PennyMac Financial Services, Inc. Reports Fourth Quarter and Full-Year 2024 Results

WESTLAKE VILLAGE, Calif.--(BUSINESS WIRE)--PennyMac Financial Services, Inc. (NYSE: PFSI) today reported net income of $104.5 million for the fourth quarter of 2024, or $1.95 per share on a diluted basis, on revenue of $470.1 million. Book value per share increased to $74.54 from $72.95 at September 30, 2024. PFSI’s Board of Directors declared a fourth quarter cash dividend of $0.30 per share, payable on February 23, 2025, to common stockholders of record as of February 13, 2025. In the fourth quarter, management reassessed its segment definitions. Prior period amounts have been recast to conform those periods' presentation to current period presentation. Non-segment activities are included under "Corporate and other" and include amounts attributable to corporate activities not directly attributable to the production and servicing segments as well as management fees earned from PennyMac Mortgage Investment Trust (NYSE: PMT). Fourth Quarter 2024 Highlights Pretax income was $129.4 million, up from pretax income of $93.9 million in the prior quarter and pretax loss of $54.2 million in the fourth quarter of 2023 Production segment pretax income was $78.0 million, down from $129.4 million in the prior quarter and up from $44.2 million in the fourth quarter of 2023 Total loan acquisitions and originations, including those fulfilled for PMT, were $35.7 billion in unpaid principal balance (UPB), up 13 percent from the prior quarter and 34 percent from the fourth quarter of 2023 Broker direct interest rate lock commitments (IRLCs) were $4.5 billion in UPB, down 17 percent from the prior quarter and up 60 percent from the fourth quarter of 2023 Consumer direct IRLCs were $3.7 billion in UPB, down 30 percent from the prior quarter and up 129 percent from the fourth quarter of 2023 Government correspondent IRLCs totaled $11.1 billion in UPB, down 11 percent from the prior quarter and essentially unchanged from the fourth quarter of 2023 Conventional correspondent IRLCs for PFSI’s account totaled $13.8 billion in UPB, up 68 percent from the prior quarter and 38 percent from the fourth quarter of 2023 Correspondent acquisitions of conventional conforming and jumbo loans fulfilled for PennyMac Mortgage Investment Trust (NYSE: PMT) were $3.5 billion in UPB, down 41 percent from the prior quarter and up 41 percent from the fourth quarter of 2023 PMT retained 19 percent of total conventional correspondent loans in the fourth quarter, down from 42 percent in the prior quarter Servicing segment pretax income was $87.3 million, up from $3.3 million in the prior quarter and $76.6 million in the fourth quarter of 2023 Pretax income excluding valuation-related changes was $168.3 million, essentially unchanged from the prior quarter as higher loan servicing fees, lower realization of mortgage servicing rights (MSR) cash flows and lower operating expenses were offset by lower earnings on custodial balances due to lower short-term interest rates Valuation-related changes included: $540.4 million in MSR fair value gains more than offset by $608.1 million in hedging losses Net impact on pretax income related to these items was $(67.7) million, or $(0.93) in earnings per share $13.3 million provision for losses on active loans Servicing portfolio grew to $665.8 billion in UPB, up 3 percent from September 30, 2024 and 10 percent from December 31, 2023 driven by production volumes which more than offset prepayment activity Pretax loss from Corporate and Other was $35.9 million, compared to $38.8 million in the prior quarter and $175.0 million in the fourth quarter of 2023 The fourth quarter of 2023 included a non-recurring expense accrual of $158.4 million as a result of the long-standing arbitration related to the development of our proprietary servicing software Full-Year 2024 Highlights Net income of $311.4 million, up from $144.7 million in 2023; excluding the non-recurring expense accrual, net income in 2023 would have been $260.5 million Pretax income of $401.0 million, up from $183.6 million in 2023; excluding the non-recurring expense accrual, pretax income in 2023 would have been $342.0 million Total net revenue of $1.6 billion, up from $1.4 billion in 2023 Total loan production of $116.3 billion in UPB, an increase of 17 percent from 2023 Servicing portfolio UPB of $665.8 billion at year end, up 10 percent from December 31, 2023 Issued $650 million of 6-year unsecured senior notes due in November 2030 Increased quarterly cash dividend to $0.30 per share, a 50% increase from $0.20 previously “PennyMac Financial delivered strong fourth quarter results, with a 16 percent1 annualized operating return on equity driven by continued strength in our servicing business and a solid contribution from our production segment despite higher mortgage rates,” said Chairman and CEO David Spector. “In total, we acquired or originated $36 billion in unpaid principal balance of loans, which drove continued growth in our servicing portfolio to $666 billion in unpaid principal balance at year end.” Mr. Spector continued, “Our full year results demonstrate both the ability of our balanced business model to generate operating returns on equity in the mid-teens in periods of higher rates, and also a substantial improvement in operating leverage from the previous year. Looking to 2025 and beyond, I continue to believe PennyMac Financial is best-positioned in the mortgage industry for continued growth and execution regardless of the path of interest rates. Our best-in-class management team has built a platform with significant scale and remains committed to unlocking additional efficiencies through continued investments in workflow and technology. It is for all of these reasons that I am confident in our ability to continue driving strong financial performance in this higher rate environment, bolstered by increases in the origination market in periods when mortgage rates decline.” 1 See page 18 for a reconciliation of non-GAAP items The following table presents the contributions of PennyMac Financial’s segments to pretax income: Quarter ended December 31, 2024 Production Servicing Reportablesegment total Corporateand Other Total (in thousands) Revenue: Net gains on loans held for sale at fair value $ 195,070 $ 26,974 $ 222,044 $ - $ 222,044 Loan origination fees 57,824 - 57,824 - 57,824 Fulfillment fees from PMT 6,356 - 6,356 - 6,356 Net loan servicing fees - 189,267 189,267 - 189,267 Management fees - - - 7,149 7,149 Net interest income (expense): Interest income 93,766 116,679 210,445 414 210,859 Interest expense 91,982 136,129 228,111 - 228,111 1,784 (19,450 ) (17,666 ) 414 (17,252 ) Other 89 735 824 3,898 4,722 Total net revenue 261,123 197,526 458,649 11,461 470,110 Expenses Compensation 91,754 49,958 141,712 31,378 173,090 Loan origination 48,046 - 48,046 - 48,046 Technology 25,743 10,108 35,851 4,980 40,831 Servicing - 38,088 38,088 - 38,088 Professional services 3,869 2,386 6,255 3,732 9,987 Occupancy and equipment 3,951 2,661 6,612 1,561 8,173 Marketing and advertising 6,919 202 7,121 644 7,765 Legal settlements - 2 2 (108 ) (106 ) Other 2,831 6,823 9,654 5,218 14,872 Total expenses 183,113 110,228 293,341 47,405 340,746 Income (loss) before provision for income taxes $ 78,010 $ 87,298 $ 165,308 $ (35,944 ) $ 129,364 Production Segment The Production segment includes the correspondent acquisition of newly originated government-insured and certain conventional conforming loans for PennyMac Financial’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. PennyMac Financial’s loan production activity for the quarter totaled $35.7 billion in UPB, $32.2 billion of which was for its own account, and $3.5 billion of which was fee-based fulfillment activity for PMT. Correspondent locks for PFSI and direct lending IRLCs totaled $33.0 billion in UPB, up 6 percent from the prior quarter and 29 percent from the fourth quarter of 2023. Production segment pretax income was $78.0 million, down from $129.4 million in the prior quarter and up from $44.2 million in the fourth quarter of 2023. Production segment revenue totaled $261.1 million, down 11 percent from the prior quarter and up 49 percent from the fourth quarter of 2023. The decrease from the prior quarter was due to higher mortgage interest rates, which resulted in lower lock volumes in the direct lending channels. The increase from the fourth quarter of 2023 was driven primarily by higher volumes across all channels. The components of net gains on loans held for sale are detailed in the following table: Quarter ended December 31,2024 September 30,2024 December 31,2023 (in thousands) Receipt of MSRs $ 748,121 $ 578,982 $ 549,965 Gains on sale of loans and mortgage servicing rights recapture payable to PennyMac Mortgage Investment Trust 2,387 2,506 (290 ) Provision for representations and warranties, net (1,633 ) (589 ) (1,002 ) Cash loss, including cash hedging results (373,307 ) (382,148 ) (606,160 ) Fair value changes of pipeline, inventory and hedges (153,524 ) 58,068 206,252 Net gains on mortgage loans held for sale $ 222,044 $ 256,819 $ 148,765 Net gains on mortgage loans held for sale by segment: Production $ 195,070 $ 235,902 $ 124,267 Servicing $ 26,974 $ 20,917 $ 24,498 PennyMac Financial performs fulfillment services for certain conventional conforming and jumbo loans acquired by PMT from non-affiliates in its correspondent production business. 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 $6.4 million in the fourth quarter, down 45 percent from the prior quarter and up 29 percent from the fourth quarter of 2023. The quarter-over-quarter decrease was driven by lower conventional acquisition volumes for PMT’s account, as PMT retained a smaller percentage of total conventional correspondent production in the fourth quarter versus the third quarter. In the first quarter of 2025, we expect PMT to retain all jumbo production and 15 to 25 percent of total conventional conforming correspondent production, compared to 19 percent in the fourth quarter. Under a renewed mortgage banking services agreement with PMT, effective July 1, 2025, correspondent production volumes will initially be acquired by PFSI. PMT will retain the right to purchase up to 100 percent of non-government correspondent loan production. Net interest income in the fourth quarter totaled $1.8 million, compared to net interest expense of $2.1 million in the prior quarter. Interest income totaled $93.8 million, up from $79.4 million in the prior quarter, and interest expense totaled $92.0 million, up from $81.5 million in the prior quarter, both due to higher average balances of loans held for sale due to the increase in funded volumes. Production segment expenses were $183.1 million, up 11 percent from the prior quarter and 40 percent from the fourth quarter of 2023. Production expenses increased from the prior quarter primarily due to higher funded volumes and increased capacity in the direct lending channels. Servicing Segment The Servicing segment includes income from owned MSRs and subservicing. The total servicing portfolio grew to $665.8 billion in UPB at December 31, 2024, an increase of 3 percent from September 30, 2024 and 10 percent from December 31, 2023. PennyMac Financial’s owned MSR portfolio grew to $434.2 billion in UPB, an increase of 4 percent from September 30, 2024 and 16 percent from December 31, 2023. PennyMac Financial subservices $230.8 billion in UPB for PMT and subservices on an interim basis $807 million in UPB of previously owned loans that have been repurchased by the United States Veterans Affairs (VA) pursuant to the Veterans Affairs Servicing Purchase (VASP) program. The table below details PennyMac Financial’s servicing portfolio UPB: December 31,2024 September 30,2024 December 31,2023 (in thousands) Prime servicing: Owned Mortgage servicing rights and liabilities Originated $ 410,393,342 $ 393,947,146 $ 352,790,614 Purchased 15,681,406 16,104,333 17,478,397 426,074,748 410,051,479 370,269,011 Loans held for sale 8,128,914 6,366,787 4,294,689 434,203,662 416,418,266 374,563,700 Subserviced for PMT 230,745,995 231,369,983 232,643,144 Subserviced for U.S. Department of Veterans Affairs 806,584 257,696 - Total prime servicing 665,756,241 648,045,945 607,206,844 Special servicing - subserviced for PMT 7,586 8,340 9,925 Total loans serviced $ 665,763,827 $ 648,054,285 $ 607,216,769 Servicing segment pretax income was $87.3 million, up from pretax income of $3.3 million in the prior quarter and $76.6 million in the fourth quarter of 2023. Servicing segment net revenues totaled $197.5 million, up from $105.9 million in the prior quarter and $175.9 million in the fourth quarter of 2023. Revenue from net loan servicing fees totaled $189.3 million, up from $75.8 million in the prior quarter and $162.3 million in the fourth quarter of 2023. The increase from the prior quarter was primarily driven by a decrease in net valuation-related losses. Net loan servicing fee revenues included $472.6 million in loan servicing fees, which was up from the prior quarter due to growth in the owned portfolio, reduced by $215.6 million from the realization of MSR cash flows. Net valuation-related losses totaled $67.7 million and included MSR fair value gains of $540.4 million driven by the increase in market interest rates, and hedging losses of $608.1 million. The following table presents a breakdown of net loan servicing fees: Quarter ended December 31,2024 September 30,2024 December 31,2023 (in thousands) Loan servicing fees $ 472,563 $ 462,037 $ 402,484 Changes in fair value of MSRs and MSLs resulting from: Realization of cash flows (215,590 ) (225,836 ) (164,255 ) Change in fair value inputs 540,406 (402,422 ) (370,705 ) Hedging (losses) gains (608,112 ) 242,051 294,787 Net change in fair value of MSRs and MSLs (283,296 ) (386,207 ) (240,173 ) Net loan servicing fees $ 189,267 $ 75,830 $ 162,311 Servicing segment revenue included $27.0 million in net gains on loans held for sale related to early buyout loans (EBOs), up from $20.9 million in the prior quarter and $24.5 million in the fourth quarter of 2023. These EBOs are previously delinquent loans that were brought back to performing status through PennyMac Financial’s successful servicing efforts. Net interest expense totaled $19.5 million, versus net interest income of $9.5 million in the prior quarter and net interest expense of $13.4 million in the fourth quarter of 2023. Interest income was $116.7 million, down from $145.6 million in the prior quarter due to decreased placement fees on custodial balances due to lower short-term rates. Interest expense was $136.1 million, essentially unchanged from the prior quarter as a higher average balance of financing for MSR assets was offset by lower financing rates on floating rate debt. Servicing segment expenses totaled $110.2 million, up from $102.6 million in the prior quarter primarily due to increased provisions for losses on active loans. 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. PennyMac Financial manages PMT for which it earns base management fees and may earn incentive compensation. Pretax loss for Corporate and Other was $35.9 million, compared to $38.8 million in the prior quarter and $175.0 million in the fourth quarter of 2023. Revenues from Corporate and Other were $11.5 million, and consisted of $7.1 million in management fees, $3.9 million in other revenue, and $0.4 million of net interest income. No performance incentive fees were earned in the fourth quarter. Expenses were $47.4 million, compared to $49.8 million in the prior quarter and $186.4 million in the fourth quarter of 2023, which included the aforementioned non-recurring expense accrual. Net assets under management were $1.9 billion as of December 31, 2024, essentially unchanged from September 30, 2024 and December 31, 2023. The following table presents a breakdown of management fees: Quarter ended December 31,2024 September 30,2024 December 31,2023 (in thousands) Management fees: Base $ 7,149 $ 7,153 $ 7,252 Performance incentive - - - Total management fees $ 7,149 $ 7,153 $ 7,252 Net assets of PennyMac Mortgage Investment Trust $ 1,938,500 $ 1,936,787 $ 1,957,090 Consolidated Expenses Total expenses were $340.7 million, up from $317.9 million in the prior quarter primarily due to increased production and servicing segment expenses as previously discussed. Taxes PFSI recorded a provision for tax expense of $24.9 million, resulting in an effective tax rate of 19.2 percent. The reduction in the effective tax rate from the prior quarter was primarily due to a decline in the provision rate from 26.85 percent to 26.70 percent and the resulting repricing of expected taxes on deferred income. 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 30, 2025. 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 4,100 people across the country. In 2024, PennyMac Financial’s production of newly originated loans totaled $116 billion in unpaid principal balance, making it a top lender in the nation. As of December 31, 2024, PennyMac Financial serviced loans totaling $666 billion in unpaid principal balance, making it a top mortgage servicer in the nation. Additional information about PennyMac Financial Services, Inc. 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 real estate values, housing prices and housing sales; changes in macroeconomic, consumer and real estate market conditions; the continually 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 the Consumer Financial Protection Bureau and its 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; foreclosure delays and changes in foreclosure practices; difficulties inherent in adjusting the size of our operations to reflect changes in business levels; purchase opportunities for mortgage servicing rights; our substantial amount of indebtedness; increases in loan delinquencies, defaults and forbearances; 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; 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 and disruptions in operations resulting 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; our initiation or expansion of 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. The following table presents the contributions of PennyMac Financial’s segments to pretax income in the prior quarter: Quarter ended September 30, 2024 Production Servicing Reportablesegment total Corporateand other Total (in thousands) Revenue: Net gains on loans held for sale at fair value $ 235,902 $ 20,917 $ 256,819 $ - $ 256,819 Loan origination fees 49,430 - 49,430 - 49,430 Fulfillment fees from PMT 11,492 - 11,492 - 11,492 Net loan servicing fees - 75,830 75,830 - 75,830 Management fees - - - 7,153 7,153 Net interest (expense) income: Interest income 79,427 145,567 224,994 476 225,470 Interest expense 81,496 136,101 217,597 - 217,597 (2,069 ) 9,466 7,397 476 7,873 Other 172 (269 ) (97 ) 3,334 3,237 Total net revenue 294,927 105,944 400,871 10,963 411,834 Expenses Compensation 82,991 52,553 135,544 35,772 171,316 Loan origination 45,208 - 45,208 - 45,208 Technology 24,115 9,866 33,981 3,078 37,059 Servicing - 28,885 28,885 - 28,885 Professional services 2,853 1,575 4,428 4,911 9,339 Occupancy and equipment 3,840 2,823 6,663 1,493 8,156 Marketing and advertising 4,830 28 4,858 230 5,088 Legal settlements - - - 108 108 Other 1,716 6,866 8,582 4,168 12,750 Total expenses 165,553 102,596 268,149 49,760 317,909 Income (loss) before provision for income taxes $ 129,374 $ 3,348 $ 132,722 $ (38,797 ) $ 93,925 The following table presents the contributions of PennyMac Financial’s segments to pretax loss in the fourth quarter of 2023: Quarter ended December 31, 2023 Production Servicing Reportablesegment total Corporateand other Total Revenue: Net gains on loans held for sale at fair value $ 124,267 $ 24,498 $ 148,765 $ - $ 148,765 Loan origination fees 38,059 - 38,059 - 38,059 Fulfillment fees from PMT 4,931 - 4,931 - 4,931 Net loan servicing fees - 162,311 162,311 - 162,311 Management fees - - - 7,252 7,252 Net interest income (expense): Interest income 72,553 91,885 164,438 504 164,942 Interest expense 65,199 105,302 170,501 - 170,501 7,354 (13,417 ) (6,063 ) 504 (5,559 ) Other 73 2,555 2,628 3,552 6,180 Total net revenue 174,684 175,947 350,631 11,308 361,939 Expenses Compensation 67,785 50,917 118,702 16,436 135,138 Loan origination 26,879 - 26,879 - 26,879 Technology 22,901 10,099 33,000 (130 ) 32,870 Servicing - 28,907 28,907 - 28,907 Professional services 2,521 1,947 4,468 5,216 9,684 Occupancy and equipment 4,230 2,716 6,946 1,826 8,772 Marketing and advertising 3,984 29 4,013 167 4,180 Legal settlements 853 - 853 159,172 160,025 Other 1,331 4,718 6,049 3,665 9,714 Total expenses 130,484 99,333 229,817 186,352 416,169 Income (loss) before provision for income taxes $ 44,200 $ 76,614 $ 120,814 $ (175,044 ) $ (54,230 ) PENNYMAC FINANCIAL SERVICES, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) December 31,2024 September 30,2024 December 31,2023 (in thousands, except share amounts) ASSETS Cash $ 238,482 $ 145,814 $ 938,371 Short-term investment at fair value 420,553 667,934 10,268 Principal-only stripped mortgage-backed securities at fair value 825,865 960,267 - Loans held for sale at fair value 8,217,468 6,565,704 4,420,691 Derivative assets 113,076 190,612 179,079 Servicing advances, net 568,512 400,764 694,038 Mortgage servicing rights at fair value 8,744,528 7,752,292 7,099,348 Investment in PennyMac Mortgage Investment Trust at fair value 944 1,070 1,121 Receivable from PennyMac Mortgage Investment Trust 30,206 32,603 29,262 Loans eligible for repurchase 6,157,172 5,512,289 4,889,925 Other 770,081 642,189 582,460 Total assets $ 26,086,887 $ 22,871,538 $ 18,844,563 LIABILITIES Assets sold under agreements to repurchase $ 8,685,207 $ 6,600,997 $ 3,763,956 Mortgage loan participation purchase and sale agreements 496,512 517,527 446,054 Notes payable secured by mortgage servicing assets 2,048,972 1,723,632 1,873,415 Unsecured senior notes 3,164,032 3,162,239 2,519,651 Derivative liabilities 40,900 41,471 53,275 Mortgage servicing liabilities at fair value 1,683 1,718 1,805 Accounts payable and accrued expenses 354,414 331,512 449,896 Payable to PennyMac Mortgage Investment Trust 122,317 81,040 208,210 Payable to exchanged Private National Mortgage Acceptance Company, LLC unitholders under tax receivable agreement 25,898 26,099 26,099 Income taxes payable 1,131,000 1,105,550 1,042,886 Liability for loans eligible for repurchase 6,157,172 5,512,289 4,889,925 Liability for losses under representations and warranties 29,129 28,286 30,788 Total liabilities 22,257,236 19,132,360 15,305,960 STOCKHOLDERS' EQUITY Common stock—authorized 200,000,000 shares of $0.0001 par value; issued and outstanding 51,376,616, 51,257,630, and 50,178,963 shares, respectively 5 5 5 Additional paid-in capital 56,072 54,415 24,287 Retained earnings 3,773,574 3,684,758 3,514,311 Total stockholders' equity 3,829,651 3,739,178 3,538,603 Total liabilities and stockholders’ equity $ 26,086,887 $ 22,871,538 $ 18,844,563 PENNYMAC FINANCIAL SERVICES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Quarter ended December 31,2024 September 30,2024 December 31,2023 (in thousands, except per share amounts) Revenues Net gains on loans held for sale at fair value $ 222,044 $ 256,819 $ 148,765 Loan origination fees 57,824 49,430 38,059 Fulfillment fees from PennyMac Mortgage Investment Trust 6,356 11,492 4,931 Net loan servicing fees: Loan servicing fees 472,563 462,037 402,484 Change in fair value of mortgage servicing rights and mortgage servicing liabilities 324,816 (628,258 ) (534,960 ) Mortgage servicing rights hedging results (608,112 ) 242,051 294,787 Net loan servicing fees 189,267 75,830 162,311 Net interest (expense) income : Interest income 210,859 225,470 164,942 Interest expense 228,111 217,597 170,501 (17,252 ) 7,873 (5,559 ) Management fees from PennyMac Mortgage Investment Trust 7,149 7,153 7,252 Other 4,722 3,237 6,180 Total net revenues 470,110 411,834 361,939 Expenses Compensation 173,090 171,316 135,138 Loan origination 48,046 45,208 26,879 Technology 40,831 37,059 32,870 Servicing 38,088 28,885 28,907 Professional services 9,987 9,339 9,684 Occupancy and equipment 8,173 8,156 8,772 Marketing and advertising 7,765 5,088 4,180 Legal settlements (106 ) 108 160,025 Other 14,872 12,750 9,714 Total expenses 340,746 317,909 416,169 Income before provision for income taxes 129,364 93,925 (54,230 ) Provision for (benefit from) income taxes 24,875 24,557 (17,388 ) Net income (loss) $ 104,489 $ 69,368 $ (36,842 ) Earnings (loss) per share Basic $ 2.04 $ 1.36 $ (0.74 ) Diluted $ 1.95 $ 1.30 $ (0.74 ) Weighted-average common shares outstanding Basic 51,274 51,180 49,987 Diluted 53,576 53,495 49,987 Dividend declared per share $ 0.30 $ 0.30 $ 0.20 PENNYMAC FINANCIAL SERVICES, INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) Year ended December 31, 2024 2023 2022 (in thousands, except earnings per share) Revenue Net gains on loans held for sale at fair value $ 817,368 $ 545,943 $ 791,633 Loan origination fees 185,700 146,118 169,859 Fulfillment fees from PennyMac Mortgage Investment Trust 26,291 27,826 67,991 Net loan servicing fees: Loan servicing fees: From non-affiliates 1,529,452 1,268,650 1,054,828 From PennyMac Mortgage Investment Trust 83,252 81,347 81,915 Other fees 186,776 134,949 91,894 1,799,480 1,484,946 1,228,637 Change in fair value of mortgage servicing rights, mortgage servicing liabilities and excess servicing spread financing (433,342 ) (605,568 ) 354,176 Hedging results (832,483 ) (236,778 ) (631,484 ) Net loan servicing fees 533,655 642,600 951,329 Net interest expense: Interest income 793,566 632,924 294,062 Interest expense 819,348 637,777 335,427 (25,782 ) (4,853 ) (41,365 ) Management fees from PennyMac Mortgage Investment Trust 28,623 28,762 31,065 Other 27,876 15,260 15,243 Total net revenue 1,593,731 1,401,656 1,985,755 Expenses Compensation 632,738 576,964 735,231 Technology 164,092 143,152 139,950 Loan origination 149,547 114,500 173,622 Servicing 105,997 69,433 59,628 Professional services 37,992 60,521 73,270 Occupancy and equipment 32,898 36,558 40,124 Marketing and advertising 21,969 17,631 46,762 Legal settlements 1,591 162,770 4,649 Other 45,881 36,496 47,272 Total expenses 1,192,705 1,218,025 1,320,508 Income before provision for income taxes 401,026 183,631 665,247 Provision for income taxes 89,603 38,975 189,740 Net income $ 311,423 $ 144,656 $ 475,507 Earnings per share Basic $ 6.11 $ 2.89 $ 8.96 Diluted $ 5.84 $ 2.74 $ 8.50 Weighted average shares outstanding Basic 50,990 49,978 53,065 Diluted 53,356 52,733 55,950 PENNYMAC FINANCIAL SERVICES, INC. RECONCILIATION OF GAAP NET INCOME TO OPERATING NET INCOME AND ANNUALIZED OPERATING RETURN ON EQUITY Quarter Ended December 31, 2024 (in thousands, except annualizedoperating return on equity) Net income $ 104,489 Increase in fair value of MSRs and MSLs due to changes in valuation inputs used in the valuation model 540,406 Hedging losses associated with MSRs (608,112 ) Tax impacts of adjustments(1) 18,078 Operating net income $ 154,117 Average stockholders' equity $ 3,779,247 Annualized operating return on equity 16 % (1) Assumes a tax rate of 26.70%

PennyMac Financial Services, Inc. Reports Fourth Quarter and Full-Year 2024 Results

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