Two Harbors Investment Stock Earnings Reports

TWO reported a negative 2.0% total economic return for Q1 2026 and book value declined to $10.57 per share (from $11.13), driven by mark-to-market losses in Agency RMBS amid higher rates and wider spreads late in the quarter after geopolitical disruptions. The Board unanimously approved a revised merger agreement with CrossCountry Mortgage (CCM), increasing the cash consideration to $11.30 per share; the transaction is expected to close in H2 2026, is not subject to a financing condition, and a shareholder vote is scheduled for May 19. Operationally, TWO highlighted continued progress in its DTC origination platform (fundings of $92M in first and second liens in Q1), a well-performing MSR portfolio (lower-than-projected prepayments and low delinquencies), $500M+ cash on the balance sheet, repaid convertible notes in January, and robust MSR financing capacity ($977M unused MSR asset financing capacity at quarter end). Risk posture: management kept interest-rate risk low given elevated macro volatility, shifted mortgage spread exposure throughout the quarter (de-risked in January, added exposure by quarter-end), and believes pairing MSR with RMBS provides attractive risk-adjusted returns. Management expects to continue regular quarterly dividends prior to close (no stub dividend) and emphasized that the merger provides cash certainty for shareholders.