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Sep 30, 2023
Two Harbors Q3 2023 Earnings Report
Reported financial results for the quarter ended September 30, 2023 and completed the acquisition of RoundPoint Mortgage Servicing LLC.
Key Takeaways
Two Harbors Investment Corp. reported a comprehensive loss of $56.8 million, or $(0.61) per weighted average basic common share. Income Excluding Market-Driven Value Changes (IXM) was $0.51 per weighted average basic common share. The company closed the acquisition of RoundPoint Mortgage Servicing LLC, which is expected to be accretive to pre-tax earnings in 2024 of $25-30 million.
Reported book value of $15.36 per common share, and declared a third quarter common stock dividend of $0.45 per share, representing a (3.5)% quarterly economic return on book value.
Incurred Comprehensive Loss of $56.8 million, or $(0.61) per weighted average basic common share.
Generated Income Excluding Market-Driven Value Changes (IXM) of $0.51 per weighted average basic common share.
Closed acquisition of RoundPoint Mortgage Servicing LLC, which is expected to be accretive to pre-tax earnings in 2024 of $25-30 million through additional revenues and cost savings achieved by vertically integrating self-servicing capabilities.
Forward Guidance
Two Harbors anticipates that bringing their servicing in-house will be accretive to pre-tax earnings in 2024 by $25-30 million and believes they can generate a low-to-mid-teens return in this environment.
Positive Outlook
- Bringing servicing in-house will be accretive to pre-tax earnings in 2024
- Bringing servicing in-house will increase revenues
- Bringing servicing in-house will result in cost savings
- Wide mortgage spreads
- Longer-term tightening potential
Challenges Ahead
- Fixed income markets fluctuated
- Higher rates
- Higher volatility
- Wider mortgage spreads
- Near-term challenges to the RMBS sector
Historical Earnings Impact
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Avg. Return Before/After Earnings
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