Good day, ladies and gentlemen, and welcome to the PennyMac Mortgage Investment Trust First Quarter 2012 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to your host for today, Mr. Stan Kurland, Chairman and CEO.

Thank you. Before we begin, please take a moment to review the forward-looking disclaimer statement on Slide 2. Let's now turn to Slide 3 and review PMT's first quarter of 2012 highlights. The first quarter benefited from solid operational performance across our primary business segments. Our correspondent lending business delivered another outstanding quarter by substantially growing volume and building the necessary infrastructure and relationships essential for future growth. Moreover the performance of our distressed mortgaged investment portfolio was strong with liquidations in modification activity up substantially, underscoring our unique ability to realize attractive returns through monetization of these loans. The quarter's results demonstrates our success in executing on our strategy and realizing our vision to become a leading non-bank financial intermediary and we remain well positioned to capitalize on opportunities before us as the mortgage landscape continues to evolve. Our success in growing our correspondent lending segment is one example that clearly demonstrate our ability to execute on the opportunities available in today's mortgage market and to also deliver attractive returns through the monetization of our investments in distressed mortgage loans. We generated another quarter of strong pretax earnings performance driven by robust growth from our correspondent lending group and higher liquidation activity in our distressed mortgage investment portfolio. We are pleased with both the level and the composition of the first quarter's results and we see opportunity for continued growth in 2012. For the first quarter, PMT reported earnings of $0.65 per diluted share on net income of $19.1 million down slightly from the fourth quarter. Revenue growth for the quarter was strong growing 19% offset by increased expenses and income taxes. Return on average equity for the quarter was 13%, down slightly from the fourth quarter. The Board of Trustees declared a dividend of $0.55 per share for…

Thank you, Stan. As shown on Slide 9, for the first quarter, PMT reported net income of $19.1 million or $0.65 per diluted share on net investment income of $46.6 million. The net income decline of 3% from the fourth quarter of 2011 was largely attributable to a decrease in net gain on investments and an increase in PMT provision for income taxes. The company's correspondent activities are conducted in PMT's taxable REIT subsidiary for we expect PMT's income tax expense to increase as this segment's profit grows. A significant portion of this tax expense relates to the value of the mortgage servicing rights received pursuant to sales of correspondent loans and is deferred rather than payable currently. A major contributing factor to PMT's decline in net gain on investments was that home values underlying our loan portfolio decreased more than projected during the first quarter of 2012 as opposed to home values declining less than projected in the fourth quarter. To a lesser extent, valuations were also down due to a smaller overall portfolio of non-performing loans resulting from PMT's liquidation activity and no acquisitions during the first quarter. Interest income increased 35% over the fourth quarter of 2011 for a couple of reasons. As modifications on non-performing loans are completed, capitalized interest is recognized. Since the first quarter had a large number of modifications, this increased the interest recognized in the period. Note that since our loans are carried at fair value, any change in value between the old bond and the modified bond is included in net gain on investments. Interest income also rose due to the increase in correspondent loans, but earned interest income in inventory as the volume of loans funded increased. Let's turn the page and look at PMT's balance sheet highlights from the…

Thank you, Anne. Let's now turn to Slide 16, to discuss the first quarter operational results of correspondent lending business in greater detail. As Stan and Anne have mentioned the correspondent lending segment is contributing in increasing amount of PMT's pretax income, a direct result of its growing volume. Total correspondent fundings are $1.8 billion during the first quarter compared to $991 million in the fourth quarter, an 81% quarter-over-quarter increase. Conventional corresponding loans with the leading loan product originated during the quarter representing 55% of all fundings. For the month of April, fundings were approximately $800 million with locks eclipsed into $1.3 billion mark. As Stan previously mentioned, we are targeting to reach approximately $1 billion in fundings per month by the end of the second quarter and are currently reevaluating our year-end targets given the current market opportunities. Prime conventional conforming loans funded in the first quarter had weighted average FICO scores of approximately 770 with less than 2.5% having FICO score below 680. You can also see that a large majority of our correspondent productions in California. As we continue to grow our correspondent partnerships across the country we expect greater geographical diversification. Let's now take a closer look at the portfolio of correspondent partners on Slide 17. During the first quarter PMT approved 17 new correspondent partners and deactivated 13. The deactivated clients are typically those who have stopped delivering loans to us or the volume is too low to justify continuation of the relationship. Our current clients consistent mostly of independent mortgage companies with some financial institutions and national builders as well. These companies are partners with PennyMac and show our focus on efficiency and quality control. They also tend to be well established companies with over half of our volume coming from companies with…

We would like to thank all of our current and future shareholders for listening to this earnings presentation. I would like to invite all those investors who have questions to submit them to our Investor Relations department via email or phone. If we receive substantial numbers of questions we will post a question and answer document on our website. We thank you again for your time.