Good afternoon, and welcome to the Second Quarter Earnings Discussion for PennyMac Mortgage Investment Trust. The slides that accompany this discussion are available from PennyMac Mortgage Investment Trust’s 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 Executive Chairman.

Thank you, Chris. Let’s begin with slide 3. PMT reported net income attributable to common shareholders of $38 million, or $0.50 per share, compared to $47.3 million, or $0.68 per share in the prior quarter. The annualized return on average common equity was 10%. Book value per common share increased to $20.79 at quarter end from $20.72 at March 31st, and PMT paid a dividend of $0.47 cents per share for the quarter. PMT reports results through four segments, Credit Sensitive Strategies, which contributed $33 million in pre-tax income; Interest Rate Sensitive Strategies, with a pretax loss of $1.9 million; Correspondent Production, which contributed $16.2 million in pre-tax income; and Corporate, with a pre-tax loss of $13.9 million. Our results this quarter were driven by continued solid results from our GSE credit risk transfer investments and strong performance in our correspondent production business. The performance of our Agency mortgage-backed securities and interest rate hedges worked to substantially offset the market-driven valuation impact on our mortgage servicing rights and excess servicing spread investments as interest rates declined during the quarter. PMT continued its strong pace of capital investment, driven by record conventional acquisition volumes totaling $12.2 billion in UPB, approximately 76% of this quarter’s mortgage production was delivered into CRT investment, which resulted in robust CRT investment growth, as well as new MSR investments on the total volume of conventional loans produced during the quarter. Turning to slide 4, let’s continue our discussion of second quarter highlights. During the quarter, we settled our fifth CRT transaction with a face amount of $933 million, and have begun to deliver loans to Fannie Mae under a commitment for our sixth CRT transaction. In addition, we issued $638 million dollars of four-year term notes to finance PMT’s fourth CRT investment and completed the sale…

Thank you, Stan. Let’s begin with slide 9 for a look at our Correspondent Production highlights. Correspondent acquisitions by PMT in the second quarter totaled $21.7 billion in UPB, up 44% from the prior quarter and 45% year-over-year, split approximately evenly between government-insured and conventional loan acquisitions. Conventional correspondent acquisitions totaled $11.1 billion in UPB, up 34% from the prior quarter and 104% year-over-year. The increase in conventional loan volumes was driven by lower mortgage rates resulting in higher volumes of refinance-purposed mortgages. As part of its correspondent loan acquisitions, PMT acquired conventional loans originated by PFSI totaling $1.1 billion in UPB. These loans were originated through PFSI’s consumer and broker direct channels, and their growth has made PennyMac Financial, PMT’s largest correspondent client. Government loan acquisitions, for which PMT earns a sourcing fee from PennyMac Financial, totaled $10.6 billion in UPB, up from $6.8 billion in the prior quarter and $9.5 billion in the second quarter of 2018. Combined, conventional lock volume totaled $12.6 billion in UPB, up 41% from the prior quarter and 110% from the second quarter of 2018. While the correspondent market as a whole remained competitive, margins improved by four basis points quarter-over-quarter and helped drive improvement of the Correspondent Production segment’s profitability. The weighted average fulfillment fee paid to PFSI to facilitate correspondent loan production was 28 basis points, down from 34 basis points in the previous quarter. We also continued to increase the number of approved correspondent sellers, up to 752 at quarter end, a slight increase from 743 approved sellers at the end of the prior quarter. July’s production volumes continue to reflect strong performance, with total correspondent loan acquisitions and interest rate lock commitments each exceeding 10 billion in UPB. Now let’s turn to slide 10 and discuss PMT’s investments in…

Thank you, David. Let’s turn to Slide 14 and discuss the second quarter’s income and return contributions by strategy. PMT’s activities in the second quarter generated an annualized return on common equity of 10%, net of all expenses. In total, Credit Sensitive Strategies contributed $33 million to pretax income, or a 22% annualized return on equity, for the quarter. Within the segment, CRT investments contributed pretax income of $37.5 million, which I will expand upon in the next slide. Distressed loan and REO investments contributed a $5.3 million pretax loss, primarily driven by expectations for slower home price appreciation and higher resolution costs. Interest Rate Sensitive Strategies, which include the performance of our MSRs, ESS and Agency and non-Agency senior MBS positions, and related interest rate hedges, together contributed a pre-tax loss of $1.9 million, or a negative 1% annualized return on equity, for the quarter. As Stan mentioned earlier, these results were driven by fair value losses on our MSR and ESS investments, which resulted from the decrease in mortgage rates, offset by gains in the fair value of our Agency MBS and other interest rate hedges. While we show the income contribution for each of these interest rate sensitive strategies separately, they are managed together as the interest rate sensitivity of MSRs and ESS is inversely correlated to that of MBS and our other interest rate hedges. Correspondent Production contributed $16.2 million to pre-tax income, or a 17% annualized return on equity for the quarter, driven by an increase in correspondent acquisition volumes and higher margins. The Corporate segment contributed a pre-tax loss of $13.9 million. Lastly, we recorded a $10.9 million benefit for income tax expense, driven by the fair value losses on MSRs which are held in PMT’s taxable REIT subsidiary. Now let’s turn to slide…

Thank you, Andy. This week marks the 10th anniversary of PennyMac Mortgage Investment Trust, and we are proud of our track record in pursuing unique mortgage related investment strategies and delivering attractive risk adjusted returns while preserving shareholder value. Our recent successful capital raises have been driven by PMT's performance and compelling investment outlook. We expect the new investments in CRT and MSRs to be accretive to PMT’s overall return profile and further benefit from increased scale economies, and we remain optimistic about our ability to drive strong returns and shareholder value over the current investment horizon. Lastly, we encourage investors with any questions to reach out to our Investor Relations team by email or phone. Thank you. End of Q&A: This concludes PennyMac Mortgage Investment Trust’s second 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.