PennyMac Financial Services (PFSI) investor relations material

Executive summary

• Net income for Q2 2026 was $22 million ($0.41 per diluted share), with adjusted EPS at $1.39 and annualized adjusted ROE of 7%; book value per share was $83.49.

• Results were pressured by interest rate volatility and MSR valuation headwinds, but technology investments in AI and automation are underway to structurally lower costs and enhance operational capacity.

• Recapture rates for conventional and government refinance loans increased significantly, and the onboarding of Cenlar's subservicing portfolio remains on track for Q4 2026.

• Strategic partnership with AWS/Amazon Web Services expanded to support AI-driven transformation.

• Loan production revenues increased due to higher broker and consumer direct channel volumes, but expenses rose significantly, impacting profitability.

Financial highlights

• Adjusted net income was $74 million, with a $0.98 difference from GAAP EPS due to $77 million in MSR fair value declines, $9 million gain from Vesta, and $1 million in Cenlar acquisition expenses.

• Production segment pre-tax income was $38 million; servicing segment pre-tax income was $22 million, or $99 million excluding valuation-related changes.

• Total origination/acquisition volumes were $34.9 billion UPB, down 8% year-over-year.

• Servicing portfolio UPB ended at $731 billion, up 1% sequentially and 4% year-over-year.

• Dividend declared at $0.30 per share for Q2 2026.

Outlook and guidance

• Adjusted ROEs expected to remain in high single digits through 2026, with a visible path to mid-teens ROEs by 2027, contingent on cost reductions and technology leverage.

• $60 million in annualized cost savings from recent realignments to be realized starting Q3.

• Cenlar acquisition is expected to close in Q4 2026, adding stable fee revenue and expanding B2B relationships.

• Broker direct market share target of 10% by end of 2026 is unlikely; focus remains on disciplined, profitable growth with major tech upgrades expected by mid-2027.

• Technology expense inflection has begun, with further declines anticipated into 2027.