PennyMac Financial Services, Inc. Reports Fourth Quarter and Full-Year 2025 Results

WESTLAKE VILLAGE, Calif.--( BUSINESS WIRE)--PennyMac Financial Services, Inc. (NYSE: PFSI) today reported net income of $106.8 million for the fourth quarter of 2025, or $1.97 per share on a diluted basis, on total net revenues of $538.0 million. Book value per share increased to $82.77 from $81.12 at September 30, 2025.

PFSI’s Board of Directors declared a fourth quarter cash dividend of $0.30 per share, payable on February 26, 2026, to common stockholders of record as of February 16, 2026.

Fourth Quarter 2025 Highlights

Full-Year 2025 Highlights

“PFSI finished the year with a solid fourth quarter, generating a 10 percent annualized return on equity with strong production results offset by increased runoff on our MSR asset as prepayment speeds increased,” said Chairman and CEO David Spector. “For the full year 2025, our balanced business model generated very strong financial results. We achieved double-digit earnings growth across both operating segments, with servicing pretax income up 58 percent and production pretax income up 19 percent. These results were driven by significant operational momentum, including a 25 percent increase in production volumes and 10 percent growth in our servicing portfolio UPB. In total, we generated a 12 percent return on equity for the year and 11 percent growth in book value per share, underscoring our ability to consistently create stockholder value through disciplined execution.”

Mr. Spector concluded, “As we look to 2026, Pennymac is uniquely positioned to lead the industry. Our balanced business model and cutting edge technology provides a powerful foundation for our continued growth. We remain focused on the continued advancement of our strategies to drive sustained long-term value for our stockholders.”

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

Production

Servicing

Reportable

segment total

Corporate

and other

Total

276,060

25,543

301,603

68,437

6,538

149,780

6,856

128,953

134,642

263,595

299

263,894

109,189

153,807

262,996

19,764

(19,165

)

599

299

898

187

(2,256

)

(2,069

)

5,962

3,893

370,986

153,902

524,888

13,117

538,005

123,386

51,612

174,998

33,075

208,073

69,651

27,909

10,847

38,756

(3,378

)

35,378

43,360

8,506

555

9,061

1,242

10,303

3,942

1,986

5,928

4,483

10,411

5,162

2,477

7,639

2,324

9,963

5,123

5,726

10,849

5,612

16,461

243,679

116,563

360,242

43,358

403,600

127,307

37,339

164,646

(30,241

)

134,405

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 $42.2 billion in UPB, $38.5 billion of which was for its own account, and $3.7 billion of which was fee-based fulfillment activity for PMT. Correspondent locks for PFSI and direct lending IRLCs totaled $42.8 billion in UPB, up 10 percent from the prior quarter and 30 percent from the fourth quarter of 2024.

Production segment pretax income was $127.3 million, up from $122.9 million in the prior quarter and $78.0 million in the fourth quarter of 2024. Production segment net revenues totaled $371.0 million, up 3 percent from the prior quarter and 42 percent from the fourth quarter of 2024. The increase in revenue from the prior quarter was primarily due to higher volumes in the consumer direct lending channel and was largely offset by lower margins. The increase from the fourth quarter of 2024 was primarily due to higher volumes across all channels.

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

December 31,

2025

September 30,

2025

December 31,

2024

775,242

700,326

748,121

16,341

17,454

2,387

(2,924

)

(2,354

)

(1,633

)

(492,013

)

(284,589

)

(373,307

)

4,957

(116,382

)

(153,524

)

301,603

314,455

222,044

276,060

280,092

195,070

25,543

34,363

26,974

PFSI performs fulfillment services for certain conventional conforming and non-Agency eligible 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 $6.5 million in the fourth quarter, up 6 percent from the prior quarter and 3 percent from the fourth quarter of 2024. The increase was driven by higher acquisition volumes for PMT’s account.

Correspondent production volumes are initially acquired by PFSI. PMT retains the right to purchase up to 100 percent of non-government correspondent loan production. In the fourth quarter, PMT acquired all non-Agency eligible correspondent production and 17 percent of total conventional conforming correspondent production. In the first quarter of 2026, we expect PMT to acquire all non-Agency eligible correspondent production and 15 to 25 percent of total conventional conforming correspondent production.

Net interest income in the fourth quarter totaled $19.8 million, up from $13.7 million in the prior quarter. Interest income totaled $129.0 million, up from $111.3 million in the prior quarter, and interest expense totaled $109.2 million, up from $97.7 million in the prior quarter, both due to the increase in volumes.

Production segment expenses were $243.7 million, up 2 percent from the prior quarter and 33 percent from the fourth quarter of 2024. The increase from the prior quarter was primarily due to higher compensation expenses that resulted from the increase in consumer direct volumes. The increase from the fourth quarter of 2024 was primarily due to higher compensation and loan origination expenses from growth in the direct lending channels.

Servicing Segment

The Servicing segment includes income from owned MSRs and subservicing. The total servicing portfolio increased to $733.6 billion in UPB at December 31, 2025, up 2 percent from September 30, 2025 and up 10 percent from December 31, 2024. PFSI’s owned MSR portfolio totaled $471.0 billion in UPB, a decrease of 1 percent from September 30, 2025 as runoff along with the sale of $24.4 billion in UPB of MSRs more than offset the net growth from production. PFSI’s owned MSR portfolio UPB increased 8 percent from December 31, 2024, primarily due to production volumes, which more than offset runoff and MSR sales. PFSI subservices $262.6 billion in UPB, up 10 percent from the prior quarter. Of total subservicing UPB, $226.8 billion was for PMT, $24.3 billion was subserviced on an interim basis and $11.6 billion was for other non-affiliates.

The table below details PFSI’s servicing portfolio UPB:

December 31,

2025

September 30,

2025

December 31,

2024

448,035,447

455,894,902

410,393,342

13,999,998

14,404,290

15,681,406

462,035,445

470,299,192

426,074,748

8,930,477

7,303,091

8,128,914

470,965,922

477,602,283

434,203,662

226,774,067

227,101,009

230,753,581

24,257,095

65,286

806,584

11,616,738

11,863,843

262,647,900

239,030,138

231,560,165

733,613,822

716,632,421

665,763,827

Servicing segment pretax income was $37.3 million, down from $157.4 million in the prior quarter and $87.3 million in the fourth quarter of 2024. Servicing segment net revenues totaled $153.9 million, down from $259.5 million in the prior quarter and $197.5 million in the fourth quarter of 2024.

Revenue from net loan servicing fees totaled $149.8 million, down from $241.2 million in the prior quarter and $189.3 million in the fourth quarter of 2024. Net loan servicing fee revenues included $532.2 million in loan servicing fees, down slightly from the prior quarter due to the aforementioned sale of MSRs. Realization of cash flows was $383.4 million in the fourth quarter, up 32 percent from the prior quarter, consistent with the increase in prepayment speeds for the owned portfolio as lower mortgage rates drove higher prepayment activity. Net valuation-related gains totaled $1.0 million, comprised of MSR fair value gains of $40.4 million and hedging losses of $39.4 million.

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

December 31,

2025

September 30,

2025

December 31,

2024

532,192

535,106

472,563

(383,368

)

(289,679

)

(215,590

)

40,388

(102,495

)

540,406

(39,432

)

98,306

(608,112

)

(382,412

)

(293,868

)

(283,296

)

149,780

241,238

189,267

Servicing segment revenue included $25.5 million in net gains on loans held for sale related to early buyout loans (EBOs), down from $34.4 million in the prior quarter and $27.0 million in the fourth quarter of 2024. The decrease from the prior quarter was primarily driven by the re-introduction of FHA’s trial payment plans, which extended modification timelines and delayed redeliveries into future quarters. These EBOs are previously delinquent loans that were brought back to performing status through PFSI’s successful servicing efforts.

Net interest expense totaled $19.2 million, compared to $15.1 million in the prior quarter and $19.5 million in the fourth quarter of 2024. Interest income was $134.6 million, down slightly from $137.1 million in the prior quarter as lower earnings rates on custodial balances more than offset the benefit of higher average balances. Interest expense was $153.8 million, up slightly from $152.2 million in the prior quarter.

Servicing segment expenses totaled $116.6 million, up from $102.1 million in the prior quarter primarily due to an increased provision for losses on active loans associated with seasonal increases in delinquencies and servicing advance balances.

Corporate and Other

Corporate and Other items include amounts attributable to corporate activities 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 $30.2 million, down from $43.9 million in the prior quarter and $35.9 million in the fourth quarter of 2024.

Corporate and Other net revenues totaled $13.1 million, and consisted of $6.9 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 fourth quarter.

Expenses were $43.4 million, down from $55.5 million in the prior quarter and $47.4 million in the fourth quarter of 2024. The decrease from the prior quarter was primarily driven by increased capitalization of certain technology expenses and decreased performance-based incentive compensation.

Average PMT shareholders’ equity was $1.8 billion for the fourth quarter of 2025, essentially unchanged from the third quarter of 2025, and down slightly from the fourth quarter of 2024.

The following table presents a breakdown of management fees:

December 31,

2025

September 30,

2025

December 31,

2024

6,856

6,912

7,149

6,856

6,912

7,149

1,813,357

1,828,365

1,896,220

Consolidated Expenses

Total expenses were $403.6 million, up from $396.5 million in the prior quarter due to higher expenses in both the production and servicing segments as mentioned above.

Taxes

PFSI recorded a provision for tax expense of $27.6 million, resulting in an effective tax rate of 20.5 percent. The provision for tax expense included a $4.3 million tax benefit consisting of a repricing of deferred tax liabilities and an adjustment to the 2025 tax accrual. PFSI’s tax provision rate in future periods is expected to be 25.1 percent, down slightly from 25.2 percent in recent quarters.

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 Thursday, January 29, 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 4,900 people across the country. In 2025, PFSI’s production of newly originated loans totaled $145 billion in UPB, making it a top lender in the nation. As of December 31, 2025, PFSI serviced loans totaling $734 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; changes in homeownership costs and affordability; compliance with changing federal, state and local laws and regulations applicable to the highly regulated industry in which we operate; lawsuits or governmental actions that may result from any noncompliance with the laws and regulations applicable to our business; the mortgage lending and servicing-related regulations promulgated by federal and state regulators and the enforcement of these regulations; the licensing and operational requirements of states and other jurisdictions applicable to our business, to which our bank competitors are not subject; 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 current roles or their guarantees or guidelines; 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 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; expanding or creating 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 pretax income excluding valuation-related items and operating net income that provide a meaningful perspective on the Company’s business results since the Company utilizes this information to evaluate and manage the business. 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)

December 31,

2025

September 30,

2025

December 31,

2024

301,680

621,921

238,482

410,037

62,228

420,553

722,528

774,021

825,865

9,123,410

7,490,473

8,217,468

187,775

202,082

113,076

589,542

396,006

568,512

9,598,941

9,653,942

8,744,528

17,122

40,165

30,206

7,409,800

5,416,967

6,157,172

1,027,854

743,315

771,025

29,388,689

25,401,120

26,086,887

8,794,002

7,130,423

8,685,207

696,618

699,182

496,512

1,326,021

1,325,716

2,048,972

4,831,742

4,829,113

3,164,032

15,806

24,276

40,900

1,572

1,593

1,683

643,896

476,094

354,414

116,585

80,605

122,317

24,757

24,806

25,898

1,184,020

1,151,395

1,131,000

7,409,800

5,416,967

6,157,172

34,894

33,064

29,129

25,079,713

21,193,234

22,257,236

96,870

86,680

56,072

4,212,101

4,121,201

3,773,574

4,308,976

4,207,886

3,829,651

29,388,689

25,401,120

26,086,887

PENNYMAC FINANCIAL SERVICES, INC.

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

December 31,

2025

September 30,

2025

December 31,

2024

301,603

314,455

222,044

68,437

61,696

57,824

6,538

6,162

6,356

532,192

535,106

472,563

(342,980

)

(392,174

)

324,816

(39,432

)

98,306

(608,112

)

149,780

241,238

189,267

263,894

248,753

210,859

262,996

249,900

228,111

898

(1,147

)

(17,252

)

6,856

6,912

7,149

3,893

3,582

4,722

538,005

632,898

470,110

208,073

205,314

173,090

69,651

69,407

48,046

43,360

29,105

38,088

35,378

44,772

40,831

10,411

10,145

9,987

10,303

14,016

7,765

9,963

8,604

8,173

16,461

15,161

14,766

403,600

396,524

340,746

134,405

236,374

129,364

27,574

54,871

24,875

106,831

181,503

104,489

2.05

3.51

2.04

1.97

3.37

1.95

52,003

51,730

51,274

54,171

53,879

53,576

0.30

PENNYMAC FINANCIAL SERVICES, INC.

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

2025

2024

2023

1,071,754

817,368

545,943

235,835

185,700

146,118

23,804

26,291

27,826

2,062,433

1,799,480

1,484,946

(1,413,280

)

(433,342

)

(605,568

)

56,546

(832,483

)

(236,778

)

705,699

533,655

642,600

924,447

793,566

632,924

960,555

819,348

637,777

(36,108

)

(25,782

)

(4,853

)

27,649

28,623

28,762

17,903

27,876

15,260

2,046,536

1,593,731

1,401,656

782,916

632,738

576,964

251,990

164,092

114,500

162,604

149,547

143,152

122,626

105,997

69,433

46,140

21,969

17,631

37,973

37,992

60,521

35,328

32,898

36,558

—

1,591

162,770

55,542

45,881

36,496

1,495,119

1,192,705

1,218,025

551,417

401,026

183,631

50,340

89,603

38,975

501,077

311,423

144,656

9.69

6.11

2.89

9.30

5.84

2.74

51,728

50,990

49,978

53,882

53,356

52,733