Earnings Roundup: PennyMac, SignatureWednesday, November 6, 2013
PennyMac Financial Services reported disappointing third quarter earnings due to a decrease in loan origination.
The Moorpark company, which produces and services U.S. residential mortgages, reported net income of $5.2 million (28 cents a share) for the third quarter ended Sept. 30 on revenue of $87.2 million. It is the company’s second earnings report since going public in May.
Analysts on average had expected net income of 39 cents a share on revenue of $109 million, according to Thomson Financial.
The company is an affiliate of publicly held mortgage REIT PennyMac Mortgage Investment Trust. Stanford Kurland, the former president of Countrywide Financial, is chief executive of both companies.
The hardest hit segment for the company was mortgage banking, where it saw a 25 percent drop in revenue from the prior quarter.
“The third quarter was challenging for the mortgage industry, and the decline in origination volumes and reduced margins had a significant impact on PennyMac Financial’s loan production businesses,” said Kurland in a prepared statement.
Shares gained 21 cents, or 1.3 percent, to close at $16.71 on the New York Stock Exchange.
PennyMac Mortgage Investment Trust reported on Wednesday falling income and revenue figures, citing rising mortgage rates that produced a decline in mortgage originations.
The Moorpark real estate investment trust posted net income of $39.7 million (57 cents a share) in the quarter ended Sept. 30, compared with $40.4 million (81 cents) in the same period a year earlier. The company’s net investment income fell 26 percent to $86 million.
The REIT primarily invests in distressed residential mortgages and other mortgage-related assets but also does correspondent lending, originating and packaging loans for sales to banks. Revenue from its correspondent lending business fell 63 percent from the second quarter to $18.9 million.
Shares lost 23 cents, or almost one percent, to close at $22.90 on the New York Stock Exchange.
Signature Group Holdings Inc. reported widening losses in its third quarter.
The Sherman Oaks company, which owns industrial supply and finance subsidiaries, reported a net loss of $5.9 million (49 cents) for the third quarter ended Sept. 30, compared to a net loss of $2.6 million (23 cents) in the same period a year earlier. Revenue fell 13 percent to $9.8 million.
Signature is the successor company to Fremont General Corp., a publicly traded insurance company that had a disastrous run in the workers’ compensation industry and later with subprime mortgages. Those troubles left the company with nearly $900 million in net operating losses that it can apply against future profits to shield them from taxes. Bouchard’s plan is to build up the company before the exemptions run out.
Shares closed up 10 cents, or almost one percent, on the over-the-counter market.