PennyMac Financial Services (PFSI) Barclays 24th Annual Global Financial Services Conference summary

Market and Operational Trends

• Mortgage rates have risen by 50 basis points since June 30, leading to lower production, reduced revenue forecasts, and lower pretax income in the production segment for 3Q26 compared to 2Q26.

• Margins are holding in consumer direct and correspondent channels, but broker direct faces some margin pressure.

• Servicing portfolio remains strong with low delinquencies, generating about $530 million in quarterly servicing fees, and owned servicing portfolio increased to $503 billion in UPB.

• Operating ROE is expected to be in the mid to high single digits for Q3, reflecting a post-COVID trough.

• Technology investments are expected to crest in Q3 and then decline as major projects complete.

Technology and Efficiency Initiatives

• Deployment of new, legacy-free technology and AI agents has reduced processing costs by 50% per marginal loan and increased loan officer efficiency by 20%.

• Reduction of excess capacity led to a $60 million cut in production expenses, stabilizing earnings.

• Broker direct channel will soon benefit from consumer direct technology, including a new broker portal, supporting share growth.

• Targeting 80% automation by year-end 2027 to reduce staffing volatility and improve cost structure.

• Natural language virtual assistants are being used to enhance borrower self-service and recapture rates.

Channel Strategies and Market Share

• Correspondent channel strategy is more selective, focusing on loan quality and recapture potential, leading to a temporary dip in market share.

• Broker channel aims for 10% market share, with technology deployment expected to drive meaningful share growth over the next 2-3 years.

• Recapture rates are at historic highs: ~30% for conventional and over 50% for government loans, driven by leadership, workflow, and technology.

• Non-QM and jumbo business are growing, and the company is actively buying loans outside the GSE footprint.