PennyMac beats profit expectations but misses on revenue
Moorpark-based PennyMac Financial Services reported a $68.9 million profit on revenue of $187.2 million for the fourth quarter, beating Wall Street expectations on profit but missing on revenue.
PennyMac Financial, which was founded by former Countrywide Financial Services executives after that company was acquired by Bank of America, reported a profit 58 cents per share – one cent higher than analyst estimates. Analysts predicted $190.5 million of revenue for the quarter.
“PennyMac Financial concluded another record year with solid financial and operational performance in the fourth quarter, which reflected balanced earnings contributions from the production and servicing segments,” Chairman and CEO Stanford Kurland said in a news release. “Our mortgage production volumes remained strong despite a seasonally smaller mortgage market and higher interest rates during the quarter.”
On the year, total net revenue was $713.1 million, up 38 percent from the prior year. Loan production totaled $48.8 billion, an increase of 67 percent over 2014.
Shares dropped 2.7 percent to $11.39 when the market closed on Feb. 3, a decrease of 35 percent in the last 12 months.
One of PennyMac Financial’s primary investment customers is PennyMac Mortgage Investment Trust, a separate public company that invests in mortgages and shares the same executive management with PennyMac Financial.
PennyMac Mortgage reported a profit of $15.7 million, or 21 cents per diluted share, for the fourth quarter of 2015 on net investment income of $50.6 million. Those measures were down 57 percent and 60 percent, respectively, from the prior quarter.
“PMT’s investment returns underperformed our expectations in the fourth quarter due to a combination of factors, the largest of which was reduced earnings from our distressed loan portfolio driven by higher yield requirements and lower home prices versus prior forecasts,” Kurland said in a news release.
On the year, net income was $90.1 million, down 54 percent from 2014. Net investment income was $248.8 million, down 30 percent from the prior year, and diluted earnings per share were down 53 percent year-over-year to $1.16.
Shares closed slightly up at $13.69 on Feb. 3. That’s a 36 percent decline over the last 12 months.
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