Good afternoon, and welcome to the Third 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, let me remind you that our discussion contains forward-looking statements that are subject to risks identified on Slide 2 that could cause our actual results to differ materially as well as certain non-GAAP measures. Thank you. Now I'd like to begin by introducing David Spector, PennyMac Financial's President and Chief Executive Officer, who will review the company's third quarter 2020 results.

Thank you, Isaac. PennyMac Financial reported an increase in earnings from a record second quarter driven by higher income in both production and servicing. Net income was $535.2 million or diluted earnings per share of $7.03. During the quarter, we issued $500 million of 5.375% senior unsecured notes. Followed by an additional $150 million after quarter end, which I will explain upon later in my presentation. We also repurchased approximately 118,000 shares of PFSI's common stock for an approximate cost of $6.9 million. Book value per share increased 22% to $41.67 from $34.26 at the end of the prior quarter. I'm pleased to note that PFSI's Board of Directors declared a third quarter cash dividend of $0.15 per share. Production segment pretax income was $613.3 million, up 14% from the prior quarter and up 242% from the third quarter of 2019, driven by continued growth in direct lending and strong performance across all channels. Direct lending locks were $16.4 billion in unpaid principal balance, up 26% from the prior quarter and up 153% from the third quarter of 2019. Of these, $10.9 billion were in the consumer direct channel, while $5.5 billion were in the broker direct channel. Government correspondent lock volume was $20.2 billion in UPB, up 56% from the prior quarter and up 27% from the third quarter of 2019. Total production volume for the quarter was $54.2 billion in UPB, up 44% from the prior quarter and up 55% from the third quarter of 2019. And finally, correspondent acquisitions of conventional loans fulfilled for PMT totaled $27.4 billion in UPB, up 45% from the prior quarter and up 64% from the third quarter of 2019. Moving on to Slide 4. The Servicing segment recorded pretax income of $111.7 million, up from a pretax loss of $62.4 million…

Thank you, David. Let's turn to Slide 15. Correspondent acquisition volumes totaled $44.3 billion in UPB in the third quarter, up 48% from the prior quarter and 43% from the third quarter of 2019. 38% of correspondent acquisitions were government loans, and 62% were conventional loans. Government loan acquisitions in the quarter totaled $17 billion in UPB, up 54% from the prior quarter. Conventional correspondent acquisitions, for which PFSI earns a fulfillment fee from PMT, totaled $27.4 billion in UPB, up 45% from the prior quarter and 64% from the third quarter of 2019. Government correspondent locks were $20.2 billion in UPB, up 56% from the prior quarter and up 27% from the third quarter 2019. In October, our correspondent acquisitions totaled $18.7 billion and locks totaled $21.7 billion. Looking at the consumer direct channel in the center column, we originated $6.3 billion in UPB of loans, up 24% from the prior quarter and 138% from the third quarter 2019. Interest rate lock commitments in the third quarter totaled $10.9 billion in UPB, up 22% from the prior quarter and 136% from the third quarter of 2019. In October, our consumer direct originations totaled $2.4 billion in UPB and locks totaled $4.3 billion. The committed pipeline at October 31 was $7.3 billion. Finally, broker direct originations totaled $3.5 billion in UPB in the third quarter, up 34% from the prior quarter and 190% from the third quarter of 2019. Interest rate lock volume was $5.5 billion in UPB, up 34% from the second quarter and 195% from the third quarter of 2019. In October, our broker direct originations totaled $1.4 billion in UPB and locks totaled $2 billion. The committed pipe at October 31 was $2.1 billion. PFSI's production margins remained elevated, especially given the mix shift to consumer and…

Thank you, Doug. On Slide 18, I will discuss our Investment Management segment, then 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. Net assets under management totaled $2.3 billion at September 30, up 2% from June 30, primarily due to the increase in PMT's book value. Investment management revenues were $9.8 million, down from $10.5 million in the prior quarter, which included gains related to PMT shares owned by PFSI. In the third quarter, PFSI did not recognize incentive fees, which we do not expect to resume for some time. Slide 19 summarizes the impact of our hedging results on PFSI's earnings. Our comprehensive hedging strategy is designed to moderate the impact of interest rate changes on the fair value of our MSR asset and also considers production-related income. The fair value of our MSR decreased modestly in the third quarter driven by increased estimates of foreclosure costs impacted by COVID-19. The decrease was partially offset by $9.7 million in hedging and other gains and was more than offset by PFSI's record production income in the quarter. Let's turn to Slide 20 to look at the drivers of profitability and PFSI's Production segment. This slide breaks down the revenue contribution from each of PFSI's loan production channels, net of loan origination expenses, including the fulfillment fees received from PMT for conventional correspondent loans. The direct lending channels have an outsized impact on PFSI's production earnings. Consumer and broker direct represented 21% of fallout-adjusted lock volume in the third quarter but accounted for over 70% of segment pretax income. Production revenue margins remain elevated, especially with PFSI's mix shift to consumer and broker direct. Revenue per fallout-adjusted lock for PFSI's own account was 236 basis…

Thank you, Andy. PennyMac Financial again delivered record earnings in the third quarter driven by increases in income from both our Production and Servicing segments. Record Production income resulted from outstanding performance across all channels and continued growth in our higher-margin consumer and broker direct lending channels. We continue to add capacity for further growth and now have more than 6,000 PennyMac employees throughout our operations across the country. Our Servicing portfolio grew over $400 billion in UPB, thanks to our record production volumes, which more than offset elevated prepayment speeds, and servicing made a significant contribution to the company's earnings driven by COVID-related loss mitigation activities. PennyMac Financial has a long track record of consistent profitability and value creation throughout its history, including more than 7 years as a public company. Our leading loan production business, historically oriented to the purchase market, and our servicing portfolio of nearly 1.9 million customers position the company to succeed across different market environments. The expected growth in direct lending and continued loss mitigation activities in our servicing business are positive trends driving PFSI's success. So while the macroeconomic outlook remains uncertain, we expect PennyMac Financial's exceptional financial performance to persist through 2021. Lastly, we encourage investors with any questions to reach out to our Investor Relations team by e-mail or phone. If any such questions are received, we will post these questions and our answers to our website. Thank you.

This concludes PennyMac Financial Services, Inc.'s third 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.