Two Harbors Investment (TWO) - 2024 Q3 - Quarterly Results

Financial Performance - Generated comprehensive income of $19.3 million, or $0.18 per weighted average basic common share[2] - Net interest income for the three months ended September 30, 2024, was $112,642, a decrease from $123,608 in the same period of 2023, representing a decline of 7.8%[28] - Total interest expense for the three months ended September 30, 2024, was $154,931, down from $173,094 in the prior year, reflecting a decrease of 10.5%[30] - Net loss attributable to common stockholders for the three months ended September 30, 2024, was $(250,269), compared to a profit of $294,077 in the same period of 2023[32] - Basic loss earnings per share for the three months ended September 30, 2024, was $(2.42), a significant decline from $3.04 in the prior year[32] - Comprehensive income attributable to common stockholders for the three months ended September 30, 2024, was $19,352, compared to a loss of $(56,845) in the same period of 2023[32] - Total other (loss) income for the three months ended September 30, 2024, was $(335,901), a significant decrease from $267,922 in the prior year[28] - Net servicing income for the three months ended September 30, 2024, was $167,832, an increase from $148,722 in the same period of 2023, representing a growth of 12.5%[28] - Earnings available for distribution to common stockholders for the three months ended September 30, 2024, was $13,186, down from $17,516 in the same period of 2023[32] Balance Sheet Highlights - Reported book value of $14.93 per common share, with a third quarter common stock dividend of $0.45 per share, representing a 1.3% quarterly economic return on book value[2] - Total assets decreased to $12,887,842,000 as of September 30, 2024, from $13,138,800,000 at the end of 2023[24] - Total liabilities decreased to $10,718,468,000 as of September 30, 2024, from $10,935,410,000 at the end of 2023[24] - Stockholders' equity was $2,169,374,000 as of September 30, 2024, compared to $2,203,390,000 at the end of 2023[26] - The company reported a decrease in cash and cash equivalents to $522,581,000 as of September 30, 2024, from $729,732,000 at the end of 2023[24] - Mortgage servicing rights at fair value decreased to $2,884,304,000 as of September 30, 2024, from $3,052,016,000 at the end of 2023[24] Portfolio and Acquisitions - Settled $3.3 billion in unpaid principal balance (UPB) of MSR through bulk and flow-sale acquisitions and recapture[3] - Funded $22.4 million UPB in first lien loans and brokered $7.5 million UPB in second lien loans during the first full quarter of direct-to-consumer originations[3] - Committed to purchase an additional $2.1 billion UPB of MSR through a bulk acquisition post quarter-end[3] - As of September 30, 2024, the company's portfolio comprised $11.4 billion of Agency RMBS, MSR, and other investment securities[8] - The portfolio included $8.5 billion of Agency RMBS, accounting for 74.7% of the total portfolio[8] - The unpaid principal balance for MSR was $202.1 billion, with a gross coupon rate of 3.4%[10] Debt and Financing - Total borrowings as of September 30, 2024, amounted to $10.0 billion, with a weighted average borrowing rate of 5.40%[12] - The debt-to-equity ratio at period-end was 4.6:1.0 for the three months ended September 30, 2024, compared to 4.5:1.0 for the previous quarter[15] - The annualized cost of financing was 6.17% for the three months ended September 30, 2024, down from 6.23% in the previous quarter[15] Other Information - The company will host a conference call on October 29, 2024, to discuss its third quarter 2024 financial results[17] - The company emphasizes the importance of forward-looking statements and the associated risks and uncertainties[19] - The company provides non-GAAP financial measures to assist investors in analyzing its results of operations[22] - Dividends declared per common share for the three months ended September 30, 2024, remained at $0.45, consistent with the same period in 2023[32] - Unrealized loss on available-for-sale securities for the three months ended September 30, 2024, was $(269,621), compared to a loss of $(350,922) in the prior year[32]