PennyMac Financial Services, Inc. Reports Third Quarter 2026 Results and Announces Changes to its Leadership Team

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.”

The table below highlights key financial performance metrics²:

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 margins¹ 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

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:

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.

Servicing Segment Highlights

The table below highlights key operating metrics and financial performance in the servicing segment:

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.

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.

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.

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.

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.