Good afternoon, and welcome to the First Quarter 2020 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 would like to begin by introducing David Spector, PennyMac Financial's President and Chief Executive Officer, who will review the company's first-quarter 2020 results.

Thank you, Isaac. PennyMac Financial reported record earnings in the first quarter, driven by continued strong production results, combined with substantial gains on our interest rate hedge investments, which more than offset fair value losses on mortgage servicing rights. Net income was $306.2 million or diluted earnings per share of $3.73. Book value per share increased to $29.85, up from $26.26 at the end of the prior quarter.In March, we repurchased approximately 238,000 shares of PFSI's common stock at a cost of $4.1 million and a weighted average price of $17.29 per share. PFSI's Board of Directors declared a cash dividend of $0.12 per share for the first quarter. Production segment pre-tax income was a record $240.1 million, up 18% from the prior quarter and 411% from the first quarter of 2019, driven by record volumes in the direct lending channels and elevated margins across all of our channels. Direct lending locks were a record $9.9 billion in unpaid principal balance, up 38% from the prior quarter and up 229% from the first quarter of 2019.Of these, $7.2 billion were in the consumer direct channel, while $2.8 billion were in the broker direct channel. Correspondent government lock volume was $14.9 billion in UPB, down 8% from the prior quarter and up 101% from the first quarter of 2019. Total production volume for the quarter was $35.4 billion in UPB, down 17% from the prior quarter and up 113% from the first quarter of 2019. And finally, correspondent acquisitions of conventional loans fulfilled for PMT totaled $16.2 billion in UPB, down 21% from the prior quarter and up 99% from the first quarter of 2019.Continuing on to Slide 4. The servicing segment recorded record pre-tax income of $170.8 million versus a pre-tax loss of $5.1 million in the prior quarter and…

Thank you, David. Our correspondent acquisition volumes decreased during the quarter. And based on estimates from inside mortgage finance, our market share in the channel was 15.2%, down from 16% in the prior quarter and up from 13.7% a year ago.While we review market share trends on a quarterly basis, it is important to note the longer-term trends are positive and we remain the largest correspondent aggregator in the U.S. for the third consecutive quarter. We estimate that this quarter, PennyMac's market share in consumer direct reached 1.1%, up from 0.9% last quarter and from 0.7% a year ago as the investments we have made in this channel allow us to continue to capture the large refinance opportunity.Our broker direct channel market position also grew quarter over quarter, reaching an estimated 1.7%, up from 1.4% at December 31 and 70 basis points a year ago as we continue to add approved brokers and fulfillment capacity. As David mentioned, our servicing portfolio continued to grow in the first quarter, and we estimate that we now service over 3.4% of all mortgage debt outstanding in the U.S., up slightly from December 31 and up from 3% at March 31, 2019.Now let's turn to Slide 9 and discuss correspondent production highlights. Correspondent acquisitions by PMT totaled $29.8 billion in UPB in the first quarter, down 20% from the prior quarter and up 100% from the first quarter of 2019. 46% of PMT's acquisitions were government loans and 54% were conventional loans. Government loan acquisitions in the quarter totaled $13.6 billion in UPB, down 18% from the prior quarter and up 102% from the first quarter of 2019.Conventional correspondent acquisitions for which PFSI earns a fulfillment fee totaled $16.2 billion in UPB, down 21% from the prior quarter and up 99% from the first-quarter…

Thank you, Doug. Net assets under management totaled $1.8 billion at March 31st, down 26% from December 31st primarily due to significant noncash fair value losses on PMT's investments in CRT, which resulted in a significant reduction in PMT's shareholders' equity as noted earlier.We believe that PMT's fair value losses on CRT are outsized compared to the additional credit losses PMT expects to incur over the life of these investments. While recent market dislocations have affected competitors and created attractive investment opportunities for PMT and its correspondent production business, we expect PFSI's base management fees will be lower, and we do not expect to receive performance incentive fees for some time as a result of the losses PMT incurred during the first quarter.Starting on Slide 14, 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 first 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 significant fair value losses on our MSR asset in the first quarter totaling $920.3 million. These fair value losses were driven primarily by expectations of increased prepayment activity in the future due to lower interest rates, combined with higher expected servicing costs due to delinquencies and increased returns demanded by market participants. The fair value decrease in the first quarter represented approximately 31% of our MSR fair value at December 31. The MSR fair value loss was more than offset by $1.1 billion of hedging and other gains as our utilization of option coverage for significant movements in rates provided a substantial benefit…

Thank you, Andy. I am very proud of our record quarterly financial performance and success given the significant dislocations resulting from the spread of COVID-19 during this period. Interest rates have fallen to new historic lows, providing a favorable environment for mortgage origination. With certain competitors forced to reduce or limit their participation, PennyMac Financial is capturing elevated production volumes and margins across all three production channels.And I would like to thank everyone of our nearly 4,500 dedicated employees who enthusiastically adapted to working from home. Over the last 12 years, our highly experienced management team has maintained its disciplined approach to interest rate, credit and operational risks, which has proven essential in the current market environment. As a result, PennyMac Financial reported record earnings and 14% book value growth in the first quarter driven by record production segment profitability and outstanding performance from our interest rate hedging strategies, which more than offset significant fair value losses on mortgage servicing rights. Additionally, we recognize that the environment is causing increased hardship to our customers.We are well-positioned as one of the largest and best capitalized independent mortgage producers and servicers in the country to offer and fulfill the forbearance programs needed. PennyMac Financial was quick to incorporate the CARES Act requirements into its technology platform and offer borrowers the ability to request forbearance immediately using the self-service capabilities made available. Our expertise in loss mitigation strategies will help assist our customers to stay in their homes with opportunities for them to refinance or seek modifications to improve their financial well-being. Since the company's founding in 2008, we have successfully navigated periods of market volatility and operational disruptions driven by external influences.And we are confident in our ability to address the current challenges and opportunities presented by the impact of COVID-19. Lastly, we encourage investors with any questions to reach out to our Investor Relations team by email or phone. If any such questions are received, we will post a Q&A to our Web site. 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.