/prospectus is a part or incorporated by reference herein. If such other information or representations are provided to you, they should not be relied upon as having been authorized by us.

        This proxy statement/prospectus is dated September 18, 2018. You should not assume that the information contained in this proxy statement/prospectus is accurate as of any date other than this date, and neither the mailing of this proxy statement/prospectus to stockholders nor the issuance of New PennyMac Financial Services, Inc. common stock pursuant to the Reorganization Agreement implies that information is accurate as of any other date.


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TABLE OF CONTENTS

 
  Page  

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

       

QUESTIONS AND ANSWERS ABOUT THE PROPOSALS AND SPECIAL MEETING

    1  

QUESTIONS AND ANSWERS ABOUT THE DISTRIBUTION

    11  

SUMMARY OF THE REORGANIZATION PROPOSAL

    12  

RISK FACTORS

    18  

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

    23  

SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION FOR EXISTING PENNYMAC

    24  

SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION FOR NEW PENNYMAC

    28  

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION FOR NEW PENNYMAC

    29  

DESCRIPTION OF THE REORGANIZATION PROPOSAL

    35  

OVERVIEW

    35  

THE PRINCIPAL PARTIES

    36  

REASONS FOR THE REORGANIZATION PROPOSAL

    37  

REQUIRED VOTE

    44  

BACKGROUND OF THE REORGANIZATION

    45  

RECOMMENDATION OF THE SPECIAL COMMITTEE

    48  

RECOMMENDATION OF THE BOARD

    48  

REORGANIZATION PROCEDURE

    48  

TREATMENT OF COMMON STOCK IN THE REORGANIZATION

    49  

TREATMENT OF EXISTING PENNYMAC EQUITY INCENTIVE PLANS AND OUTSTANDING AWARDS IN CONNECTION WITH THE REORGANIZATION

    49  

ISSUANCES OF NEW PENNYMAC COMMON STOCK UNDER THE EXISTING PENNYMAC PLANS

    50  

CORPORATE NAME FOLLOWING THE REORGANIZATION

    50  

CONDITIONS TO COMPLETION OF THE REORGANIZATION

    50  

EFFECTIVENESS OF THE REORGANIZATION

    51  

TERMINATION OF REORGANIZATION AGREEMENT

    51  

AMENDMENT OF REORGANIZATION AGREEMENT

    51  

CERTAIN MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES

    51  

ANTICIPATED ACCOUNTING TREATMENT

    55  

AUTHORIZED CAPITAL STOCK

    55  

SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS

    55  

REGULATORY REQUIREMENTS IN CONNECTION WITH THE REORGANIZATION

    55  

MARKETS AND MARKET PRICES

    55  

DE-LISTING OF EXISTING PENNYMAC COMMON STOCK

    56  

BOARD OF DIRECTORS AND EXECUTIVE OFFICERS OF NEW PENNYMAC FOLLOWING THE REORGANIZATION

    56  

INTERESTS OF CERTAIN DIRECTORS AND EXECUTIVE OFFICERS IN THE REORGANIZATION

    56  

DESCRIPTION OF THE ADJOURNMENT PROPOSAL

    58  

GENERAL

    58  

REQUIRED VOTE

    58  

DESCRIPTION OF NEW PENNYMAC CAPITAL STOCK

    59  

GENERAL

    59  

CORPORATE OPPORTUNITY

    63  

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REGISTRATION RIGHTS

    63  

LIMITATIONS OF LIABILITY AND INDEMNIFICATION

    64  

MARKET LISTING

    66  

TRANSFER AGENT AND REGISTRAR

    66  

COMPARATIVE RIGHTS OF HOLDERS OF NEW PENNYMAC COMMON STOCK AND EXISTING PENNYMAC COMMON STOCK

    67  

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

    70  

EXISTING PENNYMAC COMMON STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS OF EXISTING PENNYMAC

    73  

CERTAIN TRANSACTIONS WITH RELATED PARTIES

    75  

VALIDITY OF SHARES

    79  

EXPERTS

    79  

STOCKHOLDER PROPOSALS FOR THE 2019 ANNUAL MEETING

    79  

HOUSEHOLDING

    79  

WHERE YOU CAN FIND ADDITIONAL INFORMATION

    79  

ANNEX I REORGANIZATION AGREEMENT

    A-1  

ANNEX II FORM OF AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF NEW PENNYMAC

    A-63  

ANNEX III FORM OF AMENDED AND RESTATED BYLAWS OF NEW PENNYMAC

    A-71  

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QUESTIONS AND ANSWERS ABOUT THE PROPOSALS AND SPECIAL MEETING

1.
What matters will be voted on at the Special Meeting?

        There are two proposals scheduled to be considered and voted on at the Special Meeting:

2.
What is the Reorganization Proposal?
3.
What is the "Contribution"?

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4.
What is the "Merger"?
5.
Am I being asked to vote on both the Contribution and the Merger?
6.
Are the completion of the Contribution and the Merger contingent upon one another?
7.
If the Class A and Class B common stockholders do not approve the Reorganization Proposal, what will happen?

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8.
If the Class A common stockholders do not approve the Reorganization Proposal but the Class B common stockholders approve the Reorganization, what will happen?
9.
Have the Class B common stockholders already agreed to approve or otherwise consented to the Reorganization?

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10.
What is the effect of the Reorganization?
11.
Am I being asked to approve any other proposal other than the Reorganization Proposal?
12.
What is the Board's voting recommendation?

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13.
Why are you pursuing Reorganization?
14.
Will the management or the businesses of Existing PennyMac or any of its subsidiaries change as a result of the Reorganization?
15.
What will be the name of the public company following the Reorganization?
16.
How will being a common stockholder of New PennyMac be different from being a holder of Class A Common Stock of Existing PennyMac?

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17.
Will the Reorganization have U.S. federal income tax consequences for holders of Class A Common Stock, Class B Common Stock or Class A Units of PNMAC?
18.
How will the Reorganization be treated for accounting purposes?
19.
If the Class A and Class B common stockholders approve the Reorganization Proposal, when will the Reorganization occur?
20.
What will happen to my Existing PennyMac Class A Common Stock as a result of the Reorganization?

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21.
What will happen to my Existing PennyMac Class B Common Stock as a result of the Reorganization?
22.
Will the company's CUSIP number change as a result of the Reorganization?
23.
Do I have appraisal rights in connection with the Reorganization?
24.
Who may vote at the Special Meeting?
25.
What vote is required for approval of each of the proposals?

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26.
What constitutes a quorum?
27.
Will I receive a Notice of Internet Availability of Proxy Materials?
28.
Who can attend the Special Meeting?
29.
What shares are included in the proxy card?

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30.
How do I vote if I am a registered holder as of the Record Date or I own shares through a broker, bank or other nominee?

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31.
How will broker non-votes be treated?
32.
What happens if I sell my shares of Class A Common Stock after the Record Date but before the Special Meeting or before the Closing?
33.
Can I change my vote once I vote by mail, by telephone or over the Internet?
34.
Who will count the vote?
35.
Is my vote confidential?
36.
What percentage of the outstanding shares do directors and executive officers hold?
37.
Where can I find the voting results of the meeting?

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38.
Who do I contact if I have questions about the Reorganization Proposal?

        You may contact us at:


QUESTIONS AND ANSWERS ABOUT THE DISTRIBUTION

1.
What is the "Distribution"?
2.
Am I being asked to vote on the Distribution?
3.
Was the Distribution contingent upon the Contribution and the Merger?
4.
Are holders of outstanding equity incentive awards entitled to receive the Distribution?
5.
When was the Distribution paid?

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SUMMARY OF THE REORGANIZATION PROPOSAL

        This section highlights key aspects of the Reorganization Proposal, including the Reorganization Agreement, that are described in greater detail elsewhere in the proxy statement/prospectus. It does not contain all of the information that may be important to you. To better understand the Reorganization Proposal, and for a more complete description of the legal terms of the Reorganization Agreement, you should read this entire proxy statement/prospectus carefully, including the Annexes and the additional documents incorporated by reference. You can find information with respect to these additional documents in "Where You Can Find Additional Information."


Overview

        We are asking you to approve the creation of a new holding company above Existing PennyMac to help simplify its overall corporate structure and financial reporting by (i) eliminating Existing PennyMac's so-called "Up-C" structure and causing all equityholders to hold all of their equity interests in our business at the same top-level parent entity, which will be New PennyMac and (ii) transitioning to a single class of common stock held by all stockholders, as opposed to the two classes, Class A Common Stock and Class B Common Stock, of Existing PennyMac that are authorized, issued and outstanding today. We believe that one of the effects of this Reorganization will be to increase our current market capitalization at our parent-level entity, which could enable certain investors (those with investment position limits tied to percentages of a company's market capitalization) to own larger positions in our stock than before, and could also make shares of New PennyMac Common Stock eligible to be included in certain stock market indices for which shares of Class A Common Stock of Existing PennyMac currently are not eligible. Such eligibility, in turn, could mean an increased demand for shares of New PennyMac Common Stock, which could assist in our stated goal of seeking to maximize long-term stockholder value.

        The Reorganization Proposal is for stockholders to adopt and approve the Reorganization Agreement, and thereby adopt and approve the Reorganization. A copy of the Reorganization Agreement is attached as Annex I to this proxy statement/prospectus. You are encouraged to read the Reorganization Agreement carefully.


The Principal Parties

PennyMac Financial Services, Inc.
3043 Townsgate Road
Westlake Village, California 91361
(818) 224-7442

        PennyMac Financial Services, Inc. ("Existing PennyMac") is headquartered in Westlake Village, California, and is our current top-level parent entity. Existing PennyMac was incorporated in Delaware in December 2012 in connection with our initial public offering. Existing PennyMac operates and controls all of the business and affairs, and consolidates the financial results, of PNMAC, which is described further below. Following the Reorganization, Existing PennyMac will become a wholly-owned subsidiary of New PennyMac, shares of Class A Common Stock will be automatically converted, on a one-for-one basis, into shares of New Common Stock of New PennyMac and shares of Class B Common Stock will be automatically cancelled for no consideration.

New PennyMac Financial Services, Inc.
3043 Townsgate Road
Westlake Village, California 91361
(818) 224-7442

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        New PennyMac, a Delaware corporation, is a newly formed, direct, wholly-owned subsidiary of Existing PennyMac. Existing PennyMac formed New PennyMac for the purpose of participating in the transactions contemplated by the Reorganization Agreement. Prior to the Reorganization, New PennyMac will have no assets or operations other than those incident to its formation. If we complete the Reorganization, New PennyMac will replace Existing PennyMac as the publicly held corporation and, through its subsidiaries, will conduct all of the operations currently conducted by Existing PennyMac.

New PennyMac Merger Sub, LLC
3043 Townsgate Road
Westlake Village, California 91361
(818) 224-7442

        Merger Sub, a Delaware limited liability company, is a newly formed, direct, wholly-owned subsidiary of New PennyMac. New PennyMac caused Merger Sub to be formed for the purpose of participating in the transactions contemplated by the Reorganization Agreement. Prior to the Reorganization, Merger Sub will have no assets or operations other than those incident to its formation.

Private National Mortgage Acceptance Company, LLC
3043 Townsgate Road
Westlake Village, California 91361
(818) 224-7442

        PNMAC, a Delaware limited liability company, was founded in 2008 by members of our executive leadership team and two strategic partners, BlackRock Mortgage Ventures, LLC ("BlackRock") and HC Partners, LLC, formerly known as Highfields Capital Investments, LLC, together with its affiliates ("Highfields"). PNMAC is a specialty financial services firm with a comprehensive mortgage platform and integrated business primarily focused on the production and servicing of U.S. residential mortgage loans (activities which we refer to as mortgage banking) and the management of investments related to the U.S. mortgage market. We believe that our operating capabilities, specialized expertise, access to long-term investment capital and our management's experience across all aspects of the mortgage business will allow us to profitably grow these activities and capitalize on other related opportunities as they arise in the future.

The Contributors

        The Contributors are comprised of 45 separate entities and individuals, calculated as of the Record Date, and represent all of the holders of Class A Units of PNMAC other than Existing PennyMac. The Contributors include, among others:

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Reasons for the Reorganization

        We are asking you to approve the creation of a new holding company above Existing PennyMac to help simplify its overall corporate structure and financial reporting by (i) eliminating Existing PennyMac's so-called "Up-C" structure and causing all equityholders to hold all of their equity interests in our business at the same top-level parent entity, which will be New PennyMac, and (ii) transitioning to a single class of common stock held by all stockholders, as opposed to the two classes, Class A Common Stock and Class B Common Stock, of Existing PennyMac that are authorized, issued and outstanding today. We believe that one of the effects of this Reorganization will be to increase our current market capitalization at our parent-level entity, which will assist in our stated goal of seeking to maximize long-term stockholder value. At this time, there is no trading market for our Class B Common Stock and Class A Units of PNMAC. After completion of the Reorganization, our Class B Common Stock will be cancelled and our Class A Units of PNMAC will be exchanged on a one-for-one basis for shares of New Common Stock of New PennyMac. We believe this exchange of Class A Units for New Common Stock will increase our market capitalization at our parent-level entity by approximately 200%. The increase in our market capitalization at our parent-level entity could enable certain investors (those with investment position limits tied to percentages of a company's market capitalization) to own larger positions in our stock than before, and could also make shares of New Common Stock eligible to be included in certain stock market indices for which shares of Class A Common Stock currently are not eligible. Such eligibility, in turn, could mean an increased demand for shares of New Common Stock. These potential benefits may not be obtained if market conditions or other circumstances prevent us from taking advantage of the new attributes that we expect the Reorganization will afford us.


Required Vote

        Approval of the Reorganization Proposal requires the affirmative vote of a majority of the voting power of all the issued and outstanding shares of common stock of Existing PennyMac, which includes both shares of Class A Common Stock and Class B Common Stock voting together as a single class.


Reorganization Procedure

        Existing PennyMac currently owns all of the issued and outstanding common stock of New PennyMac and New PennyMac currently owns all of the issued and outstanding membership interests of Merger Sub. Pursuant to the Reorganization Agreement, the Contributors will voluntarily contribute all of their Class A Units of PNMAC in exchange for the issuance by New PennyMac to such

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Contributors of an aggregate number of shares of New Common Stock equal in number to the Class A Units of PNMAC so contributed. Further, pursuant to the Reorganization Agreement, Highfields, BlackRock, each of the Company's directors and each of the Company's "officers" as defined for purposes of Section 16 under the Exchange Act agreed to certain transfer restrictions (such persons, the "Restricted Transferors"). Prior to August 14, 2018 (which was the date following the record date for the Distribution), these transfer restrictions prohibited exchanges of Class A Units of PNMAC or shares of Class B Common Stock for shares of Class A Common Stock of Existing PennyMac or the disposition of any Class A Units of PNMAC or shares of Class B Common Stock. Notwithstanding this general prohibition, the transfer restrictions allowed exchanges, and any related sales of shares of Class A Common Stock of Existing PennyMac, pursuant to 10b5-1 trading plans that were established prior to the date of the Reorganization Agreement. Also, Contributors waived their right to receive the Distribution with respect to any shares of Class A Common Stock of Existing PennyMac that were issued to them in exchange for Class A Units of PNMAC after the date of the Reorganization Agreement.

        Following the approval of the Reorganization Agreement by Existing PennyMac stockholders of Class A Common Stock and Class B Common Stock, voting together as a single class, and the satisfaction or waiver of the other conditions to the Reorganization specified in the Reorganization Agreement (which are described below), and simultaneous with the Contribution described above, Merger Sub will merge with and into Existing PennyMac, with Existing PennyMac continuing as the surviving corporation, and the separate corporate existence of Merger Sub will cease. As a result of the Reorganization:


Treatment of Common Stock in the Reorganization

        Each outstanding share of Class A Common Stock will automatically be converted into one share of New Common Stock of New PennyMac. Each outstanding share of Class B Common Stock will automatically be cancelled for no consideration. Your overall proportionate economic ownership of the entire PNMAC business and your voting control percentage in New PennyMac after the Reorganization will be the same as your current overall proportionate economic ownership of the entire PNMAC business and voting control percentage in Existing PennyMac immediately prior to the Reorganization.


Treatment of Existing PennyMac Equity Incentive Plans and Outstanding Awards in connection with the Reorganization

        At the time of the Reorganization, New PennyMac will assume each Existing PennyMac equity incentive plan (collectively, the "Existing PennyMac Plans"), including all performance share awards, restricted share awards, restricted stock units and other incentive awards covering shares of Existing PennyMac Class A Common Stock, whether vested or not vested, that are then outstanding under each

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Existing PennyMac Plan. The same number of shares reserved under each Existing PennyMac Plan will be reserved by New PennyMac, and the terms and conditions that are in effect immediately prior to the Reorganization under each outstanding incentive award assumed by New PennyMac will continue in full force and effect after the Reorganization, except that the shares of Class A Common Stock reserved under the plans and issuable under each such award will be replaced by shares of New Common Stock of New PennyMac. Incentive awards granted outside of the U.S. will generally be treated as described above, except to the extent required by local law.

        No adjustment was made to any outstanding equity incentive awards (whether vested or unvested) in connection with the payment of the Distribution.


Conditions to Completion of the Reorganization

        We will complete the Reorganization only if each of the following conditions is satisfied or waived:


Termination of the Reorganization Agreement

        The Reorganization Agreement may be terminated at any time prior to the completion of the Reorganization (even after approval by our stockholders) by (i) action of the Board if it determines that, for any reason, the completion of the transactions provided for therein would be inadvisable or not in the best interests of our Company or our stockholders or (ii) written notice between Existing PennyMac, New PennyMac, Merger Sub and PNMAC on the one hand and certain Contributors holding a majority of the Class A Units then outstanding (including BlackRock and Highfields) on the other hand—if the Reorganization has not occurred nine months after the date of the Reorganization Agreement.


Certain Material U.S. Federal Income Tax Consequences

        The Reorganization is conditioned on, among other things, Existing PennyMac's receipt of a written opinion from Goodwin Procter LLP, tax counsel to Existing PennyMac, to the effect that for U.S. federal income tax purposes the Reorganization should qualify as a "reorganization" within the meaning of Section 368(a) of the Code and/or a transfer described in Section 351(a) of the Code. As a result, you should not recognize any gain or loss for U.S. federal income tax purposes upon the receipt

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of New Common Stock of New PennyMac in exchange for your shares of Class A Common Stock, Class B Common Stock and/or, as applicable, Class A Units of PNMAC, subject to the discussion below in "Description of the Reorganization Proposal—Certain Material U.S. Federal Income Tax Consequences—U.S. Federal Income Tax Consequences to the Equity Owners of the Reorganization."

        The discussion of the material U.S. federal income tax consequences contained in this registration statement is intended to provide only a general summary and is not a complete description of all potential U.S. federal income tax consequences of the Reorganization. The discussion does not address tax consequences that may vary with, or are dependent on, individual circumstances. In addition, the discussion does not address the effects of any non-U.S., state or local tax laws. For more information, see "The Reorganization Proposal—Certain Material U.S. Federal Income Tax Consequences."


Security Ownership of Directors and Executive Officers

        On September 7, 2018, the record date for the Special Meeting, directors, executive officers and their affiliates beneficially owned shares representing approximately 64.0% of the voting power of all the issued and outstanding shares of common stock of Existing PennyMac, which includes the Class A Common Stock and Class B Common Stock voting together as a single class. The affirmative vote of a majority of the voting power of all the issued and outstanding shares of common stock of Existing PennyMac is required to approve the Reorganization Proposal.


Regulatory Requirements in Connection with the Reorganization

        The Reorganization is conditioned on, among other things, (i) the SEC declaring effective the registration statement, of which this proxy statement/prospectus forms a part and (ii) the receipt of approval for listing on the NYSE of shares of New Common Stock of New PennyMac to be issued in the Reorganization. No other material federal or state regulatory requirements must be complied with or material approvals obtained in connection with the Reorganization.


Markets and Market Prices

        New Common Stock of New PennyMac is not currently traded on any stock exchange. We intend to apply to have the shares of New Common Stock of New PennyMac to be received in the Merger to be listed on the NYSE under Existing PennyMac's current trading symbol, "PFSI," on or before the effective date of the Merger. On August 1, 2018, the last trading day before the announcement of the Reorganization Proposal, the closing price per share of Class A Common Stock of Existing PennyMac was $19.15.


Board of Directors and Executive Officers of New PennyMac Following the Reorganization

        We expect that the directors and executive officers of New PennyMac following the Reorganization will be the same as those of Existing PennyMac immediately prior to the Reorganization.

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RISK FACTORS

        In addition to the other information contained or incorporated by reference in this proxy statement/prospectus, you should carefully consider the risks described below in determining whether or not to vote for approval of the Reorganization Proposal. You should carefully consider the additional risks described in our annual, quarterly and current reports, including those identified in our Annual Report on Form 10-K for the year ended December 31, 2017 and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2018. For more information, see "Where You Can Find Additional Information." You should refer to the explanation of the qualifications and limitations on these forward-looking statements in "Special Note Regarding Forward-Looking Statements."

Risks Related to the Reorganization

If the Reorganization Proposal does not receive sufficient stockholder approval, our Board may choose to defer or abandon the Reorganization.

        The affirmative vote of a majority of the voting power of all the issued and outstanding shares of common stock of Existing PennyMac, which includes both shares of Class A Common Stock and Class B Common Stock voting together as a single class, is required to approve the Reorganization Proposal. As of the Record Date, holders of Class B Common Stock are entitled to 52.3 million votes based on the aggregate number of Class A Units of PNMAC held by them as of such date. Further, as of the Record Date, holders of Class B Common Stock are entitled to 52.6 million votes of the shares of Class A Common Stock and Class B Common Stock, or control 67.9% of the votes of the shares of the Class A Common Stock and Class B Common Stock, voting together as a single class.

        There is no arrangement or agreement among any stockholder, including among the holders of our Class B Common Stock, on the one hand, and any of Existing PennyMac, New PennyMac, or Merger Sub, on the other hand (nor, to our knowledge, is there any arrangement or agreement among any of the holders of Class B Common Stock themselves) regarding the approval of the Reorganization Proposal. Each such holder is entitled to vote however they choose with respect to such proposals. Existing PennyMac is holding the Special Meeting specifically for the purpose of seeking approval from the holders of Class A Common Stock and Class B Common Stock of the Reorganization Proposal and the Adjournment Proposal. Existing PennyMac is furnishing this proxy statement to solicit proxies for approval of these proposals. The outcome of the vote on such proposals is uncertain and any (or all) of the holders of Class B Common Stock may choose not to vote in favor of the Reorganization Proposal or the Adjournment Proposal or both. Moreover, no single holder or group of affiliated holders of Class B Common Stock is capable of controlling the outcome of the vote on either the Reorganization Proposal or the Adjournment Proposal acting alone. The holders of Class B Common Stock, each of whom also separately holds Class A Units of PNMAC, have signed the Contribution Agreement as Contributors, wherein they have agreed to contribute their Class A Units of PNMAC to New PennyMac, but only if the conditions precedent to the Reorganization are satisfied, which conditions include, among other things, approval of the Reorganization Proposal, which remains uncertain and remains within the control of the holders of the Class A Common Stock and Class B Common Stock, voting together as a single class, at the Special Meeting.

        If the holders of a majority of the voting power of the Class A and Class B Common Stock, voting together as a single class, do not vote in favor of the Reorganization Proposal, we would not likely continue to pursue the Reorganization as currently structured and proposed, Existing PennyMac would remain our top-level parent and publicly-listed entity, and our so-called "Up-C" structure would remain in place.

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Even if approved by our stockholders, our Board may choose to defer or abandon the Reorganization.

        Completion of the Reorganization may be deferred or abandoned, at any time prior to consummation, by action of our Board, whether before or after the Special Meeting. Assuming that the Reorganization Proposal is approved at the Special Meeting, we currently expect the Reorganization to take place before the end of calendar 2018. However, even if holders of Class A Common Stock and Class B Common Stock approve the Reorganization Proposal, the Board may elect to defer completion of the Reorganization or may terminate the Reorganization Agreement and abandon the Reorganization should it determine, for any reason, that the Reorganization would not be in the best interests of us or our stockholders. In the event of such termination and abandonment, the Reorganization Agreement will become void and none of Existing PennyMac, New PennyMac, Merger Sub, PNMAC or the Contributors will have any liability with respect to such termination and abandonment.

We may not obtain the expected benefits of the Reorganization.

        We believe that the Reorganization will provide us with benefits in the future. These benefits include the simplification of our overall corporate structure by transitioning our capital structure into a single-class of outstanding stock as well as an approximate 200% increase in our market capitalization at our parent-level entity. Prior to the Reorganization, our current market capitalization does not take into account the Class A Units of PNMAC that are outstanding because our current market capitalization is based on the product of the current market price of the Class A Common Stock and only the number of outstanding shares of Class A Common Stock. However, after the completion of the Reorganization, we expect the market capitalization of New PennyMac will take into account shares of New Common Stock issued in exchange for both Class A Common Stock of Existing PennyMac and the Class A Units of PNMAC outstanding prior to the Merger, which should increase our total market capitalization.

        As of the Record Date, we have 25.2 million shares of Class A Common Stock outstanding and 77.5 million Class A Units of PNMAC outstanding (including Class A Units held by holders of Class B Common Stock and Existing PennyMac). Approximately 52.3 million Class A Units of PNMAC held by Class B common stockholders will be exchanged on a one-for-one basis for shares of New Common Stock of New PennyMac. After completion of the Reorganization, we expect to have outstanding up to approximately 79.1 million shares of New Common Stock. The increase in our shares outstanding after the Reorganization should increase our market capitalization at our parent-level entity which, in turn, could enable certain investors (those with investment position limits tied to percentages of a company's market capitalization) to own larger positions in our stock than before, and could also make shares of New Common Stock eligible to be included in certain stock market indices for which shares of Class A Common Stock currently are not eligible (because the market capitalization at our parent-level entity currently does not include the shares of Class A Common Stock of Existing PennyMac that are issuable upon exchange of Class A Units of PNMAC). Further, such eligibility could mean an increased demand for shares of New Common Stock. These expected benefits may not be obtained if market conditions or other circumstances prevent us from taking advantage of the new attributes that we expect the Reorganization will afford us. As a result, we may incur the costs of the Reorganization without realizing the possible benefits.

As a stockholder of New PennyMac, your rights after the Reorganization in some instances will be different from, and may be more or less favorable than, your current rights as a stockholder of Existing PennyMac.

        Immediately prior to, or upon completion of, the Merger, New PennyMac will adopt New PennyMac's Organizational Documents which are attached as Annexes II and III. Upon the completion of the Reorganization, your rights as a stockholder of New PennyMac will be governed by New PennyMac's Organizational Documents, as described in "Description of New PennyMac Capital Stock." New PennyMac's Organizational Documents are substantially similar to Existing PennyMac's Amended and Restated Certificate of Incorporation and Second Amended and Restated Bylaws. There are differences, however, that you should carefully review under the caption "Comparative Rights of Holders of New PennyMac Common Stock and Existing PennyMac Common Stock" beginning on page 67. Some of these differences may be more or less favorable to holders of Class A Common Stock.

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Even if no shares of Class A Common Stock are voted in favor of the Reorganization Proposal, if sufficient number of votes of Class B Common Stock are voted in favor of the Reorganization Proposal, the Reorganization will be approved.

        Even if no affirmative votes of Class A common stockholders are cast in favor of the Reorganization Proposal, the Reorganization Proposal will be approved if a sufficient number of votes of Class B common stockholders are cast in favor of the Reorganization Proposal. As of the Record Date, 25.2 million shares of Class A Common Stock, 45 shares of Class B Common Stock and 77.5 million Class A Units of PNMAC are outstanding. Each holder of Class A Units of PNMAC, other than Existing PennyMac, holds one share of our Class B Common Stock. The shares of Class B Common Stock have no economic rights but entitle the holder, without regard to the number of shares of Class B Common Stock held, to a number of votes on matters presented to our stockholders that is equal to the aggregate number of Class A Units of PNMAC held by such holder. As of the Record Date, holders of Class B Common Stock are entitled to 52.3 million votes based on the aggregate number of Class A Units of PNMAC held by them as of such date. Further, as of the Record Date, holders of Class B Common Stock are entitled to 52.6 million votes of the shares of Class A Common Stock and Class B Common Stock, or control 67.9% of the 77.5 million votes of the shares of the Class A Common Stock and Class B Common Stock, voting together as a single class. Based upon the percentage of control of the Class B Common Stock of the vote of the shares of Class A Common Stock and Class B Common Stock, voting together as a single class, if sufficient affirmative votes of Class B common stockholders are cast in favor of the Reorganization Proposal, the Reorganization will be approved even if no affirmative votes of Class A common stockholders are cast in favor of the Reorganization Proposal.

Members of the management and board of directors of Existing PennyMac and certain affiliates have interests in the Reorganization that are different from, or in addition to, those of holders of shares of Class A Common Stock and Class B Common Stock.

        In considering whether to approve the Reorganization, Class A common stockholders and Class B common stockholders should recognize that members of management and board of directors of Existing PennyMac may have interests in the Reorganization that differ from, or are in addition to, their interests as Class A common stockholders and Class B common stockholders. For a description of these interests, see "Description of the Reorganization Proposal—Interests of Certain Directors and Executive Officers in the Reorganization."

If the Reorganization does not qualify as a "reorganization" under Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and/or a transfer described in Section 351(a) of the Code, holders of Existing PennyMac Class A Common Stock and/or PNMAC Class A Units may be required to pay substantial U.S. federal income taxes.

        The Reorganization is conditioned on, among other things, Existing PennyMac's receipt of an opinion from its tax counsel, Goodwin Procter LLP, to the effect that, for U.S. federal income tax purposes, the Reorganization should qualify as a "reorganization" within the meaning of Section 368(a) of the Code and/or a transfer described in Section 351(a) of the Code. The opinion will be based on certain assumptions, representations as to factual matters, and covenants from Existing PennyMac, New PennyMac and Merger Sub. The opinion cannot be relied upon if any of the assumptions, representations or covenants is incorrect, incomplete or inaccurate or is violated in any material respect. In addition, the opinion is based on current law and cannot be relied upon if current law changes with retroactive effect. The opinion of counsel is not binding upon the Internal Revenue Service (the "IRS") or courts, and there is no assurance that the IRS or a court will not take a contrary position. Existing PennyMac does not intend to request a ruling from the IRS regarding any aspects of the U.S. federal income tax consequences of the Reorganization. If the IRS or a court

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determines that the Reorganization should not be treated as described in the opinion, a holder of Existing PennyMac Class A Common Stock or PNMAC Class A Units and Class B Common Stock that is a U.S. person (as defined in the section entitled "Description of the Reorganization Proposal—Certain Material U.S. Federal Income Tax Consequences" beginning on page 51) would generally recognize gain or loss for U.S. federal income tax purposes upon the exchange of Existing PennyMac Class A Common Stock, Class B Common Stock, and/or PNMAC Class A Units for New Common Stock of New PennyMac in the Reorganization. For more information on the material U.S. federal income tax consequences of the Reorganization, see the section entitled "Description of the Reorganization Proposal—Certain Material U.S. Federal Income Tax Consequences" beginning on page 51.

We may not pay dividends on our common stock in the foreseeable future.

        Other than the Distribution, Existing PennyMac does not have a history of paying dividends. We do not expect New PennyMac to pay dividends in the future. The declaration, amount and payment of any dividends on shares of New Common Stock of New PennyMac will be at the sole discretion of its board of directors. New PennyMac's board may take into account general and economic conditions, the financial condition and operating results of New PennyMac, the available cash and current and anticipated cash needs of New PennyMac, capital requirements, contractual, legal, tax and regulatory restrictions, the implications of the payment of dividends to stockholders of New PennyMac and such other factors as deemed relevant in evaluating future dividends. New PennyMac may also enter into credit agreements or other borrowing arrangements in the future that restrict or limit its ability to pay cash dividends. Accordingly, New PennyMac may not pay any dividends on shares of New Common Stock in the foreseeable future.

The market price of shares of New Common Stock of New PennyMac may be negatively affected by sales of substantial amounts of shares of New Common Stock by its affiliates.

        After the completion of the Reorganization, we expect there will be up to approximately 79.1 million shares of New Common Stock outstanding, of which approximately 33.9 million shares (or 42.8%) will be held by "affiliates" (as that term is defined in Rule 144 under the Securities Act). All of these shares will be freely transferable, except for any shares held by affiliates of New PennyMac. However, we expect affiliates of New PennyMac will be able to resell, transfer or otherwise dispose of shares of New Common Stock held by them pursuant to a resale registration statement. Because affiliates of New PennyMac are not subject to any contractual transfer restrictions after the completion of the Reorganization, the market price of shares of New Common Stock may decline significantly when these affiliates resell or otherwise dispose of any or all of their shares of New Common Stock. A decline in the price of shares of New Common Stock may hinder New PennyMac's ability to raise capital through the issuance of additional shares of New Common Stock or other securities.

Certain affiliates of Existing PennyMac, including BlackRock and Highfields, will continue to significantly influence the outcome of the votes of shares of New PennyMac and their interests may differ from those of New PennyMac's unaffiliated stockholders.

        BlackRock and Highfields are each currently party to stockholder agreements with Existing PennyMac that provide them with certain rights. In connection with the Reorganization, New PennyMac will enter into nearly identical amended and restated stockholder agreements with BlackRock and Highfields. Pursuant to these stockholder agreements, each of BlackRock and Highfields will have the right to nominate two individuals for election to New PennyMac's board of directors as long as each of BlackRock and Highfields, together with its affiliates, holds at least 15% of the voting power of New Common Stock of New PennyMac, and the right to nominate one individual for election to New PennyMac's board of directors as long as each of BlackRock and Highfields,

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together with its affiliates, holds at least 10% of the voting power of New Common Stock of New PennyMac. New PennyMac, in turn, will be obligated to use its best efforts to ensure that these nominees are elected. In addition, these agreements will provide that each of BlackRock and Highfields, as long as each of them is entitled to nominate at least one individual for election to the Board of Directors of New PennyMac and at least one designee thereof is then serving on the board of directors of New PennyMac, is entitled to have one designee serve as a member on each committee and subcommittee of the board of directors of New PennyMac. As long as those nominees meet the independence standards applicable to those committees, New PennyMac's board will appoint them as members of such committee or committees upon request. These agreements also will provide that neither New PennyMac's Certificate nor New PennyMac's Bylaws, as in effect from time to time, may be amended in any manner that is adverse to BlackRock, Highfields or their respective affiliates without the consent of BlackRock or Highfields, as applicable, as long as each, together with their affiliates, holds at least 5% of the voting power of New PennyMac's outstanding shares of capital stock.

New PennyMac's Certificate contains provisions renouncing its interest and expectancy in certain corporate opportunities identified by or presented to BlackRock and Highfields. Further, anti-takeover provisions in our governing documents and Delaware law might discourage or delay acquisition attempts for us that you might consider favorable.

        BlackRock, Highfields and their respective affiliates are in the business of providing capital to growing companies, and may acquire interests in businesses that directly or indirectly compete with certain portions of New PennyMac's business. As is the case under the current certificate of incorporation of Existing PennyMac, New PennyMac's Certificate in the form that will be in effect upon the completion of the Reorganization will similarly provide that neither BlackRock nor Highfields nor their respective affiliates has any duty (fiduciary or otherwise) to refrain from engaging, directly or indirectly, in a corporate opportunity in the same or similar lines of business in which New PennyMac or its subsidiaries engage. Please refer to "Description of New PennyMac Capital Stock—Corporate Opportunity" for more information regarding corporate opportunities with BlackRock or Highfields.

        Further, New PennyMac's Certificate and Bylaws, each in the form that will be in effect upon the completion of the Reorganization, contain nearly identical provisions to those contained in the current certificate of incorporation of Existing PennyMac, and certain of those provisions may make the acquisition of New PennyMac more difficult without the approval of its board of directors. Please refer to "Description of New PennyMac Capital Stock—Anti-Takeover Effects of Provisions of Delaware Law and New PennyMac's Organizational Documents" for more information regarding these provisions.

Risks Related to the Distribution

Current tax law is complex with respect to the proper treatment for U.S. federal income tax purposes of the Distribution, and our tax counsel is not rendering an opinion regarding such treatment.

        The proper U.S. federal income tax treatment of the Distribution is not entirely clear under current law, and our tax counsel is not rendering an opinion regarding such treatment. The Company intends that the Distribution be treated as a distribution under Section 301 of the Code. Although the Distribution was not contingent on the Reorganization and has already occurred regardless of whether or not the Reorganization is completed, it is possible that the IRS could treat the Distribution as part of the Merger Consideration paid to Existing PennyMac stockholders who receive the Distribution. Under this characterization, a stockholder receiving such a Distribution could be treated as recognizing gain in the Reorganization, equal to the lesser of: (i) the sum of the amount of cash received in such Distribution; and (ii) the amount, if any, by which the sum of the cash and the fair market value of the New Common Stock of New PennyMac received by the Existing PennyMac stockholder in the Reorganization exceeds such stockholder's tax basis in the Existing PennyMac Class A Common Stock surrendered in exchange therefor. Holders of Existing PennyMac Class A Common Stock who received the Distribution should consult with their tax advisor regarding the treatment of the Distribution.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

        Certain statements in this proxy statement/prospectus, and in the documents incorporated by reference in this proxy statement/prospectus, contain "forward-looking" statements, as defined in Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which represent our management's beliefs and assumptions concerning future events. We have identified some of these forward-looking statements with words such as "anticipates," "believes," "expects," "estimates," "is likely," "predicts," "projects," "forecasts," "objectives," "may," "will," "should," "plans" and "intends" and the negative of these words or other comparable terminology. In addition, we may from time to time make forward-looking statements in our annual report, quarterly reports and other filings with the SEC, news releases and other written and oral communications.

        These forward-looking statements are based on our expectations and assumptions, as of the date such statements are made, regarding our future operating performance and financial condition, including the expected timetable for completing the Reorganization, the future financial and operating performance of our Company, as well as the economy and other future events or circumstances.

        Factors that could cause actual results to differ materially from those stated, projected or implied by any forward-looking statements include, but are not limited to: (i) the possibility that the proposed Reorganization will not be consummated within the anticipated time period or at all, including as the result of regulatory, market or other factors or the failure to obtain stockholder approval of the Reorganization Proposal; (ii) the potential for disruption to our business in connection with the proposed Reorganization; (iii) the potential that we do not realize all of the expected benefits of the Reorganization; and (iv) the risks and uncertainties affecting us that are described in our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q (including Item 1A. Risk Factors) filed with the SEC, which are available on our website at ir.pennymacfinancial.com or on the SEC's website at www.sec.gov.

        We believe our expectations and assumptions are reasonable, but there can be no assurance that the expectations reflected herein will be achieved. Unless legally required, we undertake no obligation to update any forward-looking statements made in this proxy statement/prospectus whether as a result of new information, future events or otherwise.

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION FOR EXISTING PENNYMAC

        The following table sets forth selected historical consolidated financial data for Existing PennyMac as of and for the years ended December 31, 2017, 2016, 2015, 2014 and 2013 and as of and for the six months ended June 30, 2018 and 2017. The following selected historical financial information of Existing PennyMac is being provided to assist you in your analysis of the financial aspects of the Reorganization. Existing PennyMac derived the selected historical financial information as of and for the years ended December 31, 2017, 2016, 2015, 2014, and 2013 from its audited consolidated financial statements and the selected historical financial information as of and for the six months ended June 30, 2018 and 2017 from its unaudited condensed consolidated financial statements. No historical financial statements of New PennyMac are being provided because before the Reorganization, New PennyMac will have no assets, liabilities or operations other than those incidental to its formation.

        The information set forth below is only a summary that you should read together with the audited consolidated financial statements of Existing PennyMac and the accompanying notes thereto, as well as the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in Existing PennyMac's Annual Report on Form 10-K for the year ended December 31, 2017 and Existing PennyMac's Quarterly Report on Form 10-Q for the period ended June 30, 2018 that were previously filed with the SEC and are incorporated by reference into this proxy statement/prospectus. The selected historical financial information may not be indicative of the future performance of Existing PennyMac or New PennyMac. For more information, see "Where You Can Find Additional Information" beginning on page 79 of this proxy statement/prospectus.

        During the quarter ended March 31, 2018, Existing PennyMac adopted the Financial Accounting Standards Board's Accounting Standards Update 2016-18, Statement of Cash Flows (Topic 230)—Restricted Cash ("ASU 2016-18"). ASU 2016-18 requires that a statement of cash flows explain the change during the reporting period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the consolidated statement of cash flows.

        Beginning in the quarterly reporting period ended March 31, 2018, Existing PennyMac retrospectively changed the presentation of its consolidated statements of cash flows to conform to the requirements of ASU 2016-18. For the purpose of reporting statement of cash flows, Existing PennyMac has identified tenant security deposits relating to rental properties owned by PennyMac Mortgage Investment Trust and managed by Existing PennyMac as restricted cash. Such deposits are included in Other assets on Existing PennyMac's consolidated balance sheets.

        Due to the minor effect of the adoption of ASU 2016-18 on Existing PennyMac's consolidated financial statements, such consolidated financial statements have not been revised. Following is a summary of the effect of Existing PennyMac's adoption of ASU 2016-08 on Existing PennyMac's consolidated statements of cash flows for each of the three years ended December 31, 2017:

Year ended December 31,
  As adjusted   Adjustment   As previously
reported
 
 
  (in thousands)
 

Cash flow from operating activities

                   

2017

  $ (883,412 ) $ 173   $ (883,585 )

2016

  $ (938,324 ) $ 198   $ (938,532 )

2015

  $ 53,221   $ 77   $ 53,144  

Cash and restricted cash at year end

                   

2017

  $ 38,173   $ 448   $ 37,725  

2016

  $ 99,642   $ 275   $ 99,367  

2015

  $ 105,549   $ 77   $ 105,472  

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  Year ended December 31,  
 
  2017   2016   2015   2014   2013  
 
  (in thousands, except per share data)
 

Condensed Consolidated Statements of Income:

                               

Revenues

                               

Net gains on mortgage loans held for sale

  $ 391,804   $ 531,780   $ 320,715   $ 167,024   $ 138,013  

Loan origination fees

    119,202     125,534     91,520     41,576     23,575  

Fulfillment fees from PennyMac Mortgage Investment Trust

    80,359     86,465     58,607     48,719     79,712  

Net mortgage loan servicing fees

    306,059     185,466     229,543     216,919     90,010  

Management fees and Carried Interest

    22,545     23,726     30,865     48,664     53,749  

Net interest expense

    (1,341 )   (25,079 )   (19,382 )   (9,486 )   (1,041 )

Other

    36,835     3,995     1,242     4,861     2,541  

Total net revenue

    955,463     931,887     713,110     518,277     386,559  

Expenses

                               

Compensation

    358,721     342,153     274,262     190,707     148,576  

Servicing

    117,696     85,857     68,085     48,430     7,028  

Other

    143,137     120,794     91,570     56,107     48,829  

Total expenses

    619,554     548,804     433,917     295,244     204,433  

Income before provision for income taxes

    335,909     383,083     279,193     223,033     182,126  

Provision for income taxes

    24,387     46,103     31,635     26,722     9,961  

Net income

    311,522     336,980     247,558     196,311     172,165  

Less: Net income attributable to noncontrolling interest

    210,765     270,901     200,330     159,469     157,765  

Net income attributable to PennyMac Financial Services, Inc. common stockholders

  $ 100,757   $ 66,079   $ 47,228   $ 36,842   $ 14,400  

Earnings per share:

                               

Basic

  $ 4.34   $ 2.98   $ 2.17   $ 1.73   $ 0.83  

Diluted

  $ 4.03   $ 2.94   $ 2.17   $ 1.73   $ 0.82  

Condensed Consolidated Balance Sheets at Year End:

                               

Assets

                               

Mortgage loans held for sale at fair value

  $ 3,099,103   $ 2,172,815   $ 1,101,204   $ 1,147,884   $ 531,004  

Mortgage servicing rights

    2,119,588     1,627,672     1,411,935     730,828     483,664  

Carried Interest due from Investment Funds

    8,552     70,906     69,926     67,298     61,142  

Servicing advances

    318,066     348,306     299,354     228,630     154,328  

Other

    1,822,784     914,203     622,875     332,046     354,337  

Total assets

  $ 7,368,093   $ 5,133,902   $ 3,505,294   $ 2,506,686   $ 1,584,475  

Liabilities and stockholders' equity

                               

Assets sold under agreements to repurchase

  $ 2,381,538   $ 1,735,114   $ 1,166,731   $ 822,252   $ 471,592  

Mortgage loan participation and sale agreements

    527,395     671,426     234,872     143,568      

Notes payable

    891,505     150,942     61,136     146,855     52,154  

Excess servicing spread financing at fair value payable to PennyMac Mortgage Investment Trust

    236,534     288,669     412,425     191,166     138,723  

Other

    1,611,447     888,395     567,780     395,579     292,802  

Total liabilities

    5,648,419     3,734,546     2,442,944     1,699,420     955,271  

Stockholders' equity

    1,719,674     1,399,356     1,062,350     807,266     629,204  

Total liabilities and stockholders' equity

  $ 7,368,093   $ 5,133,902   $ 3,505,294   $ 2,506,686   $ 1,584,475  

Year end per share:

                               

Book value

  $ 19.95   $ 15.49   $ 12.32   $ 9.92   $ 8.04  

Share price

  $ 22.35   $ 16.65   $ 15.36   $ 17.30   $ 17.55  

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  Six months ended
June 30,
 
 
  2018   2017  
 
  (in thousands, except
per share data)

 

Revenues

             

Net gains on mortgage loans held for sale

  $ 132,360   $ 185,047  

Mortgage loan origination fees

    48,991     55,767  

Fulfillment fees from PennyMac Mortgage Investment Trust

    26,503     37,677  

Net mortgage loan servicing fees

    230,478     121,076  

Management fees, net

    11,439     11,381  

Carried Interest from Investment Funds

    (348 )   113  

Net interest income (expense)

    28,358     (7,519 )

Other

    4,718     2,652  

Total net revenue

    482,499     406,194  

Expenses

             

Compensation

    200,553     168,207  

Servicing

    54,789     51,545  

Technology

    29,774     22,937  

Occupancy and equipment

    12,884     11,007  

Other

    36,805     32,506  

Total expenses

    334,805     286,202  

Income before provision for income taxes

    147,694     119,992  

Provision for income taxes

    12,363     14,860  

Net income

    135,331     105,132  

Less: Net income attributable to noncontrolling interest

    100,875     83,774  

Net income attributable to PennyMac Financial Services, Inc. common stockholders

  $ 34,456   $ 21,358  

Earnings per share:

             

Basic

  $ 1.41   $ 0.93  

Diluted

  $ 1.38   $ 0.91  

Weighted average shares outstanding

             

Basic

    24,399     23,006  

Diluted

    78,947     77,641  

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  June 30,
2018
  December 31,
2017
 
 
  (in thousands)
 

Condensed Consolidated Balance Sheets:

             

Assets

             

Mortgage loans held for sale at fair value

  $ 2,527,231   $ 3,099,103  

Mortgage servicing rights

    2,486,157     2,119,588  

Carried Interest due from Investment Funds

    370     8,552  

Servicing advances

    258,900     318,066  

Other

    1,569,048     1,822,784  

Total assets

  $ 6,841,706   $ 7,368,093  

Liabilities and stockholders' equity

             

Assets sold under agreements to repurchase

    1,825,813     2,381,538  

Mortgage loan participation and sale agreements

    528,368     527,395  

Notes payable

    1,140,546     891,505  

Excess servicing spread financing at fair value payable to PennyMac Mortgage Investment Trust

    229,470     236,534  

Other

    1,255,565     1,611,447  

Total liabilities

    4,979,762     5,648,419  

Stockholders' equity

    1,861,944     1,719,674  

Total liabilities and stockholders' equity

  $ 6,841,706   $ 7,368,093  

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION FOR NEW PENNYMAC

        We have not provided historical financial statements of New PennyMac because, prior to the Reorganization, it will have no assets, liabilities or operations other than those incident to its formation. For selected historical consolidated financial data of Existing PennyMac, see "Selected Historical Consolidated Financial Information for Existing PennyMac" beginning on page 24.

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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

FOR NEW PENNYMAC

        The following unaudited pro forma condensed consolidated financial information consists of unaudited pro forma condensed consolidated statements of operations information for the six months ended June 30, 2018 and for the year ended December 31, 2017, and unaudited pro forma condensed consolidated balance sheet information as of June 30, 2018. After completion of the Reorganization, New PennyMac will consolidate the financial statements of Existing PennyMac, which will become its wholly-owned subsidiary after the Reorganization. The unaudited pro forma condensed consolidated financial information presented below has been derived by application of pro forma adjustments to Existing PennyMac's historical financial statements.

        The following unaudited pro forma condensed consolidated financial information is based upon the historical financial statements of Existing PennyMac and its consolidated subsidiaries, adjusted to reflect the Reorganization and the Distribution. The following unaudited pro forma condensed consolidated financial information of New PennyMac should be read in conjunction with the related notes and with the historical consolidated financial statements of Existing PennyMac and the related notes, which are incorporated by reference into this proxy statement/prospectus.

        The unaudited pro forma condensed consolidated statements of operations give effect to the Reorganization as if it had occurred on January 1, 2017, while the unaudited pro forma condensed consolidated balance sheet gives effect to the Reorganization and Distribution as if they had occurred on June 30, 2018. The pro forma adjustments, described in the related notes, are based on the best available information and certain assumptions that Existing PennyMac's management believe are reasonable. Excluded from the pro forma statement of operations are amounts that are non-recurring in nature or amounts that are not material, including, but not limited to, legal fees related to the Reorganization.

        The unaudited pro forma condensed consolidated financial information is provided for illustrative purposes only and is not necessarily indicative of the operating results that would have occurred had the Reorganization been completed on January 1, 2017 for the unaudited pro forma condensed consolidated statements of operations, and had the Reorganization and Distribution been completed on June 30, 2018 for the unaudited pro forma condensed consolidated balance sheet information. Readers should not rely on the unaudited pro forma condensed consolidated financial information as being indicative of the historical operating results that New PennyMac would have achieved or any future operating results or financial position that it will experience after the Reorganization is completed. There is no assurance that the Reorganization will occur even if the Reorganization Proposal is approved by Existing PennyMac stockholders. The pro forma adjustments made in connection with the Reorganization are calculated assuming the Reorganization Proposal is approved by Existing PennyMac stockholders.

        The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates and assumptions are preliminary and have been made solely for purposes of developing this unaudited pro forma condensed consolidated financial information. Actual results will differ, perhaps materially, from these estimates and assumptions.

        New PennyMac's unaudited pro forma condensed consolidated financial information has been prepared to reflect adjustments to Existing PennyMac's historical financial information that are (1) directly attributable to the Reorganization and the Distribution; (2) factually supportable; and (3) with respect to the unaudited pro forma condensed consolidated statements of operations, expected to have a continuing impact on New PennyMac's results.

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PennyMac Financial Services, Inc.
Pro Forma Condensed Consolidated Balance Sheet
June 30, 2018

 
  Historical   Pro forma
adjustments
  Pro forma   Notes
 
  (in thousands except book value per share)

ASSETS

               

Cash

  $ 189,663   $ (10,100 ) $ 179,563   (1)

Mortgage loans held for sale at fair value

    2,527,231         2,527,231    

Mortgage servicing rights

    2,486,157         2,486,157    

Investments in and advances to affiliates

    160,049         160,049    

Mortgage loans eligible for repurchase

    879,621         879,621    

Other

    598,985         598,985    

Total assets

  $ 6,841,706   $ (10,100 ) $ 6,831,606    

LIABILITIES

               

Assets sold under agreements to repurchase

  $ 1,825,813   $   $ 1,825,813    

Mortgage loan participation and sales agreement

    528,368         528,368    

Note payable

    1,140,546         1,140,546    

Payable to exchanged Private National Mortgage Acceptance Company, LLC unitholders under the Tax Receivable Agreement

    46,903         46,903    

Payable to affiliates

    329,183           329,183    

Income taxes payable

    67,357     305,324     372,681   (2)

Liability for loans eligible for repurchase

    879,621         879,621    

Other

    161,971         161,971    

Total liabilities

    4,979,762     305,324     5,285,086    

STOCKHOLDERS' EQUITY

               

Class A common stock

    3     5     8    

Class B common stock

               

Additional paid-in capital

    229,941     1,026,720     1,256,661   (3)

Retained earnings

    299,951     (10,100 )   289,851   (1)

Total stockholders' equity attributable to PennyMac

                     

Financial Services, Inc. common stockholders

    529,895     1,016,625     1,546,520    

Noncontrolling interest in Private National Mortgage Acceptance Company, LLC

    1,332,049     (1,332,049 )      

Total stockholders' equity

    1,861,944     (315,424 )   1,546,520    

Total liabilities and stockholders' equity

  $ 6,841,706   $ (10,100 ) $ 6,831,606    

Shares outstanding

    25,009     52,398     77,407    

Book value per share

 
$

21.19
       
$

19.98
 

(4)

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PennyMac Financial Services, Inc.
Pro Forma Condensed Consolidated Statement of Income
Six months ended June 30, 2018

 
  Historical   Pro forma
adjustments
  Pro forma   Notes  
 
  (In thousands except earnings per
share)

   
 

Revenue

                         

Net gains on mortgage loans held for sale at fair value:

                         

From non-affiliates

  $ 105,047   $   $ 105,047        

From PennyMac Mortgage Investment Trust

    27,313         27,313        

    132,360         132,360        

Mortgage loan origination fees:

                         

From non-affiliates

    46,241         46,241        

From PennyMac Mortgage Investment Trust

    2,750         2,750        

    48,991         48,991        

Fulfillment fees from PennyMac Mortgage Investment Trust

    26,503         26,503        

Net mortgage loan servicing fees:

                         

Mortgage loan servicing fees

                         

From non-affiliates

    274,354         274,354        

From PennyMac Mortgage Investment Trust

    20,450         20,450        

From Investment Funds

    3         3        

Ancillary and other fees

    27,808         27,808        

    322,615         322,615        

Amortization, impairment and change in estimated fair value of mortgage servicing rights:

                         

Related to servicing for non-affiliates

    (84,220 )       (84,220 )      

Change in fair value of excess servicing spread payable to PennyMac Mortgage Investment Trust

    (7,917 )       (7,917 )      

    (92,137 )       (92,137 )      

Net servicing fees

    230,478         230,478        

Management fees:

                         

From PennyMac Mortgage Investment Trust

    11,424         11,424        

From Investment Funds

    15         15        

    11,439         11,439        

Carried Interest

    (348 )       (348 )      

Net interest expense:

                         

Interest income:

                         

From non-affiliates

    93,845         93,845        

From PennyMac Mortgage Investment Trust

    3,874         3,874        

Interest income

    97,719         97,719        

Interest expense:

                         

To non-affiliates

    61,517         61,517        

To PennyMac Mortgage Investment Trust

    7,844         7,844        

    69,361         69,361        

Net interest expense

    28,358         28,358        

Change in fair value of investments in and dividends received from PennyMac Mortgage Investment Trust

    290         290        

Other

    4,428         4,428        

Total net revenue

    482,499         482,499        

Expenses

                         

Compensation

    200,553         200,553        

Servicing

    54,789         54,789        

Technology

    29,774         29,774        

Occupancy and equipment

    12,884         12,884        

Other

    36,805         36,805        

Total expenses

    334,805         334,805        

Income before provision for income taxes

    147,694         147,694        

Provision for income taxes

    12,363     26,656     39,019     (5 )

Net income

    135,331     (26,656 )   108,675        

Less: Net income attributable to noncontrolling interest

    100,875     (100,875 )       (5 )

Net income attributable to PennyMac Financial Services, Inc. common stockholders

  $ 34,456   $ 74,219   $ 108,675        

Earnings per share

                         

Basic

  $ 1.41         $ 1.41        

Diluted

  $ 1.38         $ 1.38        

Weighted-average common shares outstanding

                         

Basic

    24,399     52,583     76,982        

Diluted

    78,947           78,947        

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PennyMac Financial Services, Inc.
Pro Forma Condensed Consolidated Statement of Income
Year ended December 31, 2017

 
  Historical   Pro forma
adjustments
  Pro forma   Notes  
 
  (in thousands except earnings per share)
 

Revenue

                         

Net gains on mortgage loans held for sale at fair value:

                         

From non-affiliates

  $ 369,815   $   $ 369,815        

From PennyMac Mortgage Investment Trust

    21,989         21,989        

    391,804         391,804        

Mortgage loan origination fees:

                         

From non-affiliates

    112,124         112,124        

From PennyMac Mortgage Investment Trust

    7,078         7,078        

    119,202         119,202        

Fulfillment fees from PennyMac Mortgage Investment Trust

    80,359         80,359        

Net mortgage loan servicing fees:

                         

Mortgage loan servicing fees

                         

From non-affiliates

    475,848         475,848        

From PennyMac Mortgage Investment Trust

    43,064         43,064        

From Investment Funds

    1,461         1,461        

Ancillary and other fees

    58,924         58,924        

    579,297         579,297        

Amortization, impairment and change in estimated fair value of mortgage servicing rights:

                         

Related to servicing for non-affiliates

    (292,588 )       (292,588 )      

Change in fair value of excess servicing spread payable to PennyMac Mortgage Investment Trust

    19,350         19,350        

    (273,238 )       (273,238 )      

Net servicing fees

    306,059         306,059        

Management fees:

                         

From PennyMac Mortgage Investment Trust

    22,584         22,584        

From Investment Funds

    1,001         1,001        

    23,585         23,585        

Carried Interest

    (1,040 )       (1,040 )      

Net interest expense:

                         

Interest income:

                         

From non-affiliates

    135,141         135,141        

From PennyMac Mortgage Investment Trust

    8,038         8,038        

Interest income

    143,179         143,179        

Interest expense:

                         

To non-affiliates

    127,569         127,569        

To PennyMac Mortgage Investment Trust

    16,951         16,951        

    144,520         144,520        

Net interest expense

    (1,341 )       (1,341 )      

Change in fair value of investments in and dividends received from PennyMac Mortgage Investment Trust

    118         118        

Revaluation of payable to exchanged Private National Mortgage Acceptance Company, LLC unitholders under the Tax Receivable Agreement

    32,940         32,940        

Other

    3,777         3,777        

Total net revenue

    955,463         955,463        

Expenses

                         

Compensation

    358,721         358,721        

Servicing

    117,696         117,696        

Technology

    52,013         52,013        

Occupancy and equipment

    22,615         22,615        

Other

    68,509         68,509        

Total expenses

    619,554         619,554        

Income before provision for income taxes

    335,909         335,909        

Provision for (benefit from) income taxes

    24,387     (39,942 )   (15,555 )   (5 )

Net income

    311,522     39,942     351,464        

Less: Net income attributable to noncontrolling interest

    210,765     (210,765 )       (5 )

Net income attributable to PennyMac Financial Services, Inc.common stockholders

  $ 100,757   $ 250,707   $ 351,464        

Earnings per share

                         

Basic

  $ 4.34         $ 4.59     (6 )

Diluted

  $ 4.03         $ 4.49        

Weighted-average common shares outstanding

                         

Basic

    23,199     53,299     76,498        

Diluted

    24,999     53,299     78,298        

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        The unaudited pro forma consolidated financial statements as of and for the periods ended June 30, 2018 and for the year ended December 31, 2017 include the following:

Notes

(1)
Represents the Distribution.

(2)
Represents adjustments to income taxes payable resulting from the Reorganization.

(3)
Represents reclassification of non-controlling interest to additional paid-in capital reduced by income taxes payable relating to such non-controlling interest as a result of the Contribution as summarized below:
 
  June 30,
2018
 
 
  (in thousands)
 

Reclassification of non-controlling interest, net of par value attributable to common shares issued

  $ 1,332,044  

Increase to income taxes payable attributable to the Contribution net of deferred tax benefit relating to units previously converted

    (305,324 )

  $ 1,026,720  
(4)
Book value per share is calculated by dividing Total stockholders' equity attributable to PennyMac Financial Services, Inc. common stockholders by Shares outstanding as of the applicable date.

(5)
Represents assumption of income attributable to non-controlling interest.

(6)
The pro forma income statement for the year ended December 31, 2017 reflects basic earnings per share ("EPS") of $4.59 per share compared to the historical basic EPS of $4.34 per share. The difference arises from repricing of tax-related balance sheet items of Existing PennyMac's top-level parent company as a result of the reduction in the federal income tax rate under the Tax Cuts and Jobs Act of 2017. Specifically the difference relates to (1) repricing the liability under the Tax Receivable Agreement, and (2) repricing the net deferred tax liability (the "net DTL").

The repricing of the Tax Receivable Agreement liability resulted in income to Existing PennyMac's top-level parent company which is attributable to its operations as opposed to those of PNMAC. As a result, the benefit of this repricing is not attributable to the PNMAC Class A Units that will be exchanged if the Reorganization is completed.

The deferred tax asset ("DTA") resulting from prior exchanges of PNMAC Class A Units is an asset of Existing PennyMac's top-level company. This DTA offsets the gross DTL arising at PNMAC. The Reorganization, if completed, will result in an increase in the gross DTL attributable to the PNMAC Class A Units to be exchanged but will not affect the offsetting DTA. As a result, the net DTL at December 31, 2017 as shown in the pro forma income statement, and the benefit reflected from repricing that net DTL, is proportionally greater than the historical net DTL at December 31, 2017 and the corresponding benefit from repricing the historical net DTL.

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  Year ended
December 31, 2017
 
 
  Difference
from expected
effect on
net income
  Effect on
basic
earnings
per share
 
 
  (in thousands)
   
 

Revaluation of Payable to exchanged Private National Mortgage Acceptance Company, LLC unitholders under the Tax Receivable Agreement

  $ (75,676 ) $ (0.99 )

Repricing of net deferred tax liability

    94,097     1.23  

  $ 18,421   $ 0.24  

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DESCRIPTION OF THE REORGANIZATION PROPOSAL

        This section of the proxy statement/prospectus describes the Reorganization Proposal. Although we believe that the description in this section covers the material terms of the Reorganization Proposal, this summary may not contain all of the information that is important to you. The summary of the material provisions of the Reorganization Agreement provided below is qualified in its entirety by reference to the full text of the Reorganization Agreement, which we have attached as Annex I to this proxy statement/prospectus and which we incorporate by reference into this proxy statement/prospectus. You should carefully read the entire proxy statement/prospectus and the Reorganization Agreement for a more complete understanding of the Reorganization Proposal. Your approval of the Reorganization Proposal will constitute your approval of the Reorganization Agreement and the Reorganization.

Overview

        We are asking you to approve the creation of a new holding company above Existing PennyMac to help simplify its overall corporate structure and financial reporting by (i) eliminating Existing PennyMac's so-called "Up-C" structure and causing all equityholders to hold all of their equity interests in our business at the same top-level parent entity, which will be New PennyMac, and (ii) transitioning to a single class of common stock held by all stockholders, as opposed to the two classes, Class A and Class B, of common stock of Existing PennyMac that are authorized, issued and outstanding today. We believe that one of the effects of this Reorganization will be to increase our current market capitalization at our parent-level entity, which could enable certain investors (those with investment position limits tied to percentages of a company's market capitalization) to own larger positions in our stock than before, and could also make shares of New PennyMac Common Stock eligible to be included in certain stock market indices for which shares of Class A Common Stock of Existing PennyMac currently are not eligible. Such eligibility, in turn, could mean an increased demand for shares of New PennyMac Common Stock, which could assist in our stated goal of seeking to maximize long-term stockholder value.

        The proposal is for holders of Class A Common Stock and Class B Common Stock to approve the Reorganization Agreement by and among (i) Existing PennyMac, (ii) New PennyMac, (iii) Merger Sub, (iv) PNMAC and (v) the Contributors. New PennyMac and Merger Sub are newly formed entities organized by Existing PennyMac for the purpose of participating in the Reorganization.

        As a result of the Reorganization, New PennyMac will replace Existing PennyMac as the publicly held corporation and, through its subsidiaries, will conduct all of the operations currently conducted by Existing PennyMac. Pursuant to the Reorganization Agreement, the Contributors will voluntarily contribute all of their Class A Units of PNMAC in exchange for the issuance by New PennyMac to such Contributors of an aggregate number of shares of New Common Stock equal in number to the Class A Units of PNMAC so contributed. Also, pursuant to the Reorganization Agreement, and simultaneously with the Contribution described above, Merger Sub will merge with and into Existing PennyMac, with Existing PennyMac continuing as the surviving corporation, and each outstanding share of Class A Common Stock will be automatically converted into one share of New Common Stock of New PennyMac and each outstanding share of Class B Common Stock will automatically be cancelled for no consideration.

        Following the completion of the Reorganization, Existing PennyMac will be a wholly-owned subsidiary of New PennyMac, and the Class A Units of PNMAC contributed to New PennyMac in the Contribution, taken together with the Class A Units of PNMAC that will remain owned by Existing PennyMac following the Merger, will constitute one hundred percent (100%) of the issued and outstanding Class A Units of PNMAC, such that following the completion of both the Contribution and the Merger, New PennyMac will hold (directly or indirectly) all of the issued and outstanding Class A Units of PNMAC. Your overall proportionate economic ownership of the entire PNMAC business and

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your voting control percentage in New PennyMac after the Reorganization will be the same as your current overall proportionate economic ownership of the entire PNMAC business and voting control percentage in Existing PennyMac immediately prior to the Reorganization.

The Principal Parties

PennyMac Financial Services, Inc.
3043 Townsgate Road
Westlake Village, California 91361
(818) 224-7442

        PennyMac Financial Services, Inc. ("Existing PennyMac") is headquartered in Westlake Village, California, and is our current top-level parent entity. Existing PennyMac was incorporated in Delaware in December 2012 in connection with our initial public offering. PennyMac Financial Services, Inc. operates and controls all of the business and affairs, and consolidates the financial results, of PNMAC, which is described further below. Following the Reorganization, Existing PennyMac will become a wholly-owned subsidiary of New PennyMac, shares of Class A Common Stock will be automatically converted, on a one-for-one basis, into shares of New Common Stock of New PennyMac and shares of Class B Common Stock will be automatically cancelled for no consideration.

New PennyMac Financial Services, Inc.
3043 Townsgate Road
Westlake Village, California 91361
(818) 224-7442

        New PennyMac, a Delaware corporation, is a newly formed, direct, wholly-owned subsidiary of Existing PennyMac. Existing PennyMac formed New PennyMac for the purpose of participating in the transactions contemplated by the Reorganization Agreement. Prior to the Reorganization, New PennyMac will have no assets or operations other than those incident to its formation. If we complete the Reorganization, New PennyMac will replace Existing PennyMac as the publicly held corporation and, through its subsidiaries, will conduct all of the operations currently conducted by Existing PennyMac.

New PennyMac Merger Sub, LLC
3043 Townsgate Road
Westlake Village, California 91361
(818) 224-7442

        Merger Sub, a Delaware limited liability company, is a newly formed, direct, wholly-owned subsidiary of New PennyMac. Existing PennyMac caused Merger Sub to be formed for the purpose of participating in the transactions contemplated by the Reorganization Agreement. Prior to the Reorganization, Merger Sub will have no assets or operations other than those incident to its formation.

Private National Mortgage Acceptance Company, LLC
3043 Townsgate Road
Westlake Village, California 91361
(818) 224-7442

        PNMAC, a Delaware limited liability company, was founded in 2008 by members of our executive leadership team and two strategic partners, BlackRock and Highfields. PNMAC is a specialty financial services firm with a comprehensive mortgage platform and integrated business primarily focused on the production and servicing of U.S. residential mortgage loans (activities which we refer to as mortgage banking) and the management of investments related to the U.S. mortgage market. We believe that our operating capabilities, specialized expertise, access to long-term investment capital and our

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management's experience across all aspects of the mortgage business will allow us to profitably grow these activities and capitalize on other related opportunities as they arise in the future.

The Contributors

        The Contributors are comprised of 45 separate entities and individuals, calculated as of the Record Date, and represent all of the holders of Class A Units of PNMAC other than existing PennyMac. The Contributors include, among others:

Reasons for the Reorganization Proposal

        The following summary describes (i) the history and background of our existing corporate structure and (ii) the reasons for the Reorganization Proposal.

        Existing PennyMac is currently structured in what is known as an "Up-C" structure, which was implemented in May 2013 in connection with Existing PennyMac's initial public offering of shares of its Class A Common Stock. Prior to the initial public offering, PNMAC was the top parent-level entity of our corporate structure, and the owners of PNMAC at that time (the "Existing Owners") held various classes of membership units and other equity interests in PNMAC, representing all of the issued and

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outstanding equity interests in PNMAC at that time. In connection with the initial public offering, a series of transactions occurred as follows:

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        A visual representation of our corporate structure immediately following the initial public offering of Existing PennyMac in May 2013 is as follows:

GRAPHIC

        The existing corporate structure was put in place at the time of the initial public offering of Existing PennyMac for a number of reasons, including among others, the following:

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        As a result of the Reorganization, the following changes to our corporate structure will occur:

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        A visual representation of our new proposed corporate structure immediately following the Reorganization is as follows:

GRAPHIC

        Although the existing corporate structure has provided the benefits described above, the Board has subsequently determined that the new proposed corporate structure is advisable for the following reasons:

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Required Vote

        Approval of the Reorganization Proposal requires the affirmative vote of a majority of the voting power of all the issued and outstanding shares of common stock of Existing PennyMac, which includes both shares of Class A Common Stock and Class B Common Stock voting together as a single class. Abstentions and broker non-votes, if any, will have the same effect as votes "AGAINST" the Reorganization Proposal.

        If the holders of a majority of the voting power of the Class A and Class B Common Stock, voting together as a single class, do not vote in favor of the Reorganization Proposal, we would not likely continue to pursue the Reorganization as currently structured and proposed, Existing PennyMac would remain our top-level parent and publicly-listed entity and our so-called "Up-C" structure would remain in place. The closing of the Reorganization is subject to a number of other conditions in addition to the receipt of stockholder approval, and there can be no assurances that all of such conditions will be satisfied, even if the Class A and Class B common stockholders approve the Reorganization Proposal. Our Board can terminate the Reorganization Agreement at any time prior to the completion of the Reorganization if it determines that, for any reason, the completion of the Reorganization would be inadvisable or not in the best interests of Existing PennyMac or its stockholders.

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        However, the approval of the Reorganization Proposal or termination of the Reorganization Agreement will not affect the payment of the Distribution which already occured on August 30, 2018 to holders of record of Class A Common Stock as of August 13, 2018. The Distribution was separate from, and independent of, the Reorganization Proposal and Reorganization Agreement.

Background of the Reorganization

        Our Board and senior management regularly review and discuss Existing PennyMac's performance, business strategy and competitive position in our industry. In addition, our Board and senior management regularly review and evaluate various strategic alternatives, including acquisitions, dispositions and other strategic transactions, as part of ongoing efforts to strengthen our overall business and enhance stockholder value. As part of these ongoing efforts, and in particular after passage of the Act, our senior management in early 2018 began exploring alternatives to our existing corporate structure.

        On February 27, 2018, at a regularly scheduled meeting of the Board, Stanford L. Kurland, our Executive Chairman, introduced the idea of simplifying our overall corporate structure with a view to making our structure easier to understand for investors and, as a result, increasing long-term stockholder value. The Board discussed the current structure of Existing PennyMac and requested that management present potential ways to reorganize the Company and authorized management to discuss potential reorganization options with the holders of our Class B Common Stock.

        On April 30, 2018, management held a conference call with Highfields and BlackRock, our two largest stockholders, to discuss simplifying our corporate structure, increasing our market capitalization and the potential advantages and disadvantages of a corporate reorganization.

        On May 18, 2018, management held a conference call with BlackRock and its tax counsel regarding certain potential tax advantages and disadvantages to restructuring Existing PennyMac.

        On May 30, 2018, at a regularly scheduled meeting of the Board, management made a presentation to the Board regarding a proposed restructuring of the Company through a holding company reorganization. The reorganization would involve Existing PennyMac merging with an indirect wholly-owned subsidiary and, as part of the merger, Existing PennyMac Class A common stockholders would receive New PennyMac common stock and Existing PennyMac Class B common stock would be cancelled to eliminate the Company's current two-class structure. After the reorganization, New PennyMac would therefore have only one class of common stock held by all investors. At the Board meeting, management also again described certain of the potential advantages of the transaction, which primarily consisted of simplifying the Company's overall corporate and capital structure in light of the lower corporate tax rate for corporations, increasing the Company's total market capitalization and reducing the administrative burdens of maintaining the Company's current capital structure, as well as the potential disadvantages of the transaction, which primarily consisted of the time and expense associated with effectuating the reorganization.

        On May 31, 2018, at a regularly scheduled meeting, the Board again discussed the potential advantages and disadvantages of restructuring Existing PennyMac, and formed a special committee of the Board and appointed James K. Hunt (Chair), Patrick Kinsella, Theodore W. Tozer and Emily Youssouf, as members (the "Special Committee"), all of whom are independent members of the Board. The Board charged the Special Committee with considering, reviewing, evaluating and negotiating the terms and conditions of any such proposed reorganization and ultimately making a recommendation with respect to such reorganization to the Board as to whether the proposed reorganization should be pursued and whether it was in the best interests of the holders of the Company's Class A Common Stock not affiliated with the Company or the holders of the Company's Class B Common Stock. In the process of so forming and charging the Special Committee, the Board resolved that it would not approve any potential reorganization without a prior favorable recommendation from the Special Committee. The Board also resolved that the Special Committee would have full power and authority

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to select and retain, at the expense of the Company, such experts, consultants or advisors as the Special Committee deemed appropriate in order to assist it in discharging its responsibilities.

        On June 2, 2018, the Special Committee held a conference call with management and Existing PennyMac's outside counsel, Goodwin Procter LLP ("Goodwin") to discuss preliminary matters, including the process the Special Committee should follow and the role it should play in connection with the potential reorganization transaction.

        On June 4, 2018, the Special Committee held a meeting to discuss the reorganization, its advantages and disadvantages and other issues, and drafted a list of questions and requests for information from management. The Special Committee's questions primarily concerned the areas of (i) the mechanics of the Exchange Agreement and the Tax Receivable Agreement and the tax and accounting considerations associated with the reorganization, (ii) the effects of the reorganization on outstanding credit facilities and other material agreements of Existing PennyMac, (iii) regulatory matters, (iv) corporate governance matters and (v) other alternative transaction structures. The Special Committee's requests for information primarily concerned the areas of pro forma historical financial statements giving effect to the proposed reorganization, as well as certain prospective financial information.

        On June 11, 2018, management presented the Special Committee with written responses to its list of questions.

        On June 12, 2018, the Special Committee held a conference call with management and Goodwin to discuss the written responses to its list of questions. The primary area of discussion concerned the difference in book value per share that would occur after completing the reorganization and the underlying reasons for the difference. Management explained that the difference would result from certain assets that were currently reflected on the balance sheet of Existing PennyMac (at the parent entity level), which after the reorganization and calculated on a per share basis, would now be shared across a much larger number of outstanding shares of capital stock following the reorganization. The assets at the parent entity level included, among others, a net benefit under the Company's existing Tax Receivable Agreement, certain other tax assets, certain deferred tax liabilities, certain tax refunds receivable for prior year overpayments, and cash and cash equivalents that had resulted from historical tax distributions from PNMAC to the Company that were in excess of the actual tax liability of the Company ("Excess Cash"). Management further explained that certain of those assets were determined to have limited economic value as they were not likely to be realized for an extended period.

        On June 15, 2018, the Special Committee met to review and evaluate the reorganization transaction. The discussion at this meeting centered around whether a special dividend to the Class A common stockholders of Existing PennyMac would help address the difference in book value per share that would result from the reorganization. The Special Committee believed the special dividend generally should address the difference in book value per share attributable to the parent entity level (i) Excess Cash and (ii) the tax refund receivable, the value of which is expected to be realized in the near term, in each case, as reported on the Company's balance sheet as of June 30, 2018. The Special Committee also drafted a list of questions for Goodwin which primarily concerned the mechanics of a stockholder vote on the reorganization. Further, the Special Committee held a conference call with BlackRock regarding forecasts and estimates that were provided to the Special Committee by management and sought BlackRock's views on the benefits of the reorganization transaction versus the benefits under the Tax Receivable Agreement. The forecasts and estimates prepared by management primarily showed that the Company would not generate taxable income in the near-term and minimal taxable income in the long-term. As a result, the forecasts and estimates helped advise the Special Committee that the net present value of potential benefits to holders of Class A Common Stock resulting from future exchanges of Class A Units of PNMAC would likely be nominal.

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        On June 20, 2018, the Special Committee met with management, including representatives of the Company's accounting and tax department, and Goodwin to discuss the responses to its questions, certain financial information and presentation in SEC filings as part of the reorganization and certain tax issues, including the tax-free structure of the transaction and the key terms and mechanics that were likely to result in such tax treatment.

        On June 26, 2018, Mr. Hunt requested management provide more information concerning the special dividend and its relation to the difference in book value per share.

        On June 29, 2018, the Special Committee met with management and Goodwin and discussed the mechanics of a proposed contribution agreement and plan of merger and a registration statement on Form S-4, as well as the possibility of an increase in the conversion ratio for Class A common stockholders in any proposed merger as an alternative to a special dividend. The Special Committee requested a side-by-side analysis and comparison of a special dividend versus an increase in conversion ratio for Class A common stockholders, in each case to address the cash and tax refunds receivable on Existing PennyMac's balance sheet and partially resulting in the difference in book value per share.

        On July 13, 2018, the Special Committee met with management and Goodwin and reviewed a side-by-side analysis and comparison of a special dividend versus an increase in conversion ratio for Class A common stockholders that had been prepared by management. The Special Committee discussed differences in the two approaches with respect to, among other things, (i) the tax treatment of both approaches from the standpoint of a recipient Class A common stockholder, (ii) the impact of both approaches on outstanding equity incentive awards, (iii) financial statement impacts of both approaches, and (iv) the impact of both approaches on the availability of appraisal rights for holders of Class A common stock in connection with the reorganization. After discussion both with management and Goodwin present, and also in executive session, the Committee determined to recommend that the Company proceed with a special cash dividend rather than an increase in the conversion ratio for Class A common stockholders. The Special Committee also made requests of management and Goodwin to see final drafts of the relevant definitive transaction documents with respect to the reorganization so that the Special Committee could review and make a formal recommendation to the Board.

        On July 24, 2018, the Special Committee acted by unanimous written consent to recommend that the Board (i) authorize and approve the merger and other transactions contemplated by the proposed contribution agreement and plan of merger, (ii) authorize, adopt, approve and declare advisable the proposed contribution agreement and plan of merger, and (iii) recommend that stockholders of the Company approve and adopt the proposed contribution agreement and plan of merger and the transactions contemplated thereby, as well as approving for purposes of Section 203 of the DGCL the entry of the holders of Class A Units of PNMAC into the contribution agreement and plan of merger.

        On July 24, 2018, the Board held a meeting to receive the recommendation of the Special Committee with respect to the proposed reorganization transaction, and, if favorable, to discuss and consider the proposed reorganization transaction itself. After receipt of the Special Committee's recommendation and after further discussion, the Board determined to (i) authorize and approve the merger and other transactions contemplated by the proposed contribution agreement and plan of merger, (ii) authorize, adopt, approve and declare advisable the proposed contribution agreement and plan of merger, and (iii) recommend that stockholders of the Company approve and adopt the proposed contribution agreement and plan of merger and the transactions contemplated thereby, as well as approving for purposes of Section 203 of the DGCL the entry of the holders of Class A Units of PNMAC into the contribution agreement and plan of merger. The Board also directed the officers of the Company to attempt to cause each of the proposed Contributors to execute and become party to the proposed contribution agreement and plan of merger.

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        On August 2, 2018, the Board, including each member of the Special Committee, received a revised proposed contribution agreement and plan of merger that reflected changes requested by certain Contributors, and the Board unanimously re-authorized, adopted and approved the revised proposed Contribution agreement and plan of merger.

        On August 2, 2018, the Board declared the Distribution, a special, one-time cash dividend of $0.40 per share of Class A Common Stock to holders of record of Class A Common Stock as of August 13, 2018, and that was distributed on or about August 30, 2018.

        Later on August 2, 2018, the parties entered into the Reorganization Agreement and publicly announced the proposed reorganization.

Recommendation of the Special Committee

        After careful consideration, the Special Committee concluded that the Reorganization is advisable and in the best interests of Existing PennyMac and its stockholders (including specifically the holders of the Company's Class A Common Stock not affiliated with the Company or the holders of the Company's Class B Common Stock), approved the transactions contemplated by the proposed contribution agreement and plan of merger, and recommended that the Reorganization Proposal be submitted for stockholder approval.

Recommendation of the Board

        After careful consideration, the Board concluded that the Reorganization is advisable and in the best interests of Existing PennyMac and its stockholders, approved the Reorganization Agreement, and directed that the Reorganization Proposal be submitted for stockholder approval. The Board recommends that stockholders vote FOR the approval of the Reorganization Proposal.

Reorganization Procedure

        Existing PennyMac currently owns all of the issued and outstanding common stock of New PennyMac and New PennyMac currently owns all of the issued and outstanding membership interests of Merger Sub. Pursuant to the Reorganization Agreement, the Contributors will voluntarily contribute all of their Class A Units of PNMAC in exchange for the issuance by New PennyMac to such Contributors of an aggregate number of shares of New Common Stock equal in number to the Class A Units of PNMAC so contributed. Further, pursuant to the Reorganization Agreement, the Restricted Transferors agreed to certain transfer restrictions. Prior to August 14, 2018 (which was the date following the record date for the Distribution), these transfer restrictions prohibited exchanges of Class A Units of PNMAC or shares of Class B Common Stock for shares of Class A Common Stock of Existing PennyMac or the disposition of any Class A Units of PNMAC or shares of Class B Common Stock. However, the transfer restrictions allowed exchanges, and any related sales of shares of Class A Common Stock, pursuant to 10b5-1 trading plans that were established prior to the Reorganization Agreement. Also, all Contributors waived their right to receive the Distribution with respect to shares of Class A Common Stock that were issued to them in exchange for Class A Units of PNMAC after the date of the Reorganization Agreement.

        Following the approval of the Reorganization Agreement by Existing PennyMac stockholders of Class A Common Stock and Class B Common Stock, voting together as a single class, and the satisfaction or waiver of the other conditions to the Reorganization specified in the Reorganization Agreement (which are described below), and simultaneous with the Contribution described herein, Merger Sub will merge with and into Existing PennyMac, with Existing PennyMac continuing as the

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surviving corporation, and the separate corporate existence of Merger Sub will cease. As a result of the Reorganization:

Treatment of Common Stock in the Reorganization

        Each outstanding share of Class A Common Stock will automatically be converted into one share of New Common Stock of New PennyMac. Each outstanding share of Class B Common Stock will automatically be cancelled for no consideration. Your overall proportionate economic ownership of the entire PNMAC business and your voting control percentage in New PennyMac after the Reorganization will be the same as your current overall proportionate economic ownership of the entire PNMAC business and voting control percentage in Existing PennyMac immediately prior to the Reorganization.

        The total number of shares of New Common Stock of New PennyMac to be issued in the Reorganization will not be known until immediately prior to completing the Reorganization, but is expected to be approximately up to 79.1 million shares of New Common Stock of New PennyMac based on, among other factors, the shares of Existing PennyMac Class A Common Stock currently outstanding and the Class A Units of PNMAC that will be exchanged in the Reorganization and the shares of Existing PennyMac Class A Common Stock that may be issuable pursuant to outstanding equity-based incentive awards of Existing PennyMac prior to the completion of the Reorganization.

Treatment of Existing PennyMac Equity Incentive Plans and Outstanding Awards in connection with the Reorganization

        At the time of the Reorganization, New PennyMac will assume each Existing PennyMac Plan, including all performance share awards, restricted share awards, restricted stock units and other incentive awards covering shares of Existing PennyMac Class A Common Stock, whether vested or not vested, that are then outstanding under each Existing PennyMac Plan. The same number of shares reserved under each Existing PennyMac Plan will be reserved by New PennyMac, and the terms and conditions that are in effect immediately prior to the Reorganization under each outstanding incentive award assumed by New PennyMac will continue in full force and effect after the Reorganization, except that the shares of Class A Common Stock reserved under the plans and issuable under each such award will be replaced by shares of New Common Stock of New PennyMac. Incentive awards granted outside of the U.S. will generally be treated as described above, except to the extent required by local law.

        No adjustment was made to any outstanding equity incentive awards (whether vested or unvested) in connection with the payment of the Distribution.

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Issuances of New PennyMac Common Stock Under the Existing PennyMac Plans

        The approval of the Reorganization Proposal will also constitute approval of the assumption by New PennyMac of each of the Existing PennyMac Plans (including the existing share reserves under such plans), and approval that all the outstanding awards under such plans and all future issuances of shares of New Common Stock of New PennyMac will be made in lieu of shares of Existing PennyMac Class A Common Stock under each of the Existing PennyMac Plans, as each will be amended in connection with the Reorganization without further stockholder action.

Corporate Name Following the Reorganization

        Effective as of the time of the completion of the Reorganization, Existing PennyMac and New PennyMac will both be renamed. New PennyMac, which will be the public company following the Reorganization, will be renamed "PennyMac Financial Services, Inc." (in order to continue the use of the current public company name for our parent-level public registrant) and Existing PennyMac will be renamed "PNMAC Holdings, Inc." In order to avoid confusion regarding this post-closing name change, we will continue to refer in this proxy statement/prospectus to "New PennyMac" and "New PennyMac Financial Services, Inc." rather than referencing the post-closing name of New PennyMac.

Conditions to Completion of the Reorganization

        We will complete the Reorganization only if each of the following conditions is satisfied or waived:

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Effectiveness of the Reorganization

        The Reorganization will become effective on the date we file the certificate of merger with the Secretary of State of the State of Delaware or a later date that we specify therein.

Termination of Reorganization Agreement

        The Reorganization Agreement may be terminated at any time prior to the completion of the Reorganization (even after approval by our stockholders) by (i) action of the Board if it determines that, for any reason, the completion of the transactions provided for therein would be inadvisable or not in the best interests of our Company or our stockholders or (ii) written notice between Existing PennyMac, New PennyMac, Merger Sub and PNMAC on the one hand and certain Contributors holding a majority of the Class A Units then outstanding (including BlackRock and Highfields) on the other hand—if the Reorganization has not occurred nine months after the date of the Reorganization Agreement.

Amendment of Reorganization Agreement

        The Reorganization Agreement may, to the extent permitted by the DGCL, be supplemented, amended or modified at any time prior to the completion of the Reorganization (even after approval by our stockholders), by the mutual consent of Existing PennyMac, New PennyMac, Merger Sub, PNMAC and Contributors holding at least a majority of the PNMAC Class A Units then outstanding provided that (i) any amendment that would alter the rights or obligations of BlackRock or Highfields materially and adversely will require their consent and (ii) any amendment that would alter the rights or obligations of any Contributor in a manner that is materially and adversely different than the treatment of other Contributors will require the consent of the party so affected.

Certain Material U.S. Federal Income Tax Consequences

        The following is a discussion of certain material U.S. federal income tax consequences of the Reorganization to U.S. persons who hold (1) Existing PennyMac Class A Common Stock; or (2) Existing PennyMac Class B Common Stock and PNMAC Class A Units (all of such holders, the "Equity Owners"). For purposes of this discussion, we use the term "U.S. person" to mean a beneficial owner that is:

        Holders who are not U.S. persons may have different tax consequences than those described below and are urged to consult their own tax advisors regarding the tax treatment to them under U.S. and non-U.S. laws. This discussion applies only to Equity Owners who hold Existing PennyMac Class A Common Stock, Existing PennyMac Class B Common Stock, and/or PNMAC Class A Units as a capital asset within the meaning of Section 1221 of the Code (generally, for investment purposes). The discussion assumes that the Reorganization will be completed in accordance with the Reorganization Agreement and as further described in this proxy statement/prospectus. This discussion is not a complete description of all of the consequences of the Reorganization to a particular holder and may

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not address U.S. federal income tax consequences applicable to Equity Owners subject to special treatment under U.S. federal income tax law, including, without limitation:

        In addition, tax consequences arising under the unearned income Medicare contribution tax pursuant to the Health Care and Education Reconciliation Act of 2010, and under state, local and non-U.S. laws, and the alternative minimum tax or under federal laws other than federal income tax laws, are not addressed in this proxy statement/prospectus.

        If a partnership, or other entity or arrangement treated as a partnership for U.S. federal income tax purposes is an Equity Owner, the tax treatment of a partner in the partnership will depend upon the status of that partner and the activities of the partnership. A partner in a partnership that is an Equity Owner is strongly urged to consult with its own tax advisor regarding the tax consequences of the Reorganization.

        This discussion is based, and the tax opinion referred to in the following paragraphs will be based, upon the provisions of the Code, applicable Treasury regulations, published positions of the Internal Revenue Service, which we refer to as the IRS, judicial decisions and other applicable authorities, as in effect on the date of the registration statement on Form S-4 of which this proxy statement/prospectus is a part or the date of the tax opinion, as the case may be. There can be no assurance that future legislative, administrative or judicial changes or interpretations, which could apply retroactively, will not affect the accuracy of this discussion or the statements or conclusions set forth in the tax opinion referred to in the following paragraphs. No rulings have been or will be sought from the IRS concerning the tax consequences of the Reorganization, and the tax opinion of counsel to be received in connection with the Reorganization will not be binding on the IRS or any court. There can be no assurance that the IRS will not take a contrary position regarding the tax consequences of the Reorganization described in this discussion or the tax opinion of counsel, or that any such contrary position would not be sustained.

        Tax matters are complicated, and the tax consequences of the Reorganization to Equity Owners will depend on each holder's particular tax situation.

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Equity Owners are strongly urged to consult with their own tax advisors regarding the tax consequences of the Reorganization, including the effects of U.S. federal, state and local, non-U.S. and other tax laws.

U.S. Federal Income Tax Consequences to the Equity Owners of the Reorganization

        The Reorganization is conditioned on, among other things, Existing PennyMac's receipt of a written opinion from Goodwin Procter LLP, tax counsel to Existing PennyMac, to the effect that for U.S. federal income tax purposes, the Reorganization should qualify as a "reorganization" within the meaning of Section 368(a) of the Code and/or a transfer described in Section 351(a) of the Code.

        Existing PennyMac does not intend to waive this opinion condition to completion of the Reorganization. If Existing PennyMac waives this opinion condition after the registration statement on Form S-4 of which this proxy statement/prospectus forms a part is declared effective by the SEC, and if the U.S. federal income tax consequences of the Reorganization have materially changed, Existing PennyMac will recirculate this proxy statement/prospectus and resolicit the votes of Existing PennyMac stockholders.

        Subject to qualifications and limitations set forth herein, Goodwin Procter LLP, counsel to Existing PennyMac, is of the opinion that for U.S. federal income tax purposes the Reorganization should qualify as a "reorganization" within the meaning of Section 368(a) of the Code and/or a transfer described in Section 351(a) of the Code. Accordingly, for U.S. federal income tax purposes:

        The proper U.S. federal income tax treatment of the Distribution is not entirely clear under current law, and counsel is not rendering an opinion regarding such treatment. The Company intends that the Distribution be treated as a distribution under Section 301 of the Code. Although the Distribution was not contingent on the Reorganization and occurred regardless of whether or not the Reorganization is completed, it is possible that the IRS could treat this Distribution as part of the Merger Consideration to the Existing PennyMac holders of Class A Common Stock who receive the Distribution. Under this alternative characterization, an Existing PennyMac holder of Class A Common Stock who received such a Distribution could be treated as recognizing gain in the merger, equal to the lesser of: (i) the sum of the amount of cash received in such Distribution; and (ii) the amount, if any,

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by which the sum of the cash and the fair market value of the New PennyMac Common Stock received by the Existing PennyMac stockholder in the Reorganization exceeds such stockholder's tax basis in the Existing PennyMac Class A Common Stock surrendered in exchange therefor. Existing PennyMac holders of Class A Common Stock who received the Distribution should consult with their tax advisor regarding the tax treatment of the Distribution.

        The opinion of counsel does not address any state, local or non-U.S. tax consequences of the Reorganization. It is based on certain assumptions and representations made by certain holders of PNMAC Class A Units, Existing PennyMac, New PennyMac, Merger Sub and PNMAC, as well as certain covenants by those parties. The opinion cannot be relied upon if any of the assumptions, representations or covenants is incorrect, incomplete or inaccurate or is violated in any material respect. In addition, the opinion is based on current law and cannot be relied upon if current law changes with retroactive effect. The opinion of counsel is not binding upon the IRS or courts, and there is no assurance that the IRS or a court will not take a contrary position. Existing PennyMac does not intend to request a ruling from the IRS regarding any aspects of the U.S. federal income tax consequences of the Reorganization.

U.S. Federal Income Tax Consequences of Holding New PennyMac Common Stock Generally

        If distributions are made to a U.S. holder with respect to the New PennyMac Common Stock, such distributions will generally be treated as dividends to the extent of New PennyMac's current or accumulated earnings and profits as determined under the Code. Any portion of a distribution that exceeds such earnings and profits will first be applied to reduce a U.S. holder's tax basis in the New PennyMac Common Stock on a share-by-share basis, and the excess will be treated as gain from the disposition of the New PennyMac Common Stock.

        Upon any sale, exchange, redemption (under certain circumstances) or other disposition of the New PennyMac Common Stock, a U.S. holder will recognize capital gain or loss equal to the difference between the amount realized by the U.S. holder and the U.S. holder's adjusted tax basis in the New PennyMac Common Stock. Such capital gain or loss will be long-term capital gain or loss if the U.S. holder's holding period for the New PennyMac Common Stock is longer than one year. A U.S. holder should consult its own tax advisors with respect to applicable tax rates and netting rules for capital gains and losses. Certain limitations exist on the deduction of capital losses by both corporate and non-corporate taxpayers.

Backup Withholding for U.S. Holders of New PennyMac Common Stock

        Holders of New PennyMac Common Stock may be subject to backup withholding at the applicable rate (currently 24%) if they fail to provide a valid taxpayer identification number and comply with certain certification procedures or otherwise establish an exemption. Backup withholding is not an additional tax. Rather, any amounts withheld may be credited against such holder's U.S. federal income tax liability, and if backup withholding results in an overpayment of taxes, a refund may be obtained, provided that the required information is timely furnished to the IRS.

The discussion of the U.S. federal income tax consequences set forth above is not intended to be a complete analysis or description of all potential U.S. federal income tax consequences of the Reorganization. The discussion set forth above does not address tax consequences that may vary with, or are dependent on, individual circumstances. In addition, the discussion set forth above does not address any non-income tax or any non-U.S., state or local tax consequences of the Reorganization and does not address the tax consequences of any transaction other than the Reorganization.

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Anticipated Accounting Treatment

        For accounting purposes, the Reorganization will be treated as a transaction between entities under common control of an acquisition of noncontrolling interest. Accordingly, the consolidated financial position and results of operations of Existing PennyMac will be included in the consolidated financial statements of New PennyMac on the same basis as currently presented except for the acquisition of noncontrolling interest that will be accounted for as a capital transaction with no resulting gain or loss.

Authorized Capital Stock

        Existing PennyMac's certificate of incorporation currently authorizes the issuance of 200,001,000 shares of common stock, par value $0.0001 per share and 10,000,000 shares of preferred stock, par value $0.0001 per share. New PennyMac's Certificate, which will govern the rights of stockholders of New PennyMac after the Reorganization, authorizes the issuance of 200,000,000 shares of common stock, par value $0.0001 per share and 10,000,000 shares of preferred stock, par value $0.0001 per share. Upon completion of the Reorganization, the number of shares of New Common Stock of New PennyMac that will be outstanding will be equal to the sum of: (i) the number of shares of Class A Common Stock of Existing PennyMac outstanding immediately prior to the Reorganization and (ii) the number of Class A Units of PNMAC (other than those Class A Units held by Existing PennyMac) outstanding immediately prior to the Reorganization. There will be no shares of New PennyMac preferred stock outstanding.

Security Ownership of Directors and Executive Officers

        On September 7, 2018, the Record Date for the Special Meeting, directors, executive officers and their affiliates beneficially owned shares representing approximately 64.0% of the voting power of all of the issued and outstanding shares of common stock of Existing PennyMac, which includes the Class A Common Stock and Class B Common Stock voting together as a single class. The affirmative vote of a majority of the voting power of all of the issued and outstanding shares of Class A Common Stock and Class B Common Stock, voting together as a single-class, of Existing PennyMac is required to approve the Reorganization Proposal.

Regulatory Requirements in Connection With the Reorganization

        The Reorganization is conditioned on, among other things, (i) the SEC declaring effective the registration statement of which this proxy statement/prospectus forms a part and (ii) receipt of approval for listing on the NYSE of shares of New Common Stock of New PennyMac to be issued in the Reorganization. No other material federal or state regulatory requirements must be complied with or material approvals obtained in connection with the Reorganization.

Markets and Market Prices

        New Common Stock of New PennyMac is not currently traded on any stock exchange. The completion of the Reorganization is conditioned on the approval for listing of the shares of New Common Stock of New PennyMac issuable in the Reorganization (and any other shares to be reserved for issuance in connection with the Reorganization) on the NYSE. We intend to apply to have the shares of New Common Stock of New PennyMac to be received in the Merger to be listed on the NYSE under Existing PennyMac's current trading symbol, "PFSI," on or before the effective date of the Merger. On August 1, 2018, the last trading day before the announcement of the Reorganization Proposal, the closing price per share of Class A Common Stock of Existing PennyMac was $19.15.

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De-listing of Existing PennyMac Common Stock

        Following the Reorganization, Existing PennyMac's Class A Common Stock will no longer be listed on the NYSE and will no longer be registered under the Exchange Act.

Board of Directors and Executive Officers of New PennyMac Following the Reorganization

        We expect that the directors and executive officers of New PennyMac following the Reorganization will be the same as those of Existing PennyMac immediately prior to the Reorganization.

Interests of Certain Directors and Executive Officers in the Reorganization

        The Contributors are comprised of 45 separate entities and individuals, calculated as of the Record Date, and represent all of the holders of Class A Units of PNMAC other than existing PennyMac. The Contributors include, among others, entities affiliated with BlackRock and Highfields (our two largest stockholders as of the Record Date), as well as:

        Each of the Contributors has agreed in the Reorganization Agreement to voluntarily contribute all of their Class A Units of PNMAC, in exchange for the issuance by New PennyMac to such Contributors of an aggregate number of shares of New Common Stock equal to the Class A Units of PNMAC so contributed. Other than the receipt of the Contribution Shares, the Contributors will receive no additional consideration or other compensation of any kind in connection with the Contribution, and each of the Contributors waived its right to receive any portion of the Distribution.

        Each of the Contributors is also currently a party to (i) the Tax Receivable Agreement, (ii) the Exchange Agreement, which will be terminated in connection with the Reorganization and (iii) the Registration Rights Agreement, which will be amended and restated in connection with the Reorganization. For more information, please see "Certain Transactions with Related Parties."

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        In addition, in connection with the Reorganization, Existing PennyMac will assign to New PennyMac, and New PennyMac will assume from Existing PennyMac and agree to perform all of Existing PennyMac's obligations under, all existing indemnification agreements with each of the members of the Board of Directors and certain officers of Existing PennyMac, and all existing employment agreements and offer letters with each of the officers of Existing PennyMac. The terms of the indemnification agreements, employment agreements and offer letters will not be amended or modified in any way in connection with the Reorganization, other than as may be necessary to reflect the assignment of the rights and obligations thereunder from Existing PennyMac to New PennyMac.

        BlackRock and Highfields are each also party to certain stockholder agreements with Existing PennyMac, and such stockholder agreements will be amended and restated in order to provide, among other things, for the assumption of Existing PennyMac's obligations thereunder by New PennyMac, as well as the elimination of certain provisions relating to Existing PennyMac's "Up-C" structure. Mr. Weidman is, and Mr. Botein formerly was, affiliated with BlackRock; and Mr. Mazzella and Mr. Nanji were formerly affiliated with Highfields. For more information, please see "Certain Transactions with Related Parties."

        No named executive officer of Existing PennyMac is entitled to any payments or benefits in connection with the Reorganization, including, without limitation, any payments or benefits that otherwise would be reportable pursuant to Item 402(t) of Regulation S-K. Accordingly, because there are no amounts that would be subject to approval pursuant to such a resolution, we have not included a non-binding, advisory resolution commonly known as a "say on golden parachute" resolution in this proxy statement/prospectus.

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DESCRIPTION OF THE ADJOURNMENT PROPOSAL

General

        If there are not sufficient votes at the time of the Special Meeting to approve the Reorganization Proposal, the Board may propose to adjourn the Special Meeting to a later date or dates in order to permit the solicitation of additional proxies. Under the provisions of Existing PennyMac's bylaws, no notice of adjournment need be given to you if the date, time and place of the adjourned meeting are announced, unless the adjournment is for more than 30 days or, after the adjournment, a new record date is fixed for the adjourned meeting.

        In order to permit proxies that have been received by Existing PennyMac at the time of the Special Meeting to be voted for an adjournment, if necessary or appropriate, Existing PennyMac has submitted the Adjournment Proposal to you as a separate matter for your consideration.

        In the Adjournment Proposal, Existing PennyMac is asking you to authorize the holder of any proxy solicited by the Board to vote in favor of adjourning the Special Meeting and any later adjournments. If Existing PennyMac's stockholders approve the Adjournment Proposal, Existing PennyMac could adjourn the Special Meeting, and any adjourned session of the Special Meeting, to use the additional time to solicit additional proxies in favor of the Reorganization Proposal, including the solicitation of proxies from stockholders that have previously voted against the Reorganization Proposal. As a result, even if proxies representing a sufficient number of votes against the Reorganization Proposal have been received, Existing PennyMac could adjourn the Special Meeting without a vote on the Reorganization Proposal and seek to convince the holders of those shares of common stock to change their votes to votes in favor of the Reorganization Proposal.

        The Board believes that if the number of shares of Class A Common Stock and shares of Class B Common Stock present or represented at the Special Meeting and voting in favor of the Reorganization Proposal is insufficient to approve the Reorganization Proposal, it is in the best interests of the stockholders to enable the Board, for a limited period of time, to continue to seek to obtain a sufficient number of additional votes to approve the Reorganization Proposal.

Required Vote

        If a quorum is present, the affirmative vote of a majority of the votes cast is required to approve the Adjournment Proposal. Abstentions and broker non-votes, if any, will be treated as present for the purpose of determining a quorum. If a quorum is present, abstentions and broker non-votes will have no effect on the approval of the Adjournment Proposal. If no quorum is present, the affirmative vote of a majority of the voting power of the shares present is required to approve the Adjournment Proposal. If no quorum is present, abstentions will have the same effect as votes "AGAINST," but broker non-votes, if any, will have no effect on, the approval of the Adjournment Proposal. Under Existing PennyMac's bylaws, the chairman of the Special Meeting also has the authority to adjourn the Special Meeting (whether or not a quorum is present).

The Board of Directors recommends that stockholders vote FOR the approval of the Adjournment Proposal.

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DESCRIPTION OF NEW PENNYMAC CAPITAL STOCK

        New PennyMac is incorporated in the State of Delaware. The rights of stockholders of New PennyMac will generally be governed by Delaware law and New PennyMac's Certificate and New PennyMac's Bylaws, which will be adopted by New PennyMac immediately prior to, or upon completion of the Merger, in substantially the forms attached as Annex II and Annex III, respectively, to this proxy statement/prospectus. As described under the caption "Comparative Rights of Holders of New PennyMac Common Stock and Existing PennyMac Common Stock" beginning on page 67, the rights of stockholders of New PennyMac under New PennyMac's Organizational Documents are substantially similar to the rights of Existing PennyMac Class A common stockholders under Existing PennyMac's Organizational Documents. There are differences, however, that are listed under the caption "Comparative Rights of Holders of New PennyMac Common Stock and Existing PennyMac Common Stock" beginning on page 67, and you should carefully review that summary in deciding how to vote on the Reorganization Proposal.

        The following description of the capital stock of New PennyMac is a summary and is qualified in its entirety by reference to New PennyMac's Organizational documents, including New PennyMac's Certificate, the form of which is attached as Annex II to this proxy statement/prospectus and New PennyMac's Bylaws, the form of which is attached as Annex III to this proxy statement/prospectus.

General

        New PennyMac's authorized capital stock consists of 200,000,000 shares of New Common Stock, and 10,000,000 shares of preferred stock, par value $0.0001 per share. Unless New PennyMac's board of directors determines otherwise, New PennyMac will issue all shares of its capital stock in uncertificated form.

        Holders of shares of New Common Stock of New PennyMac are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders.

        Holders of shares of New Common Stock of New PennyMac are entitled to receive dividends when and if declared by New PennyMac's board of directors out of funds legally available therefor, subject to any statutory or contractual restrictions on the payment of dividends and to any restrictions on the payment of dividends imposed by the terms of any outstanding preferred stock.

        Upon any dissolution or liquidation or the sale of all or substantially all of the assets of New PennyMac, after payment in full of all amounts required to be paid to creditors and to the holders of preferred stock having liquidation preferences, if any, the holders of shares of New Common Stock will be entitled to receive pro rata the remaining assets available for distribution.

        Holders of shares of New Common Stock of New PennyMac do not have preemptive, subscription, redemption or conversion rights.

        New PennyMac's Certificate authorizes the board of directors to establish one or more series of preferred stock (including convertible preferred stock). Unless required by law or by any stock exchange, the authorized shares of preferred stock will be available for issuance without further action by the stockholders of New PennyMac. The board of directors of New PennyMac is able to determine, with respect to any series of preferred stock, the terms and rights of that series, including:

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        New PennyMac could issue a series of preferred stock that could, depending on the terms of the series, impede or discourage an acquisition attempt or other transaction that some, or a majority, of the stockholders of New PennyMac may believe to be in their best interests or in which the stockholders of New PennyMac might receive a premium for their shares of common stock over the market price of the shares of common stock.

        The DGCL does not require stockholder approval for any issuance of authorized shares. However, the listing requirements of the NYSE, which would apply so long as the New Common Stock of New PennyMac remains listed on the NYSE, require stockholder approval of certain issuances equal to or exceeding 20% of the then outstanding voting power or then outstanding number of shares of common stock. These additional shares may be used for a variety of corporate purposes, including future public offerings, to raise additional capital or to facilitate acquisitions.

        One of the effects of the existence of unissued and unreserved New Common Stock or preferred stock may be to enable the board of directors of New PennyMac to issue shares to persons friendly to current management, which issuance could render more difficult or discourage an attempt to obtain control of New PennyMac by means of a merger, tender offer, proxy contest or otherwise, and thereby protect the continuity of management and possibly deprive the stockholders of New PennyMac of opportunities to sell their shares of New Common Stock at prices higher than prevailing market prices.

        Immediately prior to, or upon completion of the Merger, New PennyMac's Certificate, attached as Annex II, will become effective and will allow the board of directors of New PennyMac to issue preferred stock with super voting, special approval, dividend or other rights or preferences on a discriminatory basis that could impede the success of any attempt to acquire New PennyMac or otherwise effect a change in control of New PennyMac. These and other provisions may have the effect

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of deferring, delaying or discouraging hostile takeovers, or changes in control or management of our company.

        New PennyMac's Certificate will provide that, subject to the rights of the holders of any series of preferred stock, special meetings of the stockholders may be called only by or at the direction of the board of directors, two or more of our directors, the chairman of the board, the chief executive officer or one or more holders of at least a minimum percentage of the voting power of the outstanding shares of New PennyMac's capital stock. This minimum will initially be 25% and will automatically increase to 51% on the first date on which the holders of outstanding shares of New Common Stock (other than any holder that was, or whose affiliate was, a member of PNMAC immediately prior to the initial public offering of Existing PennyMac) hold more than 51% of the voting power of all outstanding shares of the capital stock of New PennyMac. New PennyMac's Bylaws prohibit the conduct of any business at a special meeting other than as specified in the notice for such meeting. These provisions may have the effect of deferring, delaying or discouraging hostile takeovers, or changes in control or management of New PennyMac.

        New PennyMac's Bylaws will establish advance notice procedures with respect to stockholder proposals and the nomination of candidates for election as directors, other than nominations made pursuant to stockholder agreements with BlackRock and Highfields or by or at the direction of the board of directors or a committee of the board of directors. In order for any matter to be "properly brought" before a meeting, a stockholder will have to comply with advance notice requirements and provide New PennyMac with certain information. These provisions may also defer, delay or discourage a potential acquirer from conducting a solicitation of proxies to elect the acquirer's own slate of directors or otherwise attempting to obtain control of New PennyMac.

        Additionally, vacancies and newly created directorships may be filled only by a vote of a majority of the directors then in office, even though such directors may constitute less than a quorum of the board required for such action, and not by the stockholders of New PennyMac. New PennyMac's Bylaws will allow the presiding officer at a meeting of the stockholders to adopt rules and regulations for the conduct of meetings which may have the effect of precluding the conduct of certain business at a meeting if the rules and regulations are not followed. These provisions may also defer, delay or discourage a potential acquirer from conducting a solicitation of proxies to elect the acquirer's own slate of directors or otherwise attempting to obtain control of New PennyMac.

        The DGCL provides that stockholders are not entitled to the right to cumulate votes in the election of directors unless New PennyMac's Certificate provides otherwise. New PennyMac's Certificate does not expressly provide for cumulative voting.

        The DGCL provides that, unless a corporation's certificate of incorporation provides for a greater vote, the affirmative vote of holders of a majority in voting power of the outstanding shares of stock entitled to vote thereon is required to approve amendments to the certificate of incorporation. In addition to the stockholder approval required by the DGCL, the separate stockholder agreements with BlackRock and Highfields provide that New PennyMac's Certificate may not be amended in any manner that is adverse to BlackRock or Highfields without the consent of BlackRock or Highfields, as

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applicable, as long as such stockholder, together with its affiliates, holds more than 5% of the voting power of all of the outstanding shares of capital stock of New PennyMac.

        New PennyMac's Certificate authorizes the board of directors to amend or repeal New PennyMac's Bylaws, provided that, pursuant to the separate stockholder agreements with BlackRock and Highfields if that action by the board of directors amends the bylaws in a manner adverse to BlackRock or Highfields when that entity, together with its affiliates, holds at least 5% of the voting power of the outstanding shares of capital stock of New PennyMac, such action must be approved by that entity.

        Pursuant to Section 228 of the DGCL, any action required to be taken at any annual or special meeting of the stockholders may be taken without a meeting, without prior notice and without a vote if a consent or consents in writing, setting forth the action so taken, is signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares of capital stock entitled to vote thereon were present and voted, unless the company's certificate of incorporation provides otherwise. New PennyMac's Certificate prohibits the taking of any action of our stockholders by written consent without a meeting unless that action is taken with regard to a matter that has been approved by the board of directors or requires the approval only of certain series of New PennyMac preferred stock pursuant to the terms thereof.

        New PennyMac has not opted out of, and therefore is subject to, Section 203 of the DGCL. Section 203 provides that, subject to certain exceptions specified in the law, a publicly-held Delaware corporation shall not engage in certain "business combinations" with any "interested stockholder" for a three-year period after the date of the transaction in which the person became an interested stockholder. These provisions generally prohibit or delay the accomplishment of, among other things, mergers, assets or stock sales or other takeover or change-in-control attempts that are not approved by a company's board of directors.

        In general, Section 203 prohibits a publicly-held Delaware corporation from engaging, under certain circumstances, in a business combination with an interested stockholder for a period of three years following the date the person became an interested stockholder unless:

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        Generally, a business combination includes, among other things, a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. An interested stockholder is a person who, together with affiliates and associates, owns or, if such person is an affiliate or associate of the corporation, within three years prior to the determination of interested stockholder status, did own 15% or more of a corporation's outstanding voting stock. We expect that Section 203 will have an anti-takeover effect with respect to transactions the board of directors does not approve in advance. In such event, we would also anticipate that Section 203 could discourage attempts that might result in a premium over the market price for the shares of common stock held by stockholders.

        Under certain circumstances, Section 203 makes it more difficult for a person who would be an "interested stockholder" to effect various business combinations with a corporation for a three-year period. The provisions of Section 203 may encourage companies interested in acquiring New PennyMac to negotiate in advance with the board of directors because the stockholder approval requirement would be avoided if the board of directors approves either the business combination or the transaction that results in the stockholder becoming an interested stockholder. These provisions also may make it more difficult to accomplish transactions that stockholders may otherwise deem to be in their best interests.

Corporate Opportunity

        New PennyMac's Certificate will provide that neither BlackRock nor Highfields or their respective affiliates has any duty (fiduciary or otherwise) to refrain from engaging, directly or indirectly, in a corporate opportunity in the same or similar lines of business in which New PennyMac or its subsidiaries engage. In addition, in the event that either of BlackRock or Highfields, or their respective affiliates, acquires knowledge of a potential transaction or other matter which may be a corporate opportunity for themselves and for New PennyMac or its subsidiaries, then (i) neither NewPennyMac or its subsidiaries or stockholders will have any expectancy in such opportunity and (ii) none of BlackRock, Highfields or any of their affiliates will have any duty to communicate or offer such corporate opportunity to New PennyMac or its subsidiaries or stockholders and may pursue or acquire such corporate opportunity for itself or direct such corporate opportunity to another person or entity, unless such corporate opportunity is expressly offered to such affiliate in his or her capacity as a director or officer of New PennyMac.

Registration Rights

        As part of the Reorganization, that certain Registration Rights Agreement, dated as of May 8, 2013, by and among Existing PennyMac, the Contributors and certain other former members of PNMAC who have previously exchanged Class A Units of PNMAC prior to the Reorganization (the "Registration Rights Agreement") will be amended and restated, in order to, among other things, provide for the assumption of Existing PennyMac's obligations thereunder by New PennyMac.

        Pursuant to the Registration Rights Agreement (as it will be amended and restated in connection with the Reorganization), BlackRock, Highfields and certain of their permitted transferees have the right, under certain circumstances and subject to certain restrictions, to require us to register for resale the shares of New Common Stock of New PennyMac held by them.

        In October 2013, Existing PennyMac filed a registration statement to register for resale the shares of Class A Common Stock of Existing PennyMac to be delivered in exchange for Class A Units of PNMAC on behalf of BlackRock, Highfields and other selling stockholders. The registration statement was declared effective on October 28, 2013. We believe that New PennyMac should be deemed a "successor issuer" of Existing PennyMac in accordance with Rule 414 under the Securities Act and that

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accordingly, all securities registered under this previous registration statement of Existing PennyMac will be available for sale in the open market following the Reorganization unless restrictions apply.

        Demand Registration Rights.    BlackRock and Highfields and certain permitted transferees each have the right to demand that we register their New Common Stock of New PennyMac for resale, subject to the conditions set forth in the Registration Rights Agreement, no more than three times in any twelve month period. BlackRock and Highfields and certain permitted transferees have the right under the Registration Rights Agreement to require that we register their New Common Stock for resale. Such registration demand must reasonably be expected to result in aggregate gross cash proceeds to such demanding stockholder in excess of $25 million. Each of BlackRock and Highfields and certain permitted transferees will have the right to participate in any such demand registrations. New PennyMac will not be obligated to effect a demand registration within 120 days of the effective date of a registration statement filed by it. New PennyMac may postpone the filing of a registration statement for up to 60 days once in any 12-month period if the board of directors of New PennyMac determines in good faith that the filing would reasonably be expected to materially adversely affect any material financing or acquisition of New PennyMac or require premature disclosure of information that would reasonably be expected to be materially adverse to New PennyMac. The underwriters of any underwritten offering have the right to limit the number of shares of New Common Stock to be included in a registration statement filed in response to the exercise of these demand registration rights. New PennyMac must pay all expenses, except for underwriters' discounts and commissions, incurred in connection with these demand registration rights.

        Piggyback Registration Rights.    BlackRock, Highfields, certain of their permitted transferees and the minority stockholders which are parties to the Registration Rights Agreement will each have the right to "piggyback" on any registration statements that New PennyMac files on an unlimited basis, subject to the conditions set forth in the Registration Rights Agreement. If New PennyMac registers any securities for public sale, stockholders with piggyback registration rights under the registration rights agreement have the right to include their shares in the registration for resale by them, subject to specified limitations and exceptions.

        S-3 Registration Rights.    If New PennyMac is eligible to file a registration statement on Form S-3, the stockholders with Form S-3 registration rights under the Registration Rights Agreement and certain permitted transferees can request that New PennyMac register their shares of New Common Stock for resale. Any registration must be reasonably expected by the demanding stockholder to result in aggregate gross cash proceeds to such demanding stockholder in excess of $10 million, and no more than three demands for a Form S-3 registration may be made in any 12-month period. If New PennyMac is eligible as a Well Known Seasoned Issuer, or WKSI, the requesting stockholders may request that the shelf registration statement utilize the automatic shelf registration process under Rule 415 and Rule 462 promulgated under the Securities Act. If New PennyMac is not eligible as a WKSI or is otherwise ineligible to utilize the automatic shelf registration process, then New PennyMac is required to use its reasonable efforts to have the shelf registration statement declared effective.

Limitations of Liability and Indemnification

        Section 145 of the DGCL authorizes a corporation's board of directors to grant indemnification and advancement rights to current or former officers, directors, employees and other corporate agents.

        As permitted by Delaware law, New PennyMac's Certificate will provide that, no director will have any personal liability to New PennyMac or its stockholders for monetary damages for any breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is

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not permitted under the DGCL as the same exists or is thereafter amended. Pursuant to Delaware law, such protection would be not available for liability:

        New PennyMac's Bylaws further will provide that New PennyMac must indemnify its current or former directors and officers to the fullest extent permitted by Delaware law. New PennyMac's Bylaws will permit New PennyMac to secure insurance on behalf of any current or former officer or director for any liability arising out of his or her action in that capacity, whether or not Delaware law would otherwise permit indemnification.

        In addition, New PennyMac's Bylaws also will provide that New PennyMac is required to advance expenses to its current or former directors and officers as incurred in connection with legal proceedings against them for which they may be indemnified and that the rights conferred in New PennyMac's Bylaws are not exclusive.

        New PennyMac's Bylaws will provide that, except for proceedings to enforce rights to indemnification or advancement, New PennyMac is not required to indemnify or advance expenses to a current or former director or officer in connection with any action, suit or proceeding (or part thereof) commenced by such person unless such action, suit or proceeding (or part thereof) was authorized by the Board.

        The amended and restated limited liability company agreement of PNMAC also provides that PNMAC indemnify its officers, members, managers and other affiliates to the fullest extent permitted by Delaware law, and advance expenses to its officers, members, managers and other affiliates as incurred in connection with legal proceedings against them for which they may be indemnified. The rights conferred in the amended and restated limited liability company agreement of PNMAC are not exclusive.

        In connection with the Reorganization, Existing PennyMac will assign to New PennyMac, and New PennyMac will assume from Existing PennyMac and agree to perform all of Existing PennyMac's obligations under, all existing indemnification agreements with each of the members of the board of directors and certain officers of Existing PennyMac. The terms of the indemnification agreements will not be amended or modified in any way in connection with the Reorganization, other than as may be necessary to reflect the assignment of the rights and obligations thereunder from Existing PennyMac to New PennyMac.

        These indemnification agreements provide, among other things, that New PennyMac is required to indemnify each director and officer to the fullest extent permitted by Delaware law, New PennyMac's Certificate and New PennyMac's Bylaws for expenses such as, among other things, attorneys' fees, judgments, fines and settlement amounts incurred by the director or executive officer in any action or proceeding, including any action by or in New PennyMac's right, arising out of the person's services as a director or executive officer of New PennyMac or as the director or executive officer of any subsidiary of New PennyMac or any other company or enterprise to which the person provides services at New PennyMac's request. In addition, the indemnification agreements also provide that New PennyMac is required to advance expenses to its directors and officers as incurred in connection with legal proceedings against them for which they may be indemnified and that the rights conferred in the

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indemnification agreements are not exclusive. New PennyMac also maintains directors' and officers' liability insurance.

        The SEC has taken the position that personal liability of directors for violation of the federal securities laws cannot be limited and that indemnification by New PennyMac for any such violation is unenforceable.

        The limitation of liability and indemnification provisions in New PennyMac's Certificate and New PennyMac's Bylaws may discourage stockholders from bringing a lawsuit against New PennyMac's directors and officers for breach of their fiduciary duty. They may also reduce the likelihood of derivative litigation against New PennyMac's directors and officers, even though an action, if successful, may benefit New PennyMac and other stockholders. Further, a stockholder's investment may be adversely affected to the extent that New PennyMac pays the costs of settlement and damage awards against directors and officers as required by these indemnification provisions.

Market Listing

        We intend to apply to have New PennyMac Common Stock be listed on the NYSE under the symbol "PFSI."

Transfer Agent and Registrar

        The transfer agent and registrar for the New PennyMac Common Stock will be Computershare Trust Company, N.A.

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COMPARATIVE RIGHTS OF HOLDERS OF NEW PENNYMAC COMMON STOCK AND
EXISTING PENNYMAC COMMON STOCK

        After completion of the Reorganization, holders of Class A Common Stock of Existing PennyMac will hold shares of New Common Stock of PennyMac and the rights of holders of New Common Stock will be governed by the DGCL and New PennyMac's Organizational Documents. The rights that will be afforded to New PennyMac stockholders under New PennyMac's Organizational Documents are substantially similar to the rights afforded to Existing PennyMac Class A and Class B stockholders under Existing PennyMac's Organizational Documents. There are differences, however, that are listed below and you should carefully review this summary in deciding how to vote on the Reorganization Proposal. This summary is not complete and is qualified by reference to the full text of Existing PennyMac's Amended and Restated Certificate of Incorporation, filed as Exhibit 3.1 to Existing PennyMac's Form 8-K filed on May 14, 2013, and incorporated by reference herein, Existing PennyMac's Second Amended and Restated Bylaws, filed as Exhibit 3.2 to Existing PennyMac's Form 8-K filed on March 6, 2018, and incorporated by reference herein, New PennyMac's Certificate, the form of which is attached as Annex II to this proxy statement/prospectus, and New PennyMac's Bylaws, the form of which is attached as Annex III to this proxy statement/prospectus.

Topic
  Existing PennyMac   New PennyMac
Capital Stock        

 

 

 

 

 

Classes of Stock

 

Class A Common Stock

Class B Common Stock

Preferred Stock (undesignated)

 

Common Stock

Preferred Stock (undesignated)


 

 

 

 

 

Authorized Shares

 

210,001,000 shares total

200,000,000 shares Class A Common Stock

1,000 shares Class B Common Stock

10,000,000 shares Preferred Stock (undesignated)

 

210,000,000 shares total

200,000,000 shares Common Stock

10,000,000 shares Preferred Stock (undesignated)


 

 

 

 

 

Par Value

 

$0.0001 per share

 

Same


 

 

 

 

 

Voting Rights for Common Stock

 

Class A: one vote per share

Class B: one vote per Class A Unit held in PNMAC

 

One vote per share for all


 

 

 

 

 

Dividend Rights

 

Holders of common stock have the right to receive dividends when, as and if declared by the Board of Directors

 

Same


 

 

 

 

 
Board of Directors        

 

 

 

 

 

Election of Directors

 

Majority voting standard in uncontested elections

 

Same


 

 

 

 

 

Number of Directors

 

Bylaws provide for number of directors as fixed from time to time by Board, provided not in excess of eleven (11)

 

Same


 

 

 

 

 

Removal of directors

 

Directors may be removed with or without "cause" by a stockholder vote

 

Same

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Topic
  Existing PennyMac   New PennyMac

Filling Board Vacancies

 

Vacancies and newly created directorships may be filled only by a vote of a majority of directors then in office and not by stockholders

 

Same


 

 

 

 

 

Indemnification

 

Existing PennyMac is generally obligated to indemnify and advance expenses to current or former directors to the fullest extent permitted by law

 

Same


 

 

 

 

 
Stockholder Rights        

 

 

 

 

 

Calling Special Meetings

 

Special meetings of stockholders may only be called by or at the direction of the Board, two or more directors, the chairman, the CEO, or one or more holders of at least a minimum percentage of voting power (currently 25%)

 

Same


 

 

 

 

 

Ability to Act by Written Consent

 

Any stockholder action may be taken by written consent signed by the holders of outstanding shares having no less than the minimum number of votes that would be necessary to authorize or take that action at a meeting at which all shares entitled to vote on that action were present and voted, provided that action by written consent is only permissible if the action is taken with regard to a matter that has been approved by the Board

 

Same


 

 

 

 

 

Advance notice for proposing business and nominations

 

Notice must generally be provided to the secretary of the Company between 90 and 120 days before anniversary of prior year's annual meeting, subject to certain rights of BlackRock and Highfields under Stockholder Agreements

 

Same


 

 

 

 

 

Bylaw Amendments

 

Board and/or stockholders may amend, subject to certain rights of BlackRock and Highfields under Stockholder Agreements

 

Same


 

 

 

 

 

Charter Amendments

 

Board and stockholders may amend, subject to certain rights of BlackRock and Highfields under Stockholder Agreements

 

Same

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Topic
  Existing PennyMac   New PennyMac

Forum Selection

 

Unless Existing PennyMac consents in writing to the selection of an alternative forum, certain actions (including derivative actions and actions asserting a claim for breach of fiduciary duty owed by any director, officer or stockholder) to be brought exclusively in a state or federal court located within the State of Delaware

 

Same

        For more information regarding the Stockholder Agreements with BlackRock and Highfields, see "Certain Transactions with Related Parties."

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

        Beneficial ownership reflected in the tables below is based on 25,182,565 shares of Class A Common Stock outstanding as of September 7, 2018.

        The immediately following table sets forth certain information regarding the beneficial ownership of shares of Class A Common Stock by each person known to us to beneficially own more than 5% of the outstanding shares of Class A Common Stock and, further, such information is based on a review of publicly available statements of beneficial ownership filed with the SEC on Schedules 13D and 13G through September 7, 2018. Beneficial ownership is determined with respect to each stockholder in accordance with the rules of the SEC by assuming that such stockholder (and no other stockholder) has exchanged all of its Class A Units of PNMAC for an equivalent number of shares of our Class A Common Stock.

 
  Class A Common Stock Beneficially Owned(1)  
 
  Number   Percentage   % of Total Voting
Power and Total
Economic Interest
in PNMAC(2)
 
5% Stockholders                    

HC Partners LLC(3)
200 Clarendon Street, 59th Floor
Boston, Massachusetts 02116

 

 

20,169,732

 

 

44.47

%

 

26.04

%

BlackRock, Inc.(4)
55 East 52nd Street
New York, New York 10055

 

 

16,030,899

 

 

41.21

%

 

20.69

%

T. Rowe Price Associates, Inc.(5)
100 E. Pratt Street
Baltimore, Maryland 21202

 

 

3,668,633

 

 

14.57

%

 

4.74

%

Entities affiliated with Morgan Stanley(6)
1585 Broadway
New York, NY 10036

 

 

2,241,135

 

 

8.90

%

 

2.89

%

Entities affiliated with Richard Mashaal(7)
645 Madison Avenue, 10th Floor
New York, NY 10022

 

 

1,808,382

 

 

7.18

%

 

2.33

%

Basswood Capital Management, L.L.C.(8)
540 Madison Avenue, 32nd Floor
New York, New York 10022

 

 

1,784,748

 

 

7.09

%

 

2.30

%

The Vanguard Group(9)
100 Vanguard Boulevard
Malvern, Pennsylvania 19355

 

 

1,694,368

 

 

6.73

%

 

2.19

%

Entities affiliated with Leon G. Cooperman(10)
7118 Melrose Castle Lane
Boca Raton, Florida 33496

 

 

1,581,975

 

 

6.28

%

 

2.04

%

Kurland Family Investments, LLC(11)
3043 Townsgate Road
Westlake Village, California 91361

 

 

8,314,990

 

 

24.82

%

 

10.73

%

(1)
Subject to the terms of the Exchange Agreement, Class A Units of PNMAC not held by us are exchangeable at any time and from time to time for shares of our Class A Common Stock on a one-for-one basis, subject to customary conversion rate adjustments for stock splits, stock

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(2)
Represents the percentage of voting power of the Class A Common Stock and Class B Common Stock of PennyMac Financial Services, Inc. voting together as a single class. Each holder of Class A Units of PNMAC other than Existing PennyMac also holds one share of Class B Common Stock. The shares of Class B Common Stock have no economic rights but entitle the holder, without regard to the number of shares of Class B Common Stock held, to a number of votes on matters presented to our stockholders that is equal to the aggregate number of Class A Units of PNMAC held by such holder. As a holder exchanges Class A Units of PNMAC for shares of our Class A Common Stock pursuant to the Exchange Agreement, the voting power afforded to the holder by its share of Class B Common Stock will be automatically and correspondingly reduced. Total economic interest in PNMAC is calculated as the percentage of all outstanding Class A Units of PNMAC beneficially held by the stockholder, directly or indirectly through Existing PennyMac, assuming that each share of Class A Common Stock held is equivalent to one Class A Unit of PNMAC.

(3)
Consists entirely of 20,169,732 Class A Units of PNMAC exchangeable for shares of Class A Common Stock.

(4)
Consists entirely of 469,752 shares of Class A Common Stock acquired for certain client accounts (by funds and accounts for which BlackRock, Inc.'s advisory subsidiaries act as investment advisers), 1,800,000 shares of Class A Common Stock received by BlackRock Mortgage Ventures, LLC upon exchange of its Class A Units of PNMAC on December 13, 2013, and 13,760,647 Class A Units of PNMAC exchangeable by BlackRock Mortgage Ventures, LLC for shares of Class A Common Stock. BlackRock Mortgage Ventures, LLC is indirectly wholly-owned by BlackRock, Inc. BlackRock, Inc. controls the voting and investment power with respect to the securities held by BlackRock Mortgage Ventures, LLC and, therefore, may be deemed to be the beneficial owner of the shares of Class A Common Stock beneficially owned by that entity.

(5)
As reported in Amendment No. 5 to Schedule 13G filed with the SEC on February 14, 2018 by T. Rowe Price Associates, Inc., or T. Rowe Price. In the Schedule 13G amendment, T. Rowe Price disclosed that it has the sole voting power over 551,542 shares of Class A Common Stock and sole dispositive power over 3,668,633 shares of Class A Common Stock as of December 31, 2017.

(6)
As reported on a Schedule 13G jointly filed with the SEC on February 12, 2018 by Morgan Stanley and Morgan Stanley Capital Services LLC, or Morgan Stanley Capital, a wholly-owned subsidiary of Morgan Stanley. In the Schedule 13G, Morgan Stanley disclosed that it has shared voting and dispositive power over 1,274,991 shares of Class A Common Stock that are owned, or may be deemed to be beneficially owned, by Morgan Stanley Capital.

(7)
As reported in Amendment No. 5 to Schedule 13G jointly filed with the SEC on February 12, 2018 by Senvest Management, LLC, or Senvest, and Richard Mashaal, or Mr. Mashaal. In the Schedule 13G amendment, Senvest disclosed that it has shared voting and dispositive power over 1,808,382 shares of Class A Common Stock, and Mr. Mashaal has shared voting and dispositive power over 1,808,382 shares of Class A Common Stock as of December 31, 2017. The shares are held in the accounts of Senvest Master Fund, LP and Senvest Global (KY), LP, or the Investment Vehicles. Senvest serves as investment manager of the Investment Vehicles and Mr. Mashaal is the managing member of Senvest.

(8)
As reported on a Schedule 13G jointly filed with the SEC on February 9, 2018 by Basswood Capital Management, L.L.C., or Basswood, Matthew Lindenbaum and Bennett Lindenbaum. In the Schedule 13G, Basswood disclosed that it has shared voting and dispositive power over 1,784,748 shares of Class A Common Stock with Matthew Lindenbaum and Bennett Lindenbaum.

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(9)
As reported in Amendment No. 2 to Schedule 13G filed with the SEC on February 9, 2018 by The Vanguard Group, or Vanguard. In the Schedule 13G amendment, Vanguard disclosed that it has the sole voting power over 17,684 shares of Class A Common Stock, sole dispositive power over 1,677,213 shares of Class A Common Stock, and shared dispositive power over 17,684 shares of Class A Common Stock as of December 31, 2017.

(10)
As reported in the Amendment No. 3 to Schedule 13G filed on February 14, 2018 by Leon G. Cooperman. Consists of 100,000 shares of Class A Common Stock owned by Mr. Cooperman, 658,400 shares of Class A Common Stock owned by Omega Capital Partners, L.P., or Capital LP, 180,268 shares of Class A Common Stock owned by Omega Capital Investors, L.P., or Investors LP, 306,200 shares of Class A Common Stock owned by Omega Equity Investors, L.P., or Equity LP, 304,407 shares of Class A Common Stock owned by Omega Overseas Partners, Ltd., or Overseas, and 32,700 shares of Class A Common Stock held in managed accounts over which Leon Cooperman has investment discretion. Mr. Cooperman is the Managing Member of Omega Associates, L.L.C., or Associates. Associates is a private investment firm formed to invest in and act as general partner of investment partnerships or similar investment vehicles. Associates is the general partner of Capital LP, Investors LP, and Equity LP. These entities are private investment firms engaged in the purchase and sale of securities for investment for their own accounts. Mr. Cooperman is the president and majority stockholder of Omega Advisors, Inc., or Advisors, which serves as the investment manager to Overseas. Mr. Cooperman has investment discretion over portfolio investments of Overseas. Advisors also serves as a discretionary investment advisor to a limited number of institutional clients. Mr. Cooperman is the ultimate controlling person of Associates, Capital LP, Investors LP, Equity LP, and Advisors.

(11)
Consists entirely of 8,314,990 Class A Units of PNMAC exchangeable for shares of Class A Common Stock. Stanford L. Kurland, as the sole manager of Kurland Family Investments, LLC, controls the voting and investment power with respect to the securities held by that entity and, therefore, may be deemed to be the beneficial owner of the shares of Class A Common Stock beneficially owned by that entity.

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EXISTING PENNYMAC COMMON STOCK OWNERSHIP OF DIRECTORS
AND EXECUTIVE OFFICERS OF EXISTING PENNYMAC

        The following table sets forth certain information regarding the beneficial ownership of shares of Class A Common Stock by (1) each of our named executive officers, (2) each of our current directors, and (3) all of our current directors and executive officers as a group. Unless otherwise indicated, all shares are owned directly and the indicated person has sole voting and investment power.

 
  Class A Common Stock Beneficially
Owned(1)(2)
 
 
  Number   Percentage   % of Total Voting
Power and Total
Economic Interest
in PNMAC(3)
 

Executive Officers and Directors

                   

Stanford L. Kurland(4)

    9,247,055     26.87 %   11.84 %

David A. Spector(5)

    1,944,409     7.17 %   2.50 %

Anne D. McCallion(6)

    626,700     2.43 %   *  

Andrew S. Chang(7)

    991,288     3.79 %   1.28 %

Vandad Fartaj(8)

    963,041     3.69 %   1.24 %

Doug Jones(9)

    810,750     3.12 %   1.05 %

David M. Walker(10)

    567,767     2.21 %   *  

Matthew Botein(11)

    734,317     2.84 %   *  

James K. Hunt

    58,754     *     *  

Patrick Kinsella

    16,757     *     *  

Joseph Mazzella(12)

    784,604     3.03 %   1.01 %

Farhad Nanji(13)

    172,322     *     *  

Theodore W. Tozer

    1,082     *     *  

Mark Wiedman(14)

    75,985     *     *  

Emily Youssouf

    18,714     *     *  

Directors and executive officers as a group (15 persons)

    17,013,545     40.65 %   21.59 %

*
Represents less than 1.0%.

(1)
Subject to the terms of the Exchange Agreement, Class A Units of PNMAC not held by Existing PennyMac are exchangeable at any time and from time to time for shares of our Class A Common Stock on a one-for-one basis, subject to customary conversion rate adjustments for stock splits, stock dividends, reclassifications and certain other transactions that would cause the number of outstanding shares of Class A Common Stock to be different than the number of Class A Units of PNMAC owned by Existing PennyMac. The number of shares of Class A Common Stock listed in this table as being beneficially owned as a result of Class A Units of PNMAC held by any entity or individual assumes an exchange of such Class A Units for shares of Class A Common Stock on a one-for-one basis. As of September 7, 2018, a total of 52,283,192 Class A Units were exchangeable for shares of Class A Common Stock.

(2)
Based on 25,182,565 shares of Class A Common Stock outstanding as of September 7, 2018. Beneficial ownership is determined in accordance with Rule 13d-3 under the Exchange Act. A person is deemed to be the beneficial owner of any shares of Class A Common Stock if that person has or shares voting power or investment power with respect to those shares or has the right to acquire beneficial ownership at any time within 60 days of September 7, 2018. As used herein, "voting power" is the power to vote or direct the voting of shares and "investment power" is the power to dispose or direct the disposition of shares. None of the shares have been pledged as security.

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(3)
Represents the percentage of voting power of the Class A Common Stock and Class B Common Stock of Existing PennyMac voting together as a single class. Each holder of Class A Units of PNMAC other than the Company also holds one share of our Class B Common Stock. The shares of Class B Common Stock have no economic rights but entitle the holder, without regard to the number of shares of Class B Common Stock held, to a number of votes on matters presented to the Company's stockholders that is equal to the aggregate number of Class A Units of PNMAC held by such holder. As a holder exchanges Class A Units of PNMAC for shares of our Class A Common Stock pursuant to the exchange agreement, the voting power afforded to the holder by its share of Class B Common Stock will be automatically and correspondingly reduced. Total economic interest in PNMAC is calculated as the percentage of all outstanding Class A Units of PNMAC beneficially held by the stockholder, directly or indirectly through Existing PennyMac, assuming that each share of Class A Common Stock held is equivalent to one Class A Unit of PNMAC.

(4)
Includes 8,599,338 Class A Units of PNMAC exchangeable for shares of Class A Common Stock, including 8,314,990 Class A Units of PNMAC owned by Kurland Family Investments, LLC.

(5)
Includes 1,699,729 Class A Units of PNMAC exchangeable for shares of Class A Common Stock, including 465,604 Class A Units of PNMAC owned by ST Family Investment Company LLC.

(6)
Includes 510,720 Class A Units of PNMAC exchangeable for shares of Class A Common Stock held in a family trust.

(7)
Includes 856,671 Class A Units of PNMAC exchangeable for shares of Class A Common Stock.

(8)
Includes 845,254 Class A Units of PNMAC exchangeable for shares of Class A Common Stock.

(9)
Includes 712,767 Class A Units of PNMAC exchangeable for shares of Class A Common Stock held in a family trust.

(10)
Includes 463,055 Class A Units of PNMAC exchangeable for shares of Class A Common Stock held in a family trust.

(11)
Includes 718,552 Class A Units of PNMAC exchangeable for shares of Class A Common Stock.

(12)
Includes 331,052 Class A Units of PNMAC exchangeable for shares of Class A Common Stock. Does not include 407,031 Class A Units of PNMAC owned by the Mazzella Family Irrevocable Trust. Mr. Mazzella is not a trustee of that entity and, therefore, would not be deemed to be the beneficial owner of the Class A Units of PNMAC held by that entity.

(13)
Includes 122,109 Class A Units of PNMAC exchangeable for shares of Class A Common Stock.

(14)
Includes 54,556 Class A Units of PNMAC exchangeable for shares of Class A Common Stock.

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CERTAIN TRANSACTIONS WITH RELATED PARTIES

        The following related party transaction information is in addition to the related party transaction information described in Existing PennyMac's Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on March 9, 2018, including information specifically incorporated by reference therein from Existing PennyMac's Proxy Statement on Schedule 14A filed with the SEC on April 17, 2018, incorporated by reference herein.

Interests in the Reorganization

        Certain of our directors, executive officers and holders of more than 5% of the membership interests of PNMAC, or their immediate family members, have or will have a direct or indirect material interest in the Reorganization.

        The Contributors are comprised of 45 separate entities and individuals, calculated as of the Record Date, and represent all of the holders of Class A Units of PNMAC, other than those Class A Units held directly by Existing PennyMac. The Contributors include, among others, entities affiliated with:

        Each of the Contributors has agreed in the Reorganization Agreement to voluntarily contribute all of the Class A Units of PNMAC held by them to New PennyMac, in exchange for the issuance by New PennyMac to such Contributors of an aggregate number of shares of New Common Stock of

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New PennyMac that is equal in number to the number of Class A Units of PNMAC so contributed by the Contributors. Other than the receipt of the Contribution Shares, the Contributors will receive no additional consideration or other compensation of any kind in connection with the Contribution, and each of the Contributors waived its right to receive any portion of the Distribution with respect to any shares of Class A Common Stock that are issued to such Contributors in exchange for Class A Units of PNMAC after the date of the Reorganization Agreeement.

        Each of the Contributors is also currently a party to (i) the Tax Receivable Agreement, (ii) the Exchange Agreement, which will be terminated in connection with the Reorganization, and (iii) the Registration Rights Agreement, which will be amended and restated in connection with the Reorganization.

        In addition, in connection with the Reorganization, Existing PennyMac will assign to New PennyMac, and New PennyMac will assume from Existing PennyMac, and agree to perform all of its obligations under, all existing indemnification agreements with each of the members of the Board of Directors and certain officers of Existing PennyMac, and all existing employment agreements and offer letters with each of the officers of Existing PennyMac. The terms of the indemnification agreements, employment agreements and offer letters will not be amended or modified in any way in connection with the Reorganization, other than as may be necessary to reflect the assignment of the rights and obligations thereunder from Existing PennyMac to New PennyMac.

        BlackRock and Highfields are each also party to certain stockholder agreements with Existing PennyMac, and such stockholder agreements will be amended and restated in order to provide, among other things, for the assumption of Existing Parent's obligations thereunder by New PennyMac, as well as the elimination of certain provisions relating to Existing Parent's "Up-C" structure. Mr. Weidman is, and Mr. Botein formerly was, affiliated with BlackRock; and Mr. Mazzella and Mr. Nanji were formerly affiliated with Highfields.

        Each of the foregoing agreements, to the extent such agreements will remain in effect following the completion of the Reorganization, is discussed in further detail below.

        Under Existing PennyMac's historical "Up-C" structure, the Class A Unit holders of PNMAC, other than Existing PennyMac, have had the right (subject to the terms of the Exchange Agreement) to exchange their Class A Units of PNMAC for shares of Class A Common Stock of Existing PennyMac, initially on a one-for-one basis. PNMAC has had in effect an election under Section 754 of the Code effective for each taxable year in which an exchange of Class A Units of PNMAC for shares of Class A Common Stock of Existing PennyMac has occurred (or could occur) which likely resulted in a special adjustment for Existing PennyMac with respect to the tax basis of the assets of PNMAC at the time of an exchange of Class A Units of PNMAC, which adjustment affected (and will affect) only Existing PennyMac, which we refer to in this discussion as the "corporate taxpayer." These exchanges have resulted (and will result) in special increases for the corporate taxpayer in the tax basis of the assets of PNMAC that otherwise would not have been available. These increases in tax basis may reduce the amount of tax that the corporate taxpayer would otherwise be required to pay in the future. These increases in tax basis may also decrease gains (or increase losses) on future dispositions of certain capital assets to the extent tax basis is allocated to those capital assets. The IRS may challenge all or part of the existing tax basis, tax basis increase and increased deductions, and a court could sustain such a challenge.

        Existing PennyMac entered into the Tax Receivable Agreement in May 2013 with the Existing Owners that provides for the payment from time to time by the corporate taxpayer to the Existing Owners of 85% of the amount of the net tax benefits, if any, that the corporate taxpayer is deemed to realize under certain circumstances as a result of (i) increases in tax basis resulting from exchanges of

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Class A Units of PNMAC, and (ii) certain other tax benefits related to Existing PennyMac's entering into the Tax Receivable Agreement, including tax benefits attributable to payments under the Tax Receivable Agreement. These payment obligations are obligations of the corporate taxpayer and not of PNMAC. For purposes of the Tax Receivable Agreement, the tax benefit deemed realized by the corporate taxpayer is computed by comparing the actual income tax liability of the corporate taxpayer (calculated with certain assumptions) to the taxes that the corporate taxpayer would have been required to pay had there been no increase to the tax basis of the assets of PNMAC as a result of the exchanges, and had the corporate taxpayer not entered into the Tax Receivable Agreement