PennyMac Financial Services Inc. disclosed its third-quarter 2025 earnings on Wednesday, highlighted by a profit of $181.5 million from July through September — a figure that represented 33% growth from the prior quarter and 162% growth from the same period last year.
The California-based mortgage lender increased its net income during the third quarter through significant revenue growth rather by cutting expenses.
PennyMac posted net revenues of $632.9 million in Q3 2025, up 42% on a quarterly basis and 54% higher on a yearly basis. Expenses rose 8% between the second and third quarters to reach $396.5 million.
“PennyMac Financial delivered outstanding financial and operational results in the third quarter, with an 18 percent return on equity,” David Spector, the company’s chairman and CEO, said in a statement. “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 as our partners increasingly recognize the value of entrusting us with their borrowers’ mortgage experience.
“Our servicing portfolio continues to grow organically, reaching nearly $720 billion in UPB. The strong core performance of the asset was highlighted in the third quarter by the success of our hedging program, which offset MSR fair value declines and demonstrated the financial stability that is central to our operating model.”
PennyMac’s production segment took in $122.9 million in pretax income in Q3 2025, up from $57.8 million in Q2 2025 but slightly below the figure of $129.4 million in Q3 2024. A further boost is expected in the near future after the company launched a suite of non-QM products through its correspondent division in September.
The company’s total loan acquisitions and originations, including those fulfilled through PennyMac Mortgage Investment Trust, fell 4% from the second quarter to $36.5 billion in unpaid principal balance (UPB). But that was still 15% higher compared to the same period last year.
Its correspondents acquired $3.3 billion in UPB of conforming and jumbo loans during the third quarter, up 8% from the second quarter and down 44% from Q3 2024.
PennyMac’s servicing segment continues to fuel growth for the company as a whole. Pretax income rose to $157.4 million, up from $54.2 million in Q2 2025 and $3.3 million in Q3 2024. The company attributed that primarily to reduced losses tied to net valuations.
The company sustained $102.5 million in MSR fair market value losses in the third quarter, but that was largely erased by $98.3 million in hedging gains.
Spector mentioned PennyMac’s early October sale of an MSR portfolio valued at $12 billion in UPB to Annaly Capital Management. Annaly’s presence has skyrocketed since entering the MSR segment in 2020, as it’s now a top 10 servicer of agency mortgage-backed securities.
“Importantly, we retained subservicing and recapture opportunities for this portfolio, accelerating the growth of our capital-light subservicing business and freeing up capital to deploy in new, higher coupon MSRs with greater recapture and return potential,” Spector said.
“This transaction, as well as the share repurchases completed during the quarter at attractive prices, underscore our long-standing track record as best-in-class stewards of stockholder capital, ensuring our balance sheet is optimized for continued execution and growth.”
PennyMac’s servicing portfolio continues to expand, up 2% quarterly and 11% annually to $716.6 billion in UPB at the end of September.
“Our profitability — strengthened by our growing servicing portfolio and industry-leading low-cost structure — is directly amplified by our operational excellence and technological
advantages,” Spector added.
“The increases in efficiency and performance we are seeing across the business, driven by
the integration of artificial intelligence and advanced data optimization tools and accelerated by the adoption of Vesta‘s next-generation origination platform, strategically position us for enduring success.”
