Two Harbors Investment Corp.

What they do

Two Harbors invests in, finances and manages mortgage servicing rights (MSR) and Agency residential mortgage-backed securities (RMBS). Through its subsidiary RoundPoint Mortgage Servicing LLC, it services conventional loans and operates a direct-to-consumer originations platform. The company is internally managed and structured as a REIT, with its common stock listed on the NYSE under 'TWO'.

Revenue drivers

• Mortgage Servicing Rights (MSR) — MSR portfolio generates servicing fees; as of June 30, 2026, weighted average gross coupon was 3.54% and 60+ day delinquency rate was 0.79%.
• Agency RMBS — Portfolio primarily of fixed-rate Agency RMBS backed by Fannie Mae, Freddie Mac or Ginnie Mae; financed through repurchase agreements and other borrowings.
• RoundPoint Originations — In-house originations platform funds first and second mortgages; funded $84.0 million UPB in loans and brokered $48.8 million in second lien loans during Q2 2026.

Recent performance

For Q2 2026, Two Harbors reported comprehensive income of $47.9 million, or $0.45 per basic share, and GAAP net income of $49.4 million, or $0.47 per share. Book value per common share was $10.68 at June 30, 2026, compared to $10.57 at March 31, 2026. The company declared a $0.34 per share dividend, representing a 4.3% quarterly economic return on book value. It added $186.5 million UPB of MSR through flow-sale acquisitions and recapture during the quarter.

Strategy

Two Harbors seeks to leverage its core competencies in interest rate and prepayment risk to invest in MSR and Agency RMBS, aiming for more stable performance across market environments. The company's originations platform is designed to retain or recapture MSR, hedging prepayment risk and requiring less capital than third-party acquisitions. It intends to merge with CrossCountry Mortgage, with CCM acquiring all outstanding common stock for $12.00 per share.

Risks

• Merger completion risk — The merger with CrossCountry Mortgage is expected to close August 3, 2026, subject to remaining closing conditions; failure to complete could affect stock price and operations.
• Interest rate and prepayment risk — Changes in interest rates can accelerate or decelerate prepayments, impacting MSR values and Agency RMBS cash flows.
• MSR servicing concentration — Substantially all servicing for TH MSR Holdings is performed by RoundPoint; operational disruptions at RoundPoint could impair MSR asset values.
• Financing and liquidity risk — The company uses repurchase agreements and revolving credit facilities to finance assets; margin calls or reduced availability could strain liquidity.

Outlook

Management expects the merger with CrossCountry Mortgage to close on August 3, 2026, with preferred stock redeemed at $25.00 per share plus accrued dividends. A 'stub period' dividend of $0.12196 per common share has been declared for Q3 2026, contingent on merger consummation. No other forward-looking guidance is provided in the latest earnings release.