Good afternoon and welcome to the first quarter 2019 earnings discussion for PennyMac Financial Services, Inc. The slides that accompany this discussion are available from PennyMac Financial’s website at 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 first quarter financial results reflect significant interest rate volatility during the quarter that resulted in lower mortgage rates and improving production trends in addition to an adverse impact on the value of our mortgage servicing rights, which were largely offset by the effectiveness of our hedging strategies. For the quarter, PennyMac Financial earned net income of $46.1 million or diluted earnings per share of $0.58. Book value per share increased to $21.72 from $21.34 per share at December 31, 2018. Production segment pre-tax income was $47 million, up 85% from the prior quarter and 174% from the first quarter of 2018, primarily driven by higher volumes and margins in our consumer direct lending channel. Acquisition and origination volume totaled $16.6 billion in UPB, down 15% from the prior quarter but up 16% from the first quarter of 2018. Total correspondent government and non-delegated locks were $7.7 billion in UPB, down 16% from both the prior quarter and the first quarter of 2018. Direct lending locks totaled $2.7 billion in UPB, up 36% from the prior quarter and 57% from the first quarter of 2018. And finally, correspondent conventional loan acquisition volume totaled $8.1 billion in UPB, down 10% from the prior quarter and up 92% from the first quarter of 2018. This volume resulted in $27.6 million of fulfillment fee revenue for the quarter. The servicing segment recorded pre-tax income of $11.2 million, down 62% from the prior quarter and 80% from a year ago, primarily driven by net valuation-related losses in the first quarter, which adversely impacted pre-tax income by $26.3 million or $0.24 per share. Valuation-related items included a $164.9 million decrease in the MSR fair values, largely offset by $134.6 million in hedging gains and $4.1 million…

Thank you, Stan. Let’s start with a review of market share trends across PennyMac Financial’s businesses on Page 7. According to industry data reported by Inside Mortgage Finance, PennyMac Financial remained the eighth largest servicer and was the fourth largest producer of mortgage loans in the first quarter. We estimate that PennyMac’s correspondent market share declined slightly in the first quarter, driven by continued strong competition, while market share in the consumer direct channel grew as a result of increased refinance volumes. Our servicing portfolio continued to grow in the first quarter, and we estimate that we now service almost 3% of all mortgage debt outstanding in the United States, up from 2.7% at December 31, 2018. Lastly, our broker direct lending channel, launched in the first quarter of last year, has grown to nearly 0.5 point of market share over the first full year in operation. Now let’s turn to Slide 8 and discuss correspondent production highlights. Correspondent acquisitions by PMT in the first quarter totaled $15.1 billion in UPB, seasonally down 17% from the prior quarter, while up 15% year-over-year. Government loan acquisitions accounted for 45% of total correspondent acquisitions or $6.8 billion in UPB in the first quarter, down from $8.9 billion in UPB in the prior quarter and $8.8 billion in UPB in the first quarter of 2018. Conventional acquisitions comprised 55% of total correspondent acquisitions or $8.3 billion in UPB, down 10% from the prior quarter, but up 96% year-over-year. Our increased conventional loan volumes have been supported by our unique execution abilities and PMT’s ability to create CRT investments. We continue to focus on growing our non-delegated correspondent volume which increased 45% quarter-over-quarter to $174 million in UPB primarily driven by growth of government non-delegated volume following its release late last year. Total government…

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 first quarter earnings for further details. Slide 13 summarizes the impact of our hedging approach on earnings for the first quarter. Our hedging strategy is designed to moderate the impact of volatility and interest rates on the fair value of the MSR asset. In the first quarter, we recorded fair value losses on our MSR asset totaling $164.9 million, which was driven by expectations for increased prepayment activity in the future due to lower mortgage rates. MSR fair value losses were largely offset by $134.6 million in associated hedging gains and a $4.1 million gain from the change in fair value of the ESS liability. The cost of our hedging approach comprises a portion of the net fair value loss of $26.3 million for the first quarter. PennyMac Financial’s consistent profitability and book value growth across different interest rate environments highlight the importance of our comprehensive approach and expertise in managing interest rate risk. Now let’s turn to Slide 14 and discuss the profitability of our servicing segment. Pre-tax income, excluding valuation-related changes, was $35.3 million, down from an all-time high of $44.5 million in the prior quarter and modestly down from $36.3 million in the first quarter of 2018. Higher operating revenue, driven by portfolio growth, was partially offset by higher realization of cash flows resulting from a larger portfolio and an increasing prepayment activity due to lower mortgage rates. Operating expenses increased only modestly versus a year ago on a dollar basis. As a percentage of the average servicing portfolio UPB, operating expenses were flat to the prior quarter and down significantly from the first quarter of last year, demonstrating the economies of scale we are realizing in servicing. Our pre-tax income, excluding valuation-related changes, included lower EBO-related earnings than in prior periods. EBO-related revenues were modestly lower than the prior quarter and $13 million lower than a year ago due to elevated EBO revenues in the first quarter of 2018, driven by hurricane-related activity. EBO-related expenses were $2.4 million higher than the prior quarter, driven by large EBO volumes, which we expect to benefit future period income. And with that, I would like to turn it back over to Stan for some closing remarks.

Thank you, Andy. This quarter’s results highlight both the ability of our balanced mortgage banking platform to adapt to a changing market environment and our core culture of continuous improvement. We are focused on expense management and greater efficiency across the organization, capturing the benefits of scale and utilizing proprietary and third-party technology solutions to realize competitive advantages through lower costs while maintaining high quality and effectiveness of our operations. We believe these initiatives will further differentiate PennyMac Financial from our competition and further solidify our leadership position in the U.S. mortgage market. Lastly, we encourage investors with any questions to reach out to our Investor Relations team by e-mail or phone. Thank you.

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