Q1 2025 Two Harbors Investment Corp Earnings Call Transcript
Key Points
- Two Harbors Investment Corp (TWO) generated a total economic return of 4.4% for the first quarter, with both RMBS and MSR contributing positively.
- The company's book value increased to $14.66 per share at the end of March, up from $14.47 at the end of December.
- Comprehensive income for the first quarter was $64.9 million, or $0.62 per weighted average common share.
- The company maintained high liquidity levels, with $950 million in unused MSR asset financing capacity and $47 million in unused capacity for servicing advances.
- Two Harbors Investment Corp (TWO) is actively managing its portfolio to take advantage of market dislocations and attractive return opportunities.
- The macroeconomic environment remains uncertain, with volatility in interest rates and spreads impacting the market.
- Operating expenses increased due to higher noncash equity compensation expenses, which typically occur in the first quarter.
- The company experienced mark-to-market losses on swaps and futures, offsetting some of the gains from RMBS and TBA positions.
- The MSR market faces limited bulk acquisition opportunities, which could impact growth potential.
- The company's direct-to-consumer channel for loan recapture is still in its nascent stages, limiting its ability to offset portfolio runoff.
Good morning. My name is Cynthia and I will be your conference facilitator. At this time, I would like to welcome everyone to TWO's first quarter 2025 earnings call. (Operator Instructions)
I would now like to turn over the call to Maggie Karr. Please go ahead.
Good morning, everyone, and welcome to our call to discuss TWO's first quarter 2025 financial results. With me on the call this morning are Bill Greenberg, our President and Chief Executive Officer; Nick Letica, our Chief Investment Officer; and William Dellal, our Chief Financial Officer.
The earnings press release and presentation associated with today's call have been filed with the SEC and are available on SEC's website as well as the Investor Relations page of our website at twoinv.com. In our earnings release and presentation, we have provided reconciliations of GAAP to non-GAAP financial measures and we urge you to review this information in conjunction with today's call.
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