Good afternoon and welcome to the third quarter 2016 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 begin, please take a few moments to read the disclaimer on slide two 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. For the third quarter, PMT reported net income of $35.4 million, or $0.49 per diluted share, representing an annualized return on equity of 10%. PMT paid a dividend of $0.47 per share for the quarter, and book value per share increased to $20.21 at quarter end, from $20.09 at June 30. PMT’s third quarter results represent a significant improvement over recent quarters. Our results were driven by strong contributions from our correspondent production business and GSE credit risk transfer investments. The performance of our distressed loan investments improved, yet these investments underperformed our expectations primarily resulting from lower than expected REO proceeds on loans transitioning from foreclosure to REO, higher defaults on performing loans and fewer loans transitioning from foreclosure to REO. PMT reports results through two segments: Investment Activities and Correspondent Production. The Investment Activities segment reported pretax income of $13.6 million in the third quarter. The Correspondent segment reported pretax income of $31.4 million for the quarter. Our third quarter results include continued investment in GSE credit risk transfers and mortgage servicing rights resulting from PMT’s correspondent production business. Conventional correspondent loan production totaled $7.3 billion, up 40% from the second quarter. CRT deliveries for the third quarter totaled $3.6 billion in UPB, resulting in $90 million of new CRT investments. We completed our third CRT commitment with Fannie Mae and entered into a fourth commitment for $7.5 billion in unpaid principal balance. In addition, we added $78 million in new mortgage servicing rights. We also repurchased approximately 1 million of PMT’s common shares at a cost of $14.4 million. Since the program’s inception last year, PMT has repurchased 8.4 million shares, with $85 million of authorized repurchases remaining under the $200 million program. Cash proceeds from the liquidation and paydown of distressed mortgage loans…

Thank you, Stan. Let’s turn to slide 11 and discuss the resolution activity on PMT’s distressed whole loan investments. Here we show the five-quarter trend for distressed loan resolutions, which include liquidation and modification activities, and totaled $233 million in UPB during the third quarter. Modifications totaled $121 million in UPB during the quarter and comprised 52% of total resolution activity, compared to 37% in the second quarter and 37% in the third quarter a year ago. Our focus on driving reperformance through loss mitigation programs results in positive outcomes for both the homeowner and PMT, generally allowing homeowners to remain in their home with improved mortgage terms and helping to expedite PMT’s transition out of distressed loan investments. Since the beginning of the year we have placed increased emphasis on using streamlined modification programs offered through the Home Affordable Modification Program, commonly referred to as HAMP, in addition to proprietary modification programs to help more borrowers qualify for a modification. Streamlined modification programs are helpful because they eliminate income documentation requirements and move borrowers into a trial modification once they make their first modified payment. At September 30, streamlined modifications for the third quarter totaled $78 million in UPB, up from $38 million from the prior quarter. Liquidation activities totaled $105 million in UPB, down from $151 million in the second quarter, and comprised 45% of total resolutions. Liquidation activities include payoffs, foreclosure sales to third parties, short sales and sales of REO properties to third parties. Let’s take a closer look at REO activity. In the third quarter, REO property sales were $76 million, down from $110 million in the prior quarter, and comprised 33% of total resolution activity. REO property sales decreased as a percentage of total resolutions due to a reduction in inflow of REO properties…

Thank you, David. On slide 16 we show the pretax income contributions from each of PMT’s segments over the last five quarters. As Stan mentioned earlier, PMT’s third quarter pretax income totaled $45 million, comprised of $13.6 million in pretax income from Investment Activities and $31.4 million of pretax income from Correspondent Production. Now let’s turn to slide 17 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 third quarter, investment segment revenues totaled $41.3 million, an increase of $31.9 million from the second quarter. The quarter-over-quarter increase in revenues was driven by a $29.8 million increase in net gain on investments and a $2.6 million increase in net interest income related to higher modification activity. Our investments generated a net gain of $14.3 million in the third quarter, compared with a net loss of $15.5 million in the second quarter. Net gains on investments for this quarter were driven primarily by an $18.5 million gain on CRT transactions resulting from credit spread tightening and a larger investment position. These results were partially offset by a $3.4 million loss on the distressed loan portfolio, which I will discuss in further detail on slide 19, and a $2.8 million loss related to excess servicing spread, net of recapture income. Net loan servicing fees derived from PMT’s investments in MSRs were $15.8 million in the third quarter, up slightly from $15.7 million in the second quarter. Net loan servicing fees included $34.3 million in servicing fees and $409 thousand of MSR recapture income, reduced by amortization of $17.9 million. Net loan servicing fees also included $3.5 million of provisioning for impairment and $3.2 million of fair value losses related to MSRs, partially offset by $5.6…

Thank you, Anne. PMT remains uniquely positioned to access investment opportunities that result from our correspondent production activities, including GSE credit risk transfers and excess servicing spread, which are made possible through PennyMac Financial’s specialized capabilities as our manager and service provider. We continue to transition capital over time into these opportunities and away from distressed loan investments, which represent a decreasing allocation of PMT’s equity. We also continue to evaluate repurchasing our common shares, where we believe the return is superior to other investment opportunities. We believe that these strategies have the potential to produce earnings over time in line with our current dividend level. Lastly, we encourage investors with any questions to reach out to our Investor Relations team by email or phone. Thank you.

This concludes the PennyMac Mortgage Investment Trust third 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. Q -