PSMH: Profitable First Quarter!
By Ann Heffron, CFA
PSM Holdings, Inc. (PSMH) posted net earnings of $0.2 million, or $0.01 per diluted share, for the first fiscal quarter ending September 30, 2012. This compares to a fiscal fourth quarter (ending June 30, 2012) net loss of $0.3 million, or a loss per share of $0.01. Both quarters reflected the adoption of PSMH’s new business model, including all five acquisitions the Company has made to date, as well as contributions from the Costco operations.
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The first quarter matched our diluted EPS estimate of $0.01, as both revenues and operating expenses were $0.2 million lower than we had expected.
We have raised our estimate for 2013, as we have increased our projections for loan origination volume, and have slightly reduced the gross profit margin due to the growing importance of the lower margin Costco business in the mix. Our new estimate for the 2013 fiscal year ending June 30, 2013 is diluted EPS of $0.04 versus $0.02 previously. This represents the first annual profit in PSMH’s history as a public company.
Our initial estimate for fiscal 2014 shows a 10% increase in total revenues and a 73% gain in net earnings, resulting in diluted EPS of $0.06.
PSM Holdings, Inc. is engaged in the businesses of mortgage banking, in which PSMH both originates and funds mortgage loans through its own warehouse lines of credit and currently accounts for about 90% of closed loans, as well as mortgage brokerage, in which PSMH originates mortgage loans funded by over 50 third-party lenders. PSMH immediately sells these loans to its third-party lenders or into the secondary mortgage market. The Company offers a full range of mortgage loan products, including adjustable rate mortgages, fifteen, twenty, and thirty-year fixed rate loans, and balloon loans with a variety of maturities, as well as refinancing, construction loans, second mortgages, debt consolidation, and home equity loans.
PSMH had total assets of $24.7 million at the 2012 fiscal yearend on June 30, 2012, total revenues of $14.2 million for the 2012 fiscal year, and closed 2,920 mortgage loans, worth $393 million, during this period. Operations are carried out by the Company’s wholly owned subsidiary, PrimeSource Mortgage, Inc. (PSMI). Through this subsidiary, PSMH operates and is licensed in the following 15 states: Arkansas, Colorado, Florida, Iowa, Montana, Missouri, Nebraska, New Jersey, New Mexico, New York, Oklahoma, Oregon, Texas, Utah, and Washington.
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