Financial Data and Key Metrics Changes - The company recorded a comprehensive loss of $80.2 million, or $0.77 per share, including a litigation settlement expense of $175.1 million, which was $1.68 per share [16][17] - The return on book value was negative 0.63% including the litigation expense, while it would have been positive 7.6% excluding the expense [16][17] - Total economic return for the third quarter was negative 6.3%, and positive 7.6% without the litigation expense [9][10] Business Line Data and Key Metrics Changes - The RMBS portfolio decreased to $10.9 billion from $11.4 billion due to agency securities sales [6] - The company sold $19.1 billion UPB of MSR and an additional $10 billion UPB expected to settle soon, both slightly above marks [6][8] - The direct-to-consumer originations platform funded $49 million of UPB in first and second liens, with a record high of $60 million UPB in second liens brokered during the quarter [12][24] Market Data and Key Metrics Changes - The Fed cut rates by 25 basis points in September, marking the first cut since November 2024, which positively impacted equity markets, with the S&P 500 up almost 8% by quarter-end [10][11] - The nominal spread for current coupon RMBS tightened by 26 basis points to 145 basis points to the swap curve [22] Company Strategy and Development Direction - The company aims to enhance its MSR-focused investment strategy and grow its servicing and origination activities [9][13] - The company plans to redeem $262 million UPB of outstanding convertible notes to reduce structural leverage to historical levels [8] - The company is optimistic about the investment opportunities available in the market, particularly in the MSR and MBS portfolio [15][31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's liquidity and risk metrics post-litigation settlement, indicating a clear path forward [5][9] - The company sees mortgage spreads as attractive despite recent tightening and believes its strategy is well-positioned to capitalize on market conditions [14][31] - Management highlighted the importance of technology investments to improve customer experiences and reduce costs [13][69] Other Important Information - The company has established a significant relationship with a new sub-servicing client, bringing the total sub-servicing UPB to approximately $40 billion [8] - The company is focused on improving efficiencies and lowering costs in light of the recent settlement payments [9] Q&A Session Summary Question: What are the key drivers of the increase in the EAD in the third quarter relative to the second quarter? - The increase in EAD is attributed to the decrease in financing costs, allowing asset yields to remain constant [34] Question: Can you give us an update on your book value quarter to date? - The book value was up about 1% as of last Friday [37] Question: Can you talk about the various risk metrics as you think about the size of the portfolio following the settlement? - The company looks at multiple risk metrics, including returns available on asset classes and overall leverage [41][43] Question: Does the return potential slide factor in potential cost savings? - The return potential slide reflects current costs, with potential upside as cost savings are realized [44][46] Question: Can you help us understand the coupon positioning strategy? - The coupon exposure is managed based on how rates move and the current coupon risk in the MSR portfolio [51][52] Question: Can you provide insight into growth opportunities in the sub-servicing business? - The company is focused on building relationships and attracting clients dissatisfied with their current sub-servicers [60][61] Question: How do you see MSR valuations responding to a further drop in interest rates? - MSR valuations are expected to remain stable, with strong demand for low gross WAC MSR [87][88] Question: What is the valuation of the flow MSRs that you're originating versus your existing portfolio? - The price multiple for the entire portfolio is 5.8 times, with variations based on coupon rates [99][100]

Financial Data and Key Metrics Changes - The company recorded a comprehensive loss of $80.2 million, or $0.77 per share, including a litigation settlement expense of $175.1 million, which equates to $1.68 per share [14][15] - Excluding the litigation expense, the company would have generated comprehensive income of $94.9 million, or $0.91 per share [14] - The total economic return for the third quarter was negative 6.3%, while it would have been positive 7.6% without the litigation expense [8][14] - For the first nine months of the year, the total economic return on book value was negative 15.6% and positive 9.3% excluding the expense [9] Business Line Data and Key Metrics Changes - The RMBS portfolio decreased from $11.4 billion to $10.9 billion due to sales of agency securities [5] - The company sold $19.1 billion UPB of MSR and an additional $10 billion UPB expected to settle soon, both slightly above marks [5] - The direct-to-consumer originations platform funded $49 million of UPB in first and second liens, with an additional $52 million UPB in the origination pipeline at quarter-end [11] Market Data and Key Metrics Changes - The Fed cut rates by 25 basis points in September, marking the first cut since November 2024, which positively impacted equity markets, with the S&P 500 up almost 8% by quarter-end [9][10] - The nominal spread for current coupon RMBS tightened by 26 basis points to 145 basis points to the swap curve [21] - The market for MSR remains competitive, with only about 3% of the MSR portfolio considered in the money at current mortgage rates [24] Company Strategy and Development Direction - The company aims to enhance and grow its servicing and origination activities, focusing on a MSR-focused investment strategy [7][12] - The company plans to redeem $262 million UPB of outstanding convertible notes to reduce structural leverage to historical levels [6] - The company is optimistic about the growth of its sub-servicing business, establishing significant relationships with third-party clients [5][56] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the portfolio adjustments and the ability to capitalize on opportunities in the MSR and MBS portfolio [12][30] - The company views mortgage spreads as attractive despite recent tightening and believes risks to MBS performance are symmetric, supporting their strategy [13] - Management highlighted the importance of technology investments to maintain growth in the direct-to-consumer origination business [63] Other Important Information - The company has approximately $770.5 million in cash on the balance sheet after the litigation settlement payment [17] - The weighted average days to maturity for agency RMBS repo was 88 days at quarter-end [18] - The company is focused on improving efficiencies and lowering costs, with significant savings already identified [7] Q&A Session Summary Question: Key drivers of the increase in EAD in Q3 - The increase in EAD was driven by a decrease in financing costs, allowing asset yields to remain constant [32][34] Question: Update on book value quarter to date - The book value was up about 1% as of the last Friday [36] Question: Discussion on various risk metrics post-settlement - The company looks at multiple risk metrics, balancing returns available on asset classes with overall leverage and liquidity [40][42] Question: Cost savings impact on return potential - Current return potential estimates do not factor in potential cost savings, indicating upside potential as those savings are realized [43] Question: Strategy behind coupon exposure - The coupon exposure is managed based on how rates move and the current coupon's risk relative to the MSR portfolio [47][50] Question: Growth opportunities in the sub-servicing business - The company is focused on developing relationships and attracting clients dissatisfied with their current sub-servicers [54][56] Question: Valuation of flow MSRs versus existing portfolio - The valuation of flow MSRs is marked to market prices, and recapture cash flows do not impact the mark but affect yield [82]

Financial Position and Assets - As of September 30, 2025, approximately 84.0% of the company's total assets, or $9.1 billion, consisted of financial instruments recorded at fair value[230]. - At September 30, 2025, 24.2% of the company's total assets were classified as Level 3 fair value assets, indicating significant judgment in fair value measurements[237]. - The carrying value of the investment portfolio as of September 30, 2025, was $9,107,684, a decrease from $10,374,970 at the end of 2024[246]. - Total assets as of September 30, 2025, were $10.9 billion, down from $12.2 billion as of December 31, 2024[287]. - The company held $770.5 million in cash and cash equivalents as of September 30, 2025, with total stockholders' equity amounting to $1,771.7 million[301]. - The total outstanding debt as of September 30, 2025, was $8.4 billion, with significant financing from repurchase agreements and revolving credit facilities[301]. - The company had $9.3 billion in assets pledged as collateral for financing obligations as of September 30, 2025[310]. Mortgage Servicing Rights (MSR) and Portfolio - The company’s MSR business leverages core competencies in prepayment and interest rate risk analytics, with TH MSR Holdings acquiring MSR from third-party originators and its subsidiary RoundPoint[222]. - RoundPoint began operating its in-house, direct-to-consumer originations platform in late Q2 2024, aimed at benefiting the MSR portfolio by retaining existing borrowers[223]. - The fair value of MSR is estimated using a discounted cash flow model, incorporating various market data and significant unobservable inputs such as prepayment speeds and servicing costs[236]. - The MSR portfolio included 720,038 loans with an unpaid principal balance of approximately $175.8 billion[291]. - The weighted average coupon rate for the total MSR portfolio was 3.6%[291]. - The average loan age in the MSR portfolio was 61 months[291]. - The company plans to acquire MSR on loans originated by its subsidiary, RoundPoint, starting in 2024[290]. Interest Rates and Market Conditions - The Federal Reserve cut its benchmark rate by 25 basis points in September 2025, marking the first cut since November 2024, with expectations of an additional 50 basis points of cuts by year-end[240]. - Primary mortgage rates dropped to approximately 6.25% by the end of Q3 2025, the lowest level of the year, contributing to a 45% month-over-month increase in refinancing speeds for higher coupon cohorts[242]. - The nominal spread for current coupon RMBS tightened by 26 basis points to 144 basis points during Q3 2025, while option-adjusted spreads finished 14 basis points tighter at 67 basis points[241]. - The company’s forward-looking statements are subject to numerous risks and uncertainties, including changes in interest rates and the state of credit markets[227]. Financial Performance - Comprehensive loss attributable to common stockholders was $80.2 million for the three months ended September 30, 2025, compared to a comprehensive income of $19.4 million for the same period in 2024[257]. - Interest income decreased to $93.6 million for the three months ended September 30, 2025, down from $112.6 million for the same period in 2024, primarily due to a decrease in the Agency RMBS portfolio size[258]. - Interest expense decreased to $117.1 million for the three months ended September 30, 2025, from $154.9 million for the same period in 2024, attributed to lower average borrowings and a lower interest rate environment[259]. - The company recorded a net loss attributable to common stockholders of $141.2 million for the three months ended September 30, 2025, compared to a net loss of $250.3 million for the same period in 2024[257]. - Total operating expenses for the three months ended September 30, 2025, were $44.4 million, an increase from $38.6 million in 2024[281]. Leverage and Debt Management - The debt-to-equity ratio as of September 30, 2025, was 4.8:1.0, indicating a high level of leverage in funding investment securities and mortgage servicing rights[253]. - The company had $127.1 million in unused committed borrowing capacity on MSR financing facilities as of September 30, 2025[254]. - The economic debt-to-equity ratio increased from 7.0:1.0 to 7.2:1.0 for the three months ended September 30, 2025, driven by a decrease in total stockholders' equity[301]. - Total indebtedness to tangible net worth was 5.1:1.0 as of September 30, 2025, below the covenant limit of 8.0:1.0[311]. Risk Management - The company is subject to interest rate risk, which could adversely impact the operational efficiency and profitability of its loan originations platform[321]. - The company employs various interest rate risk management techniques, including derivatives, to mitigate the impact of interest rate changes on asset values[322]. - The effectiveness of hedging strategies may be affected by actual prepayment speeds differing from assumptions, potentially leading to losses[327]. - Prepayment risk is a concern as increased prepayment rates could accelerate the amortization of purchase premiums, reducing interest income earned on Agency RMBS[339]. Cash Flow and Liquidity - Cash flows from operating activities decreased cash balances by approximately $239.2 million, primarily due to financial results and a $375.0 million settlement payment[317]. - Cash flows from investing activities increased cash balances by approximately $2.1 billion, driven by net sales of AFS securities and net proceeds from reverse repurchase agreements[317]. - Cash flows from financing activities decreased cash balances by approximately $1.8 billion, primarily due to net paydowns on repurchase agreements and the payment of dividends[317]. - Cash liquidity was reported at $770.5 million, exceeding the required minimum of $200.0 million[311].

Financial Performance - The company reported a comprehensive loss of $(0.77) per share [6] - The economic return on book value was (6.3)% [6] - Excluding litigation settlement expense, the economic return on book value was 7.6% [6] - A common stock dividend of $0.34 per share was declared [6, 13] Portfolio Composition - The investment portfolio totaled $13.5 billion [6] - The portfolio composition included Agency RMBS of $6.5 billion, MSR of $2.6 billion, and cash & cash equivalents of $0.8 billion [18] - The company's economic debt-to-equity ratio was 7.2x [6] MSR Portfolio - The fair value of the MSR portfolio was $2.627 billion [41] - The UPB (Unpaid Principal Balance) of the MSR portfolio was $177.216 billion [41] - The weighted average 3-month CPR (Conditional Prepayment Rate) for the MSR portfolio was 6.0% [41]

Financial Performance - The company reported a comprehensive loss of $(80.2) million, or $(0.77) per weighted average basic common share for Q3 2025[5]. - The net loss attributable to common stockholders for the three months ended September 30, 2025, was $(141,245) thousand, compared to $(250,269) thousand in 2024, showing an improvement of approximately 44%[36]. - Comprehensive loss attributable to common stockholders for the three months ended September 30, 2025, was $(80,207) thousand, a significant decrease from $(221,807) thousand in the previous quarter[40]. - The company reported a basic loss per weighted average common share of $(1.36) for the three months ended September 30, 2025, compared to $(2.42) in the same period of 2024[36]. - For the three months ended September 30, 2025, net interest income was $(23,505) thousand, a decrease from $(42,289) thousand in the same period of 2024[36]. - Total interest income for the nine months ended September 30, 2025, was $322,079 thousand, down from $346,378 thousand in 2024, reflecting a decrease of approximately 7%[38]. - Net servicing income for the three months ended September 30, 2025, was $162,686 thousand, compared to $167,832 thousand in 2024, indicating a decline of about 3%[36]. - Total expenses for the three months ended September 30, 2025, were $219,423 thousand, significantly higher than $38,585 thousand in the same period of 2024, primarily due to litigation settlement expenses of $175,065 thousand[36]. Litigation and Settlement - The company incurred a litigation settlement expense of $175.1 million, or $1.68 per weighted average basic common share, related to a settlement with its former external manager[4]. - Excluding litigation settlement expenses, the company generated a 7.6% quarterly economic return on book value, with a total economic return of 9.3% for the first nine months of 2025[5]. Asset and Equity Management - The company's total assets decreased to $10,866,407 as of September 30, 2025, from $12,204,319 as of December 31, 2024, reflecting a decline of approximately 11.0%[35]. - The total stockholders' equity decreased to $1,771,717 as of September 30, 2025, down from $2,122,509 as of December 31, 2024, representing a decline of about 16.5%[35]. - The mortgage servicing rights at fair value decreased to $2,626,706 as of September 30, 2025, from $2,994,271 as of December 31, 2024, indicating a decline of approximately 12.3%[35]. Borrowings and Financing - As of September 30, 2025, total borrowings amounted to $8,430,709, a decrease from $10,175,579 as of June 30, 2025, representing a reduction of approximately 17.1%[21]. - The weighted average borrowing rate for total repurchase agreements was 4.61% as of September 30, 2025, compared to 4.74% as of June 30, 2025, indicating a slight improvement in financing costs[21]. - The debt-to-equity ratio at period-end improved to 4.8:1.0 as of September 30, 2025, down from 5.4:1.0 at the end of June 2025[21]. - The annualized cost of financing, including swaps, U.S. Treasury futures, and TBAs, was 3.94% for the three months ended September 30, 2025, compared to 4.43% for the three months ended June 30, 2025[21]. Investment Portfolio - The total investment portfolio as of September 30, 2025, was $13.49 billion, with $9.1 billion in Agency RMBS, MSR, and other investment securities[11]. - The MSR portfolio had a weighted average gross coupon rate of 3.58% and a 60+ day delinquency rate of 0.87% as of September 30, 2025, compared to 0.82% as of June 30, 2025[5]. - The company funded $49.8 million UPB in loans and brokered an additional $60.1 million UPB in second lien loans during the quarter[5]. - The net long TBA position increased to $4.4 billion as of September 30, 2025, compared to $3.0 billion as of June 30, 2025[19]. - The company anticipates attractive risk-adjusted returns from its core strategy of low rate MSR paired with Agency RMBS, despite recent spread tightening[6]. Conference and Communication - The company will host a conference call on October 28, 2025, to discuss its third quarter 2025 financial results[27]. - The company reported a total of 16 distinct counterparties for repurchase agreements collateralized by securities as of September 30, 2025[21]. Shareholder Returns - The reported book value was $11.04 per common share, with a declared dividend of $0.34 per share, reflecting a (6.3)% quarterly economic return on book value[5]. - Earnings available for distribution to common stockholders for the three months ended September 30, 2025, were $37,154 thousand, an increase from $29,545 thousand in the previous quarter[40]. - The weighted average basic common shares outstanding for the three months ended September 30, 2025, were 104,144,560, slightly up from 104,084,326 in the previous quarter[40]. - The unrealized gain on available-for-sale securities for the three months ended September 30, 2025, was $61,038 thousand, compared to $269,621 thousand in 2024[36].

Core Insights - The company reported its financial results for the third quarter of 2025, highlighting significant performance metrics and trends in revenue and earnings [1] Financial Performance - The company achieved a revenue of $X billion for the third quarter, representing a Y% increase compared to the same period last year [1] - Earnings per share (EPS) were reported at $Z, reflecting a change of A% year-over-year [1] - The net income for the quarter was $B million, which shows a growth of C% from the previous year [1] Operational Highlights - The company noted an increase in operational efficiency, with a reduction in costs by D% compared to the previous quarter [1] - There was a strategic focus on expanding market share in key regions, contributing to the overall revenue growth [1] Future Outlook - The company provided guidance for the upcoming quarters, projecting continued growth in revenue and earnings driven by new product launches and market expansion initiatives [1] - Management expressed confidence in achieving long-term financial goals, supported by a robust pipeline of projects [1]

Core Insights - T2 Metals Corp has received all regulatory approvals and completed the acquisition of a 100% interest in the Shanghai gold-silver project located in the Yukon, covering an area of 27.4 square kilometers [1][11] - The project is strategically located near significant mining operations, including Hecla Mining's Keno Hill silver mine and Banyan Gold's AurMac camp, enhancing its potential for exploration and resource development [3][11] Financial Summary - A total of 300,000 shares were issued as part of the acquisition, along with cash payments amounting to $50,000, with shares subject to a four-month hold period from October 10, 2025 [2] Project Overview - The Shanghai project is situated in the Mayo Mining District, within the Tombstone Gold Belt, and is in proximity to multiple resource-stage gold projects, indicating a favorable geological environment for gold and silver mining [3][4] - Recent exploration activities in the Tombstone Gold Belt by other companies have underscored the potential for significant new gold discoveries, which could enhance the value of the Shanghai project [4] Management Insights - Mark Saxon, CEO of T2 Metals, expressed enthusiasm about securing the Shanghai project, highlighting the region's recent discoveries and the strengthening mining market [5] - Shawn Ryan, a notable figure in Yukon exploration, has joined the advisory board, bringing valuable experience from his previous discoveries in the area [5] Regulatory and Operational Details - The Shanghai project has a Class 3 permit that allows for drilling, road construction, and camp installation, facilitating immediate exploration activities [6] - The project is located within the traditional territory of the Na-cho Nyak Dun First Nation, which has settled its land claim and is self-governing [6]

Core Insights - The article discusses a high-yield investment opportunity in the MREIT sector, specifically highlighting a "safe baby bond" associated with Two Harbors Investment Corp [1]. Group 1: Investment Opportunity - The focus is on presenting what is considered one of the safest baby bonds in the MREIT sector [1]. - The parent company of the highlighted investment is Two Harbors Investment Corp [1]. Group 2: Service Features - The investing group Trade With Beta offers features such as frequent picks for mispriced preferred stocks and baby bonds, weekly reviews of over 1200 equities, IPO previews, hedging strategies, and an actively managed portfolio [1]. - There is a chat room available for discussion among sophisticated traders and investors [1].

Core Insights - The article discusses a high-yield investment opportunity in the MREIT sector, specifically highlighting a "safe baby bond" associated with Two Harbors Investment Corp [1]. Group 1: Investment Opportunity - The focus is on presenting what is considered one of the safest baby bonds in the MREIT sector [1]. - The parent company of the highlighted investment is Two Harbors Investment Corp [1]. Group 2: Service Features - The investing group Trade With Beta offers features such as frequent picks for mispriced preferred stocks and baby bonds, weekly reviews of over 1200 equities, IPO previews, hedging strategies, and an actively managed portfolio [1]. - There is a chat room available for discussion among sophisticated traders and investors [1].

Core Insights - The mortgage REITs have identified an opportunity in agency-backed mortgages due to historically high spreads, leading to significant capital deployment in this sector [1][2][4] - Dynex Capital (DX) exemplifies the trend among agency mREITs, having raised over $3 billion to expand its investment portfolio in agency MBS [2][15] - The tightening of mortgage spreads has resulted in substantial mark-to-market gains for mREITs, with 30-year mortgage yields dropping from approximately 7% to 6.5% [7][11][31] Group 1: Market Dynamics - Agency-backed mortgages are considered nearly as safe as U.S. Treasuries, with the added risk of prepayment and duration risk [5] - The recent increase in mortgage rates over the past five years has led to many mortgages trading at a discount to par, making prepayment potentially profitable for mREITs [6] - The tightening of spreads has been beneficial, with a notable drop in 30-year mortgage yields contributing to gains in mREIT portfolios [7][11] Group 2: Investment Strategies - Many mREITs have followed a similar strategy to Dynex by issuing equity to capitalize on high mortgage spreads, which has diluted common shareholders but benefited preferred shareholders [17][31] - AGNC Investment has also expanded its agency RMBS portfolio through equity issuance, leading to increased asset value amid spread tightening [15][31] - Preferred shares of mREITs are viewed as more attractive investments compared to common shares, with many trading at discounts to par and offering high dividend yields [33] Group 3: Future Outlook - The anticipated 3Q earnings reports are expected to reflect significant gains in book value for mREITs due to the recent tightening of spreads [31][32] - The market may not yet fully recognize the gains experienced by these companies, which could lead to a shift in sentiment and a reduction in the risk premium for both common and preferred shares [32] - There is potential for investment in common shares, but preferred shares are generally considered the better option due to their higher yields and discounted prices [33]