Q3 2024 Two Harbors Investment Corp Earnings Call Transcript
Key Points
- Two Harbors Investment Corp (TWO) reported a 1.3% quarterly economic return on book value, demonstrating resilience in a volatile market.
- The company achieved a 7.0% total economic return on book value for the first nine months of 2024, indicating strong performance across varying market conditions.
- The acquisition of RoundPoint is on track to achieve the anticipated cost savings, enhancing the economics of their MSR investments.
- Two Harbors Investment Corp (TWO) successfully launched a direct-to-consumer loan origination channel, closing and funding $22.4 million UPB of first mortgages in its first full quarter.
- The company has built a robust investment portfolio with RMBS, reducing exposure to changes in mortgage spreads while preserving upside potential.
- The book value per share decreased from $15.19 on June 30 to $14.93 on September 30, reflecting a decline in economic return.
- Net interest expense increased to $42 million in the third quarter due to higher average borrowing balances.
- Servicing asset losses were $133 million in the quarter, driven by declining rates that decreased the servicing asset value.
- The company experienced hedging losses of $225 million due to a rally in rates, impacting overall financial performance.
- Market volatility in October led to a further decline in book value, estimated to be down between 1.5% and 3% as of October 18.
Good morning. My name is Cynthia and I will be your conference facilitator. At this time, I would like to welcome everyone to Two's third-quarter, 2024 financial results conference call. (Operator Instructions)
I would now like to turn the call over to Margaret Karr.
Good morning, everyone and welcome to our call to discuss third-quarter 2024 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 Interim 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 reconciliations of GAAP to non-GAAP financial measures and we urge you to review this information in conjunction with today's call.
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