Pennymac Financial Services, Inc. · NYSE:PFSI
Pennymac Financial Services — Q2 2025 Earnings Presentation
36 slides from Pennymac Financial Services's earnings presentation, Jul 22, 2025
Slide 1: PennyMac Financial Services, Inc. 2Q25 Earnings Report
PennyMac Financial Services, Inc. 2Q25 EARNINGS REPORT July 2025
Slide 2: 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 p
Slide 3: 2Q25 Results
3 2Q25 Results Solid operating results and a non-recurring tax benefit partially offset by net fair value declines on hedged mortgage servicing rights resulting from extreme market volatility Production Segment Servicing Segment 2Q25 RESULTS HIGHLIGHT RESILIENCE OF OUR BALANCED BUSINESS MODEL Note:
Slide 4: 2Q25 Strategic Update
~2Q25 STRATEGIC UPDATE
Slide 5: Delivering Mid-to-High-Teens Operating Returns on Equity
Mortgage Banking Operating Pretax Income ($ in millions) Production • 13 - 20% operating return on equity in recent periods of elevated mortgage rates ‒ Servicing expected to continue providing a strong base level of operating earnings, with additional upside potential for the production segment whe
Slide 6: Comprehensive Mortgage Banking Platform Is a Flywheel
Portfolio growth drives higher recurring fee income; prepayment speeds slow in rising rate environments, a natural hedge to origination income Refinance recapture to drive earnings growth when rates decline 6 COMPREHENSIVE MORTGAGE BANKING PLATFORM IS A FLYWHEEL Large volumes of production grow serv
Slide 7: Capturing Growth in the Expanding Purchase Market
7 Correspondent Production Long-standing and strong relationships with home builders and leading independent mortgage banks Increasing presence with community banks and credit unions Broker Direct Lending Strong ties to real estate agents and their local communities Nationwide footprint complements
Slide 8: Unmatched Excellence and Support for Our Business Partners
Rapid closing times enable our partners to compete effectively while feedback loops minimize loan defects A reliable partner with stability and resilience through market shifts and volatility Technology Speed Cost Structure 8 Consistency Relationships Streamlined platforms create best-in-class exper
Slide 9: Outright Leader in Correspondent Lending
9 Last Twelve Months Correspondent Volume(1) (UPB in billions) Note: All data are as of 2Q25 or 6/30/25 unless otherwise noted (1) Inside Mortgage Finance through 3/31/25; includes volumes acquired for PMT (2) Inside Mortgage Finance; 1H25 correspondent market share is an estimate Correspondent Mark
Slide 10: Rapidly-Growing Wholesale Lender
10 RAPIDLY-GROWING WHOLESALE LENDER Broker Direct Market Share(1) #3 Largest wholesale channel participant Trusted alternative and essential second partner for brokers Tech-forward platform with unmatched support throughout the origination process (1) Inside Mortgage Finance through 3/31/25; 1H25 is
Slide 11: Intense Focus on Execution in Consumer Direct
(1) ICE Mortgage Monitor Report - June 2025 11 INTENSE FOCUS ON EXECUTION IN CONSUMER DIRECT PENNYMAC CONSUMER DIRECT Portfolio & Ex Portfolio New Customers Robust data analytics to identify potential opportunities and products to help borrowers meet their needs Refinance recapture rates 2x the indu
Slide 12: Earnings Potential from Consumer Direct Recapture Opportunity
12 EARNINGS POTENTIAL FROM CONSUMER DIRECT RECAPTURE OPPORTUNITY Gov’t. Loan Refinance Recapture Rates Conv. Loans Refinance Recapture Rates > 7.00% 6.50 - 6.99% 5.50 - 5.99% 6.00 - 6.49% 5.00 - 5.49% > 7.00% 6.50 - 6.99% 6.00 - 6.49% 5.50 - 5.99% 5.00 - 5.49% • Investments in technology and process
Slide 13: Building Momentum in the Deployment of Artificial Intelligence
Rapidly advancing AI capabilities while making prudent investments and managing risk that will support our ability to: BUILDING MOMENTUM IN THE DEPLOYMENT OF ARTIFICIAL INTELLIGENCE Improve the Customer Experience Generate Additional Revenues Continue to Reduce Expenses Pennymac’s AI Accelerator Tea
Slide 14: PennyMac's Vision for Artificial Intelligence
Relentless pursuit and investment in technology has been our cornerstone, driving shareholder value, dramatic cost efficiencies and the ability to deliver unrivaled service to our millions of customers PENNYMAC’S VISION FOR ARTIFICIAL INTELLIGENCE What have we done? What are we doing? What comes nex
Slide 15: Key Operating Metrics & Other Financial Schedules
KEY OPERATING METRICS & OTHER FINANCIAL SCHEDULES
Slide 16: PennyMac's Market Share Over Time Across Its Businesses
PENNYMAC’S MARKET SHARE OVER TIME ACROSS ITS BUSINESSES 16 Loan Servicing Market Share Correspondent Production Market Share(1) (1) Broker Direct Market Share(1) Consumer Direct Market Share(1) Note: All figures are for PFSI and include volume fulfilled or subserviced for PMT (1) Historical market s
Slide 17: Production Segment Highlights – Volume by Channel
17 PRODUCTION SEGMENT HIGHLIGHTS – VOLUME BY CHANNEL Broker Direct (UPB in billions) Consumer Direct (UPB in billions) Note: Figures may not sum due to rounding (1) Government-insured or guaranteed loans and certain conventional loans acquired through PMT’s correspondent production business and subs
Slide 18: Drivers of Production Segment Results
• Revenue per fallout adjusted lock for PFSI’s own account was 58 basis points in 2Q25, down from 72 basis points in 1Q25 ‒ Higher revenue contributions in all channels partially offset by negative effects from other cross-channel impacts(3) ‒ Higher proportion of correspondent and broker direct vol
Slide 19: Servicing Segment Highlights
Selected Operational Metrics 1Q25 2Q25 Loans serviced (in thousands) 2,651 2,704 60+ day delinquency rate - owned portfolio(1) 3.1% 3.2% 60+ day delinquency rate - sub-serviced portfolio(2) 0.7% 0.7% Actual CPR - owned portfolio(1) 6.8% 8.5% Actual CPR - sub-serviced portfolio(2) 4.7% 6.5% UPB of co
Slide 20: Servicing Profitability Excluding Valuation-Related Changes
SERVICING PROFITABILITY EXCLUDING VALUATION-RELATED CHANGES 20 Note: Figures may not sum due to rounding (1) Of average portfolio UPB, annualized (2) Comprised of net gains on mortgage loans held for sale at fair value and interest income related to EBO loans (3) Consists of interest shortfall and r
Slide 21: Technology Driving Efficiencies and Lower Expenses in Servicing
• Pennymac’s per loan servicing expenses are among the lowest in the industry, despite a higher concentration of government loans, which are more difficult to service • Industry-leading customer service as evidenced by our multi-year servicing excellence awards from HUD, Fannie Mae and Freddie Mac •
Slide 22: Hedging Approach Moderates the Volatility of PFSI's Results
• PFSI seeks to moderate the impact of interest rate changes on the fair value of its MSR asset through a comprehensive hedging strategy that also considers production-related income ‒ MSR hedging results and hedge costs negatively impacted due to extreme rate volatility in April ‒ Strategically adj
Slide 23: PFSI's Strong Balance Sheet and Diverse Capital Structures
• Targeted debt-to-equity ratio near 3.5x with fluctuations largely driven by the origination environment or other market opportunities • Targeted non-funding debt-to-equity ratio near 1.5x; may be modestly above at current interest rate levels MSR & Servicing Advance Financing PFSI’S STRONG BALANCE
Slide 24: Appendix
» APPENDIX
Slide 25: Track Record of Strong Performance Across Market Environments
PFSI Purchase Mix Industry Purchase Mix(5) 25 TRACK RECORD OF STRONG PERFORMANCE ACROSS MARKET ENVIRONMENTS Proven ability to generate attractive ROEs… …across different market environments… …with a strong orientation towards purchase money mortgages. (1) Represents partial year; initial public offe
Slide 26: Current Market Environment and Macroeconomic Trends
(1) Freddie Mac Primary Mortgage Market Survey. (2) U.S. Department of the Treasury. (3) Actual originations: Inside Mortgage Finance; Forecast originations; Average of Mortgage Bankers Association (7/17/25) and Fannie Mae (6/12/25) forecasts (4) 10-year Treasury bond yield and 2/10 year Treasury yi
Slide 27: Acquisitions and Originations by Product
ACQUISITIONS AND ORIGINATIONS BY PRODUCT 27 Note: Figures may not sum due to rounding Unaudited ($ in millions) 2Q24 3Q24 4Q24 1Q25 2Q25 Correspondent Acquisitions Conventional Conforming - for PMT $ 2,195 $ 5,851 $ 3,241 $ 2,437 $ 2,740 Conventional Conforming - for PFSI 10,007 8,092 13,567 8,961 1
Slide 28: Interest Rate Locks by Product
INTEREST RATE LOCKS BY PRODUCT 28 Note: Figures may not sum due to rounding Unaudited ($ in millions) 2Q24 3Q24 4Q24 1Q25 2Q25 Correspondent Locks Conventional Conforming - for PMT $ 2,602 $ 7,373 $ 2,741 $ 2,210 $ 3,009 Conventional Conforming - for PFSI 9,914 8,229 13,810 9,988 14,697 Government -
Slide 29: Production Segment Highlights – Business Trends by Channel
Correspondent Broker Direct PRODUCTION SEGMENT HIGHLIGHTS – BUSINESS TRENDS BY CHANNEL 29 Consumer Direct ● Pennymac remains the largest correspondent aggregator in the U.S. ● Lock volumes for PFSI’s account were up 30% and acquisitions were up 32% from 1Q25, consistent with the growth in the overal
Slide 30: Credit Characteristics by Acquisition/Origination Period
CREDIT CHARACTERISTICS BY ACQUISITION/ORIGINATION PERIOD 30 Correspondent Broker Direct Consumer Direct Note: Figures exclude closed-end second liens (CES) Weighted Average FICO Weighted Average DTI 2Q24 3Q24 4Q24 1Q25 2Q25 2Q24 3Q24 4Q24 1Q25 2Q25 Government-insured 715 715 719 718 721 Government-i
Slide 31: MSR Asset Valuation
June 30, 2025 Mortgage Servicing Rights Unaudited ($ in millions) Pool UPB(1) $463,132 Weighted average coupon 4.7% Weighted average servicing fee/spread 0.39% Weighted average prepayment speed assumption (CPR) 8.9% Fair value $9,531 As a multiple of servicing fee 5.3 31 MSR ASSET VALUATION (1) Excl
Slide 32: Delinquency Trends and Servicing Advances Outstanding
FHA 2023 Vintage FHA 2024 Vintage VA 2023 Vintage VA 2024 Vintage DELINQUENCY TRENDS AND SERVICING ADVANCES OUTSTANDING 32 Trends in Delinquency and Foreclosure Rates(1) 30-60 Day 60-90 Day 90+ Day In foreclosure (1) Owned MSR portfolio and includes loans acquired for sale at fair value; delinquency
Slide 33: PFSI's Owned MSR Portfolio Characteristics
33 PFSI’S OWNED MSR PORTFOLIO CHARACTERISTICS Note: Figures may not sum due to rounding (1) Government loans include loans securitized in Ginnie Mae pools as well as loans sold to private investors (2) Other represents MSRs collateralized by conventional loans sold to private investors (3) Loan-to-v
Slide 34: Reconciliation of GAAP Net Income to Adjusted EBITDA
RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDA 34 Note: Figures may not sum due to rounding ($ in millions) 2Q24 1Q25 2Q25 Net income $ 98.3 $ 76.3 $ 136.5 Provision for income taxes 35.6 27.9 (60.0) Income before provision for income taxes 133.9 104.2 76.4 Depreciation and amortization 14.2 1
Slide 35: Reconciliation of GAAP Items to Non-GAAP Items
Reconciliation of GAAP net income to operating net income and annualized operating return on equity RECONCILIATION OF GAAP ITEMS TO NON-GAAP ITEMS Note: Figures may not sum due to rounding 35 (1) Assumes a tax rate of 26.85% in periods prior to 4Q24, 26.70% in 4Q24 and 1Q25, and 25.165% in 2Q25 Reco
Slide 36: PennyMac
™ PENNYMAC
PennyMac Financial Services — Q2 2025 Earnings Presentation on 6ix