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About David Spector

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Latest David Spector News

Servicing business carries Pennymac in Q2 2022

Aug 3, 2022

HousingWire open menu Company reduced operating expenses by more than $100M - and will continue to cost-cut Share On On the strength of its servicing segment, California-based Pennymac Financial Services delivered a $129.2 million profit in the second quarter, which was down 25.6% quarter-over-quarter and 36.7% year-over-year, the company reported Tuesday. The nonbank lender’s top executives said the company reported a strong performance given the downturn in mortgage originations. “We improved margins across all three channels,” David Spector, chairman and chief executive officer, said in a recorded earnings message. He added: “Combined with the quick, decisive and meaningful actions taken earlier this year to align our expenses with lower expected levels of activity, it led to continued profitability in our production segment, despite higher interest rates, increased volatility and industry overcapacity.”  On the production side, Pennymac’s total loan acquisitions and originations came in at $26.7 billion in the second quarter, down 20% from the prior quarter and 56% from the same period last year. Pennymac is the country’s largest correspondent aggregator, but also has smaller wholesale and direct-to-consumer businesses. The company received $9.7 million in pretax income from loan originations during the quarter, up slightly from $9.3 million in the prior quarter but down tremendously from the $244.4 million in the second quarter of 2021. “In fact, we reduced operating expenses by more than $100 million in the second quarter compared to average quarterly 2021 levels,” Spector said. “And we expect quarterly operating expenses to decline by another $50 to $60 million in the second half of 2022.”  HousingWire reported Friday the company cut  32 jobs in California  in July, marking its third round of layoffs this year, as Pennymac had a  workforce reduction  of 236 employees in March and  laid off another 207  staff members in May. The firm’s second-quarter earnings were driven by its servicing portfolio, which grew to $527.3 billion in unpaid balance, up 2% from March 31, 2022, and 11% from June 30, 2021. The company netted $233.8 million in mortgage servicing rights (MSR) fair value gains in the second quarter – as higher mortgage rates resulted in lower prepayment activity expectations. But the result was partially offset by $176 million in fair value decreases from hedging transactions due to surging interest rates. Pennymac’s servicing segment generated $167.6 million in pre-tax income in the second quarter, down from $225.2 million in the previous quarter and up from $30.9 million in the same period in 2021. “The growth of our servicing portfolio will continue to serve as an important asset while the origination landscape remains competitive and challenging,” Spector said. Among its multi-channel production business, the consumer direct interest rate lock commitments (IRLCs) were $9.3 billion in unpaid principal balance in the second quarter, down 53% from the previous quarter and 69% from the second quarter 2021. Broker direct IRLCs declined (51%) at a steeper rate than government-sponsored IRLCs (28%) from the same period last year. The consumer-direct margin increased from 297 basis points in the first quarter to 343 bps in the second quarter. Correspondent rose from 23 bps to 30 bps, while the broker direct margin inched up from 62 bps to 71 bps. Pennymac’s market share in the correspondent channel declined from 16.7% in the first quarter to 14.7% in the second quarter. Consumer direct remained at 1.6%, while broker direct declined from 2.4% to 2.2%. Loan servicing market share held steady at 4.1%. Addressing the demands of the 2.2 million servicing portfolio customers, the company recently launched closed-end second lien mortgage loans. It also introduced a “ Lock & Shop ” product, allowing borrowers to lock in current mortgage rates for up to 90 days while searching for a home. The company continued to buy back shares of its stock. It repurchased about $113.6 million worth of stock in the second quarter. PFSI’s stock closed Tuesday at $52.65, down 4% from the market opening. The stocks rose 5% in the aftermarket following the earnings publication. Leave a Reply

David Spector Investments

4 Investments

David Spector has made 4 investments. Their latest investment was in Diamond Foundry as part of their Series B on November 11, 2015.

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David Spector Investments Activity

investments chart

Date

Round

Company

Amount

New?

Co-Investors

Sources

11/11/2015

Series B

Diamond Foundry

$100M

Yes

1

12/3/2014

Series A - II

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$99M

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10

10/14/2014

Series A

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$99M

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10

7/1/2012

Seed VC

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$99M

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10

Date

11/11/2015

12/3/2014

10/14/2014

7/1/2012

Round

Series B

Series A - II

Series A

Seed VC

Company

Diamond Foundry

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Amount

$100M

$99M

$99M

$99M

New?

Yes

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Co-Investors

Sources

1

10

10

10

David Spector Portfolio Exits

1 Portfolio Exit

David Spector has 1 portfolio exit. Their latest portfolio exit was Hey on July 20, 2016.

Date

Exit

Companies

Valuation
Valuations are submitted by companies, mined from state filings or news, provided by VentureSource, or based on a comparables valuation model.

Acquirer

Sources

7/20/2016

Acq - Talent

$99M

1

Date

7/20/2016

Exit

Acq - Talent

Companies

Valuation

$99M

Acquirer

Sources

1

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