Financial Instruments and Debt - The company has issued $261.9 million in aggregate principal amount of 6.25% convertible senior notes due January 2026, with obligations to repay if not converted[101]. - The company engages in hedging transactions that may expose it to contingent liabilities, potentially affecting financial results and cash available for distribution[105]. - The company employs various interest rate risk management techniques, including entering into derivative and non-derivative instruments to hedge against interest rate changes[291]. - The company enters into interest rate derivative contracts to minimize fluctuations in earnings or market values on certain assets or liabilities, including the loan origination pipeline[381]. - The Company finances investment securities and MSR through repurchase agreements, generally considered short-term debt[386]. - The Company has three repurchase facilities secured by variable funding notes collateralized by portions of its MSR portfolio[422]. Interest Rate Risks - An increase in short-term interest rates could reduce the spread between returns on assets and borrowing costs, adversely affecting profitability[102]. - Rising interest rates may reduce the demand for mortgage loans, adversely affecting the availability of target assets and the company's ability to generate income and pay dividends[130]. - Interest rate sensitivity analyses indicate that changes in interest rates can significantly impact annualized net interest income and portfolio value, with scenarios modeled for +/− 25 and 50 basis points[302]. - The company’s operational efficiency and profitability may be adversely affected by rising interest rates, impacting its loan origination platform[290]. - The company’s interest rate risk management strategy aims to improve risk-adjusted returns and mitigate the impact of changing interest rates on investment values[292]. Cybersecurity and Compliance - The company is highly dependent on information technology, and any security breaches could materially impact financial results and stock price[103]. - The company may incur significant expenses related to cybersecurity measures and compliance with evolving regulations[104]. - Compliance with GSE guidelines is essential for maintaining approval to manage MSR and service mortgage loans; failure could result in termination of status[110]. Mortgage Servicing Rights (MSR) and Assets - The company holds $3.0 billion in mortgage servicing rights (MSR) reported at fair value, with significant unobservable inputs including prepayment speeds and option-adjusted spread[327]. - The fair value of MSR is influenced by changes in interest rates, with an expected increase in fair value in a rising interest rate environment due to decreased prepayment rates[311]. - The company retains the risk of potential credit losses on mortgage loans held-for-sale and loans underlying non-Agency securities, maintaining a low to moderate risk profile[316]. - The estimated fair value of mortgage loans held-for-sale fluctuates primarily due to changes in interest rates, with a decrease expected in a rising rate environment[312]. Financial Performance and Equity - Net income for 2024 was $298,168, a significant recovery from a net loss of $(106,371) in 2023[337]. - Basic earnings per share improved to $2.41 in 2024 from a loss of $(1.60) in 2023[337]. - Stockholders' equity decreased from $2,203,390 in 2023 to $2,122,509 in 2024, a decline of about 3.7%[334]. - The company declared common dividends of $187,906 in 2024, down from $192,220 in 2023[339]. Acquisitions and Goodwill - The company completed the acquisition of RoundPoint Mortgage Servicing LLC, which is expected to enhance its mortgage servicing capabilities[347]. - The total goodwill from the RoundPoint acquisition was calculated at $27.5 million, primarily due to expected synergies and benefits from in-house servicing[415]. - The Company recognized $1.3 million in acquisition-related costs for the year ended December 31, 2023[417]. Regulatory and Legal Risks - The company faces risks from third-party service providers, which could adversely affect business operations and financial condition[108]. - The company may face representation and warranty risk related to the ownership of MSR and prior securitization transactions, which could lead to obligations to repurchase mortgage loans or indemnify investors for losses[116]. - Certain provisions of Maryland law may inhibit changes in control, potentially deterring acquisition proposals[133]. Market Conditions and Valuation - A significant portion of the company's assets are classified as "available-for-sale," and declines in market values could adversely affect stockholders' equity and earnings[119]. - The market price of the company’s common stock may be highly volatile, influenced by changes in financial estimates and general economic conditions[145]. - The company’s qualification as a REIT may depend on the accuracy of legal opinions regarding the treatment of its securities for tax purposes[155].

Core Viewpoint - T2 Metals Corp. has reported significant assay results from its Q4 2024 drill program at the Sherridon VMS Project in Manitoba, highlighting high-grade copper, zinc, gold, and silver mineralization, particularly from the Lost Lake prospect [2][6][12]. Group 1: Drill Program Overview - The Q4 2024 drill program consisted of nine holes, with assay results from the final seven holes indicating substantial mineralization in six of them [2][3]. - The drilling aimed to extend known mineralization and explore undrilled downhole EM anomalies across a 5 km trend [3][6]. Group 2: Significant Drill Results - Notable intersections include: - SHN24015: 6.62 m grading 2.09% Cu, 2.41% Zn, 1.0 g/t Au, and 18.5 g/t Ag [4]. - SHN24016: 4.69 m grading 1.61% Cu, 1.20% Zn, 0.4 g/t Au, and 10.6 g/t Ag [4]. - SHN24012DPN: 1.75 m grading 0.38% Cu, 0.24% Zn, 1.1 g/t Au, and 8.2 g/t Ag [4]. - The results confirm the presence of high-grade polymetallic mineralization extending 250 m down plunge from the Lost Lake historical resource [12][10]. Group 3: Future Exploration Plans - A winter drilling program for Q1 2025 is planned, with the company fully funded for this initiative [6][9]. - The company is prioritizing new areas for testing using combined geophysics, geochemistry, and geological interpretation [9][12]. Group 4: Historical Context - The Sherridon area has a significant mining history with five near-surface copper-rich historical mineral resources [6][22]. - Historical mining at the site yielded 7.74 million tonnes at an average grade of 2.46% Cu, 2.84% Zn, 0.6 g/t Au, and 33 g/t Ag between 1931 and 1951 [22].

Core Viewpoint - The article emphasizes the importance of value investing and highlights Two Harbors Investments Corp (TWO) as a strong candidate for value investors due to its favorable valuation metrics and earnings outlook [2][3][6] Valuation Metrics - Two Harbors Investments Corp has a Price-to-Book (P/B) ratio of 0.87, which is attractive compared to the industry average of 0.94 [4] - The P/B ratio for TWO has fluctuated between a high of 0.92 and a low of 0.74 over the past year, with a median of 0.81 [4] - The company also has a Price-to-Cash Flow (P/CF) ratio of 4.19, significantly lower than the industry average of 11.64, indicating potential undervaluation [5] - TWO's P/CF has ranged from a high of 9.69 to a low of -16.47 in the past 12 months, with a median of 4.13 [5] Investment Outlook - The combination of TWO's strong earnings outlook and attractive valuation metrics suggests that it is likely undervalued at the moment, making it a compelling option for value investors [6]

January 30, 2025 Safe Harbor Statement FORWARD-LOOKING STATEMENTS This presentation of Two Harbors Investment Corp., or TWO, includes "forward-looking statements" 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 "expect," "target," "assume," "e ...

Core Insights - Two Harbors Investments (TWO) reported a revenue of $-34.89 million for the quarter ended December 2024, indicating a year-over-year decline of 23.6% [1] - The earnings per share (EPS) for the same period was $0.20, a significant improvement compared to -$0.11 a year ago [1]

Financial Performance - Reported book value of $14.47 per common share, with a fourth quarter common stock dividend of $0.45 per share, resulting in a flat quarterly economic return on book value[5] - Incurred a comprehensive loss of $(1.6) million, or $(0.03) per weighted average basic common share, for the fourth quarter of 2024[5] - Generated a total economic return on book value of 7.0% for the year 2024[5] - Net income attributable to common stockholders for Q4 2024 was $264,945 thousand, a turnaround from a loss of $(444,693) thousand in Q4 2023, with basic earnings per share at $2.54 compared to $(4.56) in the prior year[33] - Comprehensive income attributable to common stockholders for Q4 2024 was $(1,620) thousand, a decrease from $38,886 thousand in Q4 2023, while the year-end comprehensive income was $107,581 thousand compared to a loss of $(49,723) thousand in 2023[33] Mortgage Servicing Rights - Settled $9.2 billion in unpaid principal balance (UPB) of mortgage servicing rights (MSR), comprising 28,093 loans, through acquisitions and recapture[5] - The MSR portfolio had a 3-month CPR of 4.93%, a weighted average gross coupon rate of 3.46%, and a 60+ day delinquency rate of 0.90%[5] - The company reported a mortgage servicing rights fair value of $2,994,271 thousand as of December 31, 2024, down from $3,052,016 thousand in 2023[32] Capital Management - The company actively managed its capital structure by repurchasing 485,609 shares of preferred stock and $10.0 million principal amount of convertible senior notes due 2026[5] - Total borrowings as of December 31, 2024, amounted to $9.09 billion, with a weighted average borrowing rate of 5.15%[16] - Total borrowings decreased from $15,171,186 thousand as of September 30, 2024, to $13,849,914 thousand as of December 31, 2024, representing a reduction of approximately 8.7%[17] - The debt-to-equity ratio improved from 4.6:1.0 in Q3 2024 to 4.3:1.0 in Q4 2024, indicating a stronger equity position relative to debt[17] - The annualized cost of financing decreased from 6.17% in Q3 2024 to 5.79% in Q4 2024, reflecting improved financing conditions[17] Asset and Liability Management - Total assets decreased from $13,138,800 thousand in 2023 to $12,204,319 thousand in 2024, a reduction of about 7.1%[32] - The total liabilities decreased from $10,935,410 thousand in 2023 to $10,081,810 thousand in 2024, a decline of approximately 7.8%[32] - The fair value of available-for-sale securities decreased from $8,327,149 thousand in 2023 to $7,371,711 thousand in 2024, a decline of approximately 11.5%[32] - Cash and cash equivalents decreased from $729,732 thousand in 2023 to $504,613 thousand in 2024, a decline of approximately 30.9%[32] Income and Expenses - Net interest income for Q4 2024 was $(34,894) thousand, a decrease from $(45,679) thousand in Q4 2023, while net interest expense for the year ended 2024 was $(157,654) thousand compared to $(162,861) thousand in 2023[33] - Net servicing income for Q4 2024 was $162,993 thousand, slightly down from $166,580 thousand in Q4 2023, with total servicing income for the year at $661,579 thousand, up from $590,289 thousand in 2023[33] - Total other income for Q4 2024 was $220,387 thousand, a significant recovery from a loss of $(538,104) thousand in Q4 2023, while the year-end total other income was $6,823 thousand compared to a loss of $(395,643) thousand in 2023[33] - Dividends declared per common share remained stable at $0.45 for both Q4 2024 and Q4 2023, with total dividends for the year at $1.80, down from $1.95 in 2023[33] - Interest income for Q4 2024 was $103,774 thousand, down from $122,401 thousand in Q4 2023, while total interest income for the year was $450,152 thousand compared to $480,364 thousand in 2023[35] - Interest expense for Q4 2024 was $138,668 thousand, a decrease from $168,080 thousand in Q4 2023, with total interest expense for the year at $607,806 thousand compared to $643,225 thousand in 2023[35] Future Outlook - The company will host a conference call on January 30, 2025, to discuss its fourth quarter 2024 financial results[23] - Earnings available for distribution to common stockholders for Q4 2024 was $21,181 thousand, an increase from $13,186 thousand in Q3 2024, with earnings per share available for distribution at $0.20 compared to $0.13[37] - The company reported a significant unrealized loss on available-for-sale securities of $(266,565) thousand in Q4 2024, contrasting with a gain of $483,579 thousand in Q4 2023[37] Portfolio Overview - Total portfolio value as of December 31, 2024, was $14.84 billion, down from $16.45 billion as of September 30, 2024[10] - The weighted average cost basis for Agency RMBS was $101.17 as of December 31, 2024, compared to $101.39 as of September 30, 2024[12] - The company launched a direct-to-consumer recapture originations platform, funding $64.3 million UPB in first lien loans and brokering $40.2 million UPB in second lien loans[5]

Company Overview - Two Harbors Investment Corp. (NYSE:TWO) benefits from the current housing market gridlock, which has resulted in low transaction volumes and increased stability from longer duration assets [2][3] - The company operates primarily in two lines of business: Agency RMBS and mortgage servicing rights (MSRs), which constitute the majority of its balance sheet [5] Market Conditions - The housing market is experiencing a gridlock as potential sellers are reluctant to sell due to low existing mortgage rates, leading to frustration among homebuyers [1] - Mortgage rates have risen to around 7%, but existing mortgages are predominantly at lower rates (2%-5%), causing borrowers to hold onto their mortgages longer [8][10] Financial Performance - Two Harbors has a series of fixed-to-floating preferreds that, upon conversion, would yield between 9.6% and 10.5% based on current SOFR [3] - The company has extended the duration of its assets, providing greater visibility into future cash flows, which are sufficient to cover preferred dividends [3][14] Preferred Shares Analysis - The preferred shares of Two Harbors are trading at discounts to par, allowing for potential capital appreciation in addition to high yields [4][20] - The preferreds are seen as stable investments despite the high leverage of the company, which typically implies higher risk [3][4] Prepayment Sources - Prepayment sources such as voluntary early payment, refinancing, and defaults are currently at abnormally low levels, extending the duration of 30-year mortgages [9][12] - The low prepayment rates benefit MSRs, as the company collects fees for a longer duration on serviced mortgages [13] Preferreds Details - The preferreds include TWO-A, TWO-B, and TWO-C, each with different characteristics regarding yield and conversion dates [15][19] - TWO-A has the largest adjustment over SOFR, making it the most incentivized for redemption, while TWO-B offers significant capital appreciation potential due to its large discount to par [17][18] - TWO-C has an earlier conversion date, providing a competitive yield and likely larger dividends in the near term [19]

Core Viewpoint - T2 Metals Corp. has reported promising initial assay results from its Q4 2024 drill program at the Sherridon VMS Project in Manitoba, highlighting high-grade copper and other metals, indicating potential for further discoveries in the area [2][3][8]. Drilling Program Highlights - The first two holes of a nine-hole drilling program have been completed, with SHN24014 intersecting high-grade copper over a significant interval, including 3.56 meters grading 2.50% Cu, 5.31% Zn, 1.00 g/t Au, and 21.8 g/t Ag [2][5][8]. - The second hole, SHN24013, did not intersect the target horizon, while SHN24014 was drilled southeast of the Lost Lake Historical Mineral Resource [5][6]. - The 2024 drill program aims to test and extend known mineralization and VTEM anomalies in geologically prospective locations [6][12]. Future Plans - Planning is underway for a Q1 2025 drilling program, which will commence when winter conditions permit, and the company is fully funded for this initiative [4][12]. - Additional results from the 2024 drilling program are expected in early 2025 as the company progresses towards its next drilling phase [8]. Historical Context - The Sherridon VMS Project is located in a historically significant mining area with known copper-rich resources, having a mining history that includes the extraction of 7.74 million tonnes at an average grade of 2.46% Cu, 2.84% Zn, 0.6 g/t Au, and 33 g/t Ag from 1931 to 1951 [9][10]. - The Lost Lake and Cold Lake zones comprise a continuously mineralized horizon over a known strike length of approximately 1.8 km, previously explored by HudBay Minerals [10][11]. Technical Details - The drill program included a total of 1,584 meters across six holes, testing a strike length exceeding 1.4 km at the Cold Lake and Lost Lake prospects [9]. - Assay results confirmed the presence of semi and massive sulphide in core logging, delineating shallow-dipping and plunging massive sulphide lenses [11][12]. Company Overview - T2 Metals Corp. is focused on enhancing shareholder value through exploration and discovery, with a primary focus on the Sherridon Project in Manitoba, as well as projects in Nevada and Arizona [29].

Core Insights - T2 Metals Corp announced high-grade rock chip results from its Copper Eagle copper-gold project in Nevada, indicating significant potential for copper and silver mineralization [3][4][7]. Company Overview - T2 Metals Corp is focused on enhancing shareholder value through exploration and discovery in under-explored areas, including the Copper Eagle project [17]. - The company is well-positioned to benefit from the rising demand for copper, silver, and gold [8]. Project Details - The Copper Eagle project is located in Douglas County, Nevada, near several historic copper mines and development projects [3][11]. - The fall 2024 sampling program involved collecting 21 representative rock chip and channel samples, revealing copper grades ranging from 0.11% to 2.07%, with an average of 0.78%, and silver grades from 0.17 g/t to 6.05 g/t, averaging 1.82 g/t [4][6]. Exploration Insights - The assay results suggest the presence of an oxidized zone associated with porphyry copper mineralization, similar to the nearby Yerington deposit [4][6]. - Historical records indicate that Copper Eagle has the potential to host a porphyry copper deposit, and the company plans to conduct geophysical studies to delineate targets [7][12]. Technical Analysis - Samples were analyzed using advanced techniques, including a TerraSpec multispectral scanner, to assess the prospectivity of the mineralized area [5][14]. - The project is secured by six granted BLM lode mining claims and is easily accessible [11].

Core Viewpoint - T2 Metals Corp has successfully closed a flow-through private placement financing, raising $527,000 to fund an expanded drilling program at the Sherridon project in 2025 [2][3]. Financing Details - The financing raised gross proceeds of $527,000 by issuing 1,550,000 flow-through units at a price of $0.34 per unit [2]. - Each flow-through unit consists of one flow-through common share and one-half of a non-flow-through common share purchase warrant, with each whole warrant allowing the purchase of a non-flow-through common share at $0.50 for two years [2]. Project Development - The proceeds will enable an expanded drilling program at the Sherridon copper-gold-zinc project in Manitoba, following the recently completed 2024 program [3]. - T2 Metals is fully permitted for drilling at Sherridon until July 2027, targeting both historical mineral resources and untested regional targets [3][5]. Project Location and Access - Sherridon is located in the Flin Flon – Snow Lake Greenstone Belt of Manitoba, known for its significant mining and exploration history [4]. - The project has year-round road access and is situated 70 km from the mining center of Flin Flon, with access to an operational train line [4]. Insider Participation - Certain insiders participated in the offering, purchasing a total of 64,700 flow-through units, which was classified as a "related party transaction" but exempt from formal valuation and minority shareholder approval requirements [5]. Additional Financial Information - A finder's fee of $30,000 was paid on a portion of the financing, and all securities issued are subject to a four-month hold period and regulatory approvals [6].