Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2025 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-38727 PennyMac Financial Services, Inc. (Exact name of registrant as specified in its charter) Delaware 83- ...

Financial Data and Key Metrics Changes - PennyMac Financial Services, Inc. reported net income of $182 million for Q3 2025, translating to earnings per share of $3.37 and an annualized return on equity (ROE) of 18% [12] - The operating ROE for the quarter was 18%, with a significant contribution from the servicing business, which provided the majority of mortgage banking operating pre-tax income [2][3] - The company declared a third-quarter common share dividend of $0.30 per share [12] Business Line Data and Key Metrics Changes - The production segment reported pre-tax income of $123 million, more than double the $58 million from the previous quarter, with total acquisition and origination volumes at $36 billion, down 4% from the prior quarter [12][13] - The correspondent lending channel maintained a dominant position with total acquisitions of $28 billion, down 7% from the prior quarter, while correspondent channel margins increased to 30 basis points from 25 basis points [13] - The broker direct channel saw a 6% increase in originations and an 11% increase in locks from the prior quarter, with nearly 5,200 approved brokers, up 17% year-over-year [14][15] Market Data and Key Metrics Changes - As of September 30, $291 billion in unpaid principal balance (UPB), or 41% of the servicing portfolio, had a note rate above 5%, with $201 billion, or 28%, above 6% [10] - The company generated over $100 billion in UPB of correspondent production over the last 12 months, achieving an estimated market share of approximately 20% in the first nine months of 2025 [7] Company Strategy and Development Direction - The company completed a strategic transaction selling mortgage servicing rights (MSRs) with an unpaid principal balance of $12 billion to Annaly Capital Management, which is expected to accelerate the growth of its capital-light subservicing business [4][5] - The focus remains on optimizing the balance sheet and enhancing long-term value for customers and stockholders, with a goal to grow capital-light revenue streams leveraging servicing expertise and technology [6][7] Management's Comments on Operating Environment and Future Outlook - Management expects annualized operating returns on equity to average in the high teens to low 20s through 2026, contingent on stable mortgage rates and delinquency rates [4] - The company is confident in its ability to address refinance demand and anticipates continued improvement in recapture rates as market rates decline [11][10] Other Important Information - The servicing portfolio grew to $717 billion in UPB, with pre-tax income from servicing recorded at $158 million, nearly three times that of the prior quarter [16] - The company ended the quarter with nearly $5 billion in total liquidity, providing significant resources for opportunistic deployment [22] Q&A Session Summary Question: Expectations for fourth quarter ROEs given recent mortgage rate changes - Management indicated that if current rates persist, fourth quarter ROEs could trend towards the low 20s, but seasonality may impact results [23] Question: Implications of government shutdown on FHA business - Management is prepared for various outcomes and has sufficient commitment authority to continue operations, though some borrowers are in forbearance due to the shutdown [24][25] Question: Trends in the broker direct channel post-consolidation - Management noted that their growth in the broker direct channel is due to technology and a clear alternative to top competitors, with expectations to reach 10% market share by the end of 2026 [63] Question: Opportunities for share repurchases and MSR sale impact - Management expressed a willingness to repurchase shares if attractive opportunities arise, while also focusing on deploying capital into higher rate MSRs with better recapture potential [39][40] Question: Sustainability of the lower tax rate observed this quarter - Management indicated that the current tax rate is lower than expected going forward, with a slight increase anticipated [42][43] Question: Responsiveness of borrowers to refinancing opportunities - Management observed a quicker response from borrowers looking to refinance compared to historical trends, with recapture rates improving [48][49]

Financial Data and Key Metrics Changes - PennyMac Financial Services, Inc. (PFSI) reported net income of $182 million for Q3 2025, translating to earnings per share of $3.37 and an annualized return on equity (ROE) of 18% [12] - The operating ROE for the quarter was 18%, a decrease from 20% in Q3 2024 when mortgage rates were approximately 6% [2][3] - The company declared a common share dividend of $0.30 per share for Q3 [12] Business Line Data and Key Metrics Changes - The production segment generated pre-tax income of $123 million, more than double the $58 million reported in the previous quarter [12] - Total acquisition and origination volumes were $36 billion in unpaid principal balance (UPB), down 4% from the prior quarter [12] - The servicing segment recorded pre-tax income of $158 million, nearly three times that of the prior quarter [16] Market Data and Key Metrics Changes - PFSI maintained a market share of approximately 20% in correspondent lending, generating over $100 billion in UPB of correspondent production over the last 12 months [7] - The broker direct market share has expanded to just under 6%, with a goal to exceed 10% by the end of 2026 [8] - As of September 30, $291 billion in UPB, or 41% of the loans in the servicing portfolio, have a note rate above 5% [10] Company Strategy and Development Direction - The company completed a strategic transaction selling mortgage servicing rights (MSRs) with an unpaid principal balance of $12 billion, which is expected to enhance its capital-light subservicing business [4][5] - PFSI aims to optimize its balance sheet and enhance long-term value for customers and stockholders through disciplined capital management [7] - The company is focused on leveraging technology and operational scale to grow capital-light revenue streams [6] Management's Comments on Operating Environment and Future Outlook - Management expects annualized operating returns on equity to average in the high teens to low twenties through 2026 if mortgage rates remain stable [4] - The company is confident in its ability to address refinance demand and improve recapture rates as mortgage rates decline [11] - Management highlighted the importance of technology investments in driving efficiency and improving recapture rates [10] Other Important Information - The fair value of PFSI's MSR decreased by $102 million during the quarter, with $94 million attributed to changes in market interest rates [19][20] - The company ended the quarter with nearly $5 billion in total liquidity, providing significant resources for opportunistic deployment [22] Q&A Session Summary Question: Expectations for fourth quarter ROEs given recent mortgage rate changes - Management indicated that if current rates persist, fourth quarter ROEs could trend towards the low twenties range, but seasonality may impact results [23] Question: Impact of government shutdown on FHA business - Management expressed preparedness for various outcomes and noted an increase in borrower inquiries due to the shutdown, but did not expect significant impacts [24][25] Question: Trends in refinancing responsiveness - Management observed that borrowers are responding more quickly to refinancing opportunities compared to historical trends [49] Question: Share repurchase strategy and MSR sale implications - Management stated that share repurchases are considered based on attractive pricing relative to other capital deployment opportunities, particularly in higher rate MSRs [39][40] Question: Opportunities to reduce servicing expenses - Management expects unit servicing costs to decline through technology and AI initiatives, with potential for additional cost savings as the portfolio grows [54][55]

Financial Data and Key Metrics Changes - PennyMac Financial Services reported net income of $182 million for Q3 2025, translating to earnings per share of $3.37 and an annualized return on equity (ROE) of 18% [12] - The operating ROE for the quarter was also 18%, with a significant contribution from the servicing business, which provided the majority of pre-tax income [2][3] - The company declared a third-quarter common share dividend of $0.30 per share [12] Business Line Data and Key Metrics Changes - The production segment achieved pre-tax income of $123 million, more than double the $58 million reported in the previous quarter [12] - Total acquisition and origination volumes were $36 billion in unpaid principal balance (UPB), down 4% from the prior quarter, with $33 billion for PFSI's own account [12] - The servicing portfolio grew to $717 billion in UPB, with the servicing segment recording pre-tax income of $158 million, nearly three times that of the prior quarter [17][18] Market Data and Key Metrics Changes - PennyMac maintained a market share of approximately 20% in correspondent lending, generating over $100 billion in UPB of correspondent production over the last 12 months [6] - The broker direct business saw a market share increase to just under 6%, with a goal to exceed 10% by the end of 2026 [8] - Consumer direct origination volumes increased by 12% and lock volumes rose by 57% from the prior quarter, driven by declining mortgage rates [16] Company Strategy and Development Direction - The company completed a strategic transaction selling mortgage servicing rights (MSRs) with an unpaid principal balance of $12 billion, which is part of its capital management strategy [4][5] - PennyMac aims to grow its capital-light revenue streams and enhance its position as a dominant subservicer in the market [5] - The company is focused on deploying AI throughout its operations to drive growth and efficiency [11] Management's Comments on Operating Environment and Future Outlook - Management expects annualized operating returns on equity to average in the high teens to low twenties through 2026, contingent on stable mortgage rates and delinquency rates [4] - The management team expressed confidence in the company's ability to address refinance demand and improve recapture rates as mortgage rates decline [11][42] - The company is prepared for various outcomes, including potential impacts from a government shutdown, and has sufficient commitment authority with Ginnie Mae [26] Other Important Information - The fair value of PFSI's MSR decreased by $102 million during the quarter, primarily due to changes in market interest rates [20] - The company ended the quarter with nearly $5 billion in total liquidity, providing significant resources for opportunistic deployment [23] Q&A Session Summary Question: Expectations for fourth quarter ROEs given recent mortgage rate changes - Management indicated that if mortgage rates remain stable, fourth quarter ROEs could trend towards the low twenties range, but typical seasonal effects may apply [24][25] Question: Implications of government shutdown on FHA business - Management noted preparedness for various outcomes and highlighted an increase in borrower inquiries due to the shutdown, but did not expect significant impacts [26] Question: Trends in rate hikes and their impact on volumes - Management reported an uptick in volumes across all channels, particularly in consumer direct lending due to lower rates [28][29] Question: Share repurchase strategy and MSR sale impact - Management discussed a balanced approach to capital allocation, indicating a willingness to repurchase shares when attractive opportunities arise [34][35] Question: Changes in servicing portfolio responsiveness to rate rallies - Management observed increased borrower responsiveness to refinancing opportunities compared to historical trends, with recapture rates improving [40][42] Question: Opportunities to reduce servicing expenses - Management expects continued reductions in servicing costs through technology and AI initiatives, with guidance reflecting potential cost savings [47]

Financial Data and Key Metrics Changes - PennyMac Financial Services reported net income of $182 million for Q3 2025, translating to earnings per share of $3.37 and an annualized return on equity (ROE) of 18% [13] - The company experienced a fair value decline of $4 million on mortgage servicing rights (MSRs) net of hedges and costs, impacting diluted earnings per share negatively by $0.06 [13] - Operating income for the production segment was $123 million, more than double the $58 million reported in the previous quarter [13] Business Line Data and Key Metrics Changes - Total acquisition and origination volumes were $36 billion, down 4% from the prior quarter, with $33 billion for PennyMac's own account and $3 billion from fee-based fulfillment activity [14] - The correspondent lending channel maintained a dominant position with total acquisitions of $28 billion, down 7% from the prior quarter, while correspondent channel margins increased to 30 basis points from 25 basis points [14][40] - The broker direct channel saw a 6% increase in originations and an 11% increase in locks from the prior quarter, with the number of approved brokers rising to nearly 5,200, up 17% year-over-year [16][19] - Consumer direct origination volumes increased by 12% and lock volumes surged by 57% from the prior quarter, primarily driven by increased refinance activity [17] Market Data and Key Metrics Changes - The servicing portfolio grew to $717 billion in unpaid principal balance, with servicing segment pretax income reaching $158 million, nearly three times that of the prior quarter [19] - The fair value of PFSI's MSR decreased by $102 million, with $94 million attributed to changes in market interest rates [21] - The company ended the quarter with nearly $5 billion in total liquidity, providing significant resources for opportunistic deployment [24] Company Strategy and Development Direction - The company completed a strategic transaction selling MSRs with an unpaid principal balance of $12 billion to Annaly Capital Management, which is expected to enhance its capital light subservicing business [5][6] - PennyMac aims to grow its broker direct market share to over 10% by 2026, leveraging its technology-enabled platform and strong partnerships with brokers [9][10] - The management team is focused on deploying AI throughout the organization to drive growth and efficiency [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving high teens to low 20s operating ROEs through 2026, contingent on stable mortgage rates and delinquency rates [5][4] - The company is prepared for potential impacts from a government shutdown, emphasizing its robust technology and risk management practices [29][30] - Management noted that the responsiveness of borrowers to refinancing opportunities has improved compared to historical trends [55] Other Important Information - The company declared a third-quarter common share dividend of $0.30 per share [13] - Corporate and other items contributed a pretax loss of $44 million, primarily due to technology initiative expenses and increased performance-based compensation [22] Q&A Session Summary Question: Expectations for fourth quarter ROEs given recent mortgage rate changes - Management indicated that if current rates persist, fourth quarter ROEs could trend towards the low 20s, but seasonal factors may temper this [27][28] Question: Impact of government shutdown on FHA business - Management stated they are prepared for various outcomes and have sufficient commitment authority to continue issuing Ginnie Mae securities [29][30] Question: Trends in rate box for the fourth quarter - An uptick in volumes across all channels has been observed, particularly in direct lending and consumer direct lending due to lower rates [35][36] Question: Share repurchase appetite and MSR sale implications - Management indicated a willingness to repurchase shares if attractive opportunities arise, while focusing on deploying capital into higher rate MSRs [43][44] Question: Changes in servicing portfolio responsiveness to rate rallies - Management noted improved borrower responsiveness to refinancing opportunities and indicated that recapture rates have been increasing [52][55]

3Q25 EARNINGS REPORT PennyMac Financial Services, Inc. October 2025 FORWARD-LOOKING STATEMENTS 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 ...

[Third Quarter 2025 Results Overview](index=1&type=section&id=Third%20Quarter%202025%20Results%20Overview) This section provides a comprehensive overview of PennyMac Financial Services, Inc.'s financial and operational performance for the third quarter of 2025, highlighting key achievements and strategic initiatives [Financial Performance Summary](index=1&type=section&id=Financial%20Performance%20Summary) PennyMac Financial Services, Inc. achieved significant financial growth in Q3 2025, with substantial increases in net income and EPS, alongside rising book value and stable cash dividends | Metric | Q3 2025 | Q2 2025 | Q3 2024 | | :--- | :--- | :--- | :--- | | Net Income | $181.5 Million | $136.5 Million | $69.4 Million | | Diluted EPS | $3.37 | $2.54 | $1.30 | | Total Net Revenue | $632.9 Million | $444.7 Million | $411.8 Million | | Book Value Per Share | $81.12 | $78.04 (as of June 30) | - | | Cash Dividend Per Share | $0.30 | $0.30 | $0.30 | [Key Operational Highlights](index=1&type=section&id=Key%20Operational%20Highlights) The company demonstrated strong operational performance in Q3, with significant pretax income growth in both production and servicing, driven by direct lending expansion, successful hedging, and strategic MSR sales | Metric | Q3 2025 | Q2 2025 | Q3 2024 | | :--- | :--- | :--- | :--- | | Pretax Income | $236.4 Million | $76.4 Million | $93.9 Million | | Production Segment Pretax Income | $122.9 Million | $57.8 Million | $129.4 Million | | Servicing Segment Pretax Income | $157.4 Million | $54.2 Million | $3.3 Million | | Corporate and Other Pretax Loss | $43.9 Million | $35.5 Million | $38.8 Million | | Total Loan Acquisitions and Originations (UPB) | $36.5 Billion | Down 4% QoQ | Up 15% YoY | | Servicing Portfolio (UPB) | $716.6 Billion | Up 2% QoQ | Up 11% YoY | - The company completed the sale of a **$12 billion UPB MSR portfolio** to Annaly Capital Management, Inc., retaining all subservicing and recapture agreements to accelerate capital-light subservicing growth and deploy capital into higher-coupon MSRs[6](index=6&type=chunk)[7](index=7&type=chunk) - Repurchased **50,300 shares** of common stock at an average price of **$94.19 per share**, totaling **$4.7 million**[6](index=6&type=chunk) - Issued **$650 million** of 8.5-year unsecured senior notes (due February 2034) and **$300 million** of 5-year term notes secured by Ginnie Mae MSRs and servicing advances[6](index=6&type=chunk) - Improved efficiency and performance by integrating AI and advanced data optimization tools, adopting Vesta's next-generation loan origination platform, and launching new non-QM products to expand market reach[7](index=7&type=chunk) [Segment Performance](index=4&type=section&id=Segment%20Performance) This section details the financial and operational results of PennyMac Financial Services, Inc.'s Production, Servicing, and Corporate and Other segments for the third quarter of 2025 [Production Segment](index=4&type=section&id=Production%20Segment) The Production segment achieved significant growth in pretax and net income in Q3, driven by increased direct lending channel activity and higher volumes across all channels, despite some PMT acquisition volume decline - The Production segment includes correspondent acquisitions of newly originated government-guaranteed and conventional conforming loans, fulfillment services for PMT, and direct lending through consumer direct and broker direct channels[9](index=9&type=chunk) | Metric | Q3 2025 | Q2 2025 | Q3 2024 | | :--- | :--- | :--- | :--- | | Pretax Income | $122.9 Million | $57.8 Million | $129.4 Million | | Net Income | $361.8 Million | Up 29% QoQ | Up 23% YoY | | Loan Production Activity (UPB) | $36.5 Billion | Down 4% QoQ | Up 15% YoY | | PFSI Proprietary Loan Production (UPB) | $33.2 Billion | - | - | | PMT Fee-Based Fulfillment Activity (UPB) | $3.3 Billion | Up 8% QoQ | Down 44% YoY | | Total Locks (UPB) | $43.2 Billion | Flat QoQ | Up 11% YoY | | PFSI and Direct Lending IRLCs (UPB) | $38.8 Billion | Down 2% QoQ | Up 24% YoY | | PMT Correspondent Locks (UPB) | $4.4 Billion | Up 24% QoQ | Down 42% YoY | | Fulfillment Service Fees | $6.2 Million | Up 6% QoQ | Down 46% YoY | | Net Interest Income | $13.7 Million | Up 29.2% QoQ | - | | Production Segment Expenses | $238.9 Million | Up 8% QoQ | Up 44% YoY | Net Gain on Loans Held for Sale Breakdown | Item | September 30, 2025 | June 30, 2025 | September 30, 2024 | | :--- | :--- | :--- | :--- | | MSRs received | $700,326 | $814,538 | $578,982 | | Gain on loans sold to PMT (net of MSR recapture) | $17,454 | $7,075 | $2,506 | | Provision (net) | $(2,354) | $(1,834) | $(589) | | Cash loss (including cash hedging results) | $(284,589) | $(678,982) | $(382,148) | | Fair value changes in pipeline, inventory, and hedges | $(116,382) | $93,862 | $58,068 | | Net gain on mortgage loans held for sale | $314,455 | $234,659 | $256,819 | | Production segment net gain on mortgage loans held for sale | $280,092 | $203,961 | $235,902 | - Under the renewed mortgage banking services agreement with PMT, correspondent production is initially acquired by PFSI as of July 1, 2025. PMT retains the right to purchase up to **100% of non-government correspondent production**. PMT is expected to acquire all jumbo correspondent production and **15% to 25% of conventional conforming correspondent production** in Q4 2025[14](index=14&type=chunk) [Servicing Segment](index=6&type=section&id=Servicing%20Segment) The Servicing segment achieved significant pretax and net income growth in Q3, driven by continued MSR portfolio expansion and successful hedging offsetting MSR fair value declines - Servicing segment revenue is derived from owned MSRs and subservicing. Total servicing portfolio UPB grew to **$716.6 billion**, with owned MSR portfolio UPB increasing to **$477.6 billion** and subservicing UPB to **$239.0 billion**[17](index=17&type=chunk) | Metric | Q3 2025 | Q2 2025 | Q3 2024 | | :--- | :--- | :--- | :--- | | Pretax Income | $157.4 Million | $54.2 Million | $3.3 Million | | Net Income | $259.5 Million | $153.4 Million | $105.9 Million | | Net Loan Servicing Fees | $241.2 Million | $150.4 Million | $75.8 Million | | Loan Servicing Fees | $535.1 Million | $506.7 Million | $462.0 Million | | Cash Flow Realized | $289.7 Million | $263.1 Million | $225.8 Million | | MSR Fair Value Loss | $102.5 Million | $15.9 Million (Gain) | $402.4 Million (Loss) | | Hedging Gains | $98.3 Million | $109.1 Million (Loss) | $242.1 Million (Gain) | | Net Valuation-Related Losses | $4.2 Million | - | - | | Net Interest Expense | $15.1 Million | $28.8 Million | $9.5 Million (Income) | | Servicing Segment Expenses | $102.1 Million | $99.2 Million | - | Servicing Portfolio UPB Breakdown | Item | September 30, 2025 | June 30, 2025 | September 30, 2024 | | :--- | :--- | :--- | :--- | | **Owned MSR** | | | | | Originated | $455,894,902 | $448,312,667 | $393,947,146 | | Purchased | $14,404,290 | $14,837,637 | $16,104,333 | | **Loans Held for Sale** | $7,303,091 | $6,783,240 | $6,366,787 | | **Subservicing** | | | | | For PMT | $227,101,009 | $228,838,699 | $231,378,323 | | For U.S. Department of Veterans Affairs | $65,286 | $822,525 | $257,696 | | For other unaffiliated parties | $11,863,843 | $72,153 | - | | **Total Serviced Loans** | $716,632,421 | $699,666,921 | $648,054,285 | - Servicing segment revenue includes **$34.4 million** in net gain on loans held for sale, primarily from early buyout loans (EBOs) successfully returned to performing status through servicing efforts[22](index=22&type=chunk) [Corporate and Other](index=8&type=section&id=Corporate%20and%20Other) The Corporate and Other segment recorded a pretax loss in Q3, primarily due to increased expenses from technology initiatives and higher performance incentive compensation - Corporate and Other includes corporate activities not directly attributable to the Production and Servicing segments, along with management fees received from PMT[25](index=25&type=chunk) | Metric | Q3 2025 | Q2 2025 | Q3 2024 | | :--- | :--- | :--- | :--- | | Pretax Loss | $43.9 Million | $35.5 Million | $38.8 Million | | Net Income | $11.6 Million | - | - | | Management Fees | $6.9 Million | $6.9 Million | $7.2 Million | | Other Income | $4.4 Million | - | - | | Net Interest Income | $0.3 Million | - | - | | Expenses | $55.5 Million | $47.2 Million | $49.8 Million | | Net Assets Under Management | $1.9 Billion | Flat QoQ | Flat YoY | - Expense increase was primarily driven by technology initiative-related costs and higher performance incentive compensation[26](index=26&type=chunk) - No performance incentive fees were earned in the third quarter[26](index=26&type=chunk)[28](index=28&type=chunk) [Consolidated Financials](index=9&type=section&id=Consolidated%20Financials) This section presents PennyMac Financial Services, Inc.'s consolidated expenses and tax information for the third quarter of 2025 [Consolidated Expenses](index=9&type=section&id=Consolidated%20Expenses) The company's total consolidated expenses increased in Q3, primarily due to rising costs in the Production and Corporate segments | Metric | Q3 2025 | Q2 2025 | | :--- | :--- | :--- | | Total Expenses | $396.5 Million | $368.3 Million | | QoQ Change | Up 7.6% | - | - The increase in total expenses was primarily due to higher expenses in the Production and Corporate segments[29](index=29&type=chunk) [Taxes](index=9&type=section&id=Taxes) The company recorded **$54.9 million** in income tax expense in Q3, resulting in an effective tax rate of **23.2%** | Metric | Q3 2025 | | :--- | :--- | | Income Tax Expense | $54.9 Million | | Effective Tax Rate | 23.2% | [Company Information](index=10&type=section&id=Company%20Information) This section provides background on PennyMac Financial Services, Inc., including its business focus, operational scale, and important forward-looking statements [About PennyMac Financial Services, Inc.](index=10&type=section&id=About%20PennyMac%20Financial%20Services%2C%20Inc.) PennyMac Financial Services, Inc., established in 2008, is a leading financial services company specializing in U.S. mortgage production, servicing, and related investments - The company was founded in **2008** and employs approximately **4,700 individuals** across the United States[33](index=33&type=chunk) - Total loan originations over the past twelve months reached **$139 billion UPB** as of September 30, 2025, positioning it as one of the nation's top originators[33](index=33&type=chunk) - Total loans serviced amounted to **$717 billion UPB** as of September 30, 2025, making it one of the nation's top mortgage servicers[33](index=33&type=chunk) [Forward-Looking Statements](index=11&type=section&id=Forward-Looking%20Statements) This press release contains forward-looking statements regarding future financial performance, operations, business plans, and market conditions, which are subject to various risks and uncertainties - Forward-looking statements are subject to various factors that could cause actual results to differ materially from expectations, including changes in interest rates, housing prices, sales, real estate values, and macroeconomic, consumer, and real estate market conditions[35](index=35&type=chunk) - Additional risk factors include federal government shutdowns, compliance with evolving federal, state, and local laws and regulations, litigation or governmental actions, mortgage regulations, difficulties in scaling operations, MSR purchase opportunities, significant indebtedness, increased loan delinquencies and foreclosures, reliance on U.S. government-sponsored entities, maintaining capital and liquidity, indemnification obligations, investment management and incentive fees, accuracy of estimates, conflicts of interest, cybersecurity risks, AI developments, reputational impacts, natural disaster risks, and the ability to effectively manage and hedge risks[35](index=35&type=chunk) - The company undertakes no obligation to publicly update or revise any forward-looking statements, and statements in this press release are valid only as of the date of its issuance[35](index=35&type=chunk) [Financial Statements](index=12&type=section&id=Financial%20Statements) This section presents PennyMac Financial Services, Inc.'s unaudited consolidated balance sheets and statements of income for the specified periods [Consolidated Balance Sheets](index=12&type=section&id=Consolidated%20Balance%20Sheets) As of September 30, 2025, PennyMac Financial Services, Inc.'s consolidated balance sheet shows growth in total assets and stockholders' equity, reflecting business expansion and a strengthened capital base Consolidated Balance Sheets (Unaudited) | Item | September 30, 2025 | June 30, 2025 | September 30, 2024 | | :--- | :--- | :--- | :--- | | **Assets** | | | | | Cash | $621,921 | $162,186 | $145,814 | | Short-term investments (fair value) | $62,228 | $462,262 | $667,934 | | Loans held for sale (fair value) | $7,490,473 | $6,961,224 | $6,565,704 | | Mortgage servicing rights (fair value) | $9,653,942 | $9,531,249 | $7,752,292 | | Total assets | $25,401,120 | $24,221,904 | $22,871,538 | | **Liabilities** | | | | | Assets sold under agreements to repurchase | $7,130,423 | $7,344,254 | $6,600,997 | | Unsecured senior notes | $4,829,113 | $4,185,012 | $3,162,239 | | Total liabilities | $21,193,234 | $20,189,404 | $19,132,360 | | **Stockholders' Equity** | | | | | Retained earnings | $4,121,201 | $3,955,504 | $3,684,758 | | Total stockholders' equity | $4,207,886 | $4,032,500 | $3,739,178 | [Consolidated Statements of Income](index=13&type=section&id=Consolidated%20Statements%20of%20Income) PennyMac Financial Services, Inc.'s consolidated statements of income for Q3 2025 show significant growth in total net revenue and net income, driven by increased net gain on loans held for sale and net loan servicing fees Consolidated Statements of Income (Unaudited) | Item | September 30, 2025 | June 30, 2025 | September 30, 2024 | | :--- | :--- | :--- | :--- | | **Revenue** | | | | | Net gain on loans held for sale (fair value) | $314,455 | $234,659 | $256,819 | | Loan origination fees | $61,696 | $59,091 | $49,430 | | Net loan servicing fees | $241,238 | $150,395 | $75,830 | | Total net revenue | $632,898 | $444,730 | $411,834 | | **Expenses** | | | | | Compensation | $205,314 | $187,541 | $171,316 | | Total expenses | $396,524 | $368,288 | $317,909 | | **Profit** | | | | | Pretax income | $236,374 | $76,442 | $93,925 | | Income tax expense | $54,871 | $(60,021) | $24,557 | | Net income | $181,503 | $136,463 | $69,368 | | Diluted earnings per share | $3.37 | $2.54 | $1.30 |

Core Insights - PennyMac is undergoing leadership changes amid a consolidating home lending market, with recent acquisitions by competitors like Rocket Cos. [3][8] - The company is focusing on offering new products and competitive pricing to maintain its market position [3][4] - Recent financial performance shows a significant increase in net income and growth in the servicing portfolio [6] Company Developments - PennyMac appointed Kevin Ryan as chief strategy officer, who previously served as CFO at fintech Better and has extensive experience at Morgan Stanley [8] - Marshall Sebring has been promoted to chief investment officer, and Shiva Iyer will head enterprise risk functions, indicating a strategic alignment for future growth [8] Market Context - The Federal Reserve recently reduced the benchmark interest rate, but mortgage rates are expected to remain stable as markets react to a potential government shutdown [5] - As of September 24, the average 30-year mortgage rate was reported at 6.39% [5]

Core Viewpoint - PennyMac Financial Services (NYSE:PFSI) is experiencing a decline in stock price following a downgrade by Keefe, Bruyette & Woods, which reflects concerns over the stock's valuation [1] Group 1: Stock Performance - Shares of PennyMac Financial Services fell by 1.34% during Tuesday morning trading, reaching a price of $116.75 [1] Group 2: Market Context - The downgrade comes despite a decline in mortgage rates, as reported by Freddie Mac [1]

Core Insights - PennyMac Financial Services, Inc. and PennyMac Mortgage Investment Trust announced key executive leadership appointments [1] Group 1: Executive Appointments - Kevin Ryan will join the company as Senior Managing Director, Chief Strategy Officer on October 13, 2025 [1] - Marshall Sebring has been promoted to Senior Managing Director, Chief Investment Officer [1] - Shiva Iyer will be assuming a new position, although the specific title is not mentioned [1]