Q3 2025 Two Harbors Investment Corp Earnings Call Transcript
Key Points
- Two Harbors Investment Corp (TWO) successfully settled litigation with its former external manager, providing clarity and certainty moving forward.
- The company maintained ample liquidity post-settlement, ensuring stability in its financial operations.
- Two Harbors Investment Corp (TWO) established a significant relationship with a new subservicing client, enhancing its third-party subservicing business.
- The direct-to-consumer originations platform showed robust growth, with record locks and increased confidence in portfolio recapture.
- The company plans to redeem its outstanding convertible notes, which will reduce structural leverage and align with historical levels.
- The litigation settlement resulted in a significant expense of $1.68 per share, impacting the total economic return negatively.
- The reduction in capital base increased the expense ratio, prompting the need for cost reduction efforts.
- Despite positive performance in fixed income markets, the company experienced a comprehensive loss of $80.2 million, or $0.77 per share, including the litigation expense.
- The company's stock traded at an 11% discount to book value, indicating potential undervaluation concerns.
- The reduction in portfolio size and adjustments led to increased economic debt-to-equity, raising leverage concerns.
Good morning. My name is Taryn, and I will be your conference facilitator. At this time, I would like to welcome everyone to the Two third quarter 2025 earnings call. (Operator Instructions)
I would now like to turn the call over to Maggie Karr.
Good morning, everyone, and welcome to our call to discuss Two's third 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 the 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 reconciliation of GAAP to non-GAAP financial measures, and we urge you to review this information in conjunction with today's call. As a reminder, our comments
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