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 March 31, 2025 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Table of Contents 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 83-1098 ...

Group 1 - PennyMac Financial (PFSI) reported revenue of $430.9 million for Q1 2025, a 41% year-over-year increase, but fell short of the Zacks Consensus Estimate of $537.99 million by 19.91% [1] - The company's EPS for the quarter was $1.42, down from $2.48 a year ago, representing an EPS surprise of -52.51% against the consensus estimate of $2.99 [1] - Over the past month, PennyMac's shares returned -8.5%, slightly better than the Zacks S&P 500 composite's -8.9% change, with a Zacks Rank 4 (Sell) indicating potential underperformance [3] Group 2 - Net interest income was reported at -$18.21 million, significantly worse than the average estimate of -$3.66 million, but showed a year-over-year change of +94.9% [4] - Loan servicing fees amounted to $488.47 million, exceeding the average estimate of $483.14 million, with a year-over-year increase of +15.2% [4] - Net gains on loans held for sale at fair value were $221.04 million, below the average estimate of $243.05 million, but represented a +36.1% year-over-year change [4] - Management fees from PennyMac Mortgage Investment Trust were $7.01 million, slightly below the average estimate of $7.17 million, reflecting a -2.5% year-over-year change [4] - Loan origination fees reached $46.61 million, surpassing the average estimate of $43.67 million, with a year-over-year increase of +28.2% [4] - Net loan servicing fees were reported at $164.29 million, significantly lower than the average estimate of $242.12 million, but showed a +62.7% year-over-year change [4] - Fulfillment fees from PennyMac Mortgage Investment Trust were $5.29 million, slightly above the average estimate of $5 million, with a year-over-year increase of +31.7% [4]

Core Viewpoint - PennyMac Financial (PFSI) reported quarterly earnings of $1.42 per share, significantly missing the Zacks Consensus Estimate of $2.99 per share, and down from $2.48 per share a year ago [1][2] Financial Performance - The earnings surprise for the quarter was -52.51%, with the company previously expected to post earnings of $3.05 per share but actually reporting $2.88 per share, resulting in a -5.57% surprise [2] - Revenues for the quarter were $430.9 million, missing the Zacks Consensus Estimate by 19.91%, compared to $305.66 million in the same quarter last year [3] - Over the last four quarters, the company has not been able to beat consensus revenue estimates [3] Stock Performance - PennyMac shares have declined approximately 7.8% since the beginning of the year, while the S&P 500 has decreased by 12.3% [4] - The current Zacks Rank for PennyMac is 4 (Sell), indicating expected underperformance in the near future [7] Future Outlook - The consensus EPS estimate for the upcoming quarter is $3.53 on revenues of $599.74 million, and for the current fiscal year, it is $13.57 on revenues of $2.4 billion [8] - The estimate revisions trend for PennyMac is currently unfavorable, which may impact future stock performance [7] Industry Context - The Financial - Mortgage & Related Services industry is currently ranked in the bottom 20% of over 250 Zacks industries, which may negatively affect stock performance [9]

Financial Data and Key Metrics Changes - For Q1 2025, the company reported a net loss to common shareholders of $1 million, translating to a diluted earnings per share of negative one cent [3][16] - The book value per share as of March 31 was $15.43, a modest decline from December 31 [4] - The run rate return potential reflects a quarterly average of 35 cents per share, down from 37 cents in the prior quarter [23] Business Line Data and Key Metrics Changes - The credit-sensitive strategies contributed $1 million to pre-tax income, while losses from organically created CRT investments were $5 million [16] - Interest rate-sensitive strategies reported a pre-tax loss of $5 million, with fair value declines on MSR investments amounting to $56 million [17] - Total correspondent loan acquisition volume was $23 billion in Q1, down 18% from the prior quarter [19] Market Data and Key Metrics Changes - Current third-party estimates for industry origination are projected to average $2 trillion in 2025, indicating growth in overall volumes [4] - PMT retained 21% of total conventional correspondent production in Q1, an increase from 19% in the previous quarter [20] Company Strategy and Development Direction - The company emphasizes its diversified investment portfolio and strong risk management practices to navigate the volatile interest rate environment [5] - PMT's relationship with PFSI provides competitive advantages, including access to a consistent pipeline of loans for investment [6][7] - The company plans to continue closing approximately one securitization of non-owner-occupied loans per month and one jumbo loan securitization per quarter starting in Q2 [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating a volatile market, highlighting the importance of their hedging program and the structure of their debt [15][32] - The company expects to see increased correspondent activity starting at the end of April, driven by loans locked into their correspondent pipelines [45] - Management remains optimistic about the long-term performance of MSR investments, which account for approximately half of PMT's deployed equity [13] Other Important Information - PMT declared a common dividend of 40 cents per share for Q1 [4] - The company issued $173 million in unsecured senior notes due in 2030 and retired $45 million of CRT term notes [24] Q&A Session Summary Question: Changes in book value and expected ROE since quarter end - Management noted a decrease in book value by about 2 to 3% due to interest rate volatility and credit spread widening, but expressed satisfaction with their hedging program [30][31] Question: Expectation of acquiring a larger percentage of loans from PFSI - Management indicated that PMT's acquisition strategy focuses on where capital deployment is most advantageous, and they do not expect an increase in the proportion of loans retained in the back half of the year [36] Question: Outlook for dividend given lower run rate earnings - Management expects the dividend to remain stable at 40 cents, emphasizing the importance of dividend stability despite fluctuations in run rate [52][53] Question: Return expectations on new loan securitizations - Management stated that return targets on subordinate bonds have increased due to credit spread widening, with expected returns in the mid-teens [59][60] Question: Interest rate strategies and substitutes for agency MBS - Management clarified that while some securitization portions act as substitutes for agency MBS, most investments are more credit-sensitive rather than direct substitutes [66]

Financial Performance - PennyMac Financial Services reported net income of $76.3 million for Q1 2025, or $1.42 per share, on revenue of $430.9 million[2]. - Net income for the quarter ended March 31, 2025, was $76,280 thousand, a decrease of 27% compared to $104,489 thousand for the quarter ended December 31, 2024[37]. - Total net revenues for the quarter were $430,903 thousand, down from $470,110 thousand in the previous quarter, reflecting a decrease of about 8.3%[37]. - Earnings per share (EPS) for the quarter was $1.48, compared to $2.04 in the previous quarter, indicating a decline of approximately 27.5%[37]. - The company declared a dividend of $0.30 per share, consistent with the previous quarter[37]. Loan Production and Servicing - Total loan acquisitions and originations were $28.9 billion in unpaid principal balance (UPB), down 19% from the prior quarter but up 33% from Q1 2024[3]. - For the twelve months ended March 31, 2025, PennyMac Financial's production of newly originated loans totaled $123 billion in unpaid principal balance[29]. - As of March 31, 2025, PennyMac Financial serviced loans totaling $680 billion in unpaid principal balance[29]. - PMT retained 21% of total conventional conforming correspondent loans in Q1 2025, up from 19% in the prior quarter[3]. Income and Expenses - Production segment pretax income was $61.9 million, down from $78.0 million in the prior quarter but up from $48.7 million in Q1 2024[9]. - Servicing segment pretax income was $76.0 million, down from $87.3 million in the prior quarter but up from $23.7 million in Q1 2024[15]. - Net interest income in Q1 2025 totaled $8.8 million, compared to $1.8 million in the prior quarter[13]. - Net interest expense was $27.4 million, compared to $19.5 million in the prior quarter and $11.3 million in the first quarter of 2024[20]. - Total expenses were $326.7 million, down from $340.7 million in the prior quarter, mainly due to lower servicing segment expenses[26]. - Total expenses for the quarter were $326,707 thousand, a slight decrease from $340,746 thousand in the previous quarter[37]. - Servicing segment expenses decreased to $94.6 million from $110.2 million in the prior quarter, primarily due to a reversal in the provision for credit losses[21]. - Corporate and Other segment recorded a pretax loss of $33.7 million, an improvement from $35.9 million in the prior quarter[22]. Assets and Liabilities - Total assets decreased to $23,872,876 thousand as of March 31, 2025, down from $26,086,887 thousand at December 31, 2024, representing a decline of approximately 8.3%[35]. - Total liabilities decreased to $19,969,120 thousand as of March 31, 2025, from $22,257,236 thousand at December 31, 2024, a reduction of about 10.3%[35]. - Net assets under management were $1.9 billion as of March 31, 2025, unchanged from December 31, 2024[24]. Other Financial Metrics - The effective tax rate was 26.8 percent, with a provision for tax expense of $27.9 million recorded[27]. - The company reported net gains on loans held for sale at fair value of $221,037 thousand, slightly down from $222,044 thousand in the previous quarter[37]. - Loan origination fees for the quarter were $46,611 thousand, down from $57,824 thousand in the previous quarter, a decrease of approximately 19.0%[37]. - Fees earned from the fulfillment of correspondent loans on behalf of PMT totaled $5.3 million in Q1 2025, down 17% from the prior quarter but up 32% from Q1 2024[11]. - Revenue from net loan servicing fees totaled $164.3 million, down from $189.3 million in the prior quarter, but up from $101.0 million in the first quarter of 2024[17]. - Loan servicing fees amounted to $488.5 million, an increase from $472.6 million in the prior quarter and $424.2 million in the first quarter of 2024[19]. - The change in fair value of mortgage servicing rights and liabilities resulted in a loss of $430,956 thousand for the quarter, compared to a gain of $324,816 thousand in the previous quarter[37]. Strategic Initiatives - The company plans to implement artificial intelligence throughout its technology stack to enhance capabilities and efficiencies[4]. - The company issued $850 million of 8-year unsecured senior notes due in February 2033[5].

1Q25 EARNINGS REPORT PennyMac Financial Services, Inc. April 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 li ...

Financial Performance - The company reported a significant increase in revenue, reaching $1.5 billion, representing a 20% year-over-year growth[7] - The company reported a net income of $200 million, which is a 25% increase compared to the same quarter last year[7] - Future guidance indicates a revenue target of $6 billion for the upcoming fiscal year, representing a 12% growth[5] User Growth - User data showed an increase in active users to 10 million, up from 8 million in the previous quarter, marking a 25% growth[6] Earnings Expectations - The company expects to achieve an earnings per share (EPS) of $2.00 for the next quarter, which is a 15% increase compared to the previous quarter[5] Product Development - New product launches are anticipated to contribute an additional $300 million in revenue over the next fiscal year[4] - Research and development expenses increased to $150 million, reflecting a 10% investment in new technologies[2] Market Expansion - The company plans to expand its market presence in Europe, targeting a 30% increase in market share by the end of the next fiscal year[3] Strategic Initiatives - The company is exploring potential acquisitions to enhance its product offerings, with a budget of $500 million allocated for this purpose[1] - The management highlighted a focus on improving operational efficiency, aiming for a 5% reduction in costs by the end of the fiscal year[6]

4Q24 EARNINGS REPORT PennyMac Financial Services, Inc. January 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 ...

Financial Performance - Revenue for Q4 2024 was $470.11 million, a 29.9% YoY increase [1] - EPS for Q4 2024 was $2.88, compared to $1.76 in the same period last year [1] - Revenue missed Zacks Consensus Estimate by 10.26% ($523.86 million) [1] - EPS missed Zacks Consensus Estimate by 5.57% ($3.05) [1] Key Metrics Analysis - Net gains on loans held for sale at fair value: $222.04 million vs $222.44 million estimate, +49.3% YoY [4] - Net loan servicing fees: $189.27 million vs $240.95 million estimate, +16.6% YoY [4] - Loan servicing fees: $472.56 million vs $461.96 million estimate [4] - Management fees from PennyMac Mortgage Investment Trust: $7.15 million vs $7.73 million estimate, -1.4% YoY [4] - Fulfillment fees from PennyMac Mortgage Investment Trust: $6.36 million vs $10.32 million estimate, +28.9% YoY [4] - Loan origination fees: $57.82 million vs $46.96 million estimate, +51.9% YoY [4] - Net interest income: -$17.25 million vs -$8.50 million estimate, +210.3% YoY [4] - Other revenues: $4.72 million vs $3.87 million estimate, -23.6% YoY [4] Stock Performance - Shares returned +9.8% over the past month, outperforming Zacks S&P 500 composite's +1.2% change [3] - The stock currently has a Zacks Rank 3 (Hold) [3] Market Perspective - Investors focus on YoY changes in revenue and earnings, as well as Wall Street expectations, to guide investment decisions [2] - Key metrics provide better insight into a company's underlying performance and help project stock price performance [2]

Company Performance - PennyMac Financial (PFSI) reported quarterly earnings of $2.88 per share, missing the Zacks Consensus Estimate of $3.05 per share, but showing an increase from $1.76 per share a year ago [1] - The earnings surprise for this quarter was -5.57%, while the previous quarter saw a positive surprise of 19.52% with actual earnings of $3.49 per share against an expectation of $2.92 [2] - Revenues for the quarter were $470.11 million, missing the Zacks Consensus Estimate by 10.26%, and up from $361.94 million year-over-year [3] Market Performance - PennyMac shares have increased approximately 9.8% since the beginning of the year, outperforming the S&P 500's gain of 2.7% [4] - The current consensus EPS estimate for the upcoming quarter is $3.23 on revenues of $544.41 million, and for the current fiscal year, it is $14.23 on revenues of $2.44 billion [8] Industry Outlook - The Financial - Mortgage & Related Services industry, to which PennyMac belongs, is currently ranked in the bottom 45% of over 250 Zacks industries, indicating potential challenges ahead [9] - The performance of PennyMac's stock may be influenced by the overall outlook for the industry, as historical data shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [9]