This story was originally published on CFO Dive. To receive daily news and insights, subscribe to our free daily CFO Dive newsletter. Dive Brief: PennyMac Financial Services and its mortgage real estate investment trust subsidiary snapped up Kevin Ryan, most recently the CFO of the fintech Better and who previously spent over two decades at Morgan Stanley, as its chief strategy officer amid a series of leadership changes, according to a Monday release. Ryan will join the company on Oct. 13. The Westlake ...

PennyMac Financial Services (NYSE:PFSI) was trading lower as Keefe, Bruyette & Woods cut its recommendation on the mortgage originator, taking into account the stock's valuation. Shares were -1.34% during Tuesday morning trade to $116.75. "While mortgage rates have declined (Freddie Mac ...

company†) today announced key executive leadership appointments. Kevin Ryan will be joining the company on October 13, 2025 as Senior Managing Director, Chief Strategy Officer. Additionally, Marshall Sebring has been promoted to Senior Managing Director, Chief Investment Officer. Finally, Shiva Iyer will be assuming the po. WESTLAKE VILLAGE, Calif.--(BUSINESS WIRE)--PennyMac Financial Services, Inc. (NYSE: PFSI) and PennyMac Mortgage Investment Trust (NYSE: PMT) (collectively, "Pennymac†or "the ...

Question-and-Answer SessionYes. Great. So I think we'll jump right into it. So maybe let's start with the mark-to-market. You released an update this morning with volumes and margins quarter-to-date. Can you maybe just talk about what you're seeing across your business and also the competitive landscape?David SpectorCEO & Chairman Yes. So I'm -- as indicated by our release this morning, we're very pleased with what we're seeing after the first 2 months of the quarter. In our correspondent space, we're seein ...

Summary of PennyMac Financial Services FY Conference Call Company Overview - **Company**: PennyMac Financial Services (NYSE:PFSI) - **Date**: September 08, 2025 - **Speakers**: David Spector (CEO), Dan Perotti (CFO) Key Points Industry and Market Dynamics - **Mortgage Finance Sector**: The company operates within the mortgage finance industry, focusing on correspondent lending, broker direct, and consumer direct channels [3][4][29]. - **Market Share**: PennyMac holds approximately 20% market share in correspondent lending and aims to grow its broker share from 5% to 10% by the end of 2026 [29][30]. Financial Performance - **Margin Expansion**: The company reported an increase in margins from 23 basis points to 30 basis points in the correspondent space, despite a slight decrease in volumes [3][4]. - **Non-QM Production**: The addressable market for non-QM (Qualified Mortgage) is estimated at $70 to $80 billion, with PennyMac targeting $35 to $40 billion in production [4][35]. Strategic Initiatives - **Technology Investment**: PennyMac has partnered with Vesta to enhance its loan origination system (LOS), which has already shown a 50% reduction in time from borrower inquiry to loan lock [20][21]. - **AI Integration**: The company has launched 35 AI tools expected to save approximately $25 million annually, enhancing efficiency across all business segments [37][38]. Servicing and Operational Efficiency - **Servicing Performance**: The servicing side is performing strongly with low delinquency rates and a 40% reduction in servicing costs over the past five years [17][43]. - **Subservicing Opportunities**: The company anticipates growth in its subservicing business, capitalizing on competitors potentially stepping back from this market [18][19]. Competitive Landscape - **Broker Channel**: The broker channel is dominated by United Wholesale Mortgage (UWM) and Rocket Mortgage, with PennyMac positioning itself as a strong number two [30][56]. - **Hedging Strategy**: The company has improved its hedging strategy to provide better book value stability and reduce costs, with expected hedge costs moving closer to the lower end of the 1-2% range [11][14][15]. Future Outlook - **Return on Equity (ROE)**: In a constrained origination market, the target ROE is set at 15-18%, with potential to exceed 20% in a more favorable market [47]. - **Legislative Impact**: The potential passing of a bill to restrict trigger leads is expected to enhance recapture rates and profitability in the direct lending business [59][60]. Additional Insights - **Olympic Partnership**: The partnership with the U.S. Olympic & Paralympic Committee has positively impacted brand recognition and marketing efforts [26][27]. - **PMT Relationship**: PennyMac Mortgage Investment Trust (PMT) is a tax-efficient REIT that benefits PFSI through management fees and increased profitability from securitization activities [50][51]. This summary encapsulates the key insights and strategic directions discussed during the conference call, highlighting PennyMac's position in the mortgage finance industry and its plans for future growth and efficiency improvements.

WESTLAKE VILLAGE, Calif.--(BUSINESS WIRE)--PennyMac Financial Services, Inc. (NYSE: PFSI) (Pennymac) and Vesta Innovations, Inc. (Vesta) announced today a strategic partnership to streamline the mortgage application process and enhance the customer experience. Pennymac, a top mortgage lender and servicer, is the first large mortgage client to go live on Vesta's modern platform, marking a significant industry milestone. As part of this venture, Pennymac has made a long-term minority equity inves. ...

[PART I. FINANCIAL INFORMATION](index=8&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section provides the unaudited consolidated financial statements and management's discussion and analysis for the period ended June 30, 2025 [Item 1. Financial Statements (Unaudited)](index=8&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited consolidated financial statements for the quarterly period ended June 30, 2025, including balance sheets, income statements, equity changes, cash flows, and detailed notes [Consolidated Balance Sheets](index=8&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets decreased to **$24.22 billion** from **$26.09 billion**, while total liabilities decreased to **$20.19 billion** from **$22.26 billion**, and total stockholders' equity increased to **$4.03 billion** from **$3.83 billion** Consolidated Balance Sheet Summary (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$24,221,904** | **$26,086,887** | | Loans held for sale at fair value | $6,961,224 | $8,217,468 | | Mortgage servicing rights at fair value | $9,531,249 | $8,744,528 | | Loans eligible for repurchase | $4,962,535 | $6,157,172 | | **Total Liabilities** | **$20,189,404** | **$22,257,236** | | Assets sold under agreements to repurchase | $7,344,254 | $8,685,207 | | Unsecured senior notes | $4,185,012 | $3,164,032 | | Liability for loans eligible for repurchase | $4,962,535 | $6,157,172 | | **Total Stockholders' Equity** | **$4,032,500** | **$3,829,651** | [Consolidated Statements of Income](index=10&type=section&id=Consolidated%20Statements%20of%20Income) For Q2 2025, net income was **$136.5 million**, an increase from **$98.3 million** in Q2 2024, driven by higher net revenues despite a significant rise in total expenses Consolidated Statement of Income Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total net revenues | $444,730 | $406,127 | | Total expenses | $368,288 | $272,273 | | Income before income taxes | $76,442 | $133,854 | | (Benefit from) provision for income taxes | ($60,021) | $35,596 | | **Net income** | **$136,463** | **$98,258** | | Diluted EPS | $2.54 | $1.85 | [Consolidated Statements of Changes in Stockholders' Equity](index=11&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Stockholders' equity increased to **$4.03 billion** as of June 30, 2025, primarily due to **$212.7 million** in net income for the six-month period, partially offset by common stock dividends Changes in Stockholders' Equity for Six Months Ended June 30, 2025 (in thousands) | Description | Amount | | :--- | :--- | | Balance, December 31, 2024 | $3,829,651 | | Net income | $212,743 | | Stock-based compensation | $20,804 | | Common stock dividends ($0.60 per share) | ($30,813) | | **Balance, June 30, 2025** | **$4,032,500** | [Consolidated Statements of Cash Flows](index=12&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities significantly improved to **$934.6 million** for the six months ended June 30, 2025, compared to a **$1.99 billion** use in the prior year, resulting in a **$76.3 million** net decrease in cash Cash Flow Summary for Six Months Ended June 30 (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $934,642 | ($1,990,826) | | Net cash used in investing activities | ($127,033) | ($1,520,406) | | Net cash (used in) provided by financing activities | ($883,905) | $3,168,197 | | **Net decrease in cash** | **($76,296)** | **($343,035)** | [Notes to Consolidated Financial Statements](index=14&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed disclosures on the company's organization, significant risks, related party transactions, loan servicing, fair value measurements, debt, and segment reporting - The company's business is organized into two primary segments: mortgage banking (production and servicing) and investment management, with a significant portion of activities conducted on behalf of PennyMac Mortgage Investment Trust (PMT)[27](index=27&type=chunk)[28](index=28&type=chunk) - Revenues generated from PMT accounted for **10% of total net revenues** for the six months ended June 30, 2025, indicating a significant concentration of risk[34](index=34&type=chunk) - The company consolidates certain Variable Interest Entities (VIEs) used for securitization transactions involving Ginnie Mae and Fannie Mae MSRs[36](index=36&type=chunk) - The total loan servicing portfolio, including owned and subserviced loans, grew to **$699.7 billion** as of June 30, 2025, from **$665.8 billion** at the end of 2024[78](index=78&type=chunk)[81](index=81&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=87&type=section&id=Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance, highlighting key business trends such as the impact of elevated interest rates on the mortgage market, and analyzing results across segments, balance sheet changes, cash flows, liquidity, and capital resources - Elevated interest rates have constrained growth in the mortgage origination market, which is projected to increase from **$1.7 trillion** in 2024 to **$2.0 trillion** in 2025[216](index=216&type=chunk) - For Q2 2025, income before income taxes decreased by **$57.4 million** compared to Q2 2024, driven by a **$96.0 million** increase in expenses and a **$17.2 million** decrease in Net loan servicing fees, partially offset by a **$77.0 million** increase in loan production revenue[226](index=226&type=chunk)[228](index=228&type=chunk) - Total assets decreased by **$1.9 billion** from year-end 2024 to June 30, 2025, primarily due to a **$1.3 billion** decrease in loans held for sale and a **$1.2 billion** decrease in loans eligible for repurchase[273](index=273&type=chunk) - The company's leverage ratio (Total debt / Stockholders' equity) decreased from **3.8** at year-end 2024 to **3.4** at June 30, 2025, reflecting reduced inventory financing needs[272](index=272&type=chunk)[274](index=274&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=119&type=section&id=Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are fair value, interest rate, and prepayment risk, which are managed through a disciplined risk management framework utilizing derivative financial instruments - The company is primarily exposed to fair value, interest rate, and prepayment risk[306](index=306&type=chunk) - Rising interest rates generally have a negative effect on the fair value of IRLCs and loans held for sale, but a positive effect on the fair value of MSRs[310](index=310&type=chunk) - The company uses a variety of derivative instruments to manage risk, including MBS forward sale contracts, MBS put options, Treasury futures, and options/swaptions to hedge its MSR portfolio and loan pipeline[313](index=313&type=chunk)[314](index=314&type=chunk) MSR Fair Value Sensitivity Analysis as of June 30, 2025 (in thousands) | Change in fair value attributable to shift in: | +5% | +10% | +20% | | :--- | :--- | :--- | :--- | | Prepayment speed (adverse change) | $(155,827) | $(306,286) | $(592,174) | | Pricing spread (adverse change) | $(121,678) | $(240,330) | $(468,962) | | Annual per-loan cost of servicing (adverse change) | $(51,524) | $(103,048) | $(206,097) | [Controls and Procedures](index=123&type=section&id=Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[318](index=318&type=chunk) - No material changes were made to the company's internal control over financial reporting during the quarter ended June 30, 2025[319](index=319&type=chunk) [PART II. OTHER INFORMATION](index=125&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity sales, and other disclosures, including executive trading plans and filed exhibits [Legal Proceedings](index=125&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal and regulatory proceedings in the ordinary course of business, which management believes will not have a material adverse effect on its financial condition - The company is party to legal and regulatory proceedings arising in the ordinary course of business, but management does not expect them to have a material adverse effect on its financials[321](index=321&type=chunk) [Risk Factors](index=125&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes have occurred regarding the risk factors since the filing of the Annual Report on Form 10-K for the year ended December 31, 2024[322](index=322&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=125&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no sales of unregistered equity securities or share repurchases during Q2 2025, with **$212.3 million** remaining available for future repurchases - No unregistered equity securities were sold during the quarter ended June 30, 2025[323](index=323&type=chunk) Stock Repurchase Activity (Q2 2025) | Period | Total Shares Purchased | Average Price Paid | Approximate Dollar Value Remaining for Repurchase | | :--- | :--- | :--- | :--- | | April 2025 | 0 | $0.00 | $212,338,815 | | May 2025 | 0 | $0.00 | $212,338,815 | | June 2025 | 0 | $0.00 | $212,338,815 | | **Total** | **0** | **$0.00** | **$212,338,815** | [Other Information](index=125&type=section&id=Item%205.%20Other%20Information) On June 2, 2025, CFO Daniel Perotti adopted a Rule 10b5-1 trading plan to sell up to 35,100 common shares and 39,121 shares underlying stock options, expiring August 14, 2026 - On June 2, 2025, CFO Daniel Perotti adopted a Rule 10b5-1 trading plan to sell up to **35,100 common shares** and shares underlying **39,121 stock options**, with the plan expiring August 14, 2026[328](index=328&type=chunk) [Exhibits](index=128&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including amendments to key agreements, CEO/CFO certifications, and interactive data files (XBRL) - Filed exhibits include amendments to key agreements with PennyMac Mortgage Investment Trust, CEO/CFO certifications (Sections 302 and 906 of Sarbanes-Oxley), and XBRL data files[331](index=331&type=chunk)[334](index=334&type=chunk)

Company Performance - PennyMac Financial (PFSI) reported quarterly earnings of $1.02 per share, missing the Zacks Consensus Estimate of $3.01 per share, and down from $2.67 per share a year ago, indicating a significant decline in profitability [1][2] - The company posted revenues of $444.73 million for the quarter, which was 14.75% below the Zacks Consensus Estimate and an increase from $406.13 million year-over-year, but it has not surpassed consensus revenue estimates in the last four quarters [3] Earnings Surprises and Trends - The earnings surprise for the recent quarter was -66.11%, following a previous quarter where the earnings surprise was -52.51% [2] - Over the last four quarters, PennyMac has only surpassed consensus EPS estimates once, indicating a trend of underperformance [2] Market Performance - PennyMac shares have decreased by approximately 0.2% since the beginning of the year, contrasting with the S&P 500's gain of 7.2%, highlighting the company's underperformance relative to the broader market [4] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $3.27 on revenues of $579.18 million, and for the current fiscal year, the estimate is $12.35 on revenues of $2.12 billion [8] - The Zacks Rank for PennyMac is currently 4 (Sell), suggesting that the stock is expected to underperform the market in the near future [7] Industry Context - The Financial - Mortgage & Related Services industry, to which PennyMac belongs, is currently ranked in the bottom 12% of over 250 Zacks industries, indicating a challenging environment for companies in this sector [9]

Financial Data and Key Metrics Changes - For Q2 2025, PennyMac Financial Services Inc. reported net income of $136 million, or diluted earnings per share of $2.54, reflecting an annualized return on equity (ROE) of 14% [3][19] - Excluding fair value changes and a nonrecurring tax benefit, the annualized operating ROE was 13% [3][19] - The company declared a second quarter common share dividend of $0.30 per share [19] Business Line Data and Key Metrics Changes - Total acquisition and origination volumes were $38 billion, up 31% from the prior quarter, with $35 billion for PFSI's own account and $3 billion for fee-based fulfillment activity [20] - The servicing segment recorded pretax income of $54 million, with an increase in loan servicing fees due to growth in PFSI's MSR portfolio [25] - In the broker direct channel, originations were up almost 60% and locks were up more than 30% from the prior quarter [23] Market Data and Key Metrics Changes - The servicing portfolio totaled $700 billion in unpaid principal balance, representing 2.7 million households [5][24] - The company maintained a dominant position in correspondent lending with total acquisitions of $30 billion, up 30% from the prior quarter [20] - The broker direct market share expanded significantly, currently standing at approximately 5%, with a target of over 10% by the end of 2026 [9] Company Strategy and Development Direction - The company emphasizes a balanced business model and a comprehensive mortgage banking platform, which provides a strategic advantage in a higher interest rate environment [4][17] - There is a strong focus on artificial intelligence (AI) to enhance customer experience, unlock new revenue streams, and drive efficiency [12][16] - The company aims to capture growth in the expanding purchase market through robust correspondent lending and increasing market share in broker direct [6][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving mid to high teens operating ROE in the latter half of the year, citing improvements in margins and production trends [30][33] - The company anticipates continued growth in the servicing portfolio and expects lower hedge costs and greater consistency in hedge performance moving forward [27][36] - Management highlighted the importance of maintaining a strong risk management culture to ensure stability in delinquencies [69] Other Important Information - The company has launched or is developing over 35 AI tools and applications with a projected annual economic benefit of approximately $25 million [15] - The tax provision rate is expected to decrease to 25.2% from 26.7% in recent quarters due to a nonrecurring tax benefit [28] Q&A Session Summary Question: Discussion on operating ROEs and margin trends - Management noted that the operating ROE dipped to 13% due to production side margins and cross-channel activities, but expects improvement in the coming quarters [30][32] Question: Changes in hedging strategy - Management explained adjustments to the hedging approach to recognize potential recapture opportunities, targeting an 80% to 90% hedge ratio [34][36] Question: Servicing portfolio profitability - Management indicated that profitability in the servicing portfolio is expected to move toward a 9 to 10 basis point range, assuming stable rate levels [40] Question: Delinquency rates - Management confirmed that delinquency rates increased slightly but remained stable year-over-year, with a focus on judicious underwriting [67][69] Question: Update on subservicing initiatives - Management reported progress in subservicing efforts and expects good activity before the end of the year [57] Question: Loan origination expense increase - Management clarified that the increase in loan origination expenses was driven by broker direct volume, which includes broker fees [54][55]

Financial Data and Key Metrics Changes - PennyMac Financial Services Inc. reported net income of $136 million for Q2 2025, translating to diluted earnings per share of $2.54, with an annualized return on equity (ROE) of 14% [3][18] - Excluding fair value changes and a non-recurring tax benefit, the annualized operating ROE was 13% [3][18] - The company declared a second quarter common share dividend of $0.30 per share [18] Business Line Data and Key Metrics Changes - The production segment reported pretax income of $58 million, down from $62 million in the prior quarter [18] - Total acquisition and origination volumes reached $38 billion, up 31% from the previous quarter, with $35 billion for PFSI's own account [19] - The servicing portfolio grew to $700 billion in unpaid principal balance, representing 2.7 million households [5][23] Market Data and Key Metrics Changes - PennyMac maintained its dominant position in correspondent lending with total acquisitions of $30 billion, up 30% from the prior quarter [19] - Broker direct originations increased nearly 60%, with locks up more than 30% from the prior quarter [21] - Consumer Direct origination volumes were up 6%, while lock volumes decreased by 2% from the prior quarter [22] Company Strategy and Development Direction - The company emphasizes a balanced business model that provides stability in a high-interest-rate environment, expecting operating returns on equity to remain in the mid to high teens if rates stay between 6.5% and 7.5% [4][17] - PennyMac is focusing on artificial intelligence (AI) to enhance customer experience, unlock new revenue streams, and drive efficiency [13][16] - The company aims to grow its market share in the broker direct channel to over 10% by the end of 2026 [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in improving operating ROE in the upcoming quarters, citing recent trends in margins and production [32][34] - The company anticipates lower hedge costs and greater consistency in hedge performance moving forward [36][37] - Management highlighted the importance of maintaining strong relationships with business partners and leveraging technology to drive growth [6][7] Other Important Information - The fair value of PFSI's mortgage servicing rights (MSR) increased by $16 million, with $26 million attributed to changes in market interest rates [26] - The company ended the quarter with $4 billion in total liquidity, including cash and amounts available to draw on facilities [27] Q&A Session Summary Question: Discussion on operating ROEs and margin trends - Management noted that the operating ROE dipped to 13% due to production side margins and cross-channel activities, but they expect improvement in the latter part of the year [30][32] Question: Changes in hedging strategy - Management explained adjustments to hedging practices to better recognize recapture opportunities and expect lower costs moving forward while maintaining an 80% to 90% hedge ratio [35][36] Question: Servicing portfolio profitability - Management indicated that they expect profitability in the servicing portfolio to move toward a 9 to 10 basis point range under current rate levels [42] Question: Delinquency rates commentary - Management confirmed that delinquency rates increased slightly but remained stable year-over-year, attributing this stability to judicious underwriting practices [70][72] Question: Loan origination expense increase - Management clarified that the increase in loan origination expenses was driven by the growing broker direct volume, which includes broker fees [56][58] Question: Update on subservicing initiatives - Management reported progress in subservicing initiatives and expects to see good activity before the end of the year [60]