Good afternoon and welcome to the fourth-quarter 2019 earnings discussion for PennyMac Financial Services, Inc. The slides that accompany this discussion are available on 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 begin by introducing Stan Kurland, PennyMac Financial's Chairman.

Thank you, Isaac. As I transition in my personal role at PennyMac Financial, I would like to take a moment to reflect on the past 12 years. I'm incredibly proud of the organization we have built and the success we have achieved. And I believe our dedicated employees and the depth of our management team are unmatched in the industry.PennyMac Financial has unique capabilities including its synergistic partnership with Pennymac Mortgage Investment Trust, the REIT that we manage as well as our best-in-class operating platform, which have established this company as a leading mortgage banking enterprise. Our people, platform and governance infrastructure, which includes our focus on risk management, positions us well to sustain our competitive advantage in the residential mortgage market across a variety of economic environments.As I relinquish my day-to-day responsibilities but continue my involvement as chairman of the board, I am confident that the management team will continue to build on the established foundation in place for future growth, while providing superior, long-term returns to our stockholders. I look forward to the continued growth of the company and my ongoing responsibilities as chairman of the board.Now, I'd like to pass the call on to David Spector, PennyMac Financial's president and chief executive officer, who will review the company's fourth-quarter and full-year 2019 results.

Thank you Stan. PennyMac Financial's fourth-quarter earnings reflected exceptional operating performance as we achieved records for the company's pre-tax income and operating earnings for the second consecutive quarter. Our results were driven by outstanding performance in our production segment and improved operating performance in the servicing segment. PennyMac Financial earned net income of $152.7 million or diluted earnings per share of $1.88.Book value per share increased to $26.26, up from $24.37 at the end of the prior quarter. In addition, PFSI's board of directors declared a fourth-quarter cash dividend of $0.12 per share. Production segment pre-tax income was $203.3 million, up 13% from the prior quarter and 700% from the fourth quarter of 2018 driven by record volumes across all of our production channels. Total production volume for the quarter was $42.4 billion in unpaid principal balance, up 22% from the prior quarter and up 118% from the fourth quarter of 2018 bringing the total for the year to $117.6 billion.PFSI's lock volume in the correspondent channel, consisting of government and non-delegated locks, was $16.9 billion in UPB, up 1% from the prior quarter and up 84% from the fourth quarter of 2018. Direct lending locks were a record $6.5 billion in UPB, up 16% from the prior quarter and up 235% from the fourth quarter of 2018. Of this, $5.4 billion went to consumer direct channel while $1.1 billion went to broker direct channel. And finally, correspondent acquisitions of conventional loans fulfilled for PMT totaled $20.5 billion in UPB, up 23% from the prior quarter and up 126% from the fourth quarter of 2018.Continuing on to Slide 4. The servicing segment recorded a pre-tax loss of $5.1 million versus a pre-tax loss of $18.1 million in the prior quarter and a pre-tax income of $29.3 million in the fourth…

Thank you David. Let's begin with a review of market share trends across PennyMac Financial's businesses. According to industry data reported by Inside Mortgage Finance, PennyMac Financial was the third largest producer of mortgage loans in the country in both the fourth-quarter and the full-year 2019. We’ve increased our correspondent acquisitions by 20% in the quarter, driving our market share up to 16.3% from 15.5% in the prior quarter and 14.9% a year ago.We believe our commitment to consistently high service levels, combined with the fast turn times, is a key to our success in winning business from our correspondent seller network, And we expect this to support our market share and industry leadership going forward.We estimate that this quarter, PennyMac Financial's market share in consumer direct reached 0.9%, up from 0.7% last quarter and 0.6% a year ago as the investments we have made in this channel allowed us to capture the larger refinance opportunity provided by low interest rates. Our broker direct channel market position also grew quarter over quarter. And we continued to add approved brokers and fulfillment capacity and benefit from the investments we have made in this channel.As David mentioned, our servicing portfolio continued its growth in the fourth quarter, and we estimate that we now service almost 3.4% of all mortgage debt outstanding in the U.S., up from 3.2% at September 30 and 2.8%, December 31, 2018. Now let's turn to Slide 10 and discuss correspondent production highlights. Correspondent acquisitions by PMT totaled $37.7 billion in UPB in the fourth quarter, up 20% from the prior quarter and 109% from the fourth quarter of 2018. 45% of our acquisitions were government loans, and 55% were conventional loans.Government loan acquisitions in the quarter totaled $16.7 billion in UPB, up 16% from the prior quarter and…

Thank you Doug. Turning to Slide 14, I will highlight results in our investment management segment. Net assets under management totaled $2.5 billion at year end, up 10% from September 30. In the fourth quarter, PMT successfully raised equity capital again with $215 million in net proceeds, the majority of which was raised in December, bringing the total equity raised in 2019 to $830 million.Revenues in PFSI's investment management segment were essentially unchanged as the increase in base management fees was offset by a modest reduction in performance-based incentive fees. Starting on Slide 15, I will highlight some of the key trends and factors in PFSI's financial results. We encourage you to read our press release for more detailed information. This slide summarizes the impact of our hedging results on earnings for the fourth quarter.Our comprehensive hedging strategy is designed to moderate the impact of interest rate changes on the fair value of our MSR asset while also taking into account production-related income.We recorded fair value gains on our MSR asset totaling $160.6 million. These fair value gains were driven primarily by expectations of lower prepayment activity in the future due to higher mortgage rates at year end and were partially offset by faster-than-expected prepayments in the fourth quarter. The fair value gain represented approximately 6% of the MSR fair value at September 30.The MSR fair value gain was more than offset by $194.6 million of hedging and other losses, which include our hedge costs. We incurred higher hedge costs in the fourth quarter due to the market environment and given the strong earnings from our production activities. 2019 was a challenging year for hedging mortgage servicing rights given the volatility in interest rates as evidenced by the 10-year treasury yield which ranged from nearly 3% at the start of…

Thank you Andy. PennyMac Financial delivered outstanding performance across all of its businesses in the fourth quarter and throughout 2019. Book value per share grew 22% for the year driven by record profitability in our production segment and our ability to successfully hedge this interest rate risk inherent in mortgage servicing rights in a year characterized by significant interest rate volatility. Each of our production channels grew market share this year, and substantial growth in our consumer direct lending channel was a major contributor to the company's earnings.Our servicing portfolio also grew more than 20% for the year, while our technology investments continue to drive greater operating efficiency and better service for our 1.8 million customers. With our maturing, balanced business model, the opportunity to continue to capture market share gains across our business and the strong foundation provided by our large and growing servicing portfolio. We expect PFSI to earn a mid-teens return on equity across different market environments. However, we expect PFSI to deliver a higher ROE in 2020.As we conclude this earnings review, I would like to thank Stan for his vision and leadership of PennyMac over the last 12 years. I would also like to express my personal gratitude for his guidance and support and I look forward to working with him closely as he continues his involvement with the company as chairman of the board.Lastly, we encourage investors with any questions to reach out to our investor relations team by email or phone. Thank you. End of Q&A: This concludes PennyMac Financial Services Inc.'s fourth-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.