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TWO Reports Second Quarter 2025 Financial Results

Wider Spreads Lead to Attractive Levered Returns

NEW YORK--(BUSINESS WIRE)-- TWO (Two Harbors Investment Corp., NYSE: TWO), an MSR-focused real estate investment trust (REIT), today announced its financial results for the quarter ended June 30, 2025.

TWO Second Quarter 2025 Earnings Summary

Quarterly Summary

• Reported book value of $12.14 per common share, and declared a second quarter common stock dividend of $0.39 per share, representing a (14.5)% quarterly economic return on book value. For the first six months of 2025, generated a (10.3)% total economic return on book value.⁽¹⁾

• Incurred a Comprehensive Loss of $(221.8) million, or $(2.13) per weighted average basic common share.

• Recorded a contingency liability and related expense of $199.9 million, or $1.92 per weighted average basic common share, related to the company鈥檚 ongoing litigation with PRCM Advisers LLC.⁽²⁾

• Excluding the loss contingency accrual recognized during the quarter:

• Generated a (1.4)% quarterly economic return on book value. For the first six months of 2025, generated a 2.9% total economic return on book value.⁽¹⁾

• Incurred a Comprehensive Loss of $(21.9) million, or $(0.21) per weighted average basic common share.

• Issued $115.0 million aggregate principal amount of 9.375% Senior Notes due 2030 through an underwritten offering for net proceeds of $110.8 million.

• Settled $6.6 billion in unpaid principal balance (UPB) of MSR through two bulk purchases, flow-sale acquisitions and recapture.

• As of June 30, 2025, MSR portfolio had a weighted average gross coupon rate of 3.53% and a 60+ day delinquency rate of 0.82%, compared to 0.85% as of March 31, 2025. For the second quarter of 2025, MSR portfolio experienced a 3-month CPR of 5.8%, compared to 5.3% for the second quarter of 2024.

• Funded $48.6 million UPB in first lien loans and brokered $44.0 million UPB in second lien loans.

鈥淭he combination of our investment portfolio and operating company allows us to be dynamic and responsive as opportunities emerge across the mortgage finance space,鈥� said Bill Greenberg, TWO鈥檚 President and Chief Executive Officer. 鈥淕iven the strength of our platform and the depth of expertise across our team, we are confident in our ability to navigate through changing market cycles, creating long-term value for our stockholders, customers, and business partners.鈥�

鈥淔ixed-income and equity markets proved resilient in the second quarter,鈥� stated Nick Letica, TWO鈥檚 Chief Investment Officer. 鈥淲hile we will continue to be mindful of the many sources of volatility that can impact our portfolio, we believe there is also opportunity in this environment. Spreads for Agency RMBS remain historically wide, and offer good relative value to other high quality spread assets. Our core strategy of low coupon MSR paired with Agency RMBS is well positioned to benefit from both stable prepayments and wide Agency RMBS spreads.鈥�

Operating Performance

The following table summarizes the company鈥檚 GAAP and non-GAAP earnings measurements and key metrics for the second quarter of 2025 and first quarter of 2025:

Portfolio Summary

As of June 30, 2025, the company鈥檚 portfolio was comprised of $11.4 billion of Agency RMBS, MSR and other investment securities as well as their associated notional debt hedges. Additionally, the company held $3.0 billion bond equivalent value of net long to-be-announced securities (TBAs).

The following tables summarize the company鈥檚 investment portfolio as of June 30, 2025 and March 31, 2025:

Financing Summary

The following tables summarize the company鈥檚 financing metrics and outstanding repurchase agreements, revolving credit facilities, warehouse lines of credit, senior notes and convertible senior notes as of June 30, 2025 and March 31, 2025:

Conference Call

TWO will host a conference call on July 29, 2025 at 9:00 a.m. ET to discuss its second quarter 2025 financial results and related information. To participate in the teleconference, please call toll-free (888) 394-8218 approximately 10 minutes prior to the above start time and provide the Conference Code 3889089. The conference call will also be webcast live and accessible online in the News & Events section of the company鈥檚 website at . For those unable to attend, a replay of the webcast will be available on the company鈥檚 website approximately four hours after the live call ends.

About TWO

Two Harbors Investment Corp., or TWO, a Maryland corporation, is a real estate investment trust that invests in mortgage servicing rights, residential mortgage-backed securities, and other financial assets. TWO is headquartered in St. Louis Park, MN.

Forward-Looking Statements

This release includes 鈥渇orward-looking statements鈥� within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Actual results may differ from expectations, estimates and projections and, consequently, readers should not rely on these forward-looking statements as predictions of future events. Words such as 鈥渆xpect,鈥� 鈥渢arget,鈥� 鈥渁ssume,鈥� 鈥渆stimate,鈥� 鈥減roject,鈥� 鈥渂udget,鈥� 鈥渇orecast,鈥� 鈥渁nticipate,鈥� 鈥渋ntend,鈥� 鈥減lan,鈥� 鈥渕ay,鈥� 鈥渨ill,鈥� 鈥渃ould,鈥� 鈥渟hould,鈥� 鈥渂elieve,鈥� 鈥減redicts,鈥� 鈥減otential,鈥� 鈥渃ontinue,鈥� and similar expressions are intended to identify such forward-looking statements. These forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from expected results, including, among other things, those described in our Annual Report on Form 10-K for the year ended December 31, 2024, and any subsequent Quarterly Reports on Form 10-Q, under the caption 鈥淩isk Factors.鈥� Factors that could cause actual results to differ include, but are not limited to: the state of credit markets and general economic conditions; changes in interest rates and the market value of our assets; changes in prepayment rates of mortgages underlying our target assets; the rates of default or decreased recovery on the mortgages underlying our target assets; declines in home prices; our ability to establish, adjust and maintain appropriate hedges for the risks in our portfolio; the availability and cost of our target assets; the availability and cost of financing; changes in the competitive landscape within our industry; our ability to effectively execute and to realize the benefits of strategic transactions and initiatives we have pursued or may in the future pursue; our decision to terminate our management agreement with PRCM Advisers LLC and the ongoing litigation related to such termination; our ability to manage various operational risks and costs associated with our business, including the risks associated with operating a mortgage loan servicer and originator; interruptions in or impairments to our communications and information technology systems; our ability to acquire MSR and to maintain our MSR portfolio; our exposure to legal and regulatory claims; legislative and regulatory actions affecting our business; our ability to maintain our REIT qualification; and limitations imposed on our business due to our REIT status and our exempt status under the Investment Company Act of 1940.

Readers are cautioned not to place undue reliance upon any forward-looking statements, which speak only as of the date made. TWO does not undertake or accept any obligation to release publicly any updates or revisions to any forward-looking statement to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based. Additional information concerning these and other risk factors is contained in TWO鈥檚 most recent filings with the Securities and Exchange Commission (SEC). All subsequent written and oral forward-looking statements concerning TWO or matters attributable to TWO or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above.

Non-GAAP Financial Measures

In addition to disclosing financial results calculated in accordance with United States generally accepted accounting principles (GAAP), this press release and the accompanying investor presentation present non-GAAP financial measures, such as earnings available for distribution and related per basic common share measures. The non-GAAP financial measures presented by the company provide supplemental information to assist investors in analyzing the company鈥檚 results of operations and help facilitate comparisons to industry peers. However, because these measures are not calculated in accordance with GAAP, they should not be considered a substitute for, or superior to, the financial measures calculated in accordance with GAAP. The company鈥檚 GAAP financial results and the reconciliations from these results should be carefully evaluated. See the GAAP to non-GAAP reconciliation table on page 11 of this release.

Additional Information

Stockholders of TWO and other interested persons may find additional information regarding the company at , at the Securities and Exchange Commission鈥檚 internet site at or by directing requests to: TWO, Attn: Investor Relations, 1601 Utica Avenue South, Suite 900, St. Louis Park, MN, 55416, (612) 453-4100.

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View source version on businesswire.com:

Margaret Karr, Head of Investor Relations, TWO, (612) 453-4080, [email protected]

Source: Two Harbors Investment Corp.