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PennyMac Reports Mortgage Finance Performance

PennyMac’s pretax servicing income loss was $5.1 million in Q4 2019, down from $18.1 million in the prior quarter and pretax income of $29.3 million in the fourth quarter of 2018. The company reported net income of $152.7 million for the fourth quarter of 2019, or $1.88 per share on a diluted basis, on revenue of $490.4 million. Book value per share increased to $26.26 from $24.37 at September 30, 2019.

Additionally, PennyMac’s Investment Management segment pretax income was $5.2 million, up from $5.0 million in the prior quarter and $2.5 million in the fourth quarter of 2018.

“PennyMac Financial delivered outstanding performance across all of its businesses in the fourth quarter and throughout 2019,” said President and CEO David Spector. “Book value per share grew 22% for the year, driven by record profitability in our Production segment and our ability to successfully hedge the interest rate risk inherent in mortgage servicing rights in a year characterized by significant interest rate volatility. Each of our production channels grew market share this year and substantial growth in our consumer direct lending channel was a major contributor to the Company’s earnings. Further, our industry-leading correspondent channel became the largest aggregator of residential mortgage loans in the U.S., according to Inside Mortgage Finance. Our servicing portfolio also grew more than 20% for the year while our technology investments continue to drive greater operating efficiency and better service for our 1.8 million customers. With our maturing, balanced business model, the opportunity to continue capturing market share gains across our businesses and the strong foundation provided by our large and growing servicing portfolio, we expect PFSI to earn a mid-teens return on equity across different market environments; however, we expect PFSI to deliver a higher ROE in 2020.”

Overall, PennyMac’s pretax income was $203.4 million, up 22% from the prior quarter and 249% from the fourth quarter of 2018.

About Author: Seth Welborn

Seth Welborn is a Reporter for DS News and MReport. A graduate of Harding University, he has covered numerous topics across the real estate and default servicing industries. Additionally, he has written B2B marketing copy for Dallas-based companies such as AT&T. An East Texas Native, he also works part-time as a photographer.
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