PennyMac Financial Services, Inc. (PFSI) Q3 2025 Earnings Call

Investor webinar replay

Replay transcript excerpt

Good afternoon, and welcome to PennyMac Financial Services, Inc.' 's third quarter 2025 earnings call. Additional earnings materials, including presentation slides that will be referred to on this call, 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 that could cause the company's actual results to differ materially, as well as non-GAAP measures that have been reconciled to their GAAP equivalent in the earnings materials. Now I'd like to introduce David Spector, PennyMac Financial's Chairman and Chief Executive Officer, and Dan Perotti, PennyMac Financial's Chief Financial Officer. You may go ahead. Thank you, operator. Good afternoon, and thank you to everyone for participating in our third quarter earnings call. As shown on slide three, CFSI delivered outstanding financial and operational results in the third quarter, with an 18% return on equity on both the GAAP and operating basis. These results highlight the strategic advantage of our balanced business model, our ability to rapidly address refinance opportunities as they arise, and the success of our dynamic hedging program, which offset MSR fair value declines, thereby demonstrating the financial stability that is central to our operating model. As you can see on slide five, our consistent performance demonstrates the strength of our organic and comprehensive mortgage banking platform. The chart on the left shows our annualized operating ROEs in recent quarters. The 20% operating return on equity we earned in the third quarter of 2024 was achieved when mortgage rates declined to approximately 6%. Similarly, this quarte...