September 26, 2023
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PennyMac misses earnings targets


Both segments of PennyMac’s business missed estimates when they announced their second quarter financial earning reports on Aug. 5.

PennyMac Financial Services reported net income of $204.2 million, or $2.94 per share on a diluted basis, missing the 3.48 per share estimate predicted by Zacks Consensus Estimates. The Westlake Village-based financial services segment had earnings of $352.7 million, or $4.39 per diluted share, in the same quarter a year before.

The company attributed the lower net income to lower net gains on loans held for sale at fair value across both production and servicing.

“Our balanced business model is a key strategic advantage for PFSI,” CEO David Spector said, “which has consistently delivered outstanding returns across different environments, producing a 33% return on equity for the first half of 2021.”

The company’s board of directors declared a second quarter cash dividend of 20 cents per share, payable on Aug. 26 to common stockholders of record as of Aug. 16. PennyMac Financial Services’ board of directors approved increasing its stock repurchase authorization from $1 billion to $2 billion of outstanding common stock.

PennyMac Financial Services already repurchased 2.6 million shares of common stock at a cost of $154.9 million and bought an additional 2.5 million shares in July for $151.4 million.

PennyMac Mortgage Investment Trust, the real estate investment trust managed by PennyMac Financial Services, reported net income of $31.9 million, or 32 cents per share, for its second quarter, missing Zacks Consensus Estimates of 57 cents per share.

Net income was down more than 93% from the same period last year, when the REIT posted net income of $458.4 million, or $4.51 per share. PennyMac Mortgage Investment Trust’s position a year ago was based on record production segment income, which was driven by extraordinary volumes in the company’s direct lending channels.

PennyMac Mortgage Investment Trust did not say why its income was down, but its second quarter financial report showed the company added $413 million in new mortgage servicing rights during this quarter. Spector also said PennyMac Mortgage Investment Trust completed its first purchase of subordinate bonds relayed to a private label securitization of non-owner occupied loans.