Good afternoon, and welcome to the Second Quarter 2017 Earnings Discussion for PennyMac Financial Services, Inc. The slides that accompany this discussion are available from PennyMac Financial's website at www.ir.pennymacfinancial.com. Before we begin, please take a few minutes to read the disclaimer on Slide 2 of the presentation. Thank you. Now, I'd like to turn the discussion over to Stan Kurland, PennyMac Financial's Executive Chairman.

Thank you, Chris. Let's begin with Slide 3. PennyMac Financial’s second quarter results reflect the strength of our platform in a highly competitive market. This quarter we successfully deployed capital from our initial $400 million term note issuance into MSRs resulting from our organic production and into 4 bulk MSR portfolio acquisitions, totaling $16.2 billion in UPB. We also continued to make solid progress building our broker channel, which we will be launching in the fourth quarter. For the second quarter, PennyMac Financial earned pretax income of $58 million and diluted earnings per share of $0.44. Book value increased to $16.40 per share, up from $16.01 per share at March 31st, and from $13.29 at June 30, 2016. Looking at earnings contribution by segment. Our Production segment pretax income was $66.7 million, up 40% from the prior quarter and down 36% from the second quarter of 2016. Total production volume for the quarter was $17.6 billion in UPB, up 18% from the prior period and up 9% from the second quarter of 2016. Total correspondent government and consumer direct locks were $13.5 billion in UPB, up 21% from the first quarter and up 4% from the second quarter of 2016. These results reflect the strong contribution from both the correspondent and consumer direct channels this quarter. The Servicing segment recorded a pretax loss of $11.2 million compared to a pretax gain of $13.4 million in the prior quarter, and a pretax loss of $21 million in the second quarter of 2016. Second quarter Servicing segment results included a loss attributable to MSR valuation related changes resulting from a decline in interest rates. Excluding valuation related changes, pretax income for the Servicing segment was $15.3 million, down 31% from the previous quarter and down 26% from the second quarter of 2016.…

Thank you, Stan. On Slide 9, I would like to begin my remarks by reviewing market share and volume trends across PennyMac Financial’s businesses. PennyMac Financial was the fourth largest producer of mortgage loans in the United States during the second quarter, according to Inside Mortgage Finance. And we estimate that we ended the quarter as the tenth largest servicer. Correspondent production market share for the second quarter was an estimated 11.19%, up from 10.95% in the prior quarter. In our consumer direct business, our market share increased slightly to 0.48%. We estimate that the market share of our loan servicing portfolio grew to almost 2.1% of all mortgage debt outstanding in the United States. And lastly net assets under management by our Investment Management segment was $1.6 billion, essentially unchanged from the prior quarter. Now let's turn to Slide 10 and discuss correspondent production. Correspondent acquisitions by PMT in the second quarter totaled $16.3 billion in UPB, up 17% from the first quarter and up 12% year-over-year. Government loan acquisitions accounted for 64% of total correspondent acquisitions or $10.4 billion in the second quarter, up 12% from the prior quarter and up 10% from the second quarter of 2016. Conventional conforming acquisitions, for which PennyMac Financial performed fulfillment services for PMT, totaled $5.9 billion in the second quarter, up 28% from the prior quarter. Total lock volume for the quarter was $18.2 billion, up 26% from the prior quarter. Seasonally strong home purchase demand was the primary driver of this quarter's correspondent production volume increase. Purchase-money loans accounted for 82% of total correspondent production during the second quarter, up from 73% in the prior quarter. The purchase-money orientation of our correspondent production volume continues to be an important differentiating factor for PennyMac. We also continued to grow our seller…

Thank you, David. Slide 14 is an overview of PennyMac Financial’s results by operating segment. Stan reviewed these figures for the second quarter earlier, and the table shows trends for the last five quarters. Let's now turn to Slide 15 and take a closer look at the results of our Production segment. Production segment revenues were $130 million for the second quarter, up 19% from the prior quarter. Production revenue for PFSI's own account, which includes net gain on mortgage loans held for sale, loan origination fees, net interest income and other revenue, increased 17% from the prior quarter, driven by lock volume growth in both correspondent and consumer direct channels, partially offset by lower margins. Gross margins, which represent the revenue per lock commitment, were 81 basis points, down from 84 basis points in the prior quarter. Revenue per consumer direct lock, adjusted for expected fallout, decreased to 198 basis points from 218 in the prior quarter, while revenue per correspondent lock decreased to 50 basis points from 53 in the prior quarter. Production margins remained at the low end of the ranges that we have seen over the past several quarters. Fulfillment fee revenue was $21.1 million, up 27% from the prior quarter, driven by an increase in conventional loan acquisitions by PMT. The weighted average fulfillment fee rate during the quarter was 36 basis points, unchanged from the prior quarter. Production segment expenses were $63.8 million, a 2% increase from the prior quarter. Let's turn to Slide 16 and review the financial performance of the Servicing segment. Servicing segment revenues were $64.9 million, a decrease of 27% from the prior quarter, primarily resulting from a decrease in net loan servicing fees. Net loan servicing fees totaled $46.9 million for the second quarter compared with $74.2 million in…

Thank you, Andy. PennyMac Financial had a profitable second quarter and has consistently demonstrated an ability to operate successfully in various market conditions. We continued to invest in initiatives to enhance our platform, such as the capabilities we are developing to expand into the broker channel. In addition, we continue to focus on capturing efficiencies across our business to maximize our competitive advantage and returns on equity. We remain confident that these activities will help ensure our company's long-term financial and operational success. Lastly, we encourage investors with any questions to reach out to our Investor Relations team by e-mail or phone. Thank you.

This concludes PennyMac Financial Services, Inc.'s second quarter earnings discussion. For any questions, please visit our website at www.ir.pennymacfinancial.com, or call our Investor Relations department at (818) 264-4907. Thank you.