Two Harbors Investment Earnings Call Transcripts
Fiscal Year 2026
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Stockholders approved the CCM merger proposal and the adjournment proposal, while the non-binding compensation advisory proposal was not approved. Final voting results will be disclosed in a Form 8-K filing.
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Book value per share fell to $10.57 with a negative 2% economic return, while the MSR strategy outperformed hedged securities. The amended merger agreement with CrossCountry Mortgage increases the cash offer to $11.30 per share, with closing expected in the second half of 2026.
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The meeting was called to order to vote on a merger proposal, but insufficient votes were present. The meeting was adjourned and will reconvene virtually on March 24, 2026 to allow further proxy solicitation.
Fiscal Year 2025
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Announced a merger with UWM, doubling the MSR portfolio and driving Q4 economic return of +3.9%. Book value rose to $11.13 per share, with comprehensive income of $50.4 million. RMBS and MSR segments performed well amid tightening spreads and strong market demand.
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Litigation settlement and portfolio adjustments led to a one-time loss, but excluding this, returns were strong. Sub-servicing and originations businesses are growing, with robust liquidity and a positive outlook for MSR and RMBS strategies.
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Second quarter results were heavily impacted by a $199.9 million litigation accrual, leading to a -14.5% economic return, though core portfolio performance excluding this was stable. Agency RMBS and MSR markets remain attractive, with leverage at 7x and strong liquidity maintained.
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Total economic return was 4.4% for Q1 2025, with book value rising to $14.66 per share and comprehensive income of $64.9 million. Risk and leverage were reduced amid volatility, but return potential is higher due to wider spreads, and the dividend remains well-supported.
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Industry leaders discussed the evolving mortgage finance landscape, highlighting macroeconomic uncertainty, resilient housing, and attractive MSR opportunities. Conservative risk management and dynamic hedging remain priorities, while GSE policy changes are seen as unlikely in the near term.
Fiscal Year 2024
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Book value per share declined to $14.47, with a flat quarterly economic return and 7.0% for the year. MSR portfolio integration and new origination platforms supported stable returns, while risk management focused on interest rate volatility and balanced capital allocation.
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Rebranded as "Tu" with a strategic focus on MSR, achieving a 1.3% quarterly economic return and 7.0% YTD. Book value declined to $14.93 per share, while market volatility and wider mortgage spreads post-quarter present new investment opportunities.
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Book value per share declined to $15.19, with a flat total economic return for Q2. MSR and agency RMBS portfolios were actively managed, leverage increased to 6.8x, and return outlook remains optimistic amid expectations for Fed rate cuts and lower volatility.