PennyMac Quarterly Net Income Drops to $29 Million as Mortgage Originations Slow

PennyMac Financial Services reported third-quarter 2026 net income of $29 million, sharply below the $182 million recorded a year earlier, as higher borrowing costs and weaker mortgage activity weighed on its loan-production business.

The US mortgage banking company said on October 29 that total net revenue was $469 million, down from $633 million in the same quarter of 2025. Diluted earnings per share were $0.54, compared with $3.37 a year earlier. Adjusted net income, which excludes certain accounting items, was $56 million, or $1.05 per diluted share, on adjusted revenue of $502 million. These adjusted figures should not be presented as the company's reported net income or revenue.

Total loan acquisitions and originations fell 30% from the previous quarter to $24.4 billion in unpaid principal balance. PennyMac's production segment posted a $7 million pretax loss, while its servicing business generated $99 million in pretax income. The contrast highlights how a company that both originates and services mortgages can experience differing results across its operations.

PennyMac said it had agreed after quarter-end to sell mortgage servicing rights linked to $29 billion of loans, with expected proceeds of approximately $490 million. The sale had not yet closed when announced. Management said it planned to use the proceeds primarily to reduce debt and repurchase shares. The company also expects to reduce annualised operating expenses by about $160 million by the first quarter of 2027 relative to the second quarter of 2026.

The company announced leadership changes, including a planned June 2027 retirement for its president and a new chief financial officer from January 2027. Its cost-cutting and asset-sale plans remain subject to execution and market conditions, particularly the direction of mortgage rates and refinancing demand.