Two Harbors Investment Corp. Reports $79.1 Million Net Loss in Q1 2025

Two Harbors Investment Corp. reported a net loss of $79.1 million for the first quarter of 2025, a significant decline compared to a net income of $203.6 million in the same period of 2024. This loss translates to a basic loss per share of $0.89, down from earnings of $1.85 per share a year earlier. The company's total revenue for the quarter was $111.4 million, a decrease from $117.8 million in the prior year, primarily due to lower interest income and increased losses on investment securities. The company’s interest expense also decreased to $131.7 million from $160.0 million, reflecting a reduction in borrowing costs amid changing market conditions.

The company’s total assets increased to $13.7 billion as of March 31, 2025, up from $12.2 billion at the end of 2024. This growth was driven by an increase in available-for-sale securities, which rose to $8.6 billion from $7.4 billion. However, the company’s liabilities also increased, with total liabilities reaching $11.5 billion, up from $10.1 billion, largely due to a rise in repurchase agreements, which amounted to $9.7 billion compared to $7.8 billion at the end of the previous year. The company’s stockholders’ equity increased slightly to $2.1 billion from $2.1 billion, reflecting unrealized gains on available-for-sale securities.

Strategically, Two Harbors completed the acquisition of RoundPoint Mortgage Servicing LLC in September 2023, which has since been consolidated into its financial results. This acquisition is expected to enhance the company's operational capabilities and control over its mortgage servicing rights (MSR) portfolio. As of March 31, 2025, the company reported MSR valued at approximately $3.0 billion, a slight decrease from $3.0 billion at the end of 2024. The company’s MSR portfolio included 794,466 loans with an unpaid principal balance of $196.8 billion.

Operationally, the company reported a decrease in its servicing income, which fell to $156.9 million from $166.3 million year-over-year, primarily due to a smaller MSR portfolio and lower float income. The company’s net servicing income was $153.7 million, down from $159.2 million in the previous year. The company also experienced a loss on investment securities of $32.7 million, compared to a loss of $11.0 million in the prior year, driven by market volatility and changes in fair value assumptions.

Looking ahead, Two Harbors anticipates continued market volatility influenced by economic conditions and interest rate changes. The company plans to maintain a conservative leverage strategy while seeking to capitalize on market opportunities. The management remains focused on delivering stable performance and sustainable stockholder value through its investment strategy centered on MSR and Agency RMBS.