PennyMac Financial Q3 2026 net income falls 84% to $29M
Production recorded a $7 million pretax loss as servicing produced $99 million of pretax income in the quarter.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Rhea-AI Filing Summary
PennyMac Financial Services, Inc. (PFSI) reported third-quarter 2026 net income of $29 million ($0.54 diluted EPS) and total net revenues of $469 million, down 84% and 26%, respectively, year over year. Adjusted net income was $56 million and adjusted diluted EPS $1.05, both non-GAAP measures. The board declared a $0.30-per-share dividend, payable November 27, 2026, to holders of record November 16, 2026.
Production posted a $7 million pretax loss versus $123 million income a year earlier; servicing pretax income was $99 million, versus $157 million year over year and $22 million in the prior quarter. After quarter-end, PFSI agreed to sell $29 billion in UPB of low-rate conventional mortgage servicing rights, planning to use $490 million in proceeds to reduce higher-cost debt and repurchase common shares. Management expects $160 million in annualized operating expense reductions by the first quarter of 2027, measured from the second quarter of 2026, and expects to close the Cenlar subservicing acquisition in early 2027.
Daniel S. Perotti, Senior Managing Director and Chief Financial Officer, will resign from the CFO role on December 31, 2026, and continue in an advisory role through the first quarter of 2027. Kevin Ryan is scheduled to become CFO on January 1, 2027; Doug Jones plans to retire on June 30, 2027. Amended agreements extend David A. Spector’s term through December 31, 2031, and Doug Jones’s through June 30, 2027.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointServicing pretax income was $99 million, versus $22 million in the prior quarter.
Negative
- Moderate pointTotal net revenues declined 26%; net income declined 84% year over year.
- Moderate pointProduction’s pretax result: a $7 million loss versus $123 million income.
Filing Explained
The agreements specify contingent issuer payment obligations, including three years of salary plus incentive pay on a change-of-control termination and post-term consulting fees.
On
For specified termination events, the agreements provide any earned but unpaid prior-year bonus and a prorated earned bonus for the termination year, and unvested equity awards vest immediately. The listed events are death or disability, termination without cause, resignation for good reason, or termination in connection with a change of control.
Change-of-control termination severance is three years of base salary plus three years of incentive compensation, based on the average bonus for the two most recent years; qualifying terminations not connected with a change of control provide two and one-half years of each, payable in 24 monthly installments. After term expiration or retirement, Spector’s agreement provides an 18-month consulting period and a
8-K Event Classification
Key Figures
Key Terms
mortgage servicing rights financial
UPB financial
fallout adjusted locks financial
recapture rates financial
Earnings Snapshot
Management expects annualized operating expenses to be reduced by $160 million by the first quarter of 2027 from the second quarter of 2026.
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
How did PFSI perform in the third quarter of 2026?
What did PFSI agree to sell after the third quarter, and how does it plan to use the proceeds?
What severance would PFSI executives receive after a change of control?
What teams will Kevin Ryan continue to lead after becoming PFSI’s CFO?
AI-generated analysis. How Rhea-AI works. Not financial advice.
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
Date of Report (Date of earliest event reported):
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
| (Address of principal executive offices) | (Zip Code) |
(
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 1.01 Entry into a Material Definitive Agreement.
Employment Agreements
On October 29, 2026, PennyMac Financial Services, Inc. (the “Company”) and Private National Mortgage Acceptance Company, LLC (“PNMAC”), its wholly-owned subsidiary, entered into amended employment agreements with David A. Spector (the “Amended Spector Agreement”) and Doug Jones (the “Amended Jones Agreement” and together with the Amended Spector Agreement, the “Amended Employment Agreements”). Mr. Spector shall continue to serve as Chairman and Chief Executive Officer of the Company and Chief Executive Officer of PNMAC throughout the term of the Amended Spector Agreement. Mr. Jones shall continue to serve as President and Chief Mortgage Banking Officer of the Company and PNMAC throughout the term of the Amended Jones Agreement. The material terms of the Amended Spector Agreement and the Amended Jones Agreement are described in Item 5.02 of this report.
Item 2.02 Results of Operations and Financial Condition.
On October 29, 2026, the Company issued a press release and a slide presentation announcing its financial results for the fiscal quarter ended September 30, 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 October 29, 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 September 30, 2026 available on its website at pfsi.pennymac.com.
The information in Item 2.02 of this report, including Exhibit 99.1 and Exhibit 99.2, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or 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 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Officer Changes – Daniel S. Perotti and Kevin Ryan
On October 29, 2026, the Company issued a press release furnished as Exhibit 99.1 announcing changes in the roles of certain officers in conjunction with its financial results for the fiscal quarter ended September 30, 2026.
Daniel S. Perotti, the Company’s Senior Managing Director and Chief Financial Officer, will resign from that role as of December 31, 2026, and will continue with the Company in an advisory role.
Kevin Ryan, age 55, the Company’s Executive Managing Director and Chief Strategy Officer, will be appointed the Company’s Chief Financial Officer on January 1, 2027. Prior to joining the Company in October 2025, Mr. Ryan served as President and Chief Financial Officer at Better Home & Finance Holding Company from October 2020 to October 2025, where he managed all of the finance, accounting, markets and risk functions. Previously, Mr. Ryan worked in several executive positions during his more than two decades at Morgan Stanley, most recently as a Managing Director in the Investment Banking division where he served as the Co-Head of Banks and Diversified Finance, covering financial technology companies, banks, consumer finance companies and mortgage companies. Mr. Ryan earned a B.A. from Rutgers University and a J.D. from the University of Virginia. There are no arrangements or understandings between Mr. Ryan and any other persons pursuant to which he was appointed as an executive officer. There are no family relationships between Mr. Ryan and any director, executive officer or any other person nominated or chosen by the Company to become a director or executive officer. There are no related person transactions within the meaning of Item 404(a) of Regulation S-K between Mr. Ryan and the Company.
Amended Employment Agreements – David A. Spector and Doug Jones
As described in Item 1.01 of this report, the Company and PNMAC entered into an Amended Spector Agreement and an Amended Jones Agreement with Mr. Spector and Mr. Jones that extended Mr. Spector’s term through December 31, 2031, and Mr. Jones’ term through June 30, 2027.
Amended Employment Agreements - Base Salary and Incentive Compensation
During the terms of their Amended Employment Agreements, Mr. Spector and Mr. Jones shall each receive an annual base salary as determined by the Company’s Board of Directors (the “Board”), at least as favorable as base salaries paid to other senior executives and shall each be entitled to receive annual cash and equity incentive compensation, with such compensation awarded at levels based on annual performance targets determined by the compensation committee of the Board. All future equity awards will be granted pursuant to the Company’s 2022 Equity Incentive Plan (the “2022 Plan”) (or any successor plan thereto) and subject to vesting requirements as specified in the relevant award agreements.
Amended Employment Agreements - Other Benefits and Perquisites
The Amended Employment Agreements provide for the annual accrual of twenty days of paid time off for Mr. Spector and Mr. Jones, in each case at the executive’s regular base pay rate during each year of the term. The Amended Employment Agreements also provide for medical benefits, reimbursement for expenses related to tax advice and financial counseling, reimbursement of reasonable business expenses, and participation in such other benefits programs as are provided to the Company’s executives generally.
Amended Employment Agreements - Payments Upon Specified Termination Events
Pursuant to the Amended Employment Agreements, upon a termination due to death or disability, a termination by the Company other than for cause (as defined in the Amended Employment Agreements), a termination by the executive for good reason (as defined in the Amended Employment Agreements), or a termination as a result of a change of control (as defined in the 2022 Plan, or any other equity incentive plan adopted by the Company), in addition to any other amounts required by law to be paid to him, the executive would be entitled to any bonus earned but unpaid for the year prior to the year in which the termination date occurs and the pro rata portion of any bonus earned but unpaid for the year during which the termination date occurs. In any such termination event, any unvested equity awards granted pursuant to any equity incentive plan shall vest immediately. The Company will also generally reimburse the executive or his estate for any amounts paid by him or his estate for coverage of him and his family under the Company’s group health medical benefits plan pursuant to the Consolidated Omnibus Budget Reconciliation Act, or COBRA, for as long as the executive or his family is eligible to receive such benefits under COBRA. Upon a termination due to death, the executive’s estate will also receive a continuing payment of the executive’s annual base salary as of the termination date for a period of six months following such termination.
Upon a termination of Mr. Spector’s or Mr. Jones’ employment as a result of a change of control the executive shall also receive a severance payment equal to three (3) years of annual base salary plus three (3) years of incentive compensation (based on the average bonus received in the most recent two years), with such amounts to be paid in 24 monthly installments. In the event of a termination by the Company other than for cause, or by the executive for good reason, in each case not in connection with a change of control, the executive shall receive a severance payment equal to two and one-half (2.5) years of annual base salary plus two and one-half (2.5) years of incentive compensation (based on the average bonus received in the most recent two years), payable in 24 monthly installments. Upon termination of Mr. Spector’s or Mr. Jones’ employment by the Company or PNMAC for cause, the executive shall receive his annual base salary through the termination date, any accrued but unused paid time off and reimbursement of any unreimbursed incurred expenses.
Amended Employment Agreements - Consulting Services
Upon the expiration of the term of the Amended Spector Agreement or upon a retirement, Mr. Spector shall serve as a consultant to the Company for an 18-month period commencing on the expiration date or retirement date. During the consulting period, Mr. Spector will receive a consulting fee of $3.0 million, payable in 18 equal monthly installments; provided, however, that such compensation will cease if the executive engages in services for a business that competes with the Company.
Upon the expiration of the term of the Amended Jones Agreement or upon a retirement, Mr. Jones shall serve as a consultant to the Company for an 18-month period commencing on the expiration date or retirement date. During the consulting period, Mr. Jones will receive a consulting fee of $2.0 million, payable in 18 equal monthly installments; provided, however, that such compensation will cease if the executive engages in services for a business that competes with the Company.
The foregoing descriptions of the Amended Spector Agreement and the Amended Jones Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of such agreements, which are filed as Exhibit 10.1 and Exhibit 10.2 to this Current Report on Form 8-K.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description | |
| 10.1 | Amended Employment Agreement, dated October 29, 2026, among David A. Spector, Private National Mortgage Acceptance Company, LLC and PennyMac Financial Services, Inc. | |
| 10.2 | Amended Employment Agreement, dated October 29, 2026, among Doug Jones, Private National Mortgage Acceptance Company, LLC and PennyMac Financial Services, Inc. | |
| 99.1 | Press Release, dated October 29, 2026, issued by PennyMac Financial Services, Inc. pertaining to its financial results for the fiscal quarter ended September 30, 2026. | |
| 99.2 | Slide Presentation for use beginning on October 29, 2026 in connection with a presentation of financial results for the fiscal quarter ended September 30, 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: October 29, 2026 | /s/ Daniel S. Perotti |
| Daniel S. Perotti | |
| Senior Managing Director and Chief Financial Officer |
Exhibit 99.1
PennyMac Financial Services, Inc. Reports Third Quarter 2026 Results and
Announces Changes to its Leadership Team
WESTLAKE VILLAGE, Calif. – October 29, 2026 – PennyMac Financial Services, Inc. (NYSE: PFSI) today reported net income of $29 million, or $0.54 in diluted earnings per share (EPS), on total net revenues of $469 million for the third quarter of 2026. Adjusted net income was $56 million, or $1.05 in adjusted diluted EPS, on adjusted net revenues of $502 million1. PFSI’s Board of Directors declared a third quarter cash dividend of $0.30 per share, payable on November 27, 2026, to common stockholders of record as of November 16, 2026.
Additionally, PFSI today announced that Doug Jones, President and Chief Mortgage Banking Officer, will be retiring on June 30, 2027 after a storied career in the mortgage banking industry including more than 15 years of leadership at Pennymac. His roles and responsibilities will transition to other senior leaders within the company over the next several months.
Also, effective January 1, 2027, Kevin Ryan, currently Chief Strategy Officer, will assume the role of Chief Financial Officer (CFO). Current CFO, Daniel Perotti, will remain in his current role through the remainder of this year and will continue to support the company in an advisory role through the first quarter of 2027. Mr. Ryan will continue to lead the strategy and business development teams while in his new role.
“I am extraordinarily grateful to both Doug and Dan for their long service at Pennymac and their ongoing commitment to and passion for our business,” said Chairman and Chief Executive Officer David Spector. “Both served in various roles and helped to shape Pennymac’s significant growth and transformation into a leading mortgage company. They have made invaluable contributions to the company, and will be greatly missed.”
Mr. Spector continued, “We are very fortunate to have an exceptional leadership team and a deep bench of talent to lead Pennymac into the next chapter, and drive long-term value for our stockholders.”
CEO Commentary
“Our servicing business delivered strong profitability, while our production segment reported a pretax loss due an industry-wide contraction in origination activity coupled with margin pressure near the end of the quarter,“ said Chairman and CEO David Spector. “We expect mortgage demand will remain subdued due to higher interest rates, and as a result we have taken aggressive and proactive steps to right-size our platform appropriately. By the first quarter of 2027 we expect to have reduced our annualized operating expenses by $160 million from the second quarter of 2026.”
Mr. Spector continued, “Looking forward, we are executing on several high-impact strategic catalysts to optimize returns on capital. Subsequent to quarter-end, we agreed to sell $29 billion in UPB of low-rate conventional MSRs where recapture opportunities are limited. We plan to redeploy the $490 million in proceeds to reduce higher-cost debt and repurchase common shares while our stock trades at a sizable discount to book value. In addition, we expect to close the acquisition of Cenlar’s subservicing business in early 2027, scaling our high-margin, fee-based servicing platform. Coupled with the accelerated deployment of AI across our production workflows, we are well-positioned to capture significant operating leverage when market volumes rebound.”
1 Items labeled as “adjusted” are non-GAAP financial measures. See page 10 for a reconciliation of GAAP net income to adjusted net income and adjusted diluted EPS, as well as for a reconciliation of GAAP total net revenue to adjusted net revenues.
1
The table below highlights key financial performance metrics2:
| ($ in millions except per share metrics) | 3Q26 | 2Q26 | 3Q25 | Q/Q | Y/Y | |||||||||||||
| Total net revenues | 469 | 497 | 633 | (6 | )% | (26 | )% | |||||||||||
| Net income | 29 | 22 | 182 | 32 | % | (84 | )% | |||||||||||
| Diluted EPS | $ | 0.54 | $ | 0.41 | $ | 3.37 | 32 | % | (84 | )% | ||||||||
| Annualized return on equity (ROE) | 3 | % | 2 | % | 18 | % | 1 | % | (15 | )% | ||||||||
| Adjusted net revenues | 502 | 566 | 630 | (11 | )% | (20 | )% | |||||||||||
| Adjusted net income | 56 | 74 | 180 | (25 | )% | (69 | )% | |||||||||||
| Adjusted diluted EPS | $ | 1.05 | $ | 1.39 | $ | 3.33 | (25 | )% | (69 | )% | ||||||||
| Annualized adjusted ROE | 5 | % | 7 | % | 17 | % | (2 | )% | (12 | )% | ||||||||
| Book value per share | $ | 83.85 | $ | 83.49 | $ | 81.12 | 0 | % | 3 | % | ||||||||
| Cash dividends declared per common share | $ | 0.30 | $ | 0.30 | $ | 0.30 | -- | -- | ||||||||||
Key Operating and Financial Metrics
| ● | Annualized return on equity (ROE) was 3%, up from 2% in the prior quarter |
| ● | Annualized adjusted ROE was 5%2, down from 7% in the prior quarter |
| ● | Total loan acquisitions and originations were $24.4 billion in unpaid principal balance (UPB), down 30% from the prior quarter |
| ● | Production revenue margins3 were 76 basis points of total fallout adjusted lock volume, down slightly from 77 basis points in the prior quarter; production segment pretax loss was $7 million, compared to $38 million of pretax income in the prior quarter |
| ● | Owned servicing portfolio totaled $496 billion in UPB at September 30, 2026, up 6% from September 30, 2025 |
| ● | Servicing segment pretax income was $99 million, up from $22 million in the prior quarter; pretax income excluding MSR fair value changes net of hedge results was $132 million, up from $99 million in the prior quarter2 |
| ● | Pretax loss from Corporate and other was $49 million compared to $29 million in the prior quarter |
| ● | Book value per share was $83.85 at September 30, 2026, up 3% from September 30, 2025 |
2 Items labeled as “adjusted” are non-GAAP financial measures. See pages 10 and 11 for a reconciliation of GAAP net income to adjusted net income, adjusted diluted EPS and annualized adjusted return on equity, as well as for a reconciliation of GAAP total net revenue to adjusted net revenues, and servicing pretax income to servicing pretax income excluding MSR fair value changes net of hedge results
3 Presented net of loan origination expense
2
Business Highlights
| ● | Continued to make progress on the acquisition of Cenlar’s subservicing business and expect the transaction to close in the first quarter of 2027 |
| ● | Given a smaller projected origination market and the realization of efficiencies due to technology, we are completing proactive expense reduction initiatives, which are expected to drive nearly $160 million of declines in our annual expenses from the second quarter of 2026 to the first quarter of 2027 |
| ● | After quarter-end, entered into an agreement to sell $29 billion in UPB of low-coupon conventional MSRs with an expected close in the fourth quarter; proceeds of approximately $490 million will primarily be used to pay down debt |
Guidance
| ● | Given the smaller origination market and the ongoing execution of our expense adjustments through year-end, fourth quarter adjusted ROE is expected to remain near current levels |
Production Segment Highlights
The table below highlights key operating metrics and financial performance in the production segment:
| 3Q26 | 2Q26 | 3Q25 | Q/Q | Y/Y | |||||||||||||||
| Volume ($ UPB in billions) | |||||||||||||||||||
| Total fallout adjusted locks | 23.1 | 31.5 | 37.0 | (27 | )% | (37 | )% | ||||||||||||
| Consumer direct | 2.8 | 4.5 | 3.9 | (37 | )% | (27 | )% | ||||||||||||
| Broker direct | 4.7 | 6.5 | 5.9 | (28 | )% | (20 | )% | ||||||||||||
| Correspondent | 15.6 | 20.5 | 27.2 | (24 | )% | (43 | )% | ||||||||||||
| Total acquisitions and originations | 24.4 | 34.9 | 36.5 | (30 | )% | (33 | )% | ||||||||||||
| First lien refinance recapture rates(1) | 44 | % | 47 | % | 35 | % | (3 | )% | 9 | % | |||||||||
| Profitability ($ in millions) | |||||||||||||||||||
| Revenues(2) | 175 | 243 | 292 | (28 | )% | (40 | )% | ||||||||||||
| Expenses(2) | 182 | 205 | 169 | (11 | )% | 7 | % | ||||||||||||
| Pretax (loss) income | (7 | ) | 38 | 123 | N/M | N/M | |||||||||||||
Revenues(2) as basis points of fallout adjusted locks | 76 | 77 | 79 | (2 | ) | (4 | ) | ||||||||||||
| Pretax income as basis points of fallout adjusted locks | (3 | ) | 12 | 33 | (15 | ) | (36 | ) |
May not sum due to rounding
(1) 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 and excludes loan payoffs where no subsequent mortgage lien was recorded (i.e. cash payoffs)
(2) Presented net of loan origination expense
Consumer direct fallout adjusted lock volumes were $2.8 billion in UPB, down from $4.5 billion in the prior quarter and $3.9 billion in the third quarter of 2025. The decrease was driven by lower refinance volumes due to higher mortgage rates. Broker direct fallout adjusted lock volumes were $4.7 billion in UPB, down from $6.5 billion in the prior quarter and $5.9 billion in the third quarter of 2025. The decrease from the prior quarter and the third quarter of 2025 was driven by the smaller origination market. Correspondent fallout adjusted lock volumes were $15.6 billion in UPB, down from $20.5 billion in the prior quarter and $27.2 billion in the third quarter of 2025, both as a result of the smaller origination market and a highly competitive environment.
Production segment pretax loss was $7 million compared to pretax income of $38 million in the prior quarter and $123 million in the third quarter of 2025.
Revenues net of loan origination expenses were $175 million, down from $243 million in the prior quarter and $292 million in the third quarter of 2025. The decline from the prior quarter was primarily driven by lower volumes across all channels, while the decline from the third quarter of 2025 was driven by lower volumes and a $38 million adverse shift in secondary market impacts.
Expenses net of loan origination expenses were $182 million, down from $205 million in the prior quarter and up from $169 million in the third quarter of 2025. The decrease from the prior quarter was due to lower volumes and previously-announced reductions in headcount, and the increase from the prior year was primarily due to higher funded volumes in the consumer direct lending channel.
3
Servicing Segment Highlights
The table below highlights key operating metrics and financial performance in the servicing segment:
| 3Q26 | 2Q26 | 3Q25 | Q/Q | Y/Y | ||||||||||||||||
| Servicing portfolio | ||||||||||||||||||||
| Total UPB ($ in billions, at period end) | 737 | 731 | 717 | 1 | % | 3 | % | |||||||||||||
| Owned servicing | 496 | 488 | 470 | 2 | % | 6 | % | |||||||||||||
| Subservicing | 233 | 235 | 239 | (1 | )% | (2 | )% | |||||||||||||
| Loans held for sale | 7 | 8 | 7 | (9 | )% | (4 | )% | |||||||||||||
| Actual CPR (owned portfolio) | 8.1 | % | 11.6 | % | 8.6 | % | (3.6 | )% | (0.5 | )% | ||||||||||
| 60+ day delinquency (owned portfolio, at period end) | 4.2 | % | 4.1 | % | 3.4 | % | 0.1 | % | 0.8 | % | ||||||||||
| Profitability (in millions)(1) | ||||||||||||||||||||
| Loan servicing fees | 548 | 536 | 535 | 2 | % | 2 | % | |||||||||||||
| Earnings on custodial balances and deposits and other income | 110 | 119 | 122 | (8 | )% | (10 | )% | |||||||||||||
| Realization of mortgage servicing rights (MSR) cash flows | (275 | ) | (323 | ) | (290 | ) | (15 | )% | (5 | )% | ||||||||||
| EBO loan-related income(2) | 17 | 37 | 37 | (53 | )% | (53 | )% | |||||||||||||
| Revenues excluding MSR fair value changes net of hedge results | 401 | 369 | 405 | 9 | % | (1 | )% | |||||||||||||
| Operating expenses | 80 | 76 | 80 | 5 | % | (0 | )% | |||||||||||||
| Payoff-related expenses(3) | 19 | 29 | 18 | (34 | )% | 3 | % | |||||||||||||
| Credit losses and provisions for defaulted loans | 24 | 26 | 19 | (6 | )% | 30 | % | |||||||||||||
| Interest expense | 146 | 140 | 133 | 4 | % | 9 | % | |||||||||||||
| Expenses excluding MSR fair value changes net of hedge results | 268 | 270 | 250 | (1 | )% | 7 | % | |||||||||||||
| Pretax income excluding MSR fair value changes net of hedge results | 132 | 99 | 155 | 34 | % | (15 | )% | |||||||||||||
| MSR fair value changes | 936 | 118 | (102 | ) | N/M | N/M | ||||||||||||||
| Hedging results(4) | (964 | ) | (187 | ) | 105 | N/M | N/M | |||||||||||||
| (Provision for) losses on active loans | (6 | ) | (8 | ) | (0 | ) | N/M | N/M | ||||||||||||
| MSR fair value changes net of hedge results | (34 | ) | (77 | ) | 3 | N/M | N/M | |||||||||||||
| Pretax income | 99 | 22 | 157 | 355 | % | (37 | )% | |||||||||||||
May not sum due to rounding
(1) Non-GAAP presentation - see pages 11 and 14
(2) Includes EBO related revenues and associated expenses
(3) Includes interest shortfall and recording and release fees
(4) Includes principal-only stripped MBS valuation-related accretion changes included in net interest income in the GAAP presentation
The owned servicing portfolio totaled $496 billion in UPB at September 30, 2026, up 2% from June 30, 2026 as additions from production more than offset runoff from prepayments.
Servicing segment pretax income was $99 million, up from $22 million in the prior quarter and down from $157 million in the third quarter of 2025. Servicing segment pretax income excluding MSR fair value changes net of hedge results was $132 million, up from $99 million in the prior quarter and down from $155 million in the third quarter of 2025.
4
Servicing revenues excluding MSR fair value changes net of hedge results totaled $401 million, up from $369 million in the prior quarter and down slightly from $405 million in the third quarter of 2025. The increase from the prior quarter was primarily due to lower realization of MSR cash flows and payoff-related expenses, reflecting lower prepayment speeds, and an increase in loan servicing fees due to growth in the MSR portfolio. The decrease from the third quarter of 2025 was primarily due to lower EBO-loan related income due to higher mortgage rates and recent changes to FHA and VA loss mitigation programs, which changed the timing and volume of buyout and redelivery opportunities.
Servicing expenses excluding MSR fair value changes net of hedge results were $268 million, down slightly from $270 million in the prior quarter and up from $250 million in the third quarter of 2025. The slight decrease from the prior quarter was primarily driven by a decline in payoff-related expenses as a result of lower prepayments, partially offset by higher interest expense from larger outstanding financing balances for MSR due to higher interest rates. The increase from the third quarter of 2025 was primarily due to higher interest expense and losses and provisions for defaulted loans.
MSR fair value changes net of hedge results was a loss of $34 million, compared to $77 million in the prior quarter and $3 million of net gains in the third quarter of 2025. The losses in the quarter included $18 million in hedge costs, compared to $52 million in the prior quarter and $4 million in the third quarter of 2025.
Corporate and Other
Pretax loss from corporate and other was $49 million, compared to $29 million in the prior quarter and $44 million in the third quarter of 2025.
Revenues were $12 million, down from $23 million in the prior quarter and essentially unchanged from the third quarter of 2025. The prior quarter included a non-recurring gain from an increase in the value of our minority equity interest in Vesta.
Expenses were $61 million, up from $52 million in the prior quarter and $56 million in the third quarter of 2025. The increase from the prior quarter was driven primarily by higher compensation expenses, while the increase from the third quarter of 2025 was driven primarily by higher technology expenses.
***
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 Thursday, October 29, 2026. Management will also host a conference call and live audio webcast at 5:30 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.
***
5
About PennyMac Financial Services, Inc.
PennyMac Financial Services, Inc. (NYSE: PFSI) is a national financial services firm focused on the production and servicing of U.S. mortgage loans and the management of mortgage-related investments. Founded in 2008 and headquartered in Westlake Village, California, it is one of the nation's largest mortgage producers and servicers, and one of the few lenders operating at scale across all three production channels. The company combines advanced technology with significant operational scale to serve home buyers, existing homeowners, and its institutional partners nationwide. Additional information about PennyMac Financial Services, Inc. is available at pfsi.pennymac.com.
| Media | Investors |
| Kristyn Clark | Isaac Garden |
| mediarelations@pennymac.com | PFSI_IR@pennymac.com |
| 805.395.9943 | 818.264.4907 |
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. 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; future operating expense reductions; future mortgage servicing rights sales; the expected acquisition of Cenlar’s subservicing business; the anticipated benefits of artificial intelligence and automation initiatives; 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; our ability to close and integrate acquisitions, including the acquisition of Cenlar’s subservicing business,; changes to government modification programs; difficulties inherent in adjusting the size of our operations to reflect changes in business levels; our ability to realize anticipated cost savings from expense reduction initiatives; purchase and sales opportunities for mortgage servicing rights, including our ability to complete the pending sale of 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; our ability to implement and develop new technologies and 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 or repurchase shares of our common stock; 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.
6
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 net revenue, adjusted earnings per share, adjusted EBITDA, pretax income excluding valuation-related items, and adjusted return on equity. Adjustments to GAAP financial measures include items that the Company deems non-operating, non-recurring and market-driven fair value adjustments to mortgage servicing rights and associated hedging results that change based on interest rate shifts rather than operational efficiency. These non-GAAP measures provide a meaningful perspective on the Company’s business results because the Company utilizes this information to evaluate and manage the business, and investors use this information to calculate financial and cash flow measures. These non-GAAP measures have limitations as analytical tools and should not be viewed as a substitute for financial information determined in accordance with GAAP. Furthermore, these non-GAAP measures may not be comparable to similarly titled metrics presented by other financial institutions.
7
Consolidated Statements of Income
($ in millions, except per share amounts)
| 3Q26 | 2Q26 | 1Q26 | 4Q25 | 3Q25 | Y/Y | |||||||||||||||||||
| Revenue | ||||||||||||||||||||||||
| Owned servicing fees | 479 | 471 | 469 | 463 | 460 | 4 | % | |||||||||||||||||
| Subservicing fees | 21 | 21 | 21 | 21 | 21 | 2 | % | |||||||||||||||||
| Ancillary and other fees | 48 | 45 | 42 | 48 | 54 | (11 | )% | |||||||||||||||||
| Total loan servicing fees | 548 | 536 | 532 | 532 | 535 | 2 | % | |||||||||||||||||
| Realization of MSR cash flows | (275 | ) | (323 | ) | (355 | ) | (383 | ) | (290 | ) | (5 | )% | ||||||||||||
| Changes in fair value of MSRs due to changes in fair value inputs | 936 | 118 | 183 | 40 | (102 | ) | N/M | |||||||||||||||||
| Hedging results | (948 | ) | (186 | ) | (207 | ) | (39 | ) | 98 | N/M | ||||||||||||||
| Net loan servicing fees | 262 | 146 | 153 | 150 | 241 | 9 | % | |||||||||||||||||
| Net gains on loans held for sale | 190 | 280 | 345 | 302 | 314 | (40 | )% | |||||||||||||||||
| Loan origination fees | 47 | 70 | 72 | 68 | 62 | (24 | )% | |||||||||||||||||
| Fulfillment fees from PMT | 3 | 5 | 6 | 7 | 6 | (48 | )% | |||||||||||||||||
| Interest income | 210 | 242 | 208 | 264 | 249 | (15 | )% | |||||||||||||||||
| Interest expense | (254 | ) | (271 | ) | (250 | ) | (263 | ) | (250 | ) | 2 | % | ||||||||||||
| Net interest (expense) income | (43 | ) | (28 | ) | (42 | ) | 1 | (1 | ) | N/M | ||||||||||||||
| Management fees | 7 | 7 | 7 | 7 | 7 | (2 | )% | |||||||||||||||||
| Other revenues | 3 | 18 | 4 | 4 | 4 | (8 | )% | |||||||||||||||||
| Total net revenues | 469 | 497 | 545 | 538 | 633 | (26 | )% | |||||||||||||||||
| Expenses | ||||||||||||||||||||||||
| Compensation | 213 | 223 | 216 | 208 | 205 | 4 | % | |||||||||||||||||
| Technology | 53 | 44 | 46 | 35 | 45 | 17 | % | |||||||||||||||||
| Mortgage loan origination | 69 | 94 | 80 | 70 | 69 | (0 | )% | |||||||||||||||||
| Professional services | 13 | 16 | 14 | 10 | 10 | 31 | % | |||||||||||||||||
| Servicing | 39 | 43 | 38 | 43 | 29 | 35 | % | |||||||||||||||||
| Occupancy and equipment | 10 | 11 | 10 | 10 | 9 | 21 | % | |||||||||||||||||
| Marketing and advertising | 14 | 17 | 21 | 10 | 14 | 1 | % | |||||||||||||||||
| Other expenses | 14 | 18 | 14 | 16 | 15 | (8 | )% | |||||||||||||||||
| Total expenses | 426 | 465 | 440 | 404 | 397 | 7 | % | |||||||||||||||||
| Income before provision for income taxes | 43 | 32 | 105 | 134 | 236 | (82 | )% | |||||||||||||||||
| Provision for income taxes | 14 | 10 | 22 | 28 | 55 | (75 | )% | |||||||||||||||||
| Net income | 29 | 22 | 82 | 107 | 182 | (84 | )% | |||||||||||||||||
| Weighted average shares outstanding | ||||||||||||||||||||||||
| Basic | 52.0 | 51.9 | 52.1 | 52.0 | 51.7 | 0 | % | |||||||||||||||||
| Diluted | 53.1 | 53.3 | 53.9 | 54.2 | 53.9 | (1 | )% | |||||||||||||||||
| Earnings per share | ||||||||||||||||||||||||
| Basic | $ | 0.55 | $ | 0.42 | $ | 1.58 | $ | 2.05 | $ | 3.51 | (84 | )% | ||||||||||||
| Diluted | $ | 0.54 | $ | 0.41 | $ | 1.53 | $ | 1.97 | $ | 3.37 | (84 | )% | ||||||||||||
| Cash dividends declared per common share | $ | 0.30 | $ | 0.30 | $ | 0.30 | $ | 0.30 | $ | 0.30 | 0 | % |
May not sum due to rounding
8
Non-GAAP Reconciliations
($ in millions, except per share amounts)
Reconciliation of GAAP Total net revenues to Adjusted net revenues
| 3Q26 | 2Q26 | 1Q26 | 4Q25 | 3Q25 | ||||||||||||||||
| Total net revenues | 469 | 497 | 545 | 538 | 633 | |||||||||||||||
| Increase (decrease) in fair value of MSRs and MSLs due to changes in valuation inputs used in the valuation model | 936 | 118 | 183 | 40 | (102 | ) | ||||||||||||||
| Hedging (losses) gains associated with MSRs(1) | (964 | ) | (187 | ) | (221 | ) | (37 | ) | 105 | |||||||||||
| (Provision for) credit losses on active loans | (6 | ) | (8 | ) | (6 | ) | (11 | ) | (0 | ) | ||||||||||
| Non-recurring revenues(2) | 0 | 9 | 0 | 0 | 0 | |||||||||||||||
| Adjusted net revenues | 502 | 566 | 589 | 546 | 630 | |||||||||||||||
May not sum due to rounding
(1) Includes principal-only stripped MBS valuation-related accretion changes included in interest income for GAAP purposes
Reconciliation of GAAP Net Income to Adjusted net income,
Adjusted diluted EPS and Adjusted return on equity (ROE)
| 3Q26 | 2Q26 | 1Q26 | 4Q25 | 3Q25 | ||||||||||||||||
| Net income | 29 | 22 | 82 | 107 | 182 | |||||||||||||||
| (Increase) decrease in fair value of MSRs and MSLs due to changes in valuation inputs used in the valuation model | (936 | ) | (118 | ) | (183 | ) | (40 | ) | 102 | |||||||||||
| Hedging (gains) losses associated with MSRs(1) | 964 | 187 | 221 | 37 | (105 | ) | ||||||||||||||
| Provision for losses on active loans | 6 | 8 | 6 | 11 | 0 | |||||||||||||||
| Non-recurring pretax items(2) | 2 | (7 | ) | 3 | 0 | 0 | ||||||||||||||
| Total adjustments: | 36 | 70 | 47 | 8 | (3 | ) | ||||||||||||||
| Tax rate for adjustments | 25.1 | % | 25.1 | % | 25.1 | % | 25.1 | % | 25.2 | % | ||||||||||
| Tax impacts of adjustments | (9 | ) | (18 | ) | (12 | ) | (2 | ) | 1 | |||||||||||
| Adjusted net income | 56 | 74 | 118 | 113 | 180 | |||||||||||||||
| Diluted shares outstanding | 53.1 | 53.3 | 53.9 | 54.2 | 53.9 | |||||||||||||||
| Adjusted diluted EPS | $ | 1.05 | $ | 1.39 | $ | 2.19 | $ | 2.08 | $ | 3.33 | ||||||||||
| Average stockholders' equity | 4,352 | 4,323 | 4,324 | 4,238 | 4,110 | |||||||||||||||
| Annualized ROE | 3 | % | 2 | % | 8 | % | 10 | % | 18 | % | ||||||||||
| Annualized adjusted ROE | 5 | % | 7 | % | 11 | % | 11 | % | 17 | % | ||||||||||
May not sum due to rounding
(1) Includes principal-only stripped MBS valuation-related accretion changes included in interest income for GAAP purposes
(2) 3Q26 non-recurring pretax items includes $2 million of Cenlar acquisition related expenses
9
Non-GAAP Reconciliations (continued)
($ in millions)
Reconciliation of GAAP Net income to Adjusted EBITDA
| 3Q26 | 2Q26 | 1Q26 | 4Q25 | 3Q25 | ||||||||||||||||
| Net income | 29 | 22 | 82 | 107 | 182 | |||||||||||||||
| Provision for income taxes | 14 | 10 | 22 | 28 | 55 | |||||||||||||||
| Income before provisions for income taxes | 43 | 32 | 105 | 134 | 236 | |||||||||||||||
| Depreciation and amortization | 14 | 14 | 14 | 13 | 13 | |||||||||||||||
| (Increase) decrease in fair value of MSRs and MSLs due to changes in valuation inputs used in the valuation model | (936 | ) | (118 | ) | (183 | ) | (40 | ) | 102 | |||||||||||
| Hedging (gains) losses associated with MSRs(1) | 964 | 187 | 221 | 37 | (105 | ) | ||||||||||||||
| Provision for losses on active loans | 6 | 8 | 6 | 11 | 0 | |||||||||||||||
| Stock-based compensation | 6 | 4 | 2 | 8 | 10 | |||||||||||||||
| Non-recurring items(2) | 2 | (7 | ) | 3 | 0 | 0 | ||||||||||||||
| Interest expense on corporate debt and capital lease | 83 | 83 | 83 | 83 | 78 | |||||||||||||||
| Adjusted EBITDA | 182 | 204 | 251 | 246 | 335 | |||||||||||||||
May not sum due to rounding
(1) Includes principal-only stripped MBS valuation-related accretion changes included in interest income for GAAP purposes
(2) 3Q26 non-recurring pretax items include $2 million of Cenlar acquisition related expenses
Reconciliation of GAAP servicing pretax income to
servicing pretax income net of valuation related changes
| 3Q26 | 2Q26 | 1Q26 | 4Q25 | 3Q25 | ||||||||||||||||
| Servicing pretax income | 99 | 22 | 13 | 37 | 157 | |||||||||||||||
| (Increase) decrease in fair value of MSRs and MSLs due to changes in valuation inputs used in the valuation model | (936 | ) | (118 | ) | (183 | ) | (40 | ) | 102 | |||||||||||
| Hedging losses (gains) associated with MSRs(1) | 964 | 187 | 221 | 37 | (105 | ) | ||||||||||||||
| Provision for losses on active loans | 6 | 8 | 6 | 11 | 0 | |||||||||||||||
| Servicing pretax income excluding MSR fair value changes net of hedge results | 132 | 99 | 57 | 45 | 155 | |||||||||||||||
May not sum due to rounding
(1) Includes principal-only stripped MBS valuation-related accretion changes included in interest income for GAAP purposes
10
Production Segment Profitability and Key Metrics
($ in millions)
Production Segment Contribution to Pretax Income
| 3Q26 | 2Q26 | 1Q26 | 4Q25 | 3Q25 | Y/Y | |||||||||||||||||||
| Net gains on loans held for sale at fair value | 176 | 245 | 311 | 276 | 280 | (37 | )% | |||||||||||||||||
| Loan origination fees | 47 | 70 | 72 | 68 | 62 | (24 | )% | |||||||||||||||||
| Fulfillment fees from PMT | 3 | 5 | 6 | 7 | 6 | (48 | )% | |||||||||||||||||
| Interest income | 107 | 119 | 113 | 129 | 111 | (4 | )% | |||||||||||||||||
| Interest expense | (90 | ) | (105 | ) | (96 | ) | (109 | ) | (98 | ) | (8 | )% | ||||||||||||
| Net interest income | 17 | 14 | 17 | 20 | 14 | 25 | % | |||||||||||||||||
| Other revenues | 0 | 3 | 0 | 0 | 0 | (34 | )% | |||||||||||||||||
| Net revenues | 244 | 337 | 407 | 371 | 362 | (33 | )% | |||||||||||||||||
| Compensation | 124 | 146 | 136 | 123 | 114 | 8 | % | |||||||||||||||||
| Technology | 33 | 30 | 30 | 28 | 31 | 6 | % | |||||||||||||||||
| Loan origination expenses | 69 | 94 | 80 | 70 | 69 | (0 | )% | |||||||||||||||||
| Professional services | 6 | 5 | 6 | 4 | 3 | 62 | % | |||||||||||||||||
| Occupancy and equipment | 6 | 6 | 5 | 5 | 4 | 29 | % | |||||||||||||||||
| Marketing and advertising | 11 | 12 | 12 | 9 | 12 | (11 | )% | |||||||||||||||||
| Other expenses | 3 | 6 | 4 | 5 | 4 | (27 | )% | |||||||||||||||||
| Expenses | 251 | 299 | 273 | 244 | 239 | 5 | % | |||||||||||||||||
| Pretax (loss) income | (7 | ) | 38 | 134 | 127 | 123 | N/M | |||||||||||||||||
May not sum due to rounding
11
Production Segment Profitability and Key Metrics (continued)
($ UPB in billions)
Production Segment Volumes and Key Metrics
| 3Q26 | 2Q26 | 1Q26 | 4Q25 | 3Q25 | Y/Y | |||||||||||||||||||
| Volumes | ||||||||||||||||||||||||
| Consumer direct fallout adjusted locks | 2.8 | 4.5 | 6.6 | 5.0 | 3.9 | (27 | )% | |||||||||||||||||
| Broker direct fallout adjusted locks | 4.7 | 6.5 | 7.1 | 5.6 | 5.9 | (20 | )% | |||||||||||||||||
| Correspondent fallout adjusted locks | 15.6 | 20.5 | 24.3 | 30.5 | 27.2 | (43 | )% | |||||||||||||||||
| Total fallout adjusted locks | 23.1 | 31.5 | 38.0 | 41.0 | 37.0 | (37 | )% | |||||||||||||||||
| Consumer direct originations | 3.3 | 5.6 | 6.0 | 5.2 | 3.1 | 6 | % | |||||||||||||||||
| Broker direct originations | 5.2 | 7.0 | 6.7 | 6.5 | 5.6 | (7 | )% | |||||||||||||||||
| Correspondent acquisitions | 15.9 | 22.3 | 24.4 | 30.5 | 27.8 | (43 | )% | |||||||||||||||||
| Total acquisitions and originations | 24.4 | 34.9 | 37.0 | 42.2 | 36.5 | (33 | )% | |||||||||||||||||
| Consumer direct locks | 3.9 | 6.1 | 9.2 | 7.4 | 6.0 | (34 | )% | |||||||||||||||||
| Broker direct locks | 6.1 | 8.5 | 9.5 | 7.6 | 8.0 | (23 | )% | |||||||||||||||||
| Correspondent locks | 16.5 | 21.8 | 26.1 | 31.8 | 29.3 | (44 | )% | |||||||||||||||||
| Total locks | 26.6 | 36.5 | 44.8 | 46.8 | 43.2 | (39 | )% | |||||||||||||||||
| Key metrics | ||||||||||||||||||||||||
Revenues(1) as basis points of fallout adjusted locks | 76 | 77 | 86 | 73 | 79 | (4 | ) | |||||||||||||||||
| Pretax income as basis points of total fallout adjusted locks | (3 | ) | 12 | 35 | 31 | 33 | (36 | ) | ||||||||||||||||
| Consumer direct margins(2) | 3.35 | % | 3.00 | % | 2.64 | % | 3.12 | % | 3.51 | % | (4 | )% | ||||||||||||
| Broker direct margins(2) | 0.85 | % | 0.97 | % | 1.10 | % | 1.05 | % | 0.92 | % | (7 | )% | ||||||||||||
| PFSI correspondent margins(2) | 0.29 | % | 0.26 | % | 0.30 | % | 0.26 | % | 0.27 | % | 6 | % | ||||||||||||
| % Purchase acquisitions and originations | 78 | % | 69 | % | 58 | % | 66 | % | 83 | % | N/M | |||||||||||||
| First lien refinance recapture rates(3) | 44 | % | 47 | % | 35 | % | 33 | % | 35 | % | 9 | % | ||||||||||||
| WA FICO at acquisition / origination | 745 | 742 | 749 | 747 | 749 | (4 | ) | |||||||||||||||||
| WA DTI at acquisition / origination | 40 | 40 | 40 | 40 | 40 | 0 | ||||||||||||||||||
May not sum due to rounding
(1) Net of loan origination expenses
(2) Revenue contribution excluding secondary market impacts divided by fallout adjusted locks
(3) 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 and excludes loan payoffs where no subsequent mortgage lien was recorded (i.e. cash payoffs)
12
Servicing Segment Profitability and Key Metrics
($ in millions)
Servicing Segment Contribution to Pretax Income
| 3Q26 | 2Q26 | 1Q26 | 4Q25 | 3Q25 | Y/Y | |||||||||||||||||||
| Owned servicing fees | 479 | 471 | 469 | 463 | 460 | 4 | % | |||||||||||||||||
| Subservicing fees | 21 | 21 | 21 | 21 | 21 | 2 | % | |||||||||||||||||
| Ancillary and other fees | 48 | 45 | 42 | 48 | 54 | (11 | )% | |||||||||||||||||
| Total loan servicing fees | 548 | 536 | 532 | 532 | 535 | 2 | % | |||||||||||||||||
| Realization of MSR cash flows | (275 | ) | (323 | ) | (355 | ) | (383 | ) | (290 | ) | (5 | )% | ||||||||||||
| Changes in MSR fair value due to changes in valuation inputs | 936 | 118 | 183 | 40 | (102 | ) | N/M | |||||||||||||||||
| Hedging results | (948 | ) | (186 | ) | (207 | ) | (39 | ) | 98 | N/M | ||||||||||||||
| Net loan servicing fees | 262 | 146 | 153 | 150 | 241 | 9 | % | |||||||||||||||||
| Gains on loans held for sale | 14 | 35 | 34 | 26 | 34 | (60 | )% | |||||||||||||||||
| Interest income | 103 | 123 | 95 | 135 | 137 | (25 | )% | |||||||||||||||||
| Interest expense | (164 | ) | (166 | ) | (154 | ) | (154 | ) | (152 | ) | 8 | % | ||||||||||||
| Net interest (expense) | (61 | ) | (43 | ) | (59 | ) | (19 | ) | (15 | ) | 302 | % | ||||||||||||
| Other revenues | (2 | ) | (2 | ) | (2 | ) | (2 | ) | (1 | ) | 122 | % | ||||||||||||
| Net revenues | 213 | 137 | 125 | 154 | 259 | (18 | )% | |||||||||||||||||
| Compensation | 53 | 52 | 53 | 52 | 52 | 2 | % | |||||||||||||||||
| Technology | 11 | 8 | 11 | 11 | 10 | 7 | % | |||||||||||||||||
| Servicing | 39 | 43 | 38 | 43 | 29 | 35 | % | |||||||||||||||||
| Other expenses | 11 | 12 | 11 | 11 | 11 | 0 | % | |||||||||||||||||
| Expenses | 114 | 115 | 112 | 117 | 102 | 11 | % | |||||||||||||||||
| Pretax income | 99 | 22 | 13 | 37 | 157 | (37 | )% |
May not sum due to rounding
13
Servicing Segment Profitability and Key Metrics (continued)
($ UPB in billions)
Servicing Segment Portfolio and Key Metrics
| 3Q26 | 2Q26 | 1Q26 | 4Q25 | 3Q25 | Y/Y | |||||||||||||||||||
Servicing portfolio ($ UPB in billions, at period end) | ||||||||||||||||||||||||
| Owned MSR UPB | 496 | 488 | 474 | 462 | 470 | 6 | % | |||||||||||||||||
| Subserviced UPB | 233 | 235 | 237 | 263 | 239 | (2 | )% | |||||||||||||||||
| Loans held for sale | 7 | 8 | 10 | 9 | 7 | (4 | )% | |||||||||||||||||
| Total UPB | 737 | 731 | 720 | 734 | 717 | 3 | % | |||||||||||||||||
| Total loans serviced (in thousands) | 2,769 | 2,753 | 2,725 | 2,788 | 2,746 | 1 | % | |||||||||||||||||
Key metrics (owned portfolio, at period end except CPR) | ||||||||||||||||||||||||
| 60+ Day Delinquency | 4.2 | % | 4.1 | % | 4.2 | % | 4.2 | % | 3.4 | % | 0.8 | % | ||||||||||||
| Actual CPR | 8.1 | % | 11.6 | % | 13.7 | % | 13.0 | % | 8.6 | % | (0.5 | )% | ||||||||||||
| Weighted average coupon | 5.1 | % | 5.1 | % | 5.1 | % | 5.0 | % | 4.9 | % | 0.2 | % | ||||||||||||
| Weighted average servicing fee | 0.39 | % | 0.39 | % | 0.39 | % | 0.39 | % | 0.39 | % | 0.00 | % | ||||||||||||
| Servicing fee multiple | 6.1 | x | 5.6 | x | 5.5 | x | 5.3 | x | 5.3 | x | 0.8 | x | ||||||||||||
May not sum due to rounding
14
Corporate & Other Profitability
($ in millions)
| 3Q26 | 2Q26 | 1Q26 | 4Q25 | 3Q25 | Y/Y | |||||||||||||||||||
| Management fees | 7 | 7 | 7 | 7 | 7 | (2 | )% | |||||||||||||||||
| Interest income | 0 | 0 | 0 | 0 | 0 | N/M | ||||||||||||||||||
| Interest expense | 0 | 0 | 0 | 0 | 0 | N/M | ||||||||||||||||||
| Net interest income (expense) | 0 | 0 | 0 | 0 | 0 | N/M | ||||||||||||||||||
| Other revenues | 5 | 16 | 6 | 6 | 4 | 22 | % | |||||||||||||||||
| Net revenues | 12 | 23 | 13 | 13 | 12 | 6 | % | |||||||||||||||||
| Compensation | 37 | 25 | 28 | 33 | 39 | (6 | )% | |||||||||||||||||
| Technology | 9 | 6 | 5 | (3 | ) | 4 | 133 | % | ||||||||||||||||
| Marketing and advertising | 3 | 5 | 9 | 1 | 1 | 156 | % | |||||||||||||||||
| Professional Services | 5 | 9 | 7 | 4 | 5 | 11 | % | |||||||||||||||||
| Occupancy and equipment | 2 | 2 | 2 | 2 | 2 | 24 | % | |||||||||||||||||
| Other expenses | 5 | 6 | 5 | 6 | 5 | 2 | % | |||||||||||||||||
| Expenses | 61 | 52 | 55 | 43 | 56 | 10 | % | |||||||||||||||||
| Pretax loss | (49 | ) | (29 | ) | (42 | ) | (30 | ) | (44 | ) | 11 | % | ||||||||||||
May not sum due to rounding
15
Consolidated Balance Sheets
($ in millions)
| 9/30/26 | 6/30/26 | 3/31/26 | 12/31/25 | 9/30/25 | Y/Y | |||||||||||||||||||
| Assets | ||||||||||||||||||||||||
| Cash | 233 | 214 | 220 | 302 | 622 | (62 | )% | |||||||||||||||||
| Short-term investment at fair value | 413 | 534 | 434 | 410 | 62 | 563 | % | |||||||||||||||||
| Principal-only stripped mortgage-backed securities at fair value | 515 | 609 | 659 | 723 | 774 | (34 | )% | |||||||||||||||||
| Loans held for sale at fair value | 6,899 | 7,820 | 9,954 | 9,123 | 7,490 | (8 | )% | |||||||||||||||||
| Derivative assets | 491 | 202 | 283 | 188 | 202 | 143 | % | |||||||||||||||||
| Servicing advances, net | 604 | 589 | 623 | 590 | 396 | 53 | % | |||||||||||||||||
| Mortgage servicing rights at fair value | 11,639 | 10,587 | 10,149 | 9,599 | 9,654 | 21 | % | |||||||||||||||||
| Loans eligible for repurchase | 8,226 | 8,291 | 8,594 | 7,410 | 5,417 | 52 | % | |||||||||||||||||
| Other assets | 893 | 1,013 | 1,028 | 1,045 | 783 | 14 | % | |||||||||||||||||
| Total assets | 29,912 | 29,859 | 31,944 | 29,389 | 25,401 | 18 | % | |||||||||||||||||
| Liabilities | ||||||||||||||||||||||||
| Assets sold under agreements to repurchase | 8,088 | 8,435 | 10,178 | 8,794 | 7,130 | 13 | % | |||||||||||||||||
| Mortgage loan participation purchase and sale agreements | 678 | 696 | 691 | 697 | 699 | (3 | )% | |||||||||||||||||
| Notes payable secured by mortgage servicing assets | 1,641 | 1,426 | 1,426 | 1,326 | 1,326 | 24 | % | |||||||||||||||||
| Unsecured senior notes | 4,840 | 4,837 | 4,834 | 4,832 | 4,829 | 0 | % | |||||||||||||||||
| Income taxes payable | 1,229 | 1,216 | 1,206 | 1,184 | 1,151 | 7 | % | |||||||||||||||||
| Liability for mortgage loans eligible for repurchase | 8,226 | 8,291 | 8,594 | 7,410 | 5,417 | 52 | % | |||||||||||||||||
| Other liabilities | 853 | 621 | 688 | 838 | 640 | 33 | % | |||||||||||||||||
| Total liabilities | 25,556 | 25,523 | 27,618 | 25,080 | 21,193 | 21 | % | |||||||||||||||||
| Stockholders' equity | 4,357 | 4,337 | 4,326 | 4,309 | 4,208 | 4 | % | |||||||||||||||||
May not sum due to rounding
16
Capital and Liquidity
($ in millions)
| 3Q26 | 2Q26 | 1Q26 | 4Q25 | 3Q25 | Y/Y | |||||||||||||||||||
| Liquidity | ||||||||||||||||||||||||
| Cash and short-term investments | 646 | 749 | 654 | 712 | 684 | (6 | )% | |||||||||||||||||
| Amounts available to draw on facilities with collateral pledged | 2,880 | 3,261 | 3,507 | 3,928 | 4,288 | (33 | )% | |||||||||||||||||
| Total liquidity | 3,526 | 4,010 | 4,161 | 4,639 | 4,972 | (29 | )% | |||||||||||||||||
| Total liquidity as a % of MSR fair value | 30 | % | 38 | % | 41 | % | 48 | % | 52 | % | (21 | )% | ||||||||||||
| Capital | ||||||||||||||||||||||||
| Total equity | 4,357 | 4,337 | 4,326 | 4,309 | 4,208 | 4 | % | |||||||||||||||||
| (-) Capitalized software | 111 | 111 | 112 | 108 | 105 | 6 | % | |||||||||||||||||
| Tangible equity | 4,246 | 4,226 | 4,214 | 4,201 | 4,103 | 3 | % | |||||||||||||||||
| Face value of unsecured senior notes | 4,900 | 4,900 | 4,900 | 4,900 | 4,900 | 0 | % | |||||||||||||||||
| Face value of MSR term notes and loans | 1,330 | 1,330 | 1,330 | 1,330 | 1,330 | 0 | % | |||||||||||||||||
| Amount drawn on variable funding note | 1,645 | 1,145 | 860 | 410 | 230 | 615 | % | |||||||||||||||||
| Freddie Mac MSR facilities | 560 | 310 | 235 | -- | -- | N/M | ||||||||||||||||||
| Face value of non-funding debt | 8,435 | 7,685 | 7,325 | 6,640 | 6,460 | 31 | % | |||||||||||||||||
| Face value of assets sold under agreements to repurchase(1) | 6,208 | 7,085 | 9,189 | 8,391 | 6,908 | (10 | )% | |||||||||||||||||
| Face value of mortgage loan participation purchase and sale agreements | 679 | 696 | 691 | 697 | 700 | (3 | )% | |||||||||||||||||
| Face value of funding debt | 6,887 | 7,782 | 9,880 | 9,088 | 7,608 | (9 | )% | |||||||||||||||||
| Face value of total debt | 15,322 | 15,467 | 17,205 | 15,728 | 14,068 | 9 | % | |||||||||||||||||
| Unamortized debt issuance costs | (74 | ) | (72 | ) | (76 | ) | (80 | ) | (84 | ) | (11 | )% | ||||||||||||
| Carrying value of total debt | 15,247 | 15,395 | 17,129 | 15,648 | 13,984 | 9 | % | |||||||||||||||||
| Total assets | 29,912 | 29,859 | 31,944 | 29,389 | 25,401 | 18 | % | |||||||||||||||||
| (-) Capitalized software | 111 | 111 | 112 | 108 | 105 | 6 | % | |||||||||||||||||
| Adjusted assets | 29,801 | 29,748 | 31,832 | 29,281 | 25,296 | 18 | % | |||||||||||||||||
| (-) Loans eligible for repurchase | 8,226 | 8,291 | 8,594 | 7,410 | 5,417 | 52 | % | |||||||||||||||||
| Adjusted assets less loans eligible for repurchase | 21,575 | 21,458 | 23,237 | 21,871 | 19,879 | 9 | % | |||||||||||||||||
| Capital ratios | ||||||||||||||||||||||||
| Non-funding debt / total equity(2) | 1.9 | x | 1.8 | x | 1.7 | x | 1.5 | x | 1.5 | x | 0.4 | x | ||||||||||||
| Non-funding debt / tangible equity(2) | 2.0 | x | 1.8 | x | 1.7 | x | 1.6 | x | 1.6 | x | 0.4 | x | ||||||||||||
| Total debt / total equity | 3.5 | x | 3.6 | x | 4.0 | x | 3.7 | x | 3.3 | x | 0.2 | x | ||||||||||||
| Total debt / tangible equity | 3.6 | x | 3.7 | x | 4.1 | x | 3.7 | x | 3.4 | x | 0.2 | x | ||||||||||||
| Total equity / adjusted assets less loans eligible for repurchase | 20.2 | % | 20.2 | % | 18.6 | % | 19.7 | % | 21.2 | % | (1.0 | )% | ||||||||||||
| Tangible equity / adjusted assets less loans eligible for repurchase | 19.7 | % | 19.7 | % | 18.1 | % | 19.2 | % | 20.6 | % | (1.0 | )% | ||||||||||||
May not sum due to rounding
(1) Assets sold under agreements to repurchase shown above excludes the amount drawn on variable funding note and a certain portion of the Freddie Mac MSR facilities
(2) Uses face value of debt outstanding
17
Exhibit 99.2
| PennyMac Financial Services, Inc. October 2026 3Q26 EARNINGS REPORT |
| 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, future operating expense reductions; future mortgage servicing rights sales; the expected acquisition of Cenlar’s subservicing business; artificial intelligence and automation initiatives benefits; 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; our ability to close and integrate acquisitions, including the acquisition of Cenlar’s subservicing business; changes to government modification programs; difficulties inherent in adjusting the size of our operations to reflect changes in business levels; our ability to realize anticipated cost savings from expense reduction initiatives; purchase and sales opportunities for mortgage servicing rights, including our ability to complete the pending sale of mortgage servicing rights on the anticipated terms and timeline and to deploy the related proceeds as intended; 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; our ability to implement and develop new technologies and 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 or repurchase shares of our common stock; 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, adjusted EBITDA, pretax income excluding valuation-related items and adjusted return on equity. Adjustments to GAAP financial measures include items that the Company deems non-operating, non-recurring and market-driven fair value adjustments to Mortgage Servicing Rights (MSRs) and associated hedging results that change based on interest rate shifts rather than operational efficiency. These non-GAAP measures provide a meaningful perspective on the Company’s business results because the Company utilizes this information to evaluate and manage the business, and investors use this information to calculate financial and cash flow measures. These non-GAAP measures have limitations as analytical tools and should not be viewed as a substitute for financial information determined in accordance with GAAP. Furthermore, these non-GAAP measures may not be comparable to similarly titled metrics presented by other financial institutions. 2 FORWARD-LOOKING STATEMENTS |
| 3 3Q26 Results Production Segment Servicing Segment THIRD QUARTER HIGHLIGHTS Note: All figures are for 3Q26 or are as of 9/30/26 (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 ROE (3) Includes volume fulfilled for PennyMac Mortgage Investment Trust (NYSE: PMT) (4) MSR fair value changes net of hedge results include $936 million in MSR fair value gains, $964 million in hedging losses, which include $16 million in principal-only stripped MBS valuation-related accretion declines, 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 loss Total loan acquisitions and originations(3) PFSI correspondent lock volume Broker direct lock volume Consumer direct lock volume Pretax income Pretax income excluding MSR fair value changes net of hedge results(4) Impact to diluted EPS from MSR fair value changes net of hedge results(4) MSR fair value changes net of hedge results(4) Total servicing portfolio UPB(5) Book value per share Net income Diluted EPS(1) Adjusted EPS(2) $29mm $83.85 $(7)mm $99mm $0.54 $1.05 $24.4bn $15.3bn $132mm $(34)mm 3% 5% $6.1bn $3.9bn $(0.47) $737bn |
| 4 CONSTRAINED INDUSTRY ORIGINATION ENVIRONMENT 30-year fixed rate mortgage 7.40%(1) 3Q26 Rate & Term Agency Deliveries(2) $22B Up 93 bps from June 30, 2026 Down ~80% from 1Q26 7.4% 30-Yr Fixed Rate Mortgage(1) Sept. 2026 Fannie Mae 30-Year CPR(2) 6.5% Lowest level since March 2025 Distribution of Agency Mortgages by Coupon (2) (UPB in billions) Fannie Mae & Freddie Mac Ginnie Mae Refinance Incentive Pool <1% With >50 bp incentive to refinance Conventional 30Y Fixed Ginnie Mae II 30Y Fixed Prepayment Speeds by Agency (2) (CPR %) (1) Optimal Blue 30-Year Conforming Fixed Rate; 7.40% is as of 9/30/26 (2) Source: Bloomberg CPR (Collateral Performance Research); projections for future prepayment speeds are an average of estimates from BofA, Morgan Stanley and Barclays research |
| After quarter-end, entered into an agreement to sell $29 billion in UPB of low-coupon conventional MSRs with an expected close in the fourth quarter; proceeds of approximately $490 million will primarily be used to pay down debt BUSINESS UPDATES 5 Continued to make progress on the acquisition of Cenlar’s subservicing business and expect the transaction to close in the first quarter of 2027 Given a smaller projected origination market and the realization of efficiencies due to technology, we are completing proactive expense reduction initiatives, which are expected to drive nearly $160 million of declines in our annual expenses from 2Q26 to 1Q27 |
| Servicing net of valuation related changes Production (1) Mortgage Banking Adjusted Pretax Income ($ in millions) 6 Annualized Adjusted ROE(1) Note: Figures may not sum due to rounding (1) See slide 24 for a reconciliation of GAAP to non-GAAP items RECENT AND EXPECTED ADJUSTED RETURNS ON EQUITY Given the smaller origination market and the ongoing execution of our expense adjustments through year-end, fourth quarter adjusted ROE is expected to remain near current levels |
| ACCELERATING AI AUTOMATION ACROSS OUR ORIGINATION BUSINESS 7 Progress on Origination Processing Automation Oct ‘26 35% Remaining 37% Live Production 28% In Development AI Automation Driving Measurable Results AI Voice Agent Provides Exponential Scale in a Rally Uncoupling Platform Scale from Headcount Automating labor-intensive fulfillment workflows permanently lowers per-loan fulfillment costs and enables substantial operating leverage with reduced variable hiring requirements Efforts will continue into 2027, focused primarily on advancing AI voice agent capabilities and deploying AI agents in broker direct once live on Vesta Across our production workflows, process automation has progressed meaningfully, with the 28% currently in development expected to be completed by year-end Supported more than 15,000 transfers and 1,600 rate locks in 3Q26, and provides the ability to rapidly add capacity to meet increased demand in a market rally, enabling borrower self-service to reduce hold times and lost sales opportunities 22 AI agents have been deployed, with more than 205,000 automated agent executions and 200,000 automated document reviews; an additional 17 agents are in process |
| 8 EARNINGS POTENTIAL FROM CONSUMER DIRECT RECAPTURE OPPORTUNITY Servicing Portfolio UPB Above 5% Note Rate (1) (1) As of 9/30/26; includes first-lien loans serviced for PFSI’s own account as well as those subserviced for PMT and others with recapture arrangements with PFSI; mortgage rate: Optimal Blue 30-Year Conforming Fixed Rate as of 9/30/26 (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 and excludes loan payoffs where no subsequent mortgage lien was recorded (i.e. cash payoffs) First Lien Refinance Recapture Rates (2) 30-year fixed rate mortgage 7.40% ● Nearly all of our servicing portfolio is out-of-the-money in today's rate environment ● Recent improvements in our recapture rates position us to capitalize on portfolio refinance opportunities when rates decline (in billions) |
| KEY OPERATING METRICS & OTHER FINANCIAL SCHEDULES |
| Acquisitions for PFSI(1) 10 PRODUCTION SEGMENT – 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 Consumer Direct (UPB in billions) Correspondent (UPB in billions) Acquisitions for PMT(2) Originations Locks: $5.4bn Acquisitions: $5.4bn Locks: $1.7bn Originations: $1.3bn Locks: $0.8bn Originations: $0.7bn Total Locks(3) October (Estimated) October (Estimated) October (Estimated) Locks Originations Locks |
| 11 DRIVERS OF PRODUCTION SEGMENT RESULTS(1) Note: Figures may not sum due to rounding (1) Prior period amounts have been recast to conform to the current period presentation (2) Revenue net of direct origination costs (3) Revenue contribution, total PFSI account revenues, total production revenues and production expenses are presented net of loan origination expenses, which are managed as a component of revenue (4) Includes only loans acquired for PFSI’s own account (5) Reflects hedging, valuation changes, and other secondary marketing impacts • Production segment pretax loss driven primarily by lower volumes resulting from the rapid increase in mortgage rates • Increase in consumer direct margins as a result of a higher percentage of closed-end second lien volume versus first lien • Production expenses(3) declined 11% from the prior quarter as a result of lower volumes and capacity 3Q25 2Q26 3Q26 ($ in millions) Fallout adjusted locks Margin / fulfillment fee (bps)(2) Revenue contribution(3) Fallout adjusted locks Margin / fulfillment fee (bps)(2) Revenue contribution(3) Fallout adjusted locks Margin / fulfillment fee (bps)(2) Revenue contribution(3) PFSI correspondent(4) $ 23,585 27 $ 64 $ 18,227 26 $ 48 $ 14,714 29 $ 42 Broker direct 5,893 92 54 6,475 97 63 4,691 85 40 Consumer direct 3,872 351 136 4,490 300 135 2,824 335 95 Secondary market impacts(5) n/a n/a 32 n/a n/a (7) n/a n/a (5) Total PFSI account revenues(3) $ 33,350 86 $ 286 $ 29,192 82 $ 238 $ 22,229 77 $ 171 PMT conventional correspondent 3,602 17 6 2,292 22 5 879 36 3 Total production revenues(3) $ 36,953 79 $ 292 $ 31,484 77 $ 243 $ 23,108 76 $ 175 Production expenses(3) 46 169 65 205 79 182 Production segment pretax income 33 $ 123 12 $ 38 (3) $ (7) |
| Note: Figures may not sum due to rounding (1) Represents MSRs that we subservice for PMT and others (2) Owned portfolio is predominantly government-insured and guaranteed loans - delinquency data based on loan count (i.e., not UPB); CPR = Conditional Prepayment Rate (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 Net Portfolio Growth (UPB in billions) Owned Subserviced(1) SERVICING SEGMENT 12 Loan Servicing Portfolio Composition (UPB in billions) (5) Selected Operational Metrics 2Q26 3Q26 Loans serviced (in thousands) 2,753 2,769 60+ day delinquency rate - owned portfolio(2) 4.1% 4.2% Actual CPR - owned portfolio(2) 11.6% 8.1% UPB of completed modifications ($ in millions)(3) $2,850 $2,947 EBO loan volume ($ in millions)(4) $1,218 $1,346 • Servicing portfolio totaled $737 billion in UPB at September 30, 2026, up slightly from June 30, 2026 • Production volumes more than offset prepayment activity • 60+ day delinquency rate for owned MSR was up slightly from the prior quarter • Modification volume and EBO loan volume increased from the prior quarter |
| 13 Note: Figures may not sum due to rounding (1) Of average portfolio UPB, annualized (2) Also includes non-valuation related income from principal-only bonds (3) Comprised of net gains on mortgage loans held for sale at fair value and interest income related to EBO loans, net of related expenses (4) Consists of interest shortfall and recording and release fees (5) Changes in fair value do not include realization of MSR cash flows (6) Includes principal-only stripped MBS valuation-related accretion changes included within net interest income in the GAAP presentation (7) Considered in the assessment of MSR fair value changes DRIVERS OF SERVICING SEGMENT RESULTS • The decline in prepayment speeds from the prior quarter drove lower average custodial balances and related earnings, and also resulted in a 15% reduction in the realization of MSR cash flows • EBO loan-related income was down $20 million from the prior quarter due to higher mortgage rates and recent changes to FHA and VA loss mitigation programs, which changed the timing and volume of buyout and redelivery opportunities • Interest expense was up $6 million from the prior quarter due to higher average financing balances for MSRs 3Q25 2Q26 3Q26 $ in millions basis points(1) $ in millions basis points(1) $ in millions basis points(1) Loan servicing fees $ 535 30.2 $ 536 29.5 $ 548 30.0 Earnings on custodial balances and deposits and other income(2) 122 6.9 119 6.6 110 6.0 Realization of MSR cash flows (290) (16.4) (323) (17.8) (275) (15.0) EBO loan-related income(3) 37 2.1 37 2.0 17 0.9 Servicing expenses: Operating expenses (80) (4.5) (76) (4.2) (80) (4.4) Payoff-related expense(4) (18) (1.0) (29) (1.6) (19) (1.0) Losses and provisions for defaulted loans (19) (1.0) (26) (1.4) (24) (1.3) Interest expense (133) (7.5) (140) (7.7) (146) (8.0) Non-GAAP: Pretax income excluding MSR fair value changes net of hedge results $ 155 8.7 $ 99 5.5 $ 132 7.3 MSR fair value changes and hedge results MSR fair value(5) (102) 118 936 Hedging results(6) 105 (187) (964) (Provision for) reversal of losses on active loans(7) (0) (8) (6) GAAP: Servicing segment pretax income $ 157 $ 22 $ 99 Average servicing portfolio UPB $ 708,612 $ 726,149 $ 730,689 |
| 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) (1) Includes (provision for) reversal of losses on active loans (2) Includes principal-only stripped MBS valuation-related accretion changes • In 3Q26, gains from changes in fair value inputs on MSR were offset by hedging declines and costs • Hedge costs were meaningfully lower than the prior quarter • Shape of the yield curve, volatility, changes in mortgage basis and other factors can impact our realized hedge ratio Attributed Performance MSR(1) Hedge(2) Net Rate impacts $951 $(946) $5 Hedge costs - $(18) $(18) Other assumption & performance impacts $(21) - $(21) Prepayment-related - - - Delinquency-related $(5) - $(5) Other $(16) - $(16) Total $930 $(964) $(34) |
| 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 9/30/26 Debt-to-Equity (D/E) Ratio MSR & Servicing Advance Financing 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: ‒ Non-funding D/E ratio increased as funding facilities were utilized to fund cash impacts from hedges as interest rates increased sharply ‒ Proceeds of approximately $490 million from the expected sale of conventional portfolio in 4Q26 will be used to reduce debt and decrease non-funding D/E • 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 September 30, 2026 total liquidity including cash and amounts available to draw with collateral pledged was $3.5 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 3 rd largest in the U.S.(1) 4 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 2.8 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 6/30/26 (2) Inside Mortgage Finance as of 6/30/26; 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, 3Q26 is an estimate based on Mortgage Bankers Association (10/11/26) and Fannie Mae (10/12/26) forecasts U.S. Origination Market(3) (in trillions) PFSI's Annualized Return on Average Common Stockholders' Equity (ROE) 10-Year Treasury Yield(4) Average: 19% |
| 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) Purchase Refinance 9/30/25 12/31/25 3/31/26 6/30/26 9/30/26 10-year Treasury bond yield 4.2% 4.2% 4.3% 4.5% 5.3% Secondary mortgage rate 5.2% 5.0% 5.4% 5.4% 6.4% 30-year fixed rate mortgage 6.3% 6.2% 6.4% 6.5% 7.4% Residential mortgage originations (in billions) $495 $570 $525 $580 $490 (1) Optimal Blue 30-Year Conforming Fixed Rate. (2) U.S. Department of the Treasury. (3) Actual originations: Inside Mortgage Finance; Forecast originations; Average of Mortgage Bankers Association (10/11/26) and Fannie Mae (10/12/26) forecasts (4) 10-year Treasury bond yield: Bloomberg. Secondary mortgage rate: 30-Year FNCL Par Coupon Index (MTGEFNCL), Bloomberg. 30-year fixed rate mortgage: Optimal Blue 30-Year Conforming Fixed Rate. Residential mortgage originations are for the quarterly period ended; source: Inside Mortgage Finance |
| 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 3Q26, we estimate $2.2 trillion in total origination volume, and that the correspondent channel represented 26% of the overall origination market, retail represented 53%, and broker represented 21%. Loan servicing market share is based on PFSI’s servicing portfolio UPB of $737 billion divided by $15.0 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 costly to service • Industry-leading customer service as evidenced by our multi-year servicing excellence awards from HUD, Fannie Mae and Freddie Mac 21 Operating Expenses (annualized bps of average servicing portfolio UPB) Direct Servicing Expense(1) (annual $ cost per loan) TECHNOLOGY DRIVING EFFICIENCIES AND LOWER EXPENSES IN SERVICING • Continuing to increase efficiency through the use of emerging technologies, including capabilities of generative AI • Increased scale and efficiency as the portfolio grows • Delinquencies remain moderated in the current market environment, further reducing operating expenses % Government Portfolio (1) MBA 2026 Servicing Operations Study (2025 data), Pennymac is included within Large IMBs |
| 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 9/30/26, the UPB of mortgage servicing rights owned by PFSI and loans held for sale totaled $503 billion ● Overall, mortgage delinquency rates for the MSR portfolio were up slightly 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 $543 million at September 30, 2026, up slightly from $526 million at June 30, 2026 |
| RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDA(1) 23 ($ in millions) 3Q25 4Q25 1Q26 2Q26 3Q26 Net income $182 $107 $82 $22 $29 Provision for income taxes 55 28 22 10 14 Income (loss) before provisions for income taxes 236 134 105 32 43 Depreciation and amortization 13 13 14 14 14 (Increase) decrease in fair value of MSRs and MSLs due to changes in valuation inputs used in the valuation model 102 (40) (183) (118) (936) Hedging (gains) losses associated with MSRs(1) (105) 37 221 187 964 Provision for losses on active loans 0 11 6 8 6 Stock-based compensation 10 8 2 4 6 Non-recurring items(2) - - 3 (7) 2 Interest expense on corporate debt and capital lease 78 83 83 83 83 Adjusted EBITDA $335 $246 $251 $204 $182 Note: Figures may not sum due to rounding (1) Includes principal-only stripped MBS valuation-related accretion changes included within net interest income in the GAAP presentation (2) For 3Q26, includes $2 million of Cenlar acquisition related expenses |
| Reconciliation of GAAP net income to adjusted net income, adjusted EPS and annualized adjusted return on equity RECONCILIATION OF GAAP ITEMS TO NON-GAAP ITEMS 24 Note: Figures may not sum due to rounding (1) Includes principal-only stripped MBS valuation-related accretion changes included within net interest income in the GAAP presentation (2) For 3Q26, includes $2 million of Cenlar acquisition related expenses Reconciliation of GAAP servicing pretax income to servicing pretax income net of valuation related changes(1) 3Q25 4Q25 1Q26 2Q26 3Q26 Net income $182 $107 $82 $22 $29 (Increase) decrease in fair value of MSRs and MSLs due to changes in valuation inputs used in the valuation model 102 (40) (183) (118) (936) Hedging (gains) losses associated with MSRs(1) (105) 37 221 187 964 Provision for losses on active loans 0 11 6 8 6 Non-recurring pretax items(2) - - 3 (7) 2 Total adjustments: (3) 8 47 70 36 Assumed tax rate 25.2% 25.1% 25.1% 25.1% 25.1% Tax impacts of adjustments 1 (2) (12) (18) (9) Adjusted net income $180 $113 $118 $74 $56 Diluted shares outstanding 53.9 54.2 53.9 53.3 53.1 Adjusted diluted EPS $3.33 $2.08 $2.19 $1.39 $1.05 Average stockholders' equity 4,110 4,238 4,324 4,323 4,352 Annualized adjusted return on equity 17% 11% 11% 7% 5% 3Q25 4Q25 1Q26 2Q26 3Q26 Servicing pretax income $157 $37 $13 $22 $99 (Increase) decrease in fair value of MSRs and MSLs due to changes in valuation inputs used in the valuation model 102 (40) (183) (118) (936) Hedging (gains) losses associated with MSRs(1) (105) 37 221 187 964 Provision for losses on active loans losses on active loans 0 11 6 8 6 Servicing pretax income excluding valuation related changes $155 $45 $57 $99 $132 |
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