PennyMac Posts Higher 4Q Profits Due to Gains on Sale

PennyMac Financial Services reported higher income, reflecting larger net gains on mortgage loans held for sale.

In the fourth quarter, PennyMac Financial's net income rose 78% from the previous year, to $22.7 million. Earnings were $1 per diluted share, up from 58 cents the previous year.

PennyMac Financial's full-year net income increased to $66.1 million in 2015 from $47.2 million the year prior.

The company's net revenue jumped significantly year over year, rising to $289.3 million from $187.2 million in the fourth quarter of 2015. The net gain on mortgage loans held for sale at fair value increased 13% to $127.5 million, and net mortgage loan servicing fee income similarly expanded 24% to $95.5 million.

Expenses spiked 45% to $159.9 million, on higher employee compensation, servicing and technology costs.

"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," Stanford Kurland, the company's executive chairman, said in a news release Thursday.

"We were able to capitalize on the opportunities available during the year provided by a vibrant origination market with considerable refinance activity."

PennyMac Financial's sister company, PennyMac Mortgage Investment Trust, also reported higher net income year over year. That company's profits rose 98% to $31.2 million, primarily on a higher net gain on mortgage loans acquired for sale.

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