Two Harbors Investment (TWO) Q1 2025 earnings summary

Executive summary

• Book value per share increased to $14.66 at March 31, 2025, with a 4.4% economic return and comprehensive income of $64.9 million ($0.62 per share).

• Declared a $0.45 dividend per share, maintaining a strong yield and consistent payout.

• Portfolio focused on Agency RMBS and MSR, both contributing positively to results.

• Maintained high liquidity and reduced risk exposures amid volatile macroeconomic conditions.

• Net loss attributable to common stockholders was $92.2 million, but book value rose due to unrealized gains and net servicing income.

Financial highlights

• Net interest and servicing income rose due to higher coupon Agency RMBS and lower borrowing rates.

• Comprehensive income for Q1 2025 was $64.9 million, or $0.62 per share.

• Dividend yield was 13.5% for Q1 2025, with a $0.45 per share payout.

• Economic debt-to-equity ratio was 6.2x at quarter end.

• Total assets grew to $13.7 billion, with $10.9 billion in outstanding debt.

Outlook and guidance

• Management expects attractive return opportunities, with static return estimates of 8.7%-12.3% before leverage and 9.1%-14.7% on common equity after leverage.

• Portfolio leverage and risk remain muted until more economic clarity emerges.

• MSR market remains well supported, with low prepayment risk and ample acquisition opportunities.

• Confident in supporting the dividend with current portfolio and spread environment.

• Focus remains on maintaining high liquidity and low risk exposures in a volatile macro environment.