PennyMac Financial Reports Strong First Quarter Results
PennyMac Financial has announced solid first quarter financial results, showcasing their ability to generate strong returns even in a volatile market, according to chairman and CEO David Spector.
The company acquired or originated nearly $30 billion in unpaid principal balance (UPB) of loans at higher note rates in the production segment. This strategic move positions their consumer direct division for significant growth when interest rates decline. The production also led to continued growth of their servicing portfolio, which reached $680 billion in UPB by the end of the quarter.
Loan acquisitions and originations, including those fulfilled for PMT, totaled $28.9 billion in UPB. This figure was down 19% from the prior quarter but up 33% from Q1 2024, in line with the overall market trend of total acquisitions and origination volumes, as mentioned by PennyMac’s senior managing director and CFO, Daniel Perotti.
PennyMac achieved an annualized operating return on equity of 15%, driven by the strength of their servicing business and the solid contribution from their production segments despite elevated mortgage rates, as highlighted by Spector.
In Q1 2025, fees from fulfilling correspondent loans for PMT totaled $5.3 million, showing a decrease from the previous quarter but an increase year over year. PMT is expected to retain all jumbo production in Q2 2025, with plans to retain a percentage of total conventional/conforming correspondent production in the future.
The servicing segment operating revenues saw pretax income of $76 million in the first quarter, although this was lower than the previous quarter. The servicing portfolio grew to $680.2 billion in UPB, driven by production volumes that offset prepayment activity.
PennyMac reported a pretax loss of $33.7 million from corporate activities not directly related to production and servicing segments. Despite this, the company ended the quarter with $4 billion of total liquidity.
Spector expressed optimism about PennyMac’s future and highlighted their partnership with the U.S Olympic and Paralympic teams as a strategic move to build brand relevance and engagement. He emphasized the company’s unique position in the industry and their focus on capturing a broader share of MSR owners through sub-servicing.
Looking ahead, Spector believes that PennyMac’s growing portfolio of borrowers stands to benefit from future refinancing opportunities when interest rates decline. The company’s strategic focus on sub-servicing reflects their commitment to diversifying revenue streams and maximizing the value of their servicing platform.