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WESTLAKE VILLAGE, Calif. - PennyMac Financial Services, Inc. (NYSE:PFSI) reported third-quarter earnings that significantly exceeded analyst expectations, with net income reaching $181.5 million, or $3.37 per diluted share, compared to the consensus estimate of $2.74. Revenue for the quarter came in at $632.9 million, also surpassing the analyst estimate of $592.53 million.
The company’s pretax income surged to $236.4 million, up from $76.4 million in the previous quarter and $93.9 million in the third quarter of 2024. The stock remained unchanged following the earnings release.
PennyMac’s production segment saw pretax income of $122.9 million, more than double the $57.8 million reported in the prior quarter, though slightly below the $129.4 million recorded in the same period last year. Total loan acquisitions and originations reached $36.5 billion in unpaid principal balance (UPB), representing a 15% increase YoY despite a 4% decline from the previous quarter.
The servicing segment generated pretax income of $157.4 million, a substantial improvement from $54.2 million in the prior quarter and $3.3 million in the third quarter of 2024. The company’s servicing portfolio grew to $716.6 billion in UPB, up 2% from June 30 and 11% YoY.
"PennyMac Financial delivered outstanding financial and operational results in the third quarter, with an 18% return on equity," said Chairman and CEO David Spector. "In production, profitability nearly doubled from the prior quarter. The increase reflected strong recapture in our consumer direct lending division combined with the continued expansion of our presence in broker-direct."
The company’s board declared a quarterly cash dividend of $0.30 per share, payable on November 26 to shareholders of record as of November 17. Book value per share increased to $81.12 from $78.04 at the end of the previous quarter.
During the quarter, PennyMac completed the sale of a $12 billion UPB mortgage servicing rights portfolio to Annaly Capital Management while retaining subservicing and recapture activities. The company also repurchased 50,300 shares at an average price of $94.19 per share.
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