Company's Q2 pre-tax profit represented 91% jump from the previous quarter
PennyMac Financial Services saw a bumper profit for the second quarter, reporting a pre-tax income of $72.9 million – up 91% from the previous quarter.
“PennyMac Financial reported solid results in the second quarter, reflecting increased production volumes and profitability from the prior quarter as well as a continued strong contribution from our large and growing servicing business,” said PennyMac chairman and CEO David Spector. “Though the mortgage origination market remains constrained, I have never felt better about our competitive position.”
The company announced a net income of $58.3 million on revenue of $336.5 million. Its production segment bounced back in Q2, posting a pre-tax gain of $24.4 million, an improvement from its Q1 loss of $19.6 million.
However, the strong operating performance compensated for net valuation-related losses and a fall in servicing segment profits, down to $46.5 million from $57.4 million in the prior quarter.
According to its financial report, the net valuation losses resulted from the inverted yield curve and elevated hedge costs driven by multi-year highs in interest rate volatility. “Book value per share was up to $69.77 at quarter end,” he said. “We continue to operate at high levels of efficiency while also focusing on investing in technology to support our balanced, multi-channel production and servicing platform.”
Total loan acquisitions and originations, including those fulfilled for PennyMac Mortgage (PMT) Investment Trust, increased by 9% to $24.9 billion in unpaid principal balance (UPB).
Read next: Pennymac TPO announces integration partnership with ARIVE
PennyMac’s servicing portfolio grew 2% quarter over quarter to $576.5 billion in UPB, driven by production volumes that more than offset prepayment activity.
“Our leading correspondent lending activities continue to drive the organic growth of our servicing portfolio by adding loans at prevailing mortgage rates, which we expect will provide meaningful opportunities for our consumer direct division in future periods when rates decline,” Spector said. “I am also extraordinarily proud of the growth we have achieved in broker direct since our entrance into the wholesale channel only five years ago.”
Want to keep up with the latest mortgage news? Get exclusive interviews, breaking news, and industry events in your inbox, and always be the first to know by subscribing to our FREE daily newsletter.
