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PennyMac Financial beats Wall Street’s earnings estimates

By   /   Thursday, February 2nd, 2017  /   Comments Off on PennyMac Financial beats Wall Street’s earnings estimates

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Updated at 1 p.m. on Feb. 3:

Moorpark-based PennyMac Financial Services reported net income of $113.8 million on revenue of $289.3 million for the fourth quarter of 2016, exceeding Wall Street’s expectations on earnings per share.

PennyMac Financial, which was founded by former Countrywide Financial Services executives after that company was acquired by Bank of America, reported earnings of $1 per diluted share – 23 cents higher than analyst estimates.

“PennyMac Financial closed out a record year with outstanding earnings in the fourth quarter, driven by continued strength in our production segment and improved contribution from our servicing segment,” Chairman and CEO Stanford Kurland said in a news release. “We were able to capitalize on the opportunities available during the year provided by a vibrant origination market with considerable refinance activity. We also made great strides in further building out the company’s leading mortgage origination and servicing platforms.”

On the year, pretax income reached a record $383.1 million, up 37 percent from the prior year. Loan production totaled $69.7 billion, an increase of 44 percent over 2015. It had a total net revenue of $931.9 million, up 31 percent from the prior year.

Shares surged 11 percent to $18.80 on Feb. 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 net income of $31.2 million for the fourth quarter of 2016, down 12 percent from the prior quarter, on net investment income of $68.9 million.

The company reported diluted earnings per common share of 44 cents, down 10 percent from the prior quarter but beating analyst estimates by 3 cents.

“PMT’s fourth quarter earnings reflect contributions from its credit and interest-rate sensitive strategies as well as its correspondent production activities,” Kurland said in a news release. “Credit risk transfer investments and correspondent production delivered strong performance. However, the distressed loan portfolio underperformed expectations.”

PennyMac Mortgage reported a return on average equity of 5 percent on the year, down 6 percent from 2015. Net investment income was $272.1 million, up 9 percent from the prior year.

Total mortgage assets reached $5.6 billion, up 9 percent from 2015.

Shares dropped 3 percent to $16.63 on Feb. 3.

• Contact Alex Kacik at [email protected]

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