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PSMH: Fourth Quarter Better than Expected


By Ann Heffron, CFA

PSM Holdings, Inc. (OTC BB:PSMH) posted a net loss of $0.3 million, or a loss per share of $0.01, for 2012’s fiscal fourth quarter, ending June 30, 2012. This compares to a fiscal third quarter (ending March 31, 2012) net loss of $1.4 million, or a loss per share of $0.05. Both quarters reflected the adoption of PSMH’s new business model, including all five acquisitions the Company has made to date.

The fourth quarter was above our EPS estimate of a $0.02 net loss per share as revenues of $5.0 million were $1.0 million, or 24%, higher than our $4.0 million estimate due to better-than-expected loan origination volume and gross profit margins.

Total operating expenses were $5.3 million versus our $4.6 million estimate, with the overage largely reflecting increased variable compensation costs stemming from higher loan production.

We have raised our estimates, as we have increased our projections for loan origination volume and the gross profit margin. Our new estimate for the 2013 fiscal year ending June 30, 2013 is diluted EPS of $0.02, the first profit in PSMH’s history as a public company. This compares to our previous estimate of a $0.07 net loss per share.

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.

To view a free copy of our most recent research report on PSMH, visit  Ann Heffron's page at  Zacks Small Cap Research .


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