Good afternoon, and welcome to the Fourth Quarter 2018 Earnings Discussion for PennyMac Financial Services, Inc. The slides that accompany this discussion are available from PennyMac Financial's website at www.ir.pennymacfinancial.com. Before we begin, please take a few moments to read the disclaimer on Slide 2 of the presentation. Thank you. Now I'd like to turn the discussion over to Stan Kurland, PennyMac Financial's Executive Chairman.

Thank you, Chris. Let's begin with Slide 3. PennyMac Financial's results reflect the strength of our balanced mortgage banking business platform to drive solid results in a market environment characterized by continued rising interest rates and a somewhat smaller purchase-oriented mortgage production market. PennyMac financial earned pretax income of $58.3 million and diluted earnings per share of $0.63. Fourth quarter results included a benefit from the remeasurement of state tax-related items totaling $0.11 per share. Additionally, our tax provision rate was reduced to 26.9% from 27.4%. Book value per share increased to $21.34 from $20.67 per share at September 30. Pro forma to adjust for the impact of the company's corporate reorganization completed in November 2018. During the fourth quarter, we repurchased approximately 24,000 shares of PFSI common stock at a cost of $500,000, representing a weighted average price of $19.75 per share. Production segment pretax income was $25.4 million, down 1% from the prior quarter and 54% from the fourth quarter of 2017. Acquisition and origination volume totaled $19.4 billion in UPB, up 8% from the prior quarter and 14% from the fourth quarter of 2017. Total correspondent government, nondelegated and direct lending locks were $11.2 billion in UPB, down 1% from the prior quarter and 5% from the fourth quarter of 2017. The Servicing segment recorded pretax income of $29.3 million, down 13% from the prior quarter and 8% from the fourth quarter of 2017. Excluding valuation-related items, pretax income for the Servicing segment was $44.5 million, up 49% from the third quarter and 57% from the fourth quarter of 2017. Valuation-related items for the third quarter included a $67.2 million decrease in MSR fair values, partially offset by a $59.8 million increase from associated hedging activities. We continue to grow our Servicing portfolio, which totaled $299.3 billion…

Thank you, Stan. On Slide 8, let's begin with the review of market share and volume trends across PennyMac Financial's businesses. According to fourth quarter industry data reported by Inside Mortgage Finance, PennyMac Financial remained the eighth largest servicer and became the third largest producer of mortgage loans. PennyMac increased its correspondent market share by over 3 percentage points during the fourth quarter, growing production volumes, while many of the larger correspondent channel participants saw their volumes decrease. Production volume this quarter was driven by strong growth on behalf of PMT in conventional conforming activity, from which it creates and retains attractive credit risk transfer and MSR investments. Turning to Consumer Direct, our market share increased this quarter despite a modest quarter-over-quarter volume decrease as the overall retail market decreased even more. We estimate that our Servicing portfolio now represents over 2.7% of all mortgage debt outstanding in the U.S. at quarter-end, up from 2.6% at September 30. Finally, net assets under management in our Investment Management business were $1.6 billion, essentially unchanged from the prior quarter. Now let's turn to Slide 9 and discuss correspondent production highlights. Correspondent acquisitions by PMT in the fourth quarter totaled $18.1 billion in UPB, up 9% from the prior quarter and up 17% from the fourth quarter of 2017. Government loan acquisitions accounted for 49% of total correspondent acquisitions or $8.9 billion in UPB in the fourth quarter, down slightly from $9 billion in UPB in the prior quarter and down $9.5 billion in UPB in the fourth quarter of 2017. Conventional conforming acquisitions, for which PennyMac Financial performed fulfillment services for PMT, totaled $9 billion in UPB, up 21% from the prior quarter and up 54% year-over-year. As I mentioned earlier, this volume supports PMT's creation of long-term investments in CRT from…

Thank you, David. I will highlight some of the key trends and factors in our financial results on the next couple of slides. We encourage you to read our press release on fourth quarter earnings for further details. Slide 14 summarizes the impact of our hedging approach on earnings for the fourth quarter and full year. Our hedging strategy is designed to moderate the impact of volatility and interest rates on the fair value of the MSR asset. In the fourth quarter, we recorded fair value losses on our MSR asset totaling $67.3 million, which resulted from expectations for increased prepayment activity in the future, driven by lower mortgage rates at the end of the fourth quarter. MSR fair value losses were largely offset by $59.8 million in associated hedging gains and $0.5 million decrease in the fair value of the ESS liability. While there was significant volatility in interest rates throughout 2018, PennyMac Financial's approach to hedging the MSR asset was successful as we recorded a $34.1 million gain in the MSR fair value, net of hedges and the ESS liability. Now let's go to Slide 15 and review the profitability of our Servicing segment. Pretax income, excluding valuation-related changes, was $44.5 million, up from $29.9 million in the prior quarter and $28.2 million in the fourth quarter of 2017. This core operating profitability of our Servicing segment has increased considerably over the last several quarters and reached its highest level thus far in the fourth quarter of 2018. Operating revenue increased by approximately $20 million quarter-over-quarter, driven by the 5% growth in our Servicing portfolio due to organic production activity and the bulk MSR acquisitions completed during the quarter. Operating expenses were flat to the prior quarter on a dollar basis and down as a percentage of our Servicing portfolio's average UPB. Credit losses and the provision for defaulted loans were in line with prior period levels. EBO-related revenue decreased from the prior quarter as a result of higher average interest rates during the fourth quarter. As David mentioned, higher mortgage rates also reduced the population of loans eligible for buyout, resulting in fewer buyouts and lower transaction-related expenses. Interest expense decreased by $4 million quarter-over-quarter. Interest expense in the third quarter was elevated due to the accelerated recognition of costs related to the refinancing of MSR-backed term notes. Overall, the core financial performance of our Servicing business remains strong, and we are confident that investments we are making in our operations to capture greater efficiencies and scale will deliver meaningful cost savings in the future. And with that, I would like to turn it back over to Stan for some closing remarks.

Thank you, Andy. PennyMac Financial is well-positioned for growth in 2019 as we continue to pursue opportunities we find attractive. We are proud of both a firm-wide effort that resulted in the company becoming the first nonbank lender to directly offer its customers a HELOC product and the launch of a prime non-QM loan product in our correspondent channel. We continue to realize operational efficiencies across our enterprise, such as in our Servicing business, as our investments in technology and portfolio growth add to greater efficiency and scale, driving improved operating profits. We remain focused on further development of our direct lending channels and building out our product menu to provide mortgage solutions that meet our customers' evolving financial needs. Our scale, platform and ability to adapt to a changing market environment are reasons why we expect to be a beneficiary of market consolidation and continue delivering strong financial performance in the future. Lastly, we encourage investors with any questions to reach out to our Investor Relations team by email or phone. Thank you.

This concludes PennyMac Financial Services, Inc.'s fourth quarter earnings discussion. For any questions, please visit our website at www.ir.pennymacfinancial.com or call our Investor Relations department at (818) 264-4907. Thank you.