PennyMac reported record origination levels in 2019, with direct lending locks in the fourth quarter up 235 percent year-over-year.
The company said it totaled profits of $152.7 million in the fourth quarter. Direct lending locks totaled $5.4 billion in the fourth quarter and overall loan production totaled $117.6 billion for the year, up 74 percent from 2018.
“PennyMac Financial delivered outstanding performance across all of its businesses in the fourth quarter and throughout 2019,” President and CEO David Spector said in a news release accompanying the earnings. “Book value per share grew 22 percent 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.”
Pretax income in 2019 totaled a record $529.4 million, up 98 percent year-over-year. According to Inside Mortgage Finance, PennyMac was the third-largest producer of mortgage loans for the fourth quarter and the full year of 2019.
Loan production activity totaled $42.4 billion in the fourth quarter.
“PennyMac Financial has demonstrated its ability to grow market share over the last six and a half years,” Spector said in a conference call. “The investments we make in technology combined with the size and scale we have achieved are critical to (PennyMac’s) success in the highly competitive mortgage market. Our leadership position in the correspondent channel has driven the significant growth of our servicing portfolio, which also expands the opportunity for our consumer direct lending channel where we continue to improve systems while expanding capacity.”
Chief Mortgage Banking Officer Doug Jones said on the call that the company estimated its market share in consumer direct lending rose to 0.9 percent, up from 0.6 percent in 2018, led by investments which allowed PennyMac to capture the refi spike.
“We originated 3.8 billion dollars in UPB (unpaid principal balance) of loans in our consumer direct channel, up 42 percent from the prior quarter and 217 percent from the fourth quarter of 2018, as we continue to add scale, and build out our sales and fulfillment capacity to address the larger market opportunity,” Jones said. “As David discussed earlier, our use of data analytics continues to improve, driving higher quality lead generation and enhanced operational efficiency. Strong performance in our consumer direct channel continued in January, with $1.3 billion in UPB of originations, $2.3 billion of locks and a committed pipeline of $2.8 billion at the end of the month, up from $2.4 billion at Dec. 31.”