Good afternoon, and welcome to the Fourth Quarter 2014 Earnings Discussion for PennyMac Mortgage Investment Trust. The slides that accompany this discussion are available from PennyMac Mortgage Investment Trust website at www.pennymac-reit.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 turn the discussion over to Stan Kurland, PMT's Chairman and Chief Executive Officer.

Thank you, Chris. PMT's diversified investment portfolio continues to generate strong cash flow, which are consistent with our current dividend level, despite fourth quarter earnings that were adversely affected by reduced valuation gains. In addition, we have entered into significant new investments in nonperforming loans and excess servicing spread that we expect will deliver strong contributions to PMT's returns going forward. I would like to begin with the highlights of PMT's fourth quarter on Slide 3. For the fourth quarter, PMT earned $26.5 million in net income or $0.34 per diluted share, which represents an annualized return on equity of 7%. PMT paid a dividend of $0.61 per share in the fourth quarter, and book value declined to $21.18 per share from $21.42 per share at the end of the third quarter. PMT reports results through 2 segments: Investment Activities and Correspondent Production. The Investment Activities segment earned $11 million in pretax income. This represented a meaningful reduction from the third quarter due to the impact of lower current and future home price expectations on the valuation of distressed mortgage loans and a seasonal slowdown in the progression of loans towards ultimate resolution. The Correspondent Production segment earned $900,000 in pretax income, which reflected the highly competitive correspondent market for newly originated conventional conforming loans. Correspondent loan acquisitions totaled $7.3 billion during the fourth quarter, down 10% from the third quarter, primarily resulting from a 21% decline in conventional conforming loan acquisitions. Investments in MSRs and excess servicing spread, or ESS, investments totaled $549 million at year-end, which relates to $63 billion of UPB of servicing. During the quarter, PMT made $32 million of direct investments in MSRs from conventional correspondent production activities, representing $2.9 billion in UPB. Investments in ESS totaled $17 million during the quarter, related to $2.3…

Thank you, Stan. I'd like to begin my comments on Slide 9 and review our investments in distressed whole loans. During the fourth quarter, we acquired $331 million in UPB of nonperforming whole loans from a large bank and entered into an agreement with another large bank to purchase $310 million in UPB of nonperforming loans, which settled in January. These 2 transactions marked the first significant nonperforming loan acquisitions by PMT since the first quarter of 2014. These pools fit well into PMT's portfolio strategy and have attractive characteristics that include high average property values, geographical locations in or close to major cities, equity in a large percentage of underlying properties and significant modification and reperformance opportunities. We continue to see a strong supply of distressed whole loans and remain an active bidder in the distressed market, while we continue to be patient and disciplined in making new investments. We also continue to manage our existing investments of nonperforming and reperforming loans to their optimal resolution. Lets now turn to Slide 10 and review the operational results of our Correspondent Production business. PMT's correspondent acquisitions totaled $7.3 billion in UPB in the fourth quarter, down 10% from the third quarter. Conventional conforming jumbo loan acquisitions were $2.9 billion in UPB, a decrease of 21% from the prior quarter. Correspondent lock volume for the quarter was $7.5 billion in UPB, an 11% decrease from the third quarter. Conventional conforming and jumbo locks were $3.0 billion in UPB, a 20% decrease from the prior quarter. In January, total correspondent loan acquisitions were $2.3 billion in UPB, and interest rate lock commitments were $2.4 billion in UPB. During the fourth quarter, we continued to deliver on initiatives to grow the number of seller relationships and deepen our relationships with existing sellers. We…

Thank you, David. On Slide 15, we show the pretax earnings contribution from each of PMT's segments over the last 5 quarters. In the fourth quarter, pretax earnings totaled $11.9 million, $11 million from Investment Activities and $900,000 from Correspondent Production. Additionally, fourth quarter net income included a tax benefit of $14.6 million. This benefit was related to a loss in the taxable REIT subsidiary and an improvement in that entity's estimated tax rate. Now let's turn to Slide 16 and look at the results of the Investment Activities segment. The Investment Activities segment income is derived from the performance of PMT's investment portfolio. In the fourth quarter, segment revenues totaled $38.8 million, down 55% from the third quarter. The quarter-over-quarter decline in revenues was driven by a decline in net gains on investments, partially offset by increases in net interest income, higher net loan servicing fees and a reduction in expenses, driven by lower management and servicing fees. Net gain on investments, which includes realized and unrealized gains and losses on our distressed loan investments, Agency and non-Agency MBS and excess servicing spread, decreased by 78% from the third quarter. Net gain on investments includes valuation gains on distressed loans of $20.7 million and gains on MBS of $3.4 million, partially offset by valuation losses on retained interest positions of $5.4 million and losses on ESS of $3.0 million. Losses on ESS largely resulted from the reduction in mortgage rates during the quarter and expectations of increased prepayment speeds in the future. As those prepayments occur in future periods, however, PMT receives recapture income. PMT received $1.2 million of recapture income in the fourth quarter. Partially offsetting lower Investment Activities segment revenues was a $2.8 million quarter-over-quarter increase in net interest income due to increased capitalized interest from loan…

Thank you, Anne. PMT continues to grow and diversify its investments. We continue to make new investments and prudently increase our use of leverage, which enhances returns to shareholders. PMT is investing in assets such as MSRs and ESS, which are well positioned in today's low interest rate environment. And we see considerable opportunities for PMT to continue making attractive investments in mortgage-related assets as the U.S. economy strengthens. In closing, we encourage investors with any questions to reach out to our Investor Relations team by e-mail 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.