PennyMac Financial (NYSE: PFSI) Q1 2026 earnings, ROE and dividend
Rhea-AI Filing Summary
PennyMac Financial Services, Inc. reported first quarter 2026 net income of $82.3 million, or $1.53 diluted EPS, on total net revenues of $545.0 million. Adjusted net income was $117.7 million, with adjusted diluted EPS of $2.19 and an 11% annualized adjusted return on equity.
Production pretax income rose to $133.6 million on loan production volume of $37.0 billion UPB, while servicing pretax income was $12.7 million. The servicing portfolio reached $720.3 billion UPB, and book value per share increased to $83.31. The board declared a quarterly dividend of $0.30 per share.
Positive
- Strong production-driven earnings and returns: Q1 2026 adjusted net income reached $117.7 million with an 11% annualized adjusted return on equity, supported by $133.6 million of production segment pretax income and $406.9 million of production net revenues.
Negative
- None.
Insights
Stronger production and solid returns offset weaker servicing.
PennyMac Financial delivered Q1 2026 net income of $82.3 million and adjusted net income of $117.7 million, producing an 11% annualized adjusted return on equity. Total net revenues reached $545.0 million, reflecting robust activity across its mortgage platform.
Production was the primary earnings driver, with segment pretax income of $133.6 million and net revenues of $406.9 million, helped by higher direct lending volumes. Servicing contributed pretax income of $12.7 million amid net MSR valuation-related losses of $24.3 million, showing sensitivity to rate and hedge dynamics.
The company grew its owned MSR portfolio to $483.8 billion in UPB and maintained a large total servicing book of $720.3 billion. Management highlighted expected benefits from the Cenlar acquisition and declared a $0.30 per-share dividend. Future filings may show how higher rates and integration costs affect returns through 2026.
8-K Event Classification
Key Figures
Key Terms
adjusted net income financial
mortgage servicing rights financial
annualized adjusted return on equity financial
early buyout loans (EBOs) financial
Earnings Snapshot
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Item 2.02 Results of Operations and Financial Condition.
On May 5, 2026, PennyMac Financial Services, Inc. (the “Company”) issued a press release and a slide presentation announcing its financial results for the fiscal quarter ended March 31, 2026. Copies of the press release and the slide presentation used in connection with the Company’s presentation of financial results were made available on May 5, 2026 and are furnished as Exhibit 99.1 and Exhibit 99.2, respectively. In addition, the Company has made other supplemental financial information for the fiscal quarter ended March 31, 2026 available on its website at pfsi.pennymac.com.
The information in Item 2.02 of this report, including the exhibits hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to Section 18 liabilities, nor shall it be deemed incorporated by reference into any disclosure document relating to the Company, except to the extent, if any, expressly set forth by specific reference in such document.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description |
| 99.1 | Press Release, dated May 5, 2026, issued by PennyMac Financial Services, Inc. pertaining to its financial results for the fiscal quarter ended March 31, 2026. |
| 99.2 | Slide Presentation for use beginning on May 5, 2026 in connection with a presentation of financial results for the fiscal quarter ended March 31, 2026. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| PENNYMAC FINANCIAL SERVICES, INC. | |
| Dated: May 5, 2026 | /s/ Daniel S. Perotti |
| Daniel S. Perotti | |
| Senior Managing Director and Chief Financial Officer |
Exhibit 99.1
PennyMac Financial Services, Inc. Reports
First Quarter 2026 Results
WESTLAKE VILLAGE, Calif. – May 5, 2026 – PennyMac Financial Services, Inc. (NYSE: PFSI) today reported net income of $82.3 million for the first quarter of 2026, or $1.53 per share on a diluted basis, on total net revenues of $545.0 million. Adjusted net income was $117.7 million and adjusted earnings per share (EPS) was $2.19.1 Book value per share increased to $83.31 from $82.77 at December 31, 2025.
PFSI’s Board of Directors declared a first quarter cash dividend of $0.30 per share, payable on May 28, 2026, to common stockholders of record as of May 18, 2026.
First Quarter 2026 Highlights
| · | Pretax income was $104.7 million, down from $134.4 million in the prior quarter and up slightly from $104.2 million in the first quarter of 2025 |
| · | Production segment pretax income was $133.6 million, up from $127.3 million in the prior quarter and $61.9 million in the first quarter of 2025 |
| o | Total loan acquisitions and originations, including those fulfilled for PennyMac Mortgage Investment Trust (NYSE: PMT), were $37.0 billion in unpaid principal balance (UPB), down 12% from the prior quarter and up 28% from the first quarter of 2025 |
| – | Production revenue margins, including fulfillment fees from PMT, were 86 basis points, up from 73 basis points in the prior quarter and 68 basis points in the first quarter of 2025 |
| – | Total correspondent acquisitions were $24.4 billion in UPB, down 20% from the prior quarter and up 6% from the first quarter of 2025 |
| – | Broker direct originations were $6.7 billion in UPB, up 3% from the prior quarter and 102% from the first quarter of 2025 |
| – | Consumer direct originations were $6.0 billion in UPB, up 15% from the prior quarter and 130% from the first quarter of 2025 |
1 See page 14 for a reconciliation of GAAP net income to adjusted net income and adjusted EPS
| 1 |
| o | Total locks, including those for PMT, were $44.8 billion in UPB, down 4% from the prior quarter and up 31% from the first quarter of 2025 |
| · | Servicing segment pretax income was $12.7 million, down from $37.3 million in the prior quarter and $76.0 million in the first quarter of 2025 |
o Pretax income excluding valuation-related items was $56.7 million, up 25% from the prior quarter
| o | Valuation-related items included: |
| – | $183.0 million in mortgage servicing rights (MSR) fair value gains more than offset by $221.1 million in hedging losses, including $13.8 million in principal-only stripped mortgage-backed security (MBS) valuation-related accretion changes, and $6.0 million in provisions for losses on active loans |
| · | Net impact on pretax income related to these items was $(44.1) million or $(0.61) in diluted earnings per share |
| o | Servicing portfolio at the end of the quarter was $720.3 billion in UPB, down 2% from December 31, 2025 due to runoff and the transfer of $24 billion in UPB of MSR that was sold in the prior quarter which more than offset growth from production volumes |
| · | Pretax loss from Corporate and Other was $41.5 million, compared to $30.2 million in the prior quarter and $33.7 million in the first quarter of 2025 |
| · | Repurchased approximately 560,000 shares of PFSI’s common stock at an average price of $89.28 per share for a cost of $50.0 million |
“In the first quarter, PennyMac Financial generated an 8% annualized return on equity and an 11% annualized adjusted return on equity2,” said Chairman and CEO David Spector. “Our performance reflects our ongoing emphasis on maximizing returns on invested capital. The combination of strong operational execution in our consumer and broker direct lending channels along with improving operating efficiency drove production segment pretax income to its highest level in nearly five years. The growth in our direct channels was paired with our consistent strategic deployment of capital through the correspondent channel.”
Mr. Spector continued, “We are focused on driving growth where the marginal returns are most accretive to our current operating returns and where we can further lean into the operational scale we have achieved. We expect the acquisition of Cenlar to leverage the significant scale advantage of our tech-first platform and enhance our profitability over time. Despite expectations for a smaller origination market as interest rates move higher again, we remain confident in our ability to generate meaningful adjusted returns on equity as we move through 2026.”
2 See page 14 for a reconciliation of GAAP net income to annualized adjusted return on equity
| 2 |
The following table presents the contributions of PFSI’s segments to pretax income:
| Quarter ended March 31, 2026 | ||||||||||||||||||||
| Production | Servicing | Reportable segment total | Corporate and other | Total | ||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| Revenue: | ||||||||||||||||||||
| Net gains on loans held for sale at fair value | $ | 311,201 | $ | 33,784 | $ | 344,985 | $ | - | $ | 344,985 | ||||||||||
| Loan origination fees | 72,446 | - | 72,446 | - | 72,446 | |||||||||||||||
| Fulfillment fees from PMT | 5,737 | - | 5,737 | - | 5,737 | |||||||||||||||
| Net loan servicing fees | - | 152,830 | 152,830 | - | 152,830 | |||||||||||||||
| Management fees | - | - | - | 6,762 | 6,762 | |||||||||||||||
| Net interest income (expense): | ||||||||||||||||||||
| Interest income | 112,999 | 94,922 | 207,921 | 258 | 208,179 | |||||||||||||||
| Interest expense | 95,588 | 154,134 | 249,722 | - | 249,722 | |||||||||||||||
| 17,411 | (59,212 | ) | (41,801 | ) | 258 | (41,543 | ) | |||||||||||||
| Other | 125 | (2,316 | ) | (2,191 | ) | 5,958 | 3,767 | |||||||||||||
| Total net revenue | 406,920 | 125,086 | 532,006 | 12,978 | 544,984 | |||||||||||||||
| Expenses | ||||||||||||||||||||
| Compensation | 136,264 | 52,537 | 188,801 | 27,592 | 216,393 | |||||||||||||||
| Loan origination | 79,696 | - | 79,696 | - | 79,696 | |||||||||||||||
| Technology | 30,054 | 11,117 | 41,171 | 4,961 | 46,132 | |||||||||||||||
| Servicing | - | 38,233 | 38,233 | - | 38,233 | |||||||||||||||
| Marketing and advertising | 11,951 | 514 | 12,465 | 8,629 | 21,094 | |||||||||||||||
| Professional services | 5,649 | 2,080 | 7,729 | 6,670 | 14,399 | |||||||||||||||
| Occupancy and equipment | 5,332 | 2,502 | 7,834 | 2,157 | 9,991 | |||||||||||||||
| Other | 4,399 | 5,452 | 9,851 | 4,504 | 14,355 | |||||||||||||||
| Total expenses | 273,345 | 112,435 | 385,780 | 54,513 | 440,293 | |||||||||||||||
| Income (loss) before income taxes | $ | 133,575 | $ | 12,651 | $ | 146,226 | $ | (41,535 | ) | $ | 104,691 | |||||||||
Production Segment
The Production segment includes the correspondent acquisition of newly originated government-insured and conventional conforming loans for PFSI’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.
| 3 |
PFSI’s loan production activity for the quarter totaled $37.0 billion in UPB, $34.2 billion of which was for its own account, and $2.8 billion of which was fee-based fulfillment activity for PMT. Correspondent locks for PFSI and direct lending IRLCs totaled $41.1 billion in UPB, down 4% from the prior quarter and up 31% from the first quarter of 2025.
Production segment pretax income was $133.6 million, up from $127.3 million in the prior quarter and $61.9 million in the first quarter of 2025. Production segment net revenues totaled $406.9 million, up 10% from the prior quarter and 64% from the first quarter of 2025. The increase in revenue from the prior quarter and the first quarter of 2025 was primarily due to higher volumes in the direct lending channels.
The components of net gains on loans held for sale are detailed in the following table:
| Quarter ended | ||||||||||||
| March 31, 2026 | December 31, 2025 | March 31, 2025 | ||||||||||
| (in thousands) | ||||||||||||
| Receipt of MSRs | $ | 719,586 | $ | 775,242 | $ | 650,349 | ||||||
| Gains on sale of loans to PennyMac Mortgage Investment Trust net of mortgage servicing rights recapture payable | 7,749 | 16,341 | 4,838 | |||||||||
| Provision for representations and warranties, net | (1,478 | ) | (2,924 | ) | (2,132 | ) | ||||||
| Cash loss, including cash hedging results | (204,312 | ) | (492,013 | ) | (587,009 | ) | ||||||
| Fair value changes of pipeline, inventory and hedges | (176,560 | ) | 4,957 | 154,991 | ||||||||
| Net gains on mortgage loans held for sale | $ | 344,985 | $ | 301,603 | $ | 221,037 | ||||||
| Net gains on mortgage loans held for sale by segment: | ||||||||||||
| Production | $ | 311,201 | $ | 276,060 | $ | 187,145 | ||||||
| Servicing | $ | 33,784 | $ | 25,543 | $ | 33,892 | ||||||
PFSI performs fulfillment services for certain conventional conforming and nonconforming loans that it acquires from non-affiliates in its correspondent production business and subsequently sells to PMT. 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 $5.7 million in the first quarter, down 12% from the prior quarter and up 8% from the first quarter of 2025. The decrease from the prior quarter was driven by lower acquisition volumes for PMT’s account.
| 4 |
Correspondent production volumes are initially acquired by PFSI. PMT retains the right to purchase up to 100% of non-government correspondent loan production. In the first quarter, PMT acquired all nonconforming correspondent production and 18% of total conventional conforming correspondent production.
Net interest income in the first quarter totaled $17.4 million, down from $19.8 million in the prior quarter. Interest income totaled $113.0 million, down from $129.0 million in the prior quarter, and interest expense totaled $95.6 million, down from $109.2 million in the prior quarter, both due to the lower overall volumes.
Production segment expenses were $273.3 million, up 12% from the prior quarter and 47% from the first quarter of 2025. The increase from the prior quarter was primarily due to higher volumes in direct lending, increased capacity and seasonal factors. The increase from the first quarter of 2025 was primarily due to higher volumes in direct lending and increased capacity.
Servicing Segment
The Servicing segment includes income from owned MSRs and subservicing. The total servicing portfolio decreased to $720.3 billion in UPB at March 31, 2026, down 2% from December 31, 2025 and up 6% from March 31, 2025. PFSI’s owned MSR portfolio totaled $483.8 billion in UPB, an increase of 3% from December 31, 2025 and 8% from March 31, 2025. PFSI subservices $236.5 billion in UPB, down 10% from the prior quarter. The decrease was driven by the transfer of $24 billion in UPB of MSR sold in the prior quarter. Of total subservicing UPB, $225.1 billion was for PMT, and $11.4 billion was for non-affiliates.
The table below details PFSI’s servicing portfolio UPB:
| March 31, 2026 | December 31, 2025 | March 31, 2025 | ||||||||||
| (in thousands) | ||||||||||||
| Owned | ||||||||||||
| Mortgage servicing rights and liabilities | ||||||||||||
| Originated | $ | 460,361,759 | $ | 448,035,447 | $ | 426,951,027 | ||||||
| Purchased | 13,633,606 | 13,999,998 | 15,276,140 | |||||||||
| 473,995,365 | 462,035,445 | 442,227,167 | ||||||||||
| Loans held for sale | 9,821,486 | 8,930,477 | 6,911,473 | |||||||||
| 483,816,851 | 470,965,922 | 449,138,640 | ||||||||||
| Subserviced for: | ||||||||||||
| PMT | 225,093,530 | 226,774,067 | 229,907,855 | |||||||||
| Non-affiliates | 11,413,998 | 11,616,738 | 75,310 | |||||||||
| Interim servicing | - | 24,257,095 | 1,072,760 | |||||||||
| 236,507,528 | 262,647,900 | 231,055,925 | ||||||||||
| Total loans serviced | $ | 720,324,379 | $ | 733,613,822 | $ | 680,194,565 | ||||||
| 5 |
Servicing segment pretax income was $12.7 million, down from $37.3 million in the prior quarter and $76.0 million in the first quarter of 2025. Servicing segment net revenues totaled $125.1 million, down from $153.9 million in the prior quarter and $170.6 million in the first quarter of 2025.
Revenue from net loan servicing fees totaled $152.8 million, up from $149.8 million in the prior quarter and down from $164.3 million in the first quarter of 2025. Net loan servicing fee revenues included $532.1 million in loan servicing fees, essentially unchanged from the prior quarter. Realization of cash flows was $355.0 million in the first quarter, down 7% from the prior quarter, reflecting the expectation of lower prepayment speeds in the future from portfolio burnout. Net MSR valuation-related losses totaled $24.3 million, comprised of MSR fair value gains of $183.0 million and hedging losses of $207.3 million.
The following table presents a breakdown of net loan servicing fees:
| Quarter ended | ||||||||||||
| March 31, 2026 | December 31, 2025 | March 31, 2025 | ||||||||||
| (in thousands) | ||||||||||||
| Loan servicing fees | $ | 532,110 | $ | 532,192 | $ | 488,468 | ||||||
| Changes in fair value of MSRs and MSLs resulting from: | ||||||||||||
| Realization of cash flows | (355,022 | ) | (383,368 | ) | (225,462 | ) | ||||||
| Change in fair value inputs | 183,029 | 40,388 | (205,494 | ) | ||||||||
| Hedging (losses) gains | (207,287 | ) | (39,432 | ) | 106,774 | |||||||
| Net change in fair value of MSRs and MSLs | (379,280 | ) | (382,412 | ) | (324,182 | ) | ||||||
| Net loan servicing fees | $ | 152,830 | $ | 149,780 | $ | 164,286 | ||||||
Servicing segment revenue included $33.8 million in net gains on loans held for sale related to early buyout loans (EBOs), up from $25.5 million in the prior quarter and essentially unchanged from $33.9 million in the first quarter of 2025. The increase from the prior quarter reflects higher initiation volumes and redelivery margins as a result of lower rates in the beginning of the quarter. These EBOs are previously delinquent loans that were brought back to performing status through PFSI’s successful servicing efforts.
| 6 |
Net interest expense totaled $59.2 million, compared to $19.2 million in the prior quarter and $27.4 million in the first quarter of 2025. Interest income was $94.9 million, down from $134.6 million in the prior quarter due primarily to lower short-term interest rates and the reversal of principal-only stripped MBS accretion due to slower expected future runoff. Interest expense was $154.1 million, up slightly from $153.8 million in the prior quarter.
Servicing segment expenses totaled $112.4 million, down from $116.6 million in the prior quarter primarily due to a decrease in provisions for losses on active loans.
Corporate and Other
Corporate and Other items include amounts attributable to corporate activities or not directly attributable to the production and servicing segments as well as management fees earned from PMT. PFSI manages PMT for which it earns base management fees and may earn performance incentive fees.
Pretax loss for Corporate and Other was $41.5 million, up from $30.2 million in the prior quarter and $33.7 million in the first quarter of 2025.
Corporate and Other net revenues totaled $13.0 million, and consisted of $6.8 million in management fees, $6.0 million in other revenue, and $0.3 million of net interest income. No performance incentive fees were earned in the first quarter.
Expenses were $54.5 million, up from $43.4 million in the prior quarter and $46.1 million in the first quarter of 2025. The increase from the prior quarter was primarily driven by higher advertising expenses related to the 2026 Winter Olympics, as well as $3.2 million of expenses associated with the Cenlar acquisition. The prior quarter also included reduced expenses related to technology accruals.
| 7 |
The following table presents a breakdown of management fees:
| Quarter ended | ||||||||||||
| March 31, 2026 | December 31, 2025 | March 31, 2025 | ||||||||||
| (in thousands) | ||||||||||||
| Management fees: | ||||||||||||
| Base | $ | 6,762 | $ | 6,856 | $ | 7,012 | ||||||
| Performance incentive | - | - | - | |||||||||
| Total management fees | $ | 6,762 | $ | 6,856 | $ | 7,012 | ||||||
| Average PMT shareholders' equity used to calculate base management fees | $ | 1,828,237 | $ | 1,813,357 | $ | 1,895,785 | ||||||
Consolidated Expenses
Total expenses were $440.3 million, up from $403.6 million in the prior quarter due to higher expenses in the production and corporate and other segments as mentioned above.
Taxes
PFSI recorded a provision for tax expense of $22.4 million, resulting in an effective tax rate of 21.4%.
***
Management’s slide presentation and accompanying material will be available in the Investor Relations section of the Company’s website at pfsi.pennymac.com after the market closes on Tuesday, May 5, 2026. Management will also host a conference call and live audio webcast at 5:00 p.m. Eastern Time to review the Company’s financial results. The webcast can be accessed at pfsi.pennymac.com, and a replay will be available shortly after its conclusion.
***
About PennyMac Financial Services, Inc.
PennyMac Financial Services, Inc. is a specialty financial services firm 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 5,300 people across the country. For the twelve months ended March 31, 2026, PFSI’s production of newly originated loans totaled $154 billion in UPB, making it a top lender in the nation. As of March 31, 2026, PFSI serviced loans totaling $720 billion in UPB, making it a top mortgage servicer in the nation. Additional information about PFSI is available at pfsi.pennymac.com.
| Media | Investors | |
| Kristyn Clark | Kevin Chamberlain | |
| mediarelations@pennymac.com | Isaac Garden | |
| 805.395.9943 | PFSI_IR@pennymac.com | |
| 818.264.4907 |
| 8 |
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, our 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: interest rate changes; changes in macroeconomic, consumer and real estate market conditions; changes in housing prices, housing sales and real estate values; rising homeownership costs negatively impacting housing affordability; the continually changing federal, state and local laws and regulations applicable to our highly regulated industry; lawsuits or governmental actions resulting from noncompliance with laws and regulations; the mortgage lending and servicing-related regulations promulgated by federal and state regulators and the enforcement of these regulations; licensing and operational requirements of jurisdictions applicable to our business, to which our bank competitors are not subject; changes to government modification programs; difficulties inherent in adjusting the size of our operations to reflect changes in business levels; purchase and sales opportunities for mortgage servicing rights; our substantial amount of indebtedness; increases in loan delinquencies, defaults and forbearances; foreclosure delays and changes in foreclosure practices; our dependence on U.S. government-sponsored entities and changes in their roles; our ability to manage third-party vendors and mortgage investor requirements; our exposure to counterparties that do not fulfill contractual obligations; our reliance on PennyMac Mortgage Investment Trust (NYSE: PMT) as a significant contributor to our mortgage banking business; maintaining sufficient capital and liquidity and 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; our obligation to indemnify PMT if our services fail to meet certain criteria or characteristics or under other circumstances; investment management and incentive fees; the accuracy or changes in the estimates we make about uncertainties, contingencies and asset and liability valuations; conflicts of interest in allocating our services and investment opportunities among us and our advised entity; our ability to mitigate cybersecurity risks, cyber incidents and technology disruptions; the development of artificial intelligence; the effect of public opinion on our reputation; our exposure to risks of loss and disruption in operations from severe weather events, man-made or other natural conditions, including climate change and pandemics; our ability to effectively identify, manage and hedge our credit, interest rate, prepayment, liquidity and climate risks; expansion of new business activities or strategies; our ability to detect misconduct and fraud; 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.
The press release contains financial information calculated other than in accordance with U.S. generally accepted accounting principles (“GAAP”), such as adjusted net income, adjusted earnings per share, pretax income excluding valuation-related items and adjusted return on equity that provide a meaningful perspective on the Company’s business results since the Company utilizes this information to evaluate and manage the business and investors use this information to calculate financial and cash flow measures. Non-GAAP disclosures have limitations as an analytical tool and should not be viewed as a substitute for financial information determined in accordance with GAAP.
| 9 |
PENNYMAC FINANCIAL SERVICES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
| March 31, 2026 | December 31, 2025 | March 31, 2025 | ||||||||||
| (in thousands, except share amounts) | ||||||||||||
| ASSETS | ||||||||||||
| Cash | $ | 219,513 | $ | 301,680 | $ | 211,093 | ||||||
| Short-term investment at fair value | 434,220 | 410,037 | 443,393 | |||||||||
| Principal-only stripped mortgage-backed securities at fair value | 659,235 | 722,528 | 817,596 | |||||||||
| Loans held for sale at fair value | 9,954,495 | 9,123,410 | 7,095,270 | |||||||||
| Derivative assets | 282,595 | 187,775 | 171,931 | |||||||||
| Servicing advances, net | 622,890 | 589,542 | 496,917 | |||||||||
| Mortgage servicing rights at fair value | 10,149,036 | 9,598,941 | 8,963,889 | |||||||||
| Receivable from PennyMac Mortgage Investment Trust | 17,500 | 17,122 | 29,198 | |||||||||
| Loans eligible for repurchase | 8,594,471 | 7,409,800 | 4,979,127 | |||||||||
| Other | 1,010,043 | 1,027,854 | 664,462 | |||||||||
| Total assets | $ | 31,943,998 | $ | 29,388,689 | $ | 23,872,876 | ||||||
| LIABILITIES | ||||||||||||
| Assets sold under agreements to repurchase | $ | 10,177,643 | $ | 8,794,002 | $ | 7,058,053 | ||||||
| Mortgage loan participation purchase and sale agreements | 691,081 | 696,618 | 510,141 | |||||||||
| Notes payable secured by mortgage servicing assets | 1,426,325 | 1,326,021 | 1,724,608 | |||||||||
| Unsecured senior notes | 4,834,396 | 4,831,742 | 3,998,702 | |||||||||
| Derivative liabilities | 70,652 | 15,806 | 15,293 | |||||||||
| Mortgage servicing liabilities at fair value | 1,568 | 1,572 | 1,651 | |||||||||
| Accounts payable and accrued expenses | 459,016 | 643,896 | 365,056 | |||||||||
| Payable to PennyMac Mortgage Investment Trust | 96,033 | 116,585 | 101,175 | |||||||||
| Payable to exchanged Private National Mortgage Acceptance Company, LLC unitholders under tax receivable agreement | 24,757 | 24,757 | 25,898 | |||||||||
| Income taxes payable | 1,206,492 | 1,184,020 | 1,158,642 | |||||||||
| Liability for loans eligible for repurchase | 8,594,471 | 7,409,800 | 4,979,127 | |||||||||
| Liability for losses under representations and warranties | 35,805 | 34,894 | 30,774 | |||||||||
| Total liabilities | 27,618,239 | 25,079,713 | 19,969,120 | |||||||||
| STOCKHOLDERS' EQUITY | ||||||||||||
| Common stock¾authorized 200,000,000 shares of $0.0001 par value; issued and outstanding 51,923,059, 52,061,346, and 51,658,984 shares, respectively | 5 | 5 | 5 | |||||||||
| Additional paid-in capital | 46,926 | 96,870 | 68,902 | |||||||||
| 4325.759 | 4,278,828 | 4,212,101 | 3,834,849 | |||||||||
| Total stockholders' equity | 4,325,759 | 4,308,976 | 3,903,756 | |||||||||
| Total liabilities and stockholders’ equity | $ | 31,943,998 | $ | 29,388,689 | $ | 23,872,876 | ||||||
| 10 |
PENNYMAC FINANCIAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
| Quarter ended | ||||||||||||
| March 31, 2026 | December 31, 2025 | March 31, 2025 | ||||||||||
| (in thousands, except per share amounts) | ||||||||||||
| Revenues | ||||||||||||
| Net gains on loans held for sale at fair value | $ | 344,985 | $ | 301,603 | $ | 221,037 | ||||||
| Loan origination fees | 72,446 | 68,437 | 46,611 | |||||||||
| Fulfillment fees from PennyMac Mortgage Investment Trust | 5,737 | 6,538 | 5,290 | |||||||||
| Net loan servicing fees: | ||||||||||||
| Loan servicing fees | 532,110 | 532,192 | 488,468 | |||||||||
| Change in fair value of mortgage servicing rights and mortgage servicing liabilities | (171,993 | ) | (342,980 | ) | (430,956 | ) | ||||||
| Mortgage servicing rights hedging results | (207,287 | ) | (39,432 | ) | 106,774 | |||||||
| Net loan servicing fees | 152,830 | 149,780 | 164,286 | |||||||||
| Net interest (expense) income: | ||||||||||||
| Interest income | 208,179 | 263,894 | 189,871 | |||||||||
| Interest expense | 249,722 | 262,996 | 208,082 | |||||||||
| (41,543 | ) | 898 | (18,211 | ) | ||||||||
| Management fees from PennyMac Mortgage Investment Trust | 6,762 | 6,856 | 7,012 | |||||||||
| Other | 3,767 | 3,893 | 4,878 | |||||||||
| Total net revenues | 544,984 | 538,005 | 430,903 | |||||||||
| Expenses | ||||||||||||
| Compensation | 216,393 | 208,073 | 181,988 | |||||||||
| Loan origination | 79,696 | 69,651 | 44,096 | |||||||||
| Technology | 46,132 | 35,378 | 40,197 | |||||||||
| Servicing | 38,233 | 43,360 | 21,875 | |||||||||
| Professional services | 21,094 | 10,411 | 9,432 | |||||||||
| Marketing and advertising | 14,399 | 10,303 | 9,037 | |||||||||
| Occupancy and equipment | 9,991 | 9,963 | 8,382 | |||||||||
| Other | 14,355 | 16,461 | 11,700 | |||||||||
| Total expenses | 440,293 | 403,600 | 326,707 | |||||||||
| Income before provision for income taxes | 104,691 | 134,405 | 104,196 | |||||||||
| Provision for income taxes | 22,369 | 27,574 | 27,916 | |||||||||
| Net income | $ | 82,322 | $ | 106,831 | $ | 76,280 | ||||||
| Earnings per share | ||||||||||||
| Basic | $ | 1.58 | $ | 2.05 | $ | 1.48 | ||||||
| Diluted | $ | 1.53 | $ | 1.97 | $ | 1.42 | ||||||
| Weighted-average common shares outstanding | ||||||||||||
| Basic | 52,132 | 52,003 | 51,506 | |||||||||
| Diluted | 53,859 | 54,171 | 53,624 | |||||||||
| Dividend declared per share | $ | 0.30 | $ | 0.30 | $ | 0.30 | ||||||
| 11 |
PENNYMAC FINANCIAL SERVICES, INC. RECONCILIATION OF GAAP NET INCOME
TO ADJUSTED NET INCOME AND ANNUALIZED ADJUSTED RETURN ON EQUITY
| Quarter Ended March 31, 2026 | ||||
| (in thousands, except annualized adjusted return on equity) | ||||
| Net income | $ | 82,322 | ||
| Increase in fair value of MSRs and MSLs due to changes in valuation inputs used in the valuation model | (183,028 | ) | ||
| Principal-only stripped MBS valuation-related accretion changes | 13,814 | |||
| Hedging losses associated with MSRs | 207,287 | |||
| Provision for losses on active loans | 5,991 | |||
| Cenlar acquisition-related expenses | 3,212 | |||
| Total adjustments: | 47,275 | |||
| Tax impacts of adjustments(1) | 11,866 | |||
| Adjusted net income | $ | 117,731 | ||
| Diluted shares outstanding | 53,859 | |||
| Adjusted diluted EPS | $ | 2.19 | ||
| Average stockholders' equity | 4,323,518 | |||
| Annualized adjusted return on equity | 11 | % | ||
(1) Assumes tax rate of 25.1%
| 12 |
Exhibit 99.2
| PennyMac Financial Services, Inc. 1Q26 EARNINGS REPORT May 2026 |
| This presentation 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, our 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. These forward-looking statements include, but are not limited to, statements regarding future changes in interest rates, prepayment rates and the housing market; future loan origination, servicing and production, including future production, operating and hedge expenses; future loan delinquencies, defaults and forbearances; future earnings, return on equity as well as other business and financial projections and expectations. Factors which could cause actual results to differ materially from historical results or those anticipated include, but are not limited to: interest rate changes; changes in macroeconomic, consumer and real estate market conditions; changes in housing prices, housing sales and real estate values; rising homeownership costs negatively impacting housing affordability; the continually changing federal, state and local laws and regulations applicable to our highly regulated industry; lawsuits or governmental actions resulting from noncompliance with laws and regulations; the mortgage lending and servicing-related regulations promulgated by federal and state regulators and the enforcement of these regulations; licensing and operational requirements of jurisdictions applicable to our business, to which our bank competitors are not subject; changes to government modification programs; difficulties inherent in adjusting the size of our operations to reflect changes in business levels; purchase and sales opportunities for mortgage servicing rights; our substantial amount of indebtedness; increases in loan delinquencies, defaults and forbearances; foreclosure delays and changes in foreclosure practices; our dependence on U.S. government-sponsored entities and changes in their roles; our ability to manage third-party vendors and mortgage investor requirements; our exposure to counterparties that do not fulfill contractual obligations; our reliance on PennyMac Mortgage Investment Trust (NYSE: PMT) as a significant contributor to our mortgage banking business; maintaining sufficient capital and liquidity and 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; our obligation to indemnify PMT if our services fail to meet certain criteria or characteristics or under other circumstances; investment management and incentive fees; the accuracy or changes in the estimates we make about uncertainties, contingencies and asset and liability valuations; conflicts of interest in allocating our services and investment opportunities among us and our advised entity; our ability to mitigate cybersecurity risks, cyber incidents and technology disruptions; the development of artificial intelligence; the effect of public opinion on our reputation; our exposure to risks of loss and disruption in operations from severe weather events, man-made or other natural conditions, including climate change and pandemics; our ability to effectively identify, manage and hedge our credit, interest rate, prepayment, liquidity and climate risks; expansion of new business activities or strategies; our ability to detect misconduct and fraud; 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 presentation are current as of the date of this presentation only. The presentation contains financial information calculated other than in accordance with U.S. generally accepted accounting principles (“GAAP”), such as adjusted net income, adjusted earnings per share, pretax income excluding valuation-related items and adjusted return on equity that provide a meaningful perspective on the Company’s business results since the Company utilizes this information to evaluate and manage the business and investors use this information to calculate financial and cash flow measures. Non-GAAP disclosures have limitations as an analytical tool and should not be viewed as a substitute for financial information determined in accordance with GAAP. 2 FORWARD-LOOKING STATEMENTS |
| 3 1Q26 Results Production Segment Servicing Segment FIRST QUARTER HIGHLIGHTS Note: All figures are for 1Q26 or are as of 3/31/26 (1) EPS = earnings per share; ROE = return on equity (2) See slide 24 for a reconciliation of GAAP net income to non-GAAP adjusted net income, adjusted EPS and annualized adjusted return on equity (3) Includes volume fulfilled for PennyMac Mortgage Investment Trust (NYSE: PMT) (4) Valuation-related changes include $183 million in MSR fair value gains, $14 million in principal-only stripped MBS valuation-related accretion declines, $207 million in hedging losses, and $6 million in provision for losses on active loans - see slide 13 (5) UPB = unpaid principal balance; includes loans subserviced for PMT and others Annualized ROE(1) Annualized adjusted ROE(2) Pretax income Total loan acquisitions and originations(3) PFSI correspondent lock volume Broker direct lock volume Consumer direct lock volume Pretax income Pretax income excluding valuation-related changes(4) Impact to diluted EPS from valuation-related changes(4) Valuation-related changes(4) Total servicing portfolio UPB(5) Book value per share Net income Diluted EPS(1) Adjusted EPS(1)(2) $1.53 $2.19 $82mm $83.31 $134mm $13mm $37.0bn $22.4bn $9.5bn $9.2bn $57mm $(44)mm 8% 11% $(0.61) $720bn |
| BUSINESS UPDATES Repurchased 1% of common stock outstanding for $50 million at a weighted average price of $89.28 per share Continued to make progress on the acquisition of Cenlar’s subservicing business and expect the transaction to close in the second half of this year, as initially expected Conventional first-lien refinance recapture rates increased to 22%, up 5 percentage points from the prior quarter Successfully implemented a new loan origination system built with modern technology into our consumer direct lending channel 4 |
| 1Q26 STRATEGIC UPDATE |
| With a smaller projected origination market due to higher interest rates, we expect adjusted ROEs to remain near current levels in the second quarter before increasing to the low-to-mid teens in the second half of 2026 as we realize the benefits of technology and efficiency enhancements Mortgage Banking Adjusted Pretax Income ($ in millions) Production 6 Annualized Adjusted ROE(1) Note: Figures may not sum due to rounding (1) Prior period amounts have been recast to conform to the current period presentation; see slides 24 and 25 for a reconciliation of GAAP to non-GAAP items Servicing net of valuation related changes(1) DELIVERING DOUBLE-DIGIT ADJUSTED RETURNS ON EQUITY |
| 7 EARNINGS POTENTIAL FROM CONSUMER DIRECT RECAPTURE OPPORTUNITY Gov’t. Loan First Lien Refinance Recapture Conv. Loan First Lien Refinance Recapture > 7.00% 6.50 - 6.99% 5.50 - 5.99% 6.00 - 6.49% 5.00 - 5.49% Note: Figures may not sum due to rounding (1) Includes first-lien serviced for PFSI’s own account as well as those subserviced for PMT and others with recapture arrangements with PFSI (2) Numerator = UPB of new consumer direct first lien refinance originations for existing portfolio customers; denominator = UPB of payoffs with no transfer of title or MLS listing identified Refinance Recapture Origination Volume (UPB in billions) First-lien refinance recapture rate(2) Gov’t. Loans: Note Rates >5%(1) (UPB in billions) Conv. Loans: Note Rates >5%(1) (UPB in billions) 3/31/26 3/31/26 > 7.00% 6.50 - 6.99% 6.00 - 6.49% 5.50 - 5.99% 5.00 - 5.49% • Improvement in conventional first-lien recapture rates from the prior quarter drove a meaningful return contribution from consumer direct and strong production segment results • Significant upside potential remains as we continue to implement specific solutions to drive higher recapture rates and margins Refinance Recapture Origination Volume (UPB in billions) First-lien refinance recapture rate(2) |
| (1) Numerator consists of consumer direct expenses net of loan origination expenses (2) Numerator consists of compensation in the “Corporate and Other” segment; adjusted revenue excludes realization of MSR cash flows and valuation-related changes - see slide 25 8 TECHNOLOGY AND SCALE TO CONTINUE DRIVING EFFICIENCIES Operating Expenses (annualized bps of average portfolio UPB) Compensation (as a percentage of adjusted revenues)(2) Consumer Direct Servicing Corporate & Other -24% -44% Reducing unit costs to historic lows through technology-driven automation with significant opportunity to further expand and optimize our platform Direct Expenses (as a percentage of fallout adjusted locks)(1) -26% Achieving more with less through a unified technology foundation, with ample room for continued integration and overhead reduction Driving a significantly lower unit cost as our portfolio expands and further scaling through automation and artificial intelligence Intensely focused on optimizing returns on capital by leveraging our tech-first platform to drive persistent operating leverage and superior unit economics across the enterprise |
| KEY OPERATING METRICS & OTHER FINANCIAL SCHEDULES |
| Acquisitions for PFSI(1) 10 PRODUCTION SEGMENT HIGHLIGHTS – VOLUME BY CHANNEL Broker Direct (UPB in billions) (1) Government-insured or guaranteed loans and certain conventional loans acquired through PFSI’s correspondent production business; PFSI earns income from holding and selling or securitizing the loans (2) Loans fulfilled for PMT; for these loans, PFSI earns a fulfillment fee from PMT rather than income from holding and selling or securitizing the loans (3) Includes locks related to loans sold to PMT (4) Commitments to originate mortgage loans at specified terms at period end Consumer Direct (UPB in billions) Correspondent (UPB in billions) Acquisitions for PMT(2) Originations Locks: $8.9bn Acquisitions: $8.8bn Locks: $3.1bn Originations: $2.5bn Committed pipeline(4): $2.6bn Locks: $2.4bn Originations: $2.2bn Committed pipeline(4): $2.7bn Total Locks(3) April April April Locks Originations Locks |
| 11 DRIVERS OF PRODUCTION SEGMENT RESULTS 1Q25 4Q25 1Q26 ($ in millions) Fallout Adjusted Locks Margin / Fulfillment Fee (bps)(1) Revenue Contribution (net of Loan origination expense) % of Production Revenue Fallout Adjusted Locks Margin / Fulfillment Fee (bps)(1) Revenue Contribution (net of Loan origination expense) % of Production Revenue Fallout Adjusted Locks Margin / Fulfillment Fee (bps)(1) Revenue Contribution (net of Loan origination expense) % of Production Revenue PFSI correspondent(2) $ 21,216 27 $ 57.7 28% $ 27,149 25 $ 69.0 23% $ 21,539 28 $ 61.1 19% Broker direct 4,050 91 36.7 18% 5,576 101 56.1 19% 7,066 99 69.7 21% Consumer direct 2,455 354 86.9 43% 4,971 274 136.1 45% 6,649 267 177.5 54% Other(3) n/a n/a 17.2 8% n/a n/a 33.6 11% n/a n/a 13.2 4% Total PFSI account revenues(4) $ 27,721 72 $ 198.6 97% $ 37,697 78 $ 294.8 98% $ 35,254 91 $ 321.5 98% PMT conventional correspondent 2,443 22 5.3 3% 3,303 20 6.5 2% 2,776 21 5.7 2% Total Production revenues(4) 68 $ 203.8 100% 73 $ 301.3 100% 86 $ 327.2 100% Production expenses(4) $ 30,163 47 $ 141.9 70% $ 41,000 42 $ 174.0 58% $ 38,030 51 $ 193.6 59% Production segment pretax income 21 $ 61.9 30% 31 $ 127.3 42% 35 $ 133.6 41% Note: Figures may not sum due to rounding (1) Expected revenue net of direct origination costs at time of lock (2) Includes government-insured or guaranteed loans and certain conventional loans for PFSI’s own account (3) Reflects timing of revenue and loan origination expense recognition, hedging, pricing & execution changes, and other items (4) Total PFSI account revenues, total production revenues and production expenses are presented net of loan origination expenses, which are managed as a component of revenue margins • Production segment pretax income more than doubled from 1Q25 and was up 5% from 4Q25 • Revenue per fallout adjusted lock for PFSI’s own account was 91 basis points in 1Q26, up from 78 basis points in 4Q25 due to a mix-shift towards the direct lending channels ‒ Decreased revenue contribution from PFSI correspondent driven by increased focus on expanding unit profitability with a higher mix of government-insured or guaranteed loans ‒ Increased revenue contributions from consumer and broker direct primarily due to higher volumes ‒ Decrease in other revenue driven primarily by strong secondary market execution relative to initial pricing in the prior quarter • Production expenses(4) increased 11% from the prior quarter due to higher volumes in direct lending, increased capacity and seasonal factors |
| Net Portfolio Growth (UPB in billions) Selected Operational Metrics 4Q25 1Q26 Loans serviced (in thousands) 2,788 2,725 60+ day delinquency rate - owned portfolio(1) 4.2% 4.2% 60+ day delinquency rate - sub-serviced portfolio(2) 0.7% 0.7% Actual CPR - owned portfolio(1) 13.0% 13.7% UPB of completed modifications ($ in millions)(3) $1,622 $1,400 EBO loan volume ($ in millions)(4) $623 $632 Owned Subserviced(2) Note: Figures may not sum due to rounding (1) Owned portfolio is predominantly government-insured and guaranteed loans - delinquency data based on loan count (i.e., not UPB); CPR = Conditional Prepayment Rate (2) Represents MSRs that we subservice for PMT and others (3) UPB of completed modifications includes loss mitigation efforts associated with partial claims programs (4) Early buyouts of delinquent loans from Ginnie Mae pools during the period (5) Includes consumer and broker direct production, government and conventional correspondent acquisitions, and conventional conforming and jumbo loan acquisitions subserviced for PMT SERVICING SEGMENT HIGHLIGHTS 12 Loan Servicing Portfolio Composition (UPB in billions) (5) • Servicing portfolio totaled $720.3 billion in UPB at March 31, 2026, down 2% Q/Q and up 6% Y/Y ‒ Production volume was more than offset by $26 billion in runoff from prepayments and the previously-announced sale of $24 billion in UPB of MSRs that transferred early in 1Q26 • 60+ day delinquency rates for owned MSR were essentially unchanged from the prior quarter • Modification volume decreased from the prior quarter while EBO loan volume increased slightly |
| 13 Note: Figures may not sum due to rounding (1) Prior period amounts have been recast to conform to the current period presentation (2) Of average portfolio UPB, annualized (3) Also includes non-valuation related income from principal-only bonds (4) Comprised of net gains on mortgage loans held for sale at fair value and interest income related to EBO loans, net of related expenses (5) Consists of interest shortfall and recording and release fees (6) Changes in fair value do not include realization of MSR cash flows (7) Considered in the assessment of MSR fair value changes DRIVERS OF SERVICING SEGMENT RESULTS(1) 1Q25 4Q25 1Q26 $ in millions basis points(2) $ in millions basis points(2) $ in millions basis points(2) Loan servicing fees $ 488.5 29.0 $ 532.2 29.4 $ 532.1 29.5 Earnings on custodial balances and deposits and other income(3) 96.0 5.7 128.1 7.1 105.3 5.8 Realization of MSR cash flows (225.5) (13.4) (383.4) (21.2) (355.0) (19.7) EBO loan-related income(4) 35.1 2.1 26.0 1.4 33.9 1.9 Servicing expenses: Operating expenses (78.2) (4.6) (78.8) (4.4) (80.6) (4.5) Payoff-related expense(5) (13.3) (0.8) (29.3) (1.6) (31.0) (1.7) Losses and provisions for defaulted loans (15.4) (0.9) (23.9) (1.3) (22.7) (1.3) Interest expense (119.2) (7.1) (125.7) (6.9) (125.3) (6.9) Non-GAAP: Pretax income excluding valuation-related changes $ 168.1 10.0 $ 45.2 2.5 $ 56.7 3.1 Valuation-related changes MSR fair value(6) (205.5) 40.4 183.0 Principal-only stripped MBS valuation-related accretion changes 3.4 2.6 (13.8) Hedging derivatives (losses) gains 106.8 (39.4) (207.3) (Provision for) reversal of losses on active loans(7) 3.2 (11.4) (6.0) GAAP: Servicing segment pretax income $ 76.0 $ 37.3 $ 12.7 Average servicing portfolio UPB $ 672,965 $ 724,283 $ 721,377 • Average portfolio UPB and loan servicing fees unchanged from the prior quarter due to the previously-announced sale of $24 billion in UPB of MSRs; operating expenses increased slightly • Earnings on custodial balances and deposits and other income was down from the prior quarter primarily due to lower short-term interest rates – Custodial funds managed for PFSI’s owned servicing portfolio averaged $8.6 billion in 1Q26, down from $9.1 billion in 4Q25 due to seasonal impacts and the sale of MSRs in the prior quarter • Although realized prepayment speeds increased slightly, realization of MSR cash flows was down 7% from the prior quarter due to the expectation of lower prepayment speeds in future periods from portfolio burnout • EBO income increased due to higher initiation volumes and redelivery margins as a result of lower rates in the beginning of the quarter |
| 14 HEDGING APPROACH MODERATES THE VOLATILITY OF PFSI’S RESULTS MSR Valuation Changes and Offsets ($ in millions) MSR fair value changes before realization of cash flows(1) Hedging and related gains (losses)(2) ● In 1Q26, gains from changes in fair value on MSR were more than offset by hedging declines and costs ● Hedge costs were contained despite the increased volatility in the latter half of the quarter, and we expect to continue realizing results in line with our targeted hedge ratio ● Shape of the yield curve, volatility, changes in mortgage basis and other factors can impact our realized hedge ratio (1) Includes (provision for) reversal of losses on active loans (2) Includes principal-only stripped MBS valuation-related accretion changes Attributed Performance MSR(1) Hedge(2) Net Rate Impacts $200.6 $(207.3) $(6.7) Hedge Costs - $(13.8) $(13.8) Other Assumption & Performance Impacts $(23.6) - $(23.6) Prepayment-related $(6.4) - $(6.4) Delinquency-related $(6.4) - $(6.4) Other $(10.8) - $(10.8) Total $177.0 $(221.1) $(44.1) |
| 15 STRONG BALANCE SHEET AND DIVERSE CAPITAL STRUCTURES (1) Non-funding debt includes face value of unsecured senior notes and notes payable secured by MSR, in addition to the amount drawn on the variable funding note (2) Tangible net worth excludes capitalized software (3) As of 3/31/26 Low Debt-to-Equity (D/E) Ratio MSR & Servicing Advance Financing High Tangible Net Worth (TNW)(2)/Assets Non-funding D/E(1) Total D/E Diverse Financing Sources(3) TNW / Assets TNW / Assets ex. Loans eligible for repurchase • Active management of targeted D/E ratios: ‒ D/E ratios increased slightly due to increased direct lending production and higher interest rate levels ‒ Expect D/E ratios to remain near these levels in the current interest rate environment • High tangible net worth (TNW) / assets excluding loans eligible for repurchase • Unsecured senior notes enhance liquidity at low, fixed interest rates; first maturity in February 2029 • As of March 31, 2026 total liquidity including cash and amounts available to draw with collateral pledged was $4.2 billion Financing capacity across multiple banks |
| APPENDIX |
| Portfolio growth drives higher recurring fee income; prepayment speeds slow in rising rate environments, a natural hedge to origination income Refinance recapture to drive earnings growth when rates decline 17 COMPREHENSIVE MORTGAGE BANKING PLATFORM IS A FLYWHEEL Large volumes of production grow servicing portfolio 2 nd largest in the U.S.(1) 5 th largest in the U.S.(2) A culture of continuous process improvement and technological innovation to drive further scale and operational efficiency gains Customer base of 2.7 million drives leads for consumer direct Correspondent Production Broker Direct Consumer Direct Leading market position in third-party lending enables access to the more consistent and growing purchase market Servicing Portfolio UPB(2) (in billions) (1) Inside Mortgage Finance for the 12 months ended 3/31/26 (2) Inside Mortgage Finance as of 12/31/25; includes volume subserviced for PMT and others Loan Production Loan Servicing |
| PFSI Purchase Mix Industry Purchase Mix(5) 18 TRACK RECORD OF STRONG PERFORMANCE ACROSS MARKET ENVIRONMENTS Proven ability to generate attractive ROEs… …across different market environments… …with a strong orientation towards purchase money mortgages. (1) Represents partial year; initial public offering was May 8, 2013 (2) Adjusted return on equity was 7% excluding arbitration accrual of $158 million and related tax impact (3) Inside Mortgage Finance (4) Bloomberg (5) Inside Mortgage Finance for historical industry purchase mix, 1Q26 is an estimate based on Mortgage Bankers Association (4/20/26) and Fannie Mae (4/13/26) forecasts U.S. Origination Market(3) (in trillions) PFSI's Annualized Return on Average Common Stockholders' Equity (ROE) 10-Year Treasury Yield(4) |
| (1) Freddie Mac Primary Mortgage Market Survey. (2) U.S. Department of the Treasury. (3) Actual originations: Inside Mortgage Finance; Forecast originations; Average of Mortgage Bankers Association (4/20/26) and Fannie Mae (4/13/26) forecasts (4) 10-year Treasury bond yield and 2/10 year Treasury yield spread: Bloomberg. Average 30-year fixed rate mortgage: Freddie Mac Primary Mortgage Market Survey. Average secondary mortgage rate: 30-Year FNCL Par Coupon Index (MTGEFNCL), Bloomberg. U.S. home price appreciation: S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index (SPCSUSA); data is as of 1/31/26. Residential mortgage originations are for the quarterly period ended; source: Inside Mortgage Finance CURRENT MARKET ENVIRONMENT AND MACROECONOMIC TRENDS 19 Average 30-year fixed rate mortgage(1) Macroeconomic Metrics(4) U.S. Origination Market Forecast(3) (UPB in trillions) 10-year Treasury Bond Yield(2) 3/31/25 6/30/25 9/30/25 12/31/25 3/31/26 10-year Treasury bond yield 4.2% 4.2% 4.2% 4.2% 4.3% 2/10 year Treasury yield spread 0.3% 0.5% 0.5% 0.7% 0.5% 30-year fixed rate mortgage 6.7% 6.8% 6.3% 6.2% 6.4% Secondary mortgage rate 5.6% 5.5% 5.2% 5.0% 5.5% U.S. home price appreciation (Y/Y% change) 3.4% 1.9% 1.3% 1.1% 0.9% Residential mortgage originations (in billions) $360 $500 $495 $570 $530 6.15% 6.38% 4.17% 4.32% Purchase Refinance |
| PENNYMAC’S MARKET SHARE OVER TIME ACROSS ITS BUSINESSES 20 Loan Servicing Market Share Correspondent Production Market Share(1) (1) Broker Direct Market Share(1) Consumer Direct Market Share(1) Note: All figures are for PFSI and include volume fulfilled or subserviced for PMT (1) Historical market share: Inside Mortgage Finance; excludes second lien originations. For LTM 1Q26, we estimate $2.1 trillion in total origination volume, and that the correspondent channel represented 28% of the overall origination market, retail represented 52%, and broker represented 20%. Loan servicing market share is based on PFSI’s servicing portfolio UPB of $720 billion divided by $14.9 trillion in mortgage debt outstanding |
| • Pennymac’s per loan servicing expenses are among the lowest in the industry, despite a higher concentration of government loans, which are more difficult to service • Industry-leading customer service as evidenced by our multi-year servicing excellence awards from HUD, Fannie Mae and Freddie Mac • Lower unit costs due to the implementation of SSE, our servicing system, in 2019 21 Operating Expenses(2) (annualized bps of average servicing portfolio UPB) Direct Servicing Expense(1) (annual $ cost per loan) TECHNOLOGY DRIVING EFFICIENCIES AND LOWER EXPENSES IN SERVICING • Culture of continuous process improvement • Continuing to increase efficiency through the use of emerging technologies, including capabilities of generative artificial intelligence • Increased scale and efficiency as the portfolio grows • Delinquencies remain moderated in the current market environment, further reducing operating expenses % Government Portfolio (1) MBA 2025 Servicing Operations Study (2024 data), Pennymac is included within Large IMBs (2) Prior period amounts have been recast to conform to the current period presentation |
| DELINQUENCY TRENDS AND SERVICING ADVANCES OUTSTANDING 22 Trends in Delinquency and Foreclosure Rates(1) (1) Owned MSR portfolio and includes loans acquired for sale at fair value; delinquency and foreclosure rates based on UPB; as of 12/31/25, the UPB of mortgage servicing rights owned by PFSI and loans held for sale totaled $471 billion ● Overall, mortgage delinquency rates for the MSR portfolio decreased from the prior quarter, consistent with typical seasonal trends and within expected ranges for a predominately government-insured or guaranteed loan portfolio ● Servicing advances outstanding for PFSI’s MSR portfolio were approximately $545 million at March 31, 2026, up from $522 million at December 31, 2025 due to a larger percentage of later-stage delinquencies ‒ No principal and interest advances are outstanding 30-60 Day 60-90 Day 90+ Day In foreclosure |
| RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDA(1) Note: Figures may not sum due to rounding 23 (1) Prior period amounts have been recast to conform to the current period presentation ($ in millions) 1Q25 4Q25 1Q26 Net income $ 76.3 $ 106.8 $ 82.3 Provision for (benefit from) income taxes 27.9 27.6 22.4 Income before provision for income taxes 104.2 134.4 104.7 Depreciation and amortization 13.9 12.8 13.5 (Increase) decrease in fair value of MSRs and MSLs due to changes in valuation inputs used in the valuation model 205.5 (40.4) (183.0) Principal-only stripped MBS valuation-related accretion changes (3.4) (2.6) 13.8 Hedging losses (gains) associated with MSRs (106.8) 39.4 207.3 Provision for (reversal of) losses on active loans (3.2) 11.4 6.0 Stock-based compensation 11.1 7.7 2.4 Interest expense on corporate debt 60.1 83.3 83.3 Cenlar acquisition related expenses - - 3.2 Adjusted EBITDA $ 281.4 $ 246.0 $ 251.2 |
| Reconciliation of GAAP net income to adjusted net income, adjusted EPS and annualized adjusted return on equity(1) RECONCILIATION OF GAAP ITEMS TO NON-GAAP ITEMS 24 Note: Figures may not sum due to rounding (1) Prior period amounts have been recast to conform to the current period presentation (2) Assumes a tax rate of 26.70% in 1Q25, 25.165% in 2Q25 and 3Q25, and 25.1% in 4Q25 and 1Q26 ($ in millions) 1Q25 2Q25 3Q25 4Q25 1Q26 Net income $ 76.3 $ 136.5 $ 181.5 $ 106.8 $ 82.3 (Increase) decrease in fair value of MSRs and MSLs due to changes in valuation inputs used in the valuation model 205.5 (15.9) 102.5 (40.4) (183.0) Principal-only stripped MBS valuation-related accretion changes (3.4) 2.5 (6.8) (2.6) 13.8 Hedging losses (gains) associated with MSRs (106.8) 109.1 (98.3) 39.4 207.3 Provision for (reversal of) losses on active loans (3.2) (3.6) 0.1 11.4 6.0 Cenlar acquisition related expenses - - - - 3.2 Total adjustments: 92.1 92.1 (2.5) 7.9 47.3 Tax impacts of adjustments(2) 24.6 23.2 (0.6) 2.0 11.9 Non-recurring tax adjustment - (81.6) - - - Adjusted net income $ 143.8 $ 123.8 $ 179.7 $ 112.7 $ 117.7 Diluted shares outstanding 53.6 53.6 53.9 54.2 53.9 Adjusted diluted EPS $ 2.68 $ 2.31 $ 3.33 $ 2.08 $ 2.19 Average stockholders' equity $ 3,857.5 $ 3,939.9 $ 4,109.6 $ 4,237.9 $ 4,323.5 Annualized adjusted return on equity 15% 13% 17% 11% 11% |
| Note: Figures may not sum due to rounding 25 (1) Prior period amounts have been recast to conform to the current period presentation RECONCILIATION OF GAAP ITEMS TO NON-GAAP ITEMS Reconciliation of GAAP servicing pretax income to servicing pretax income net of valuation related changes(1) ($ in millions) 1Q25 2Q25 3Q25 4Q25 1Q26 Servicing pretax income $ 76.0 $ 54.2 $ 157.4 $ 37.3 $ 12.7 (Increase) decrease in fair value of MSRs and MSLs due to changes in valuation inputs used in the valuation model 205.5 (15.9) 102.5 (40.4) (183.0) Principal-only stripped MBS valuation-related accretion changes (3.4) 2.5 (6.8) (2.6) 13.8 Hedging losses (gains) associated with MSRs (106.8) 109.1 (98.3) 39.4 207.3 Provision for credit losses on active loans (3.2) (3.6) 0.1 11.4 6.0 Servicing pretax income net of valuation related changes $ 168.1 $ 146.3 $ 154.9 $ 45.2 $ 56.7 Reconciliation of GAAP total net revenue to adjusted revenue ($ in millions) 2022 2023 2024 2025 LTM 1Q26 Total net revenue $ 1,985.8 $ 1,401.7 $ 1,593.7 $ 2,046.5 $ 2,160.6 Realization of MSR cash flows (523.5) (662.4) (840.7) (1,161.6) (1,291.2) Increase (decrease) in fair value of MSRs and MSLs due to changes in valuation inputs used in the valuation model 877.7 56.8 407.4 (251.7) 136.8 Principal-only stripped MBS valuation-related accretion changes - - 8.1 10.2 (7.0) Hedging losses (gains) associated with MSRs (631.5) (236.8) (832.5) 56.5 (257.5) Provision for credit losses on active loans 44.4 13.9 (13.0) (4.7) (13.9) Non-recurring items - - 12.5 - - Adjusted revenue $ 2,218.6 $ 2,230.1 $ 2,851.9 $ 3,397.7 $ 3,593.4 |
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