February 5, 2023
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PennyMac beats analyst estimates for third quarter earnings


Moorpark-based PennyMac Financial Services reported a $122.3 million profit on revenue of $291.4 million for the third quarter, exceeding Wall Street expectations on earnings per share and revenue.

PennyMac Financial, which was founded by former Countrywide Financial Services executives after that company was acquired by Bank of America, reported earnings of $1.06 cents per diluted share – 16 cents higher than analyst estimates. Revenue was up 54 percent year over year, beating Wall Street’s mark by $31.6 million.

“We have once again achieved record quarterly earnings driven by record production volumes in each of PennyMac Financial’s correspondent and consumer direct channels,” Chairman and CEO Stanford Kurland said in a news release. “We have been able to capitalize on the strong origination market and the unique ability of our platform to scale up quickly and efficiently to generate strong volumes amid continuing low interest rates.”

Total loan production activity of $20.6 billion in unpaid principal balance was up 28 percent from the prior quarter. Net assets under management were approximately $1.6 billion, slightly ticking down from the second quarter.

Shares increased by a quarter to $17.15 when the market closed on Nov. 3.

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 $35.4 million, or 49 cents per diluted share, for the third quarter on net investment income of $103.3 million. Earnings per share beat analyst expectations by 11 cents. Profit was down from $38.8 million in the third quarter of 2015 while net investment income was up 13.8 percent from $90.8 million last year.

“PMT remains uniquely positioned, through PFSI’s specialized capabilities as our manager and service provider, to access investment opportunities that result from our correspondent production activities, including GSE credit risk transfers and excess servicing spread,” Kurland said. “We continue to transition capital over time into these opportunities and away from distressed loan investments, which represent a decreasing allocation of PMT’s equity. We also continue to evaluate repurchasing our common shares, where we believe the return is superior to other investment opportunities. We believe that these strategies have the potential to continue producing earnings in line with our dividend level.”

Shares closed up 5 cents to $14.82 on Nov. 3.

• Contact Alex Kacik at akacik@pacbiztimes.com.