PennyMac’s Q4 Net Income Led by Loan Servicing

PennyMac Financial Services, Inc., recently reported higher fourth quarter profits, led by their loan servicing department.

According to PennyMac's fourth quarter earning statement, its net income totaled $68.9 million for the quarter, up from $65.3 million in the third quarter and $45.9 million last year in the fourth quarter. Total net revenue for the fourth quarter was $187.2 million, down from last quarter's total of $189.2 but up from last year's total of $141.7. Net income attributable to common stockholders was $12.8 million or $0.58 per diluted share.

Chairman and CEO Stanford L. Kurland noted that 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.

The statement showed that servicing revenue rose 70 percent from the third quarter to $78.2 million, while the servicing portfolio rose 4 percent from September 30, 2015 to $160.3 billion in UPB. The servicing portfolio at PennyMac reached $160.3 billion in UPB, up 51 percent from December 31, 2014, "driven by the organic additions from loan production and $32.8 billion in UPB of mortgage servicing rights (MSR) acquisitions."

PennyMac also reported that loan production increased 67 percent year-over-year to total $48.4 billion in UPB. This included $4.1 billion in UPB of consumer direct production, an increase of 113 percent from the prior year.

"Our mortgage production volumes remained strong despite a seasonally smaller mortgage market and higher interest rates during the quarter. Our servicing segment delivered record pretax income, driven primarily by growth in core servicing profitability and MSR valuation gains that were largely offset by hedging activities. Our consistently strong financial performance reflects our dedicated approach to interest rate risk management across the production pipeline and the MSR asset.”

Click here to view the full earnings statement.