Stanford Kurland – Chairman and CEO David Spector – President and COO Anne McCallion – CFO

Good afternoon and welcome to the Fourth Quarter 2013 Earnings discussion for PennyMac Mortgage Investment Trust. The slides that accompany this discussion are available from the PennyMac Mortgage Investment Trust website at www.pennymac-reit.com. Before we’d 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, PMT’s Chairman and Chief Executive Officer. Stan?

Thank you, Chris. PMT flashed a successful 2013 with a strong fourth quarter, which is reflected in higher earnings per share and the increase in our quarterly dividend. We continue to grow and diversify PMT’s portfolio of long-term investments, our investments in distressed whole loans continued to perform well and despite various challenges in the mortgage origination market, our correspondent lending business delivered meaningful profits. I would like to begin my comments by reviewing the highlight of PMT’s fourth quarter performance. PMT earned $52.7 million in net income or $0.69 per share in the fourth quarter. Net investment income was $96.1 million driven by positive earnings contributions from both of the company segments investment activities and correspondent lending. As we previously announced PMT declared a dividend for the fourth quarter of $0.59 per share an increase from the prior dividend level of $0.57. The investment activity segment earned $48.4 million in pretax income driven by the solid performance of our portfolio of distressed whole loans valuation gains and higher net loan servicing fees. The correspondent segment earned $6.3 million in pretax income driven by relatively more stable margins and lower fulfillment fee expense. During the fourth quarter PMT completed several important previously announced acquisitions, including investments totaling a $136 million in excess servicing spread and the acquisition of a pool of non-performing whole loans totaling $507 million in unpaid principal balance. Correspondent loan volumes totaled $5.8 billion down 25% from the third quarter and lock volumes totaled $6 billion a decrease of 10% from the third quarter. Higher mortgage rates continued to cause a decline in U.S. mortgage originations for the quarter with the top lenders reporting volume declines in excess of 35%. After the end of the quarter, we completed a notable transaction with the sale in January of…

Thank you, Stan. I’d like to begin my comments from slide 11, and review our recent investments in distressed whole loans. Here we show PMT’s acquisition volume over the last five quarters by unpaid principle balance, in addition to the acquisitions expect in the first quarter. With the acquisition of $507 million in UPB in the fourth quarter, PMT’s distressed whole loans acquired totaled $2.2 billion in UPB in 2013 compared to $1 billion in 2012. Subsequent to the end of the quarter, we entered into an agreement to acquire an additional $351 million in unpaid principle balance of non-performing loans. We expect to see a continued supply of distressed whole loans in the market, but we also anticipate that new buyers will enter the market including REO acquisition vehicles. Let’s move to slide 12 and turn to the correspondent lending results. Correspondent loan acquisitions totaled $5.8 billion in the fourth quarter, a decline of 25% from the prior quarter. Conventional and jumbo loan acquisitions were $2.4 billion, a decline of 33% from the prior quarter. Correspondent lock volume for the quarter was $6 billion, a 10% decline from the prior quarter. Conventional and jumbo locks fell $2.6 billion, a decline of 13% from the prior quarter. For the full year 2013 correspondent acquisitions totaled $31 billion, a 42% increase in 2012. In January loan acquisition volumes were $1.7 billion, while lock volumes totaled $1.5 billion. As Stan discussed higher mortgage rates have slowed refinance activity and industry forecast predict a $1.2 trillion mortgage origination market for 2014. Our correspondent lending business is focusing on a variety of strategic initiatives to grow volume and optimize profitability. As Stan mentioned, the change in mortgage origination landscape has shifted volume to small originators, creating opportunities to focus on the needs of this…

Thank you, David. On slide 16, we show the pretax earnings contribution from each segment in the last five quarters. For the fourth quarter pretax earnings totaled $54.7 million, $48.4 million from investment activities and $6.3 million from correspondent lending. Now let’s turn to slide 17 and look at the results of the investment activity segment. This segment revenue relates to the performance of our investment portfolio including distressed mortgage loans, mortgage servicing rights, excess servicing spread, mortgage-backed securities and retained interest. In the fourth quarter, the investment activity segment revenues totaled $78 million up 16% from the third quarter. Net gain on investments which includes valuation gains on distressed whole loans, excess servicing spread and MBS and retained interest from the jumbo securitization declined 3% from the third quarter. The decline resulted from valuation losses on agency MBS which were partially offset by valuation gains on both performing and non-performing loans and excess servicing spread. Expenses in the segment decreased 4% quarter-over-quarter primarily due to the absence of securitization related expenses in the fourth quarter partially offset by higher servicing expense from a growing servicing portfolio. Now I’d like to turn to slide 18, and dive a little deeper into the performance of the distressed whole loan portfolio in the fourth quarter. PMT’s distressed mortgage loan portfolio generated realized and unrealized gains on mortgage loans totaling $50.6 million in the fourth quarter compared to $48 million in the third quarter. Valuation gains totaled $44.7 million in the fourth quarter compared to $41.9 million in the third quarter. Valuation gains on performing loans totaled $9.9 million in the fourth quarter compared to a $15,000 loss in the third quarter. This improvement was largely driven by higher net valuation gains from performing loans in the portfolio, partially offset by $13.7 million…

Thank you, Anne. As you can see, we are successfully executing PMT’s strategy of building and managing a diversified portfolio of residential mortgage related investments. The excess servicing spread investments completed in the fourth quarter and the sale of performing loans from the distressed portfolio in January are significant new transactions for the company. We believe that the multiple investment strategy approach differentiates PMT, especially in periods of fluctuating interest rates and other market uncertainties. PMT has a track record of successfully investing in and resolving distressed whole loans and strong financial performance overall. I am optimistic about the outlook across all of PMT’s investment strategies and continuing to deliver valuable returns for our shareholders. Finally, we encourage investors with any questions to reach out to our investor relations group by email or phone. Thank you.

This concludes the PennyMac Mortgage Investment Trust fourth quarter earnings discussion. For any questions please visit our website at www.pennymac-reit.com or call our investor relations department at 818-224-7028. Thank you.