Blog: Aclaris Therapeutics Reports First Quarter 2021 Financial Results and Provides a Corporate Update – GlobeNewswire

  •  Data from Phase 2a Trial of ATI-1777 for Moderate to Severe Atopic Dermatitis Expected in Second Quarter of 2021
  • Advancing ATI-450 with Planned Initiation of Phase 2b Trial for Moderate to Severe Rheumatoid Arthritis in Second Half of 2021
  • Advancing ATI-450 into Two Additional Indications: Hidradenitis Suppurativa and Psoriatic Arthritis
  • Expands Scientific Advisory Board

WAYNE, Pa., May 07, 2021 (GLOBE NEWSWIRE) — Aclaris Therapeutics, Inc. (NASDAQ: ACRS), a clinical-stage biopharmaceutical company focused on developing novel drug candidates for immuno-inflammatory diseases, today announced its financial results for the first quarter of 2021 and provided a corporate update.

“We’re very pleased with the progress of our novel immuno-inflammatory drug development pipeline and look forward to reporting data from our Phase 2a trial of ATI-1777 in the second quarter of 2021,” said Dr. Neal Walker, President & CEO of Aclaris. “ATI-1777 is our second development program generated by KINect, our proprietary drug discovery platform. After generating proof of mechanism in inhibiting TNFα, IL1β and IL6 in our Phase 2a trial of ATI-450 in moderate to severe rheumatoid arthritis, we are planning to move ATI-450 forward with a Phase 2b trial in moderate to severe rheumatoid arthritis in the second half of 2021 and planning to initiate two additional trials of ATI-450 in hidradenitis suppurativa and psoriatic arthritis.”

Research and Development Highlights:

The global COVID-19 pandemic continues to rapidly evolve and has caused and may continue to cause Aclaris to experience disruptions that could impact the timing of its research and development and regulatory activities listed below.

  • ATI-450, an investigational oral small molecule MK2 inhibitor compound:
    • ATI-450-RA-201: A Phase 2a, multicenter, randomized, investigator and patient-blind, sponsor-unblinded, parallel group, placebo-controlled clinical trial to investigate the safety, tolerability, pharmacokinetics and pharmacodynamics of ATI-450 in 19 subjects with moderate to severe rheumatoid arthritis. The trial consisted of a 12-week treatment period and a 4-week follow-up period. Two subjects withdrew from the trial during the treatment period, one in the treatment arm and one in the placebo arm.
      • Final per-protocol analysis, which consisted of 17 subjects who completed the treatment period (15 in the treatment arm and two in the placebo arm), confirmed that ATI-450 demonstrated durable clinical activity, as defined by a marked and sustained reduction in DAS28-CRP and improvement of ACR20/50/70 responses over 12 weeks.
      • Overall, ATI-450 was generally well tolerated. There were no treatment-related serious adverse events and all adverse events were mild to moderate. There was one non-treatment-related serious adverse event (COVID-19) reported in the 4-week follow-up period of the trial in a subject who was no longer receiving treatment. The subject withdrew during the 4-week follow-up period of the trial.
    • Aclaris intends to progress ATI-450 into a Phase 2b trial in moderate to severe rheumatoid arthritis in the second half of 2021.
    • As part of its planned expansion of its Phase 2 immuno-inflammatory clinical development programs, Aclaris also plans to progress ATI-450 into Phase 2 trials in hidradenitis suppurativa and psoriatic arthritis.
  • ATI-1777, an investigational topical “soft” Janus Kinase (JAK) 1/3 inhibitor compound:
    • ATI-1777-AD-201: An ongoing Phase 2a, multicenter, randomized, double-blind, vehicle-controlled, parallel-group clinical trial to investigate the efficacy, safety, tolerability and pharmacokinetics of ATI-1777 in 50 subjects with moderate to severe atopic dermatitis. The primary endpoint is the percentage change from baseline in the Eczema Area and Severity Index (EASI) score at week 4.
      • Enrollment in this trial was completed in March 2021.
      • Data from this trial are now expected in the second quarter of 2021.
  • ATI-2138, an investigational oral ITK/TXK/JAK3 (ITJ) inhibitor compound:
    • Currently being developed as a potential treatment for T-cell mediated diseases such as psoriasis and/or inflammatory bowel disease.
    • Submission of Investigational New Drug Application is expected in the second half of 2021.

Aclaris is also expanding its Scientific Advisory Board with the addition of Dr. Philip Mease. Dr. Mease, a rheumatologist, currently serves as a Director of the Division of Rheumatology Clinical Research at the Swedish Medical Center/Providence St. Joseph Health and is a Clinical Professor at the University of Washington in Seattle. His major clinical and research focus is psoriatic arthritis and axial spondyloarthritis.

Financial Highlights:

Liquidity and Capital Resources

As of March 31, 2021, Aclaris had aggregate cash, cash equivalents and marketable securities of $142.7 million compared to $54.1 million as of December 31, 2020. The primary factors for the change in cash, cash equivalents and marketable securities during the three months ended March 31, 2021 included:

  • Net proceeds of $103.3 million from a public offering in January 2021 in which Aclaris sold 6.3 million shares of common stock.
  • Net cash used in operating activities of $12.2 million resulting from net loss of $28.8 million and changes in operating assets and liabilities of $2.9 million, partially offset by non-cash adjustments of $19.4 million which was primarily related to a $16.4 million charge for the revaluation of contingent consideration.

Aclaris anticipates that its cash, cash equivalents and marketable securities as of March 31, 2021 will be sufficient to fund its operations through the end of 2023, including estimated costs for the Phase 2b trial of ATI-450 for moderate to severe rheumatoid arthritis and the planned expansion of its Phase 2 immuno-inflammatory clinical development programs for hidradenitis suppurativa and psoriatic arthritis, without giving effect to any potential business development transactions or financing activities.

Financial Results

First Quarter 2021

  • Net loss was $28.8 million for the first quarter of 2021 compared to $15.6 million for the first quarter of 2020.
  • Total revenue was $1.8 million for the first quarter of 2021 compared to $1.4 million for the first quarter of 2020.
  • Research and development (R&D) expenses were $7.8 million for the quarter ended March 31, 2021 compared to $7.7 million for the prior year period.
    • The quarter-over-quarter increase of $0.1 million was primarily the result of continued investment in the further development of Aclaris’ immuno-inflammatory drug development pipeline, including ATI-450, ATI-1777 and ATI-2138, partially offset by a reduction in spend for legacy dermatology assets and personnel costs.
  • General and administrative (G&A) expenses were $4.8 million for the quarter ended March 31, 2021 compared to $6.2 million for the prior year period.
    • The quarter-over-quarter decrease of $1.4 million was primarily the result of lower personnel and non-cash stock-based compensation expenses.
  • Revaluation of contingent consideration charges related to the Confluence acquisition was $16.4 million for the quarter ended March 31, 2021 compared to $1.8 million for the prior year period.
    • The quarter-over-quarter increase in contingent consideration of $14.7 million primarily resulted from updates to probability of success and estimated future sales level assumptions following the completion of a Phase 2a clinical trial of ATI-450 in subjects with moderate to severe rheumatoid arthritis.

About Aclaris Therapeutics, Inc.

Aclaris Therapeutics, Inc. is a clinical-stage biopharmaceutical company developing a pipeline of novel drug candidates to address the needs of patients with immuno-inflammatory diseases who lack satisfactory treatment options. The company has a multi-stage portfolio of drug candidates powered by a robust R&D engine exploring protein kinase regulation. For additional information, please visit http://www.aclaristx.com.

Cautionary Note Regarding Forward-Looking Statements

Any statements contained in this press release that do not describe historical facts may constitute forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements may be identified by words such as “believe,” “expect,” “intend,” “may,” “plan,” “potential,” “will,” and similar expressions, and are based on Aclaris’ current beliefs and expectations. These forward-looking statements include expectations regarding the clinical development of Aclaris’ drug candidates, including the availability of data from its clinical trials and timing for regulatory filings, and its belief that its existing cash, cash equivalents and marketable securities will be sufficient to fund its operations through the end of 2023. These statements involve risks and uncertainties that could cause actual results to differ materially from those reflected in such statements. Risks and uncertainties that may cause actual results to differ materially include uncertainties inherent in the conduct of clinical trials, Aclaris’ reliance on third parties over which it may not always have full control, Aclaris’ ability to enter into strategic partnerships on commercially reasonable terms, the uncertainty regarding the COVID-19 pandemic and other risks and uncertainties that are described in the Risk Factors section of Aclaris’ Annual Report on Form 10-K for the year ended December 31, 2020, and other filings Aclaris makes with the U.S. Securities and Exchange Commission from time to time. These documents are available under the “SEC Filings” page of the “Investors” section of Aclaris’ website at http://www.aclaristx.com. Any forward-looking statements speak only as of the date of this press release and are based on information available to Aclaris as of the date of this release, and Aclaris assumes no obligation to, and does not intend to, update any forward-looking statements, whether as a result of new information, future events or otherwise.



Aclaris Therapeutics, Inc.
Condensed Consolidated Statements of Operations
(unaudited, in thousands, except share and per share data)

    Three Months Ended
    March 31,
       2021        2020  
Revenues:            
Contract research   $ 1,535     $ 1,189  
Other revenue     242       218  
Total revenue     1,777       1,407  
             
Costs and expenses:            
Cost of revenue (1)     1,202       1,269  
Research and development (1)     7,838       7,677  
General and administrative (1)     4,827       6,200  
Revaluation of contingent consideration     16,439       1,767  
Total costs and expenses     30,306       16,913  
Loss from operations     (28,529 )     (15,506 )
Other income (expense), net     (225 )     178  
Loss from continuing operations     (28,754 )     (15,328 )
Loss from discontinued operations           (258 )
Net loss   $ (28,754 )   $ (15,586 )
Net loss per share, basic and diluted   $ (0.57 )   $ (0.37 )
Weighted average common shares outstanding, basic and diluted     50,337,807       41,618,429  
             
(1) Amounts include stock-based compensation expense as follows:            
             
Cost of revenue   $ 247     $ 260  
Research and development     876       816  
General and administrative     1,552       2,377  
Total stock-based compensation expense   $ 2,675     $ 3,453  



Aclaris Therapeutics, Inc.
Selected Consolidated Balance Sheet Data
(unaudited, in thousands, except share data)

             
       March 31, 2021      December 31, 2020
             
Cash, cash equivalents and marketable securities   $ 142,657   $ 54,131
Total assets   $ 161,399   $ 70,784
Total current liabilities   $ 14,505   $ 14,874
Total liabilities   $ 49,105   $ 33,134
Total stockholders’ equity   $ 112,294   $ 37,650
Common stock outstanding     52,081,729     45,109,314


Aclaris Contact

investors@aclaristx.com

Blog: MIX TELEMATICS LTD : Regulation FD Disclosure, Financial Statements and Exhibits (form 8-K) – marketscreener.com

Item 7.01. Regulation FD Disclosure.

This report contains a copy of the submission to the Johannesburg Stock Exchange
by MiX Telematics Limited (the “Company”) announcing the date of fourth quarter
and fiscal year 2021 conference call and webcast. The submission is furnished as
Exhibit 99.1 to this Current Report on Form 8-K.

The information contained in this Item 7.01, including the information contained
in the presentation furnished as Exhibit 99.1 hereto, is being “furnished” and
shall not be deemed to be “filed” for purposes of Section 18 of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to
the liabilities of that section, nor shall such information be deemed to be
incorporated by reference in any filing under the Securities Act of 1933, as
amended, or the Exchange Act, except as shall be expressly set forth by specific
reference in such filing

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

Exhibit
No. Description of Exhibit

99.1 Submission to the Johannesburg Stock Exchange – MiX – date of

    fourth     quarter     and     fiscal     year     2021 conference call and
webcast.




——————————————————————————–

© Edgar Online, source Glimpses

Blog: William Fry announces two new partners – Irish Legal News

William Fry announces two new partners

Published



Pictured: Louise McNabola and David Kirton

William Fry today announced the appointment of two new partners across its Banking & Finance and Technology departments.

Louise McNabola has been appointed as a partner in the Banking & Finance Department where she specialises in financial regulation. She has extensive knowledge and experience in debt finance and financial regulation. Ms McNabola advises Irish and international clients in relation to all aspects of financial regulation including advice on Irish regulatory authorisations as a payment/electronic money institution, regulatory capital requirements, the acquisition and disposal of qualifying holdings, anti-money laundering legislation, fitness and probity requirements and ongoing compliance with conduct of business requirements and general regulatory compliance.

David Kirton has been appointed as a partner in the Technology Department, where he specialises in technology, intellectual property and commercial law, with a focus on the life sciences and online platforms sectors. His practice includes all aspects of the development, protection and exploitation of IP rights, intermediary liability issues and EU and Irish legislation affecting online services, with a specialism at the intersection between IP and competition law.

As an experienced commercial lawyer, he also provides strategic advice on the structuring and negotiation of contracts for a wide range of commercial arrangements and transformative technology and outsourcing projects.

Owen O’Sullivan, managing partner said: “I am delighted to welcome Louise and David to the William Fry partnership. As a Firm, we invest strongly in our people to ensure we deliver the highest levels of service possible to our clients. In spite of ongoing challenges, our Firm continues to grow, particularly across our key practice groups such as Banking & Finance and Technology, in response to the needs of our clients both in Ireland and internationally.”

Blog: Six things you might not know about Jill Mortimer – the Thirsk farmer who became Hartlepool’s first Conservative MP since 1964 – The Yorkshire Post

Jill Mortimer comfortably won the Hartlepool by-electionJill Mortimer comfortably won the Hartlepool by-election
Jill Mortimer comfortably won the Hartlepool by-election

Labour have held Hartlepool since the constituency was created in 1974. Prior to that, ‘The Hartlepools’ has mostly been held by Labour since the Second World War apart from five years between 1959 and 1964 when it was Conservative.

Yet Mrs Mortimer secured the seat with a comfortable 6,940 majority in the Hartlepool by-election after the town went to the polls on May 6.

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So who is the politician behind this historic victory for the Conservatives?

Mrs Mortimer lives near Thirsk – around 30 miles from Hartlepool – and is described as a farmer.

Before moving to Thirsk, she spent around ten years away from the constituency, living both in London and abroad – including the Cayman islands in the Caribbean.

Conservative co-chairman Amanda Milling clarified that Mrs Mortimer moved there with her children due to the job of her ex-husband, “a highly experienced and respected regulator of financial services and a qualified barrister”.

The reply noted that Mrs Mortimer’s ex-husband was “a leading authority on financial regulation and has worked and published widely on counter-fraud, anti-corruption, anti-terrorist financing and many other matters”.

Mrs Mortimer is also a district councillor for the Raskelf and White Horse Ward on Hambleton council in North Yorkshire.

She contested the Leeds East seat against Labour in the 2019 General Election but lost by 5,531 votes to sitting MP and former Labour shadow minister Richard Burgon.

When campaigning for the Hartlepool seat, Mrs Mortimer listed her priorities as recovering from the pandemic, regenerating high streets and local communities, unlocking the opportunities of Brexit to help create good quality sustainable jobs, helping businesses deliver more apprenticeships, and recruiting more police officers.

She said Labour’s reign over Hartlepool was “why the town has been taken for granted and struggled.”

Blog: PennyMac Financial Services, Inc. Reports First Quarter 2021 Results – Business Wire

WESTLAKE VILLAGE, Calif.–(BUSINESS WIRE)–PennyMac Financial Services, Inc. (NYSE: PFSI) today reported net income of $376.9 million for the first quarter of 2021, or $5.15 per share on a diluted basis, on revenue of $944.7 million. Book value per share increased to $51.78 from $47.80 at December 31, 2020.

PFSI’s Board of Directors declared a first quarter cash dividend of $0.20 per share, payable on May 27, 2021, to common stockholders of record as of May 17, 2021.

First Quarter 2021 Highlights

  • Pretax income was $506.0 million, down 18 percent from the prior quarter and up 22 percent from the first quarter of 2020

    • Earnings reflect continued strong production and core servicing results partially offset by the performance of our hedged mortgage servicing rights
    • Repurchased approximately 4.7 million shares of PFSI’s common stock for an approximate cost of $288.4 million; repurchased an additional 270,000 shares in April for an approximate cost of $15.8 million
    • Issued $650 million of 8-year senior unsecured notes
  • Production segment pretax income of $362.9 million, down 37 percent from the prior quarter and up 51 percent from the first quarter of 2020

    • Direct lending interest rate lock commitments (IRLCs) were a record $19.1 billion in unpaid principal balance (UPB), up 3 percent from the prior quarter and 92 percent from the first quarter of 2020

      – $13.4 billion in UPB of IRLCs in the consumer direct channel; $5.7 billion in UPB of IRLCs in the broker direct channel
    • Government correspondent IRLCs totaled $17.1 billion in UPB, down 14 percent from the prior quarter and up 15 percent from the first quarter of 2020
    • Total loan acquisitions and originations were $67.0 billion in UPB, down 4 percent from the prior quarter and up 89 percent from the first quarter of 2020
    • Correspondent acquisitions of conventional loans fulfilled for PennyMac Mortgage Investment Trust (NYSE: PMT) were $33.8 billion in UPB, down 11 percent from the prior quarter and up 109 percent from the first quarter of 2020
  • Servicing segment pretax income was $141.7 million, up from $42.0 million in the prior quarter and down from $170.8 million in the first quarter of 2020

    • Pretax income excluding valuation-related items was $258.4 million, up 10 percent from the prior quarter and up 511 percent from the first quarter of 2020, driven by continued loss mitigation activities related to COVID-19
    • Valuation items included:

      – $306.1 million in MSR fair value gains driven by higher mortgage rates partially offset by valuation impacts primarily attributable to significant prepayment activity and early buyouts

      – $443.2 million in hedging and other fair value declines which included elevated hedge costs driven by increased market volatility

      – Net impact on pretax income related to these items was $(137.1) million and on earnings per share was $(1.38)

      – $20.4 million of reversals related to provisions for credit losses on active loans
    • Servicing portfolio grew to $448.8 billion in UPB, up 5 percent from December 31, 2020 and 17 percent from March 31, 2020, driven by strong production volumes which offset elevated prepayment activity
  • Investment Management segment pretax income was $1.4 million, down from $2.6 million in the prior quarter and $3.8 million in the first quarter of 2020

    • Net assets under management (AUM) were $2.4 billion, up 3 percent from December 31, 2020 and 29 percent from March 31, 2020

“PennyMac Financial again produced exceptional financial results in the first quarter with a return on equity of 43 percent,” said Chairman and CEO David Spector, “in an environment characterized by rising rates and declining margins. We successfully grew our consumer direct lending channel, originating $10.7 billion and locking $13.4 billion in the quarter, both record levels. Despite elevated levels of competition in the wholesale channel, we maintained our pricing discipline and continued to gain market share, aided by 18 percent growth in our approved brokers. With $67 billion in total production across all channels, our servicing portfolio grew to nearly $450 billion in unpaid principal balance and 2 million customers. Our growing servicing portfolio continues to generate strong pretax income excluding fair value changes, which we seek to moderate through time with our hedging activity.”

Mr. Spector concluded, “PennyMac Financial has built an extremely valuable mortgage banking enterprise well positioned for long-term success. We believe deeply in that value, which is why we continue to repurchase shares. Since the beginning of 2020, we have now repurchased approximately 18 percent of PFSI’s common shares. We also continue to make substantial investments in our technology and operations. I remain confident in our ability to profitably and responsibly grow our direct lending channels while maintaining our leadership position in correspondent production. Combined with our large and growing residential loan servicing portfolio, we expect to continue producing strong returns for our stockholders. For the remainder of 2021, we project PennyMac Financial to achieve a return on equity closer to our pre-COVID historical returns. Finally, we look forward to further discussing our outlook for the business at our upcoming investor day for PennyMac Financial and PennyMac Mortgage Investment Trust.”

The following table presents the contributions of PennyMac Financial’s segments to pretax income:

Quarter ended March 31, 2021
Mortgage Banking Investment
Management
Production Servicing Total Total
(in thousands)
Revenue
Net gains on loans held for sale at fair value

$

515,963

 

$

238,378

 

$

754,341

 

$

 

$

754,341

 

Loan origination fees

 

104,037

 

 

 

 

104,037

 

 

 

 

104,037

 

Fulfillment fees from PMT

 

60,835

 

 

 

 

60,835

 

 

 

 

60,835

 

Net loan servicing fees

 

 

 

39,720

 

 

39,720

 

 

 

 

39,720

 

Management fees

 

 

 

 

 

 

 

8,449

 

 

8,449

 

Net interest expense:
Interest income

 

29,531

 

 

52,550

 

 

82,081

 

 

 

 

82,081

 

Interest expense

 

38,072

 

 

69,638

 

 

107,710

 

 

3

 

 

107,713

 

 

(8,541

)

 

(17,088

)

 

(25,629

)

 

(3

)

 

(25,632

)

Other

 

597

 

 

1,197

 

 

1,794

 

 

1,142

 

 

2,936

 

Total net revenue

 

672,891

 

 

262,207

 

 

935,098

 

 

9,588

 

 

944,686

 

Expenses

 

309,996

 

 

120,463

 

 

430,459

 

 

8,219

 

 

438,678

 

Pretax income

$

362,895

 

$

141,744

 

$

504,639

 

$

1,369

 

$

506,008

 

Production Segment

The Production segment includes the correspondent acquisition of newly originated government-insured mortgage loans for PennyMac Financial’s own account, fulfillment services on behalf of PMT and direct lending through the consumer direct and broker direct channels, including the underwriting and acquisition of loans from correspondent sellers on a non-delegated basis.

PennyMac Financial’s loan production activity for the quarter totaled $67.0 billion in UPB, $33.2 billion of which was for its own account, and $33.8 billion of which was fee-based fulfillment activity for PMT. Correspondent government and direct lending IRLCs totaled $36.1 billion in UPB, down 6 percent from the prior quarter and up 46 percent from the first quarter of 2020.

Production segment pretax income was $362.9 million, down 37 percent from the prior quarter and up 51 percent from the first quarter of 2020. Production revenue totaled $672.9 million, down 18 percent from the prior quarter and up 59 percent from the first quarter of 2020. The quarter-over-quarter decrease was primarily driven by a $143.9 million decrease in net gains on loans held for sale primarily as a result of lower production margins across all channels.

The components of net gains on loans held for sale are detailed in the following table:

Quarter ended
March 31,
2021
December 31,
2020
March 31,
2020
(in thousands)
Receipt of MSRs and recognition of MSLs in loan sale transactions

$

463,571

 

$

367,501

 

$

275,739

 

Mortgage servicing rights recapture payable to PennyMac Mortgage Investment Trust

 

(14,248

)

 

(11,868

)

 

(3,308

)

Provision of liability for representations and warranties, net

 

(6,368

)

 

(4,667

)

 

(2,036

)

Cash gain (1)

 

818,937

 

 

459,887

 

 

70,315

 

Fair value changes of pipeline, inventory and hedges

 

(507,551

)

 

48,208

 

 

3,572

 

Net gains on mortgage loans held for sale

$

754,341

 

$

859,061

 

$

344,282

 

Net gains on mortgage loans held for sale by segment:
Production

$

515,963

 

$

659,915

 

$

316,635

 

Servicing

$

238,378

 

$

199,146

 

$

27,647

 

 
(1) Net of cash hedging results

PennyMac Financial performs fulfillment services for conventional conforming and jumbo loans acquired by PMT from non-affiliates in its correspondent production business. These services include, but are not limited to, marketing, relationship management, correspondent seller approval and monitoring, loan file review, underwriting, pricing, hedging and activities related to the subsequent sale and securitization of loans in the secondary mortgage markets for PMT.

Fees earned from the fulfillment of correspondent loans on behalf of PMT totaled $60.8 million in the first quarter, down 16 percent from the prior quarter and up 45 percent from the first quarter of 2020. The quarter-over-quarter decrease in fulfillment fee revenue was driven primarily by an 11 percent decrease in acquisition volumes by PMT and a slight decrease in the weighted average fulfillment fee rate to 18 basis points from 19 basis points in the prior quarter.

Net interest expense totaled $8.5 million, up from net interest expense of $1.3 million in the prior quarter and net interest income of $6.4 million in the first quarter of 2020. Interest income in the first quarter totaled $29.5 million, down slightly from $29.8 million in the prior quarter. Interest expense totaled $38.1 million, up from $31.0 million in the prior quarter as a result of the increased volumes in the direct lending channels.

Production segment expenses were $310.0 million, up 23 percent from the prior quarter and 70 percent from the first quarter of 2020. The quarter-over-quarter increase resulted from record origination volumes in the direct lending channels.

Servicing Segment

The Servicing segment includes income from owned MSRs, subservicing and special servicing activities. Servicing segment pretax income was $141.7 million, versus pretax income of $42.0 million in the prior quarter and $170.8 million in the first quarter of 2020. Servicing segment net revenues totaled $262.2 million, up 26 percent from the prior quarter and down 9 percent from the first quarter of 2020. The quarter-over-quarter increase was primarily driven by a $39.2 million increase on net gains on loans held for sale.

Revenue from net loan servicing fees totaled $39.7 million, up from $26.5 million in the prior quarter, as a result of lower net valuation related declines and realization of cash flows. Revenue from net loan servicing fees included $259.4 million in servicing fees, reduced by $82.7 million from the realization of MSR cash flows. Net valuation-related losses totaled $137.1 million, and included MSR fair value gains of $306.1 million, and hedging and other declines of $443.2 million.

The following table presents a breakdown of net loan servicing fees:

Quarter ended
March 31,
2021
December 31,
2020
March 31,
2020
(in thousands)
Loan servicing fees (1)

$

259,445

 

$

262,740

 

$

241,929

 

Changes in fair value of MSRs and MSLs resulting from:
Realization of cash flows

 

(82,663

)

 

(89,611

)

 

(114,919

)

Change in fair value inputs

 

306,126

 

 

(44,163

)

 

(920,294

)

Change in fair value of excess servicing spread financing

 

(1,037

)

 

6,677

 

 

14,522

 

Hedging (losses) gains

 

(442,151

)

 

(109,147

)

 

1,036,570

 

Net change in fair value of MSRs and MSLs

 

(219,725

)

 

(236,244

)

 

15,879

 

Net loan servicing fees

$

39,720

 

$

26,496

 

$

257,808

 

 
(1) Includes contractually-specified servicing fees

Servicing segment revenue included $238.4 million in net gains on loans held for sale related to reperforming government-insured and guaranteed loans, up from $199.1 million in the prior quarter and $27.6 million in the first quarter of 2020 as a result of increased loss mitigation activity on loans emerging from forbearance. These previously delinquent loans were purchased out of Ginnie Mae securitizations and brought back to performing status through PennyMac Financial’s successful servicing efforts, primarily through loan modifications or FHA Partial Claims. With respect to the FHA Partial Claims, the reperforming loans must remain current for a minimum of six months to be eligible for resecuritization. Net interest expense totaled $17.1 million, versus net interest expense of $18.2 million in the prior quarter and net interest income of $4.6 million in the first quarter of 2020. Interest income was $52.6 million, up from $44.4 million in the prior quarter, driven by the increase in interest received on loans bought out in prior periods. Interest expense was $69.6 million, up from $62.6 million in the prior quarter driven by the financing of increased balances of loans purchased out of Ginnie Mae securitizations.

Servicing segment expenses totaled $120.5 million, down 27 percent from the prior quarter driven by $20.4 million of reversals related to provisions for credit losses on active loans. The prior quarter included a $45.6 million provision for credit losses on active loans.

The total servicing portfolio grew to $448.8 billion in UPB at March 31, 2021, an increase of 5 percent from December 31, 2020 and 17 percent from March 31, 2020. PennyMac Financial subservices and conducts special servicing for $188.3 billion in UPB, an increase of 8 percent from December 31, 2020 and 30 percent from March 31, 2020. PennyMac Financial’s owned MSR portfolio grew to $260.5 billion in UPB, an increase of 3 percent from December 31, 2020 and 9 percent from March 31, 2020.

The table below details PennyMac Financial’s servicing portfolio UPB:

March 31,
2021
December 31,
2020
March 31,
2020
(in thousands)
Prime servicing:
Owned
Mortgage servicing rights
Originated

$

208,189,112

$

196,873,590

$

173,171,678

Acquisitions

 

36,178,818

 

41,537,219

 

58,312,483

 

244,367,930

 

238,410,809

 

231,484,161

Mortgage servicing liabilities

 

3,173,793

 

2,857,492

 

2,635,734

Loans held for sale

 

12,959,016

 

11,063,938

 

5,276,688

 

260,500,739

 

252,332,239

 

239,396,583

Subserviced for PMT

 

188,279,019

 

174,360,317

 

144,734,874

Total prime servicing

 

448,779,758

 

426,692,556

 

384,131,457

Special servicing – subserviced for PMT

 

45,143

 

58,274

 

95,169

Total loans serviced

$

448,824,901

$

426,750,830

$

384,226,626

 
Loans serviced:
Owned
Mortgage servicing rights

$

244,367,930

$

238,410,809

$

231,484,161

Mortgage servicing liabilities

 

3,173,793

 

2,857,492

 

2,635,734

Loans held for sale

 

12,959,016

 

11,063,938

 

5,276,688

 

260,500,739

 

252,332,239

 

239,396,583

Subserviced

 

188,324,162

 

174,418,591

 

144,830,043

Total loans serviced

$

448,824,901

$

426,750,830

$

384,226,626

Investment Management Segment

PennyMac Financial manages PMT for which it earns base management fees and may earn incentive compensation. Net AUM were $2.4 billion as of March 31, 2021, up 3 percent from December 31, 2020.

Pretax income for the Investment Management segment was $1.4 million, down from $2.6 million in the prior quarter and $3.8 million in the first quarter of 2020. Management fees, which include base management and performance incentive fees from PMT were $8.4 million, down from $8.7 million in the prior quarter and $9.1 million in the first quarter of 2020. Base management fees were $8.4 million, down from $8.7 million in the prior quarter and $9.1 million in the first quarter of 2020. Performance-based incentive fees were not earned in the first quarter of 2021 due to the impact of PMT’s loss in the first quarter of 2020.

The following table presents a breakdown of management fees:

Quarter ended
March 31,
2021
December 31,
2020
March 31,
2020
(in thousands)
Management fees:
PennyMac Mortgage Investment Trust
Base

$

8,449

$

8,687

$

9,055

Performance incentive

 

 

 

Total management fees

$

8,449

$

8,687

$

9,055

 
Net assets of PennyMac Mortgage Investment Trust

$

2,357,143

$

2,296,859

$

1,823,368

Investment Management segment expenses totaled $8.2 million, up 16 percent from the prior quarter and 35 percent from the first quarter of 2020.

Consolidated Expenses

Total expenses were $438.7 million, up 3 percent from the prior quarter and 43 percent from the first quarter of 2020. The quarter-over-quarter increase was driven by increased levels of activity in the direct lending channels and was largely offset by the lower servicing expenses described above.

Management’s slide presentation will be available in the Investor Relations section of the Company’s website at ir.pennymacfinancial.com beginning at 1:30 p.m. (Pacific Time) on Thursday, May 6, 2021.

About PennyMac Financial Services, Inc.

PennyMac Financial Services, Inc. is a specialty financial services firm with a comprehensive mortgage platform and integrated business focused on the production and servicing of U.S. mortgage loans and the management of investments related to the U.S. mortgage market.

Founded in 2008, the company is recognized as a leader in the U.S. residential mortgage industry and employs approximately 6,500 people across the country. For the twelve months ended March 31, 2021, PennyMac Financial’s production of newly originated loans totaled $228 billion in unpaid principal balance, making it the second largest mortgage lender in the nation. As of March 31, 2021, PennyMac Financial serviced loans totaling $449 billion in unpaid principal balance, making it a top ten mortgage servicer in the nation.

Additional information about PennyMac Financial Services, Inc. is available at ir.pennymacfinancial.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, regarding management’s beliefs, estimates, projections, and assumptions with respect to, among other things, the Company’s financial results, future operations, business plans and investment strategies, as well as industry and market conditions, all of which are subject to change. Words like “believe,” “expect,” “anticipate,” “promise,” “project,” “plan,” and other expressions or words of similar meanings, as well as future or conditional verbs such as “will,” “would,” “should,” “could,” or “may” are generally intended to identify forward-looking statements. Actual results and operations for any future period may vary materially from those projected herein and from past results discussed herein. Factors which could cause actual results to differ materially from historical results or those anticipated include, but are not limited to: our exposure to risks of loss and disruptions in operations resulting from adverse weather conditions, man-made or natural disasters, climate change and pandemics such as COVID-19; failure to modify, resell or refinance early buyout loans; the continually changing federal, state and local laws and regulations applicable to the highly regulated industry in which we operate; lawsuits or governmental actions that may result from any noncompliance with the laws and regulations applicable to our businesses; the mortgage lending and servicing-related regulations promulgated by the Consumer Financial Protection Bureau and its enforcement of these regulations; our dependence on U.S. government‑sponsored entities and changes in their current roles or their guarantees or guidelines; changes to government mortgage modification programs; the licensing and operational requirements of states and other jurisdictions applicable to the Company’s businesses, to which our bank competitors are not subject; foreclosure delays and changes in foreclosure practices; changes in macroeconomic and U.S. real estate market conditions; difficulties inherent in growing loan production volume; difficulties inherent in adjusting the size of our operations to reflect changes in business levels; purchase opportunities for mortgage servicing rights and our success in winning bids; changes in prevailing interest rates; our substantial amount of indebtedness; expected discontinuation of LIBOR; increases in loan delinquencies and defaults; our reliance on PennyMac Mortgage Investment Trust (NYSE: PMT) as a significant source of financing for, and revenue related to, our mortgage banking business; maintaining sufficient capital and liquidity to support business growth including compliance with financial covenants; our obligation to indemnify third‑party purchasers or repurchase loans if loans that we originate, acquire, service or assist in the fulfillment of, fail to meet certain criteria or characteristics or under other circumstances; our obligation to indemnify PMT if our services fail to meet certain criteria or characteristics or under other circumstances; decreases in the returns on the assets that we select and manage for our clients, and our resulting management and incentive fees; the extensive amount of regulation applicable to our investment management segment; conflicts of interest in allocating our services and investment opportunities among us and our advised entities; the effect of public opinion on our reputation; our recent growth; our ability to effectively identify, manage, monitor and mitigate financial risks; our initiation or expansion of new business activities or strategies; our ability to detect misconduct and fraud; our ability to mitigate cybersecurity risks and cyber incidents; our ability to pay dividends to our stockholders; and our organizational structure and certain requirements in our charter documents. You should not place undue reliance on any forward- looking statement and should consider all of the uncertainties and risks described above, as well as those more fully discussed in reports and other documents filed by the Company with the Securities and Exchange Commission from time to time. The Company undertakes no obligation to publicly update or revise any forward-looking statements or any other information contained herein, and the statements made in this press release are current as of the date of this release only.

This press release contains financial information calculated other than in accordance with U.S. generally accepted accounting principles (“GAAP”), such as pretax income excluding valuation items that provide a meaningful perspective on the Company’s business results since the Company utilizes this information to evaluate and manage the business. Non-GAAP disclosure has limitations as an analytical tool and should not be viewed as a substitute for financial information determined in accordance with GAAP.

PENNYMAC FINANCIAL SERVICES, INC.

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

 
March 31,
2021
December 31,
2020
March 31,
2020
(in thousands, except share amounts)
ASSETS
Cash

$

441,870

$

532,716

$

878,826

Short-term investments at fair value

 

24,850

 

15,217

 

1,884

Loans held for sale at fair value

 

13,385,789

 

11,616,400

 

5,541,987

Assets purchased from PennyMac Mortgage Investment Trust under agreements to resell pledged to creditors

 

 

80,862

 

99,766

Derivative assets

 

530,852

 

711,238

 

433,211

Servicing advances, net

 

550,150

 

579,528

 

299,550

Mortgage servicing rights

 

3,268,910

 

2,581,174

 

2,193,697

Operating lease right-of-use assets

 

74,795

 

74,934

 

71,639

Investment in PennyMac Mortgage Investment Trust at fair value

 

1,470

 

1,105

 

797

Receivable from PennyMac Mortgage Investment Trust

 

68,644

 

87,005

 

56,223

Loans eligible for repurchase

 

12,312,393

 

14,625,447

 

980,618

Other

 

638,257

 

692,169

 

332,935

Total assets

$

31,297,980

$

31,597,795

$

10,891,133

 
LIABILITIES
Assets sold under agreements to repurchase

$

10,848,477

$

9,654,797

$

4,444,545

Mortgage loan participation and sale agreements

 

518,747

 

521,477

 

528,750

Obligations under capital lease

 

10,468

 

11,864

 

18,145

Notes payable secured by mortgage servicing assets

 

1,296,285

 

1,295,840

 

1,294,514

Unsecured senior notes

 

1,288,198

 

645,820

 

Excess servicing spread financing payable to PennyMac Mortgage Investment Trust at fair value

 

 

131,750

 

157,109

Derivative liabilities

 

68,557

 

42,638

 

43,152

Mortgage servicing liabilities at fair value

 

46,026

 

45,324

 

29,761

Operating lease liabilities

 

96,069

 

94,193

 

89,829

Accounts payable and accrued expenses

 

355,429

 

308,398

 

198,897

Payable to PennyMac Mortgage Investment Trust

 

164,469

 

140,306

 

59,281

Payable to exchanged Private National Mortgage Acceptance Company, LLC unitholders under tax receivable agreement

 

35,165

 

35,165

 

46,158

Income taxes payable

 

751,855

 

622,700

 

613,043

Liability for loans eligible for repurchase

 

12,312,393

 

14,625,447

 

980,618

Liability for losses under representations and warranties

 

38,428

 

32,688

 

23,202

Total liabilities

 

27,830,566

 

28,208,407

 

8,527,004

 
STOCKHOLDERS’ EQUITY
Common stock — authorized 200,000,000 shares of $0.0001 par value; issued and outstanding 66,961,401, 70,905,532, and 79,190,245 shares, respectively

 

7

 

7

 

8

Additional paid-in capital

 

762,585

 

1,047,052

 

1,341,219

Retained earnings

 

2,704,822

 

2,342,329

 

1,022,902

Total stockholders’ equity

 

3,467,414

 

3,389,388

 

2,364,129

Total liabilities and stockholders’ equity

$

31,297,980

$

31,597,795

$

10,891,133

 

PENNYMAC FINANCIAL SERVICES, INC.

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

 
Quarter ended
March 31,
2021
December 31,
2020
March 31,
2020
(in thousands, except earnings per share)
Revenue
Net gains on loans held for sale at fair value

$

754,341

 

$

859,061

 

$

344,282

 

Loan origination fees

 

104,037

 

 

93,460

 

 

57,571

 

Fulfillment fees from PennyMac Mortgage Investment Trust

 

60,835

 

 

72,606

 

 

41,940

 

Net loan servicing fees:
Loan servicing fees

 

259,445

 

 

262,740

 

 

241,929

 

Change in fair value of mortgage servicing rights, mortgage
servicing liabilities and excess servicing spread financing

 

222,426

 

 

(127,097

)

 

(1,020,691

)

Hedging results

 

(442,151

)

 

(109,147

)

 

1,036,570

 

Net loan servicing fees

 

39,720

 

 

26,496

 

 

257,808

 

Net interest (expense) income:
Interest income

 

82,081

 

 

74,192

 

 

72,564

 

Interest expense

 

107,713

 

 

93,653

 

 

61,512

 

 

(25,632

)

 

(19,461

)

 

11,052

 

Management fees from PennyMac Mortgage Investment Trust

 

8,449

 

 

8,687

 

 

9,055

 

Change in fair value of investment in and dividends received from PennyMac Mortgage Investment Trust

 

401

 

 

149

 

 

(857

)

Results of real estate acquired in settlement of loans

 

780

 

 

233

 

 

(707

)

Revaluation of payable to exchange Private National Mortgage Acceptance Company, LLC unitholders under tax receivable agreement

 

 

 

280

 

 

 

Other

 

1,755

 

 

635

 

 

1,681

 

Total net revenue

 

944,686

 

 

1,042,146

 

 

721,825

 

Expenses
Compensation

 

258,829

 

 

187,807

 

 

168,436

 

Loan origination

 

87,392

 

 

69,069

 

 

46,004

 

Technology

 

33,672

 

 

42,594

 

 

19,107

 

Servicing

 

19,183

 

 

87,155

 

 

42,166

 

Professional services

 

13,286

 

 

19,853

 

 

13,404

 

Occupancy and equipment

 

9,038

 

 

8,535

 

 

8,038

 

Other

 

17,278

 

 

9,907

 

 

9,940

 

Total expenses

 

438,678

 

 

424,920

 

 

307,095

 

Income before provision for income taxes

 

506,008

 

 

617,226

 

 

414,730

 

Provision for income taxes

 

129,140

 

 

164,422

 

 

108,487

 

Net income

$

376,868

 

$

452,804

 

$

306,243

 

Earnings per share
Basic

$

5.45

 

$

6.31

 

$

3.89

 

Diluted

$

5.15

 

$

5.97

 

$

3.73

 

Weighted-average common shares outstanding
Basic

 

69,113

 

 

71,793

 

 

78,689

 

Diluted

 

73,117

 

 

75,898

 

 

82,008

 

Dividend declared per share

$

0.20

 

$

0.15

 

$

0.12

 

 

Blog: Tax impact of European Commission’s draft foreign subsidies Regulation – Lexology

Under the European Commission’s draft Regulation for a new regime to address the impact of subsidies from non-EU countries on trade within the EU published on 5 May 2021, tax concessions, reliefs and credits granted by the UK or other non-EU countries could, in certain circumstances, become subject to the EC’s oversight. Interested parties may want to make use of the opportunity to provide feedback on the proposal during the next 8 weeks.

The draft Regulation seeks to close a perceived regulatory gap in the internal market. Within the EU, existing rules on State aid and public procurement ensure fair competition is maintained when companies receive subsidies from Member States. However, these tools do not apply to subsidies granted by non-EU governments. Under the draft Regulation, the EC would have powers to investigate financial contributions granted by public authorities of a non-EU country (which now also includes the UK) where these confer benefits on individual companies engaging in an economic activity (in the form of acquisitions or tender activity) in the EU, and to redress their distortive effects.

If the Regulation is implemented, it will introduce a major new regulatory hurdle for UK and other non-EU businesses seeking to do business in the EU. The concept of “subsidy” that is applied in the draft Regulation is broad and could include support that is not specifically targeted at acquisitions or tender activity, such as tax concessions or credits targeted at particular business sectors. Indeed, subsidies given through the tax system feature in a number of the case studies included in the impact assessment published alongside the draft Regulation to illustrate potential distortive effects which the draft Regulation seeks to address.

Please refer to my colleagues’ briefing for more detail on the draft Regulations, as well as associated practical questions and challenges.

Blog: Pope Francis’ Prayer Intention for May is for the Regulation of Financial Markets – National Catholic Register

The pope is asking Catholics to pray “that those responsible for finance will collaborate with governments to regulate financial markets and protect citizens from its dangers.”

VATICAN CITY — Pope Francis is asking Catholics to pray throughout May for the regulation of financial markets to “protect citizens from its dangers.”

“How far is the world of big finance from most people’s lives. Finance, if not regulated, becomes pure speculation animated by monetary policies. This situation is unsustainable. It’s dangerous,” Pope Francis said in a video message released May 4.

“To prevent the poor from paying the consequences again, financial speculation must be strictly regulated.”

The Vatican released a video message to present the pope’s prayer intention for May. 

The pope is asking Catholics to pray “that those responsible for finance will collaborate with governments to regulate financial markets and protect citizens from its dangers.”

Each month, the Pope’s Worldwide Prayer Network produces a video to spread the pope’s prayer intention. In 2021, these intentions have ranged from prayer for women who are victims of violence to prayer that more people will return to the sacrament of confession.

Jesuit Fr. Frédéric Fornos, president of the network, said that “this prayer intention must be understood in the context of the crisis we’re living through, which has made evident the great inequality there is in the world.”

In 2020, global Gross Domestic Product (GDP) recorded its largest drop since the end of World War II, with millions of job losses as a result of restrictions imposed in response to the coronavirus pandemic.

“The pope said it again recently,” Fr. Fornos said. “We cannot be content with ‘a return to an unequal and unsustainable model of economic and social life, where a tiny minority of the world’s population owns half of its wealth.’”

In this month’s video, Pope Francis stressed that “finance is a tool” to be put at the service of people and to “take care of our common home.”

He said: “We still have time to start a process of global change to put into practice a different, more just, inclusive, sustainable economy that leaves no one behind. Let’s do it.”