Looking back on thrifts & mortgage finance stocks’ Q2 earnings, we examine this quarter’s best and worst performers, including PennyMac Financial Services (NYSE: PFSI) and its peers.

Thrifts & Mortgage Finance institutions operate by accepting deposits and extending loans primarily for residential mortgages, earning revenue through interest rate spreads (difference between lending rates and borrowing costs) and origination fees. The industry benefits from demographic tailwinds as millennials enter prime homebuying age, technological advancements streamlining the loan approval process, and potential interest rate stabilization improving affordability. However, significant headwinds include net interest margin compression during rate volatility, increased competition from fintech disruptors offering digital-first experiences, mounting regulatory compliance costs, and potential housing market corrections that could impact loan portfolios and default rates.

The 12 thrifts & mortgage finance stocks we track reported a slower Q2. As a group, revenues missed analysts’ consensus estimates by 3.4% while next quarter’s revenue guidance was 10.1% below.

Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 19.1% since the latest earnings results.

PennyMac Financial Services (NYSE: PFSI)

Founded during the 2008 financial crisis to help address the mortgage market meltdown, PennyMac Financial Services (NYSE: PFSI) is a specialty financial services company that originates, services, and manages investments related to residential mortgage loans in the United States.

PennyMac Financial Services reported revenues of $565.8 million, up 5.4% year on year. This print was in line with analysts’ expectations, but overall, it was a softer quarter for the company with a significant miss of analysts’ net interest income estimates and a significant miss of analysts’ EPS estimates.

“PennyMac Financial generated a 2% annualized return on equity and a 7% annualized adjusted return on equity1 in the second quarter,” said Chairman and CEO David Spector.

The market seems disappointed with the results as the stock is down 28.7% since reporting and currently trades at $61.34.

Read our full report on PennyMac Financial Services here, it’s free.

Best Q2: Arbor Realty Trust (NYSE: ABR)

With roots dating back to 2003 and a focus on the stability of multifamily housing, Arbor Realty Trust (NYSE: ABR) is a specialized lender that provides financing solutions for multifamily and commercial real estate while also originating and servicing government-backed mortgage loans.

Arbor Realty Trust reported revenues of $115.9 million, down 11.1% year on year, outperforming analysts’ expectations by 7.1%. The business had a stunning quarter with a beat of analysts’ EPS estimates and a solid beat of analysts’ net interest income estimates.

Although it had a fine quarter compared to its peers, the market seems unhappy with the results as the stock is down 35% since reporting. It currently trades at $3.12.

Is now the time to buy Arbor Realty Trust? Access our full analysis of the earnings results here, it’s free.

Rocket Companies (NYSE: RKT)

Born in Detroit during the 1980s and evolving into a tech-driven financial powerhouse, Rocket Companies (NYSE: RKT) is a fintech company that provides digital mortgage lending, real estate services, and personal finance solutions through its technology platform.

Rocket Companies reported revenues of $2.76 billion, up 92.9% year on year, falling short of analysts’ expectations by 2.7%. It was a disappointing quarter as it posted EPS in line with analysts’ estimates.

As expected, the stock is down 10.9% since the results and currently trades at $11.79.

Read our full analysis of Rocket Companies’s results here.

WaFd Bank (NASDAQ: WAFD)

Founded in 1917 and rebranded from Washington Federal in 2023, WaFd (NASDAQ: WAFD) is a bank holding company that provides lending, deposit services, and insurance through its Washington Federal Bank subsidiary across eight western states.

WaFd Bank reported revenues of $202 million, up 8.4% year on year. This print surpassed analysts’ expectations by 1.2%. Zooming out, it was a mixed quarter as it also recorded a narrow beat of analysts’ net interest income estimates but EPS in line with analysts’ estimates.

The stock is down 24% since reporting and currently trades at $29.87.

Read our full, actionable report on WaFd Bank here, it’s free.

Franklin BSP Realty Trust (NYSE: FBRT)

Operating as a specialized real estate investment trust (REIT) with roots dating back to 2012, Franklin BSP Realty Trust (NYSE: FBRT) originates and manages a diversified portfolio of commercial real estate debt investments secured by properties in the United States and abroad.

Franklin BSP Realty Trust reported revenues of $58.06 million, up 14.2% year on year. This result missed analysts’ expectations by 28.3%. All in all, it was a mixed quarter for the company.

Franklin BSP Realty Trust had the weakest performance against analyst estimates among its peers. The stock is down 16.8% since reporting and currently trades at $6.27.

Read our full, actionable report on Franklin BSP Realty Trust here, it’s free.

Market Update

Over the past year, investors have been forced to repeatedly answer the same question: what is the market’s biggest risk? The answer has changed several times, and each shift has reshaped market leadership.

Late in 2025 and early 2026, artificial intelligence became the market’s primary uncertainty. Investors questioned whether AI would erode software pricing power and weaken competitive moats as AI made it easier to replicate once-differentiated products.

By the spring, technology took a back seat to geopolitics. The U.S. conflict with Iran briefly became the market’s dominant narrative, raising concerns about oil prices, inflation, and global growth. But as energy markets remained orderly and fears of a prolonged supply disruption faded, investors quickly turned their focus back to fundamentals.

Want to invest in winners with rock-solid fundamentals? Check out our Hidden Gem Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.