PennyMac Financial Services, Inc. Reports First Quarter 2026 Results

Published: 2026-05-05 16:19:05 ET PFSI

Published on 05/05/2026 at 04:19 pm EDT

PennyMac Financial Services, Inc. (NYSE: PFSI) today reported net income of $82.3 million for the first quarter of 2026, or $1.53 per share on a diluted basis, on total net revenues of $545.0 million. Adjusted net income was $117.7 million and adjusted earnings per share (EPS) was $2.19.1 Book value per share increased to $83.31 from $82.77 at December 31, 2025.

PFSI’s Board of Directors declared a first quarter cash dividend of $0.30 per share, payable on May 28, 2026, to common stockholders of record as of May 18, 2026.

First Quarter 2026 Highlights

“In the first quarter, PennyMac Financial generated an 8% annualized return on equity and an 11% annualized adjusted return on equity2,” said Chairman and CEO David Spector. “Our performance reflects our ongoing emphasis on maximizing returns on invested capital. The combination of strong operational execution in our consumer and broker direct lending channels along with improving operating efficiency drove production segment pretax income to its highest level in nearly five years. The growth in our direct channels was paired with our consistent strategic deployment of capital through the correspondent channel.”

Mr. Spector continued, “We are focused on driving growth where the marginal returns are most accretive to our current operating returns and where we can further lean into the operational scale we have achieved. We expect the acquisition of Cenlar to leverage the significant scale advantage of our tech-first platform and enhance our profitability over time. Despite expectations for a smaller origination market as interest rates move higher again, we remain confident in our ability to generate meaningful adjusted returns on equity as we move through 2026.”

See page 14 for a reconciliation of GAAP net income to adjusted net income and adjusted EPS

See page 14 for a reconciliation of GAAP net income to annualized adjusted return on equity

The following table presents the contributions of PFSI’s segments to pretax income:

311,201

33,784

344,985

72,446

5,737

152,830

6,762

112,999

94,922

207,921

258

208,179

95,588

154,134

249,722

17,411

(59,212

)

(41,801

)

258

(41,543

)

125

(2,316

)

(2,191

)

5,958

3,767

406,920

125,086

532,006

12,978

544,984

136,264

52,537

188,801

27,592

216,393

79,696

30,054

11,117

41,171

4,961

46,132

38,233

11,951

514

12,465

8,629

21,094

5,649

2,080

7,729

6,670

14,399

5,332

2,502

7,834

2,157

9,991

4,399

5,452

9,851

4,504

14,355

273,345

112,435

385,780

54,513

440,293

133,575

12,651

146,226

(41,535

)

104,691

Production Segment

The Production segment includes the correspondent acquisition of newly originated government-insured and conventional conforming loans for PFSI’s own account, fulfillment services on behalf of PMT and direct lending through the consumer direct and broker direct channels, including the underwriting and acquisition of loans from correspondent sellers on a non-delegated basis.

PFSI’s loan production activity for the quarter totaled $37.0 billion in UPB, $34.2 billion of which was for its own account, and $2.8 billion of which was fee-based fulfillment activity for PMT. Correspondent locks for PFSI and direct lending IRLCs totaled $41.1 billion in UPB, down 4% from the prior quarter and up 31% from the first quarter of 2025.

Production segment pretax income was $133.6 million, up from $127.3 million in the prior quarter and $61.9 million in the first quarter of 2025. Production segment net revenues totaled $406.9 million, up 10% from the prior quarter and 64% from the first quarter of 2025. The increase in revenue from the prior quarter and the first quarter of 2025 was primarily due to higher volumes in the direct lending channels.

The components of net gains on loans held for sale are detailed in the following table:

719,586

775,242

650,349

7,749

16,341

4,838

(1,478

)

(2,924

)

(2,132

)

(204,312

)

(492,013

)

(587,009

)

(176,560

)

4,957

154,991

344,985

301,603

221,037

311,201

276,060

187,145

33,784

25,543

33,892

PFSI performs fulfillment services for certain conventional conforming and nonconforming loans that it acquires from non-affiliates in its correspondent production business and subsequently sells to PMT. These services include, but are not limited to, marketing, relationship management, correspondent seller approval and monitoring, loan file review, underwriting, pricing, hedging and activities related to the subsequent sale and securitization of loans in the secondary mortgage markets for PMT.

Fees earned from the fulfillment of correspondent loans on behalf of PMT totaled $5.7 million in the first quarter, down 12% from the prior quarter and up 8% from the first quarter of 2025. The decrease from the prior quarter was driven by lower acquisition volumes for PMT’s account.

Correspondent production volumes are initially acquired by PFSI. PMT retains the right to purchase up to 100% of non-government correspondent loan production. In the first quarter, PMT acquired all nonconforming correspondent production and 18% of total conventional conforming correspondent production.

Net interest income in the first quarter totaled $17.4 million, down from $19.8 million in the prior quarter. Interest income totaled $113.0 million, down from $129.0 million in the prior quarter, and interest expense totaled $95.6 million, down from $109.2 million in the prior quarter, both due to the lower overall volumes.

Production segment expenses were $273.3 million, up 12% from the prior quarter and 47% from the first quarter of 2025. The increase from the prior quarter was primarily due to higher volumes in direct lending, increased capacity and seasonal factors. The increase from the first quarter of 2025 was primarily due to higher volumes in direct lending and increased capacity.

Servicing Segment

The Servicing segment includes income from owned MSRs and subservicing. The total servicing portfolio decreased to $720.3 billion in UPB at March 31, 2026, down 2% from December 31, 2025 and up 6% from March 31, 2025. PFSI’s owned MSR portfolio totaled $483.8 billion in UPB, an increase of 3% from December 31, 2025 and 8% from March 31, 2025. PFSI subservices $236.5 billion in UPB, down 10% from the prior quarter. The decrease was driven by the transfer of $24 billion in UPB of MSR sold in the prior quarter. Of total subservicing UPB, $225.1 billion was for PMT, and $11.4 billion was for non-affiliates.

The table below details PFSI’s servicing portfolio UPB:

460,361,759

448,035,447

426,951,027

13,633,606

13,999,998

15,276,140

473,995,365

462,035,445

442,227,167

9,821,486

8,930,477

6,911,473

483,816,851

470,965,922

449,138,640

225,093,530

226,774,067

229,907,855

11,413,998

11,616,738

75,310

24,257,095

1,072,760

236,507,528

262,647,900

231,055,925

720,324,379

733,613,822

680,194,565

Servicing segment pretax income was $12.7 million, down from $37.3 million in the prior quarter and $76.0 million in the first quarter of 2025. Servicing segment net revenues totaled $125.1 million, down from $153.9 million in the prior quarter and $170.6 million in the first quarter of 2025.

Revenue from net loan servicing fees totaled $152.8 million, up from $149.8 million in the prior quarter and down from $164.3 million in the first quarter of 2025. Net loan servicing fee revenues included $532.1 million in loan servicing fees, essentially unchanged from the prior quarter. Realization of cash flows was $355.0 million in the first quarter, down 7% from the prior quarter, reflecting the expectation of lower prepayment speeds in the future from portfolio burnout. Net MSR valuation-related losses totaled $24.3 million, comprised of MSR fair value gains of $183.0 million and hedging losses of $207.3 million.

The following table presents a breakdown of net loan servicing fees:

532,110

532,192

488,468

(355,022

)

(383,368

)

(225,462

)

183,029

40,388

(205,494

)

(207,287

)

(39,432

)

106,774

(379,280

)

(382,412

)

(324,182

)

152,830

149,780

164,286

Servicing segment revenue included $33.8 million in net gains on loans held for sale related to early buyout loans (EBOs), up from $25.5 million in the prior quarter and essentially unchanged from $33.9 million in the first quarter of 2025. The increase from the prior quarter reflects higher initiation volumes and redelivery margins as a result of lower rates in the beginning of the quarter. These EBOs are previously delinquent loans that were brought back to performing status through PFSI’s successful servicing efforts.

Net interest expense totaled $59.2 million, compared to $19.2 million in the prior quarter and $27.4 million in the first quarter of 2025. Interest income was $94.9 million, down from $134.6 million in the prior quarter due primarily to lower short-term interest rates and the reversal of principal-only stripped MBS accretion due to slower expected future runoff. Interest expense was $154.1 million, up slightly from $153.8 million in the prior quarter.

Servicing segment expenses totaled $112.4 million, down from $116.6 million in the prior quarter primarily due to a decrease in provisions for losses on active loans.

Corporate and Other

Corporate and Other items include amounts attributable to corporate activities or not directly attributable to the production and servicing segments as well as management fees earned from PMT. PFSI manages PMT for which it earns base management fees and may earn performance incentive fees.

Pretax loss for Corporate and Other was $41.5 million, up from $30.2 million in the prior quarter and $33.7 million in the first quarter of 2025.

Corporate and Other net revenues totaled $13.0 million, and consisted of $6.8 million in management fees, $6.0 million in other revenue, and $0.3 million of net interest income. No performance incentive fees were earned in the first quarter.

Expenses were $54.5 million, up from $43.4 million in the prior quarter and $46.1 million in the first quarter of 2025. The increase from the prior quarter was primarily driven by higher advertising expenses related to the 2026 Winter Olympics, as well as $3.2 million of expenses associated with the Cenlar acquisition. The prior quarter also included reduced expenses related to technology accruals.

The following table presents a breakdown of management fees:

6,762

6,856

7,012

6,762

6,856

7,012

1,828,237

1,813,357

1,895,785

Consolidated Expenses

Total expenses were $440.3 million, up from $403.6 million in the prior quarter due to higher expenses in the production and corporate and other segments as mentioned above.

Taxes

PFSI recorded a provision for tax expense of $22.4 million, resulting in an effective tax rate of 21.4%.

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 Tuesday, May 5, 2026. Management will also host a conference call and live audio webcast at 5:00 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. is a specialty financial services firm focused on the production and servicing of U.S. mortgage loans and the management of investments related to the U.S. mortgage market. Founded in 2008, the company is recognized as a leader in the U.S. residential mortgage industry and employs approximately 5,300 people across the country. For the twelve months ended March 31, 2026, PFSI’s production of newly originated loans totaled $154 billion in UPB, making it a top lender in the nation. As of March 31, 2026, PFSI serviced loans totaling $720 billion in UPB, making it a top mortgage servicer in the nation. Additional information about PFSI 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. 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; changes to government modification programs; difficulties inherent in adjusting the size of our operations to reflect changes in business levels; purchase and sales opportunities for 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; the development of 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; 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 earnings per share, pretax income excluding valuation-related items and adjusted return on equity that provide a meaningful perspective on the Company’s business results since the Company utilizes this information to evaluate and manage the business and investors use this information to calculate financial and cash flow measures. Non-GAAP disclosures have limitations as an analytical tool and should not be viewed as a substitute for financial information determined in accordance with GAAP.

PENNYMAC FINANCIAL SERVICES, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED)

219,513

301,680

211,093

434,220

410,037

443,393

659,235

722,528

817,596

9,954,495

9,123,410

7,095,270

282,595

187,775

171,931

622,890

589,542

496,917

10,149,036

9,598,941

8,963,889

17,500

17,122

29,198

8,594,471

7,409,800

4,979,127

1,010,043

1,027,854

664,462

31,943,998

29,388,689

23,872,876

10,177,643

8,794,002

7,058,053

691,081

696,618

510,141

1,426,325

1,326,021

1,724,608

4,834,396

4,831,742

3,998,702

70,652

15,806

15,293

1,568

1,572

1,651

459,016

643,896

365,056

96,033

116,585

101,175

24,757

25,898

1,206,492

1,184,020

1,158,642

8,594,471

7,409,800

4,979,127

35,805

34,894

30,774

27,618,239

25,079,713

19,969,120

46,926

96,870

68,902

4,278,828

4,212,101

3,834,849

4,325,759

4,308,976

3,903,756

31,943,998

29,388,689

23,872,876

PENNYMAC FINANCIAL SERVICES, INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

344,985

301,603

221,037

72,446

68,437

46,611

5,737

6,538

5,290

532,110

532,192

488,468

(171,993

)

(342,980

)

(430,956

)

(207,287

)

(39,432

)

106,774

152,830

149,780

164,286

208,179

263,894

189,871

249,722

262,996

208,082

(41,543

)

898

(18,211

)

6,762

6,856

7,012

3,767

3,893

4,878

544,984

538,005

430,903

216,393

208,073

181,988

79,696

69,651

44,096

46,132

35,378

40,197

38,233

43,360

21,875

21,094

10,411

9,432

14,399

10,303

9,037

9,991

9,963

8,382

14,355

16,461

11,700

440,293

403,600

326,707

104,691

134,405

104,196

22,369

27,574

27,916

82,322

106,831

76,280

1.58

2.05

1.48

1.53

1.97

1.42

52,132

52,003

51,506

53,859

54,171

53,624

0.30

PENNYMAC FINANCIAL SERVICES, INC. RECONCILIATION OF GAAP NET INCOME TO ADJUSTED NET INCOME AND ANNUALIZED ADJUSTED RETURN ON EQUITY

82,322

(183,028

)

13,814

207,287

5,991

3,212

47,275

11,866

117,731

53,859

2.19

4,323,518

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