Two Harbors Investment Stock Earnings Reports

Key points for investors: TWO executed an amended merger agreement with CrossCountry Mortgage (CCM) increasing the cash consideration to $11.30 per share, terminating the prior UWM transaction; the Board unanimously recommends the CCM deal, a shareholder vote is scheduled for May 19, and the transaction is expected to close in H2 2026 (the company states the deal is not subject to a financing condition). Financial results for Q1 2026: total economic return of -2.0%, book value declined to $10.57 per share (including a $0.34 common dividend), and a comprehensive loss of $24.7 million ($0.24/share). RMBS performance was strong early in the quarter but weakened after geopolitical shock (Middle East conflict), causing wider spreads and higher volatility; mortgage rates and Treasury yields rose over the quarter. Portfolio and business highlights: total portfolio of $11.9 billion (including $3.0 billion in TBAs); hedged MSR strategy outperformed hedged securities during the quarter; MSR portfolio additions and pricing improved slightly (MSR multiple ~5.9x), 60+ day delinquencies remain low (<1%), and prepayment speeds were below projections for much of the portfolio. Originations via the DTC platform continue to scale (funded $92M first/second liens in Q1, $38M brokered seconds, $57M pipeline); the company ended the quarter with over $500M cash, repaid $261.9M convertible notes in January, and maintains substantial unused MSR financing capacity (~$977M). Outlook: management projects static returns for servicing (11–14%) and securities (11–15%), implying a portfolio static return before leverage of ~8–11.4% and prospective common equity returns (after unsecured notes and preferred) of ~7.3–12.9%; near-term performance remains sensitive to interest-rate volatility and geopolitical developments, while MSR and RMBS technical support (including GSE purchases and potential Basel III effects) are constructive.