PennyMac Financial Services, Inc. (PFSI) Q2 2026 Earnings Call

Investor webinar replay

Replay transcript excerpt

and welcome to Pennymont Financial Services, Inc.'s second quarter 2026 earnings call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. Additional earnings materials including presentation slides that will be referred to in this call, as well as an Excel file with supplemental information, are available on PennyMac Financial's website at pfsi.pennymac.com. Before we begin, let me remind you that this call may contain forward-looking statements that are subject to certain risks identified on slide two of the earnings presentation Thank you, Operator. Good afternoon and thank you to everyone for participating in our second quarter 2026 earnings call. As shown on slide three, PennyMac Financial generated net income of $22 million in the second quarter, or 41 cents in earnings per diluted share, representing a 2% annualized return on equity. While interest rate volatility during the quarter created non-cash MSR valuation headwinds that impacted our gap results. Our underlying adjusted earnings per share came in at $1.39, or 7% annualized adjusted return on equity. Although our operational execution remained solid, these results fell short of our expectations as interest rates increased and origination demand declined. To address these rate headwinds, we have already taken proactive steps to align our cost structure with current market conditions. and the operational capabilities provided by recent enhancements to our technology platform. Our results were also impacted by our current funding of major technology initiatives in AI and automation that will structurally lower our cost to produce and cost to service while en...