$TWOD

TWO HARBORS INVESTMENT CORP.

CIK:0001465740|SEC Filings

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2026	Jun. 30, 2025	Jun. 30, 2026	Jun. 30, 2025
Net interest expense:
Interest income	$ 83,536	$ 117,082	$ 172,186	$ 228,464
Interest expense	89,557	136,701	184,718	268,415
Net interest expense	(6,021)	(19,619)	(12,532)	(39,951)
Net servicing income:
Servicing income	129,070	158,354	259,213	315,213
Servicing costs	3,211	2,386	5,059	5,583
Net servicing income	125,859	155,968	254,154	309,630
Other income (loss):
Loss on investment securities	(2,123)	(32,830)	(13,109)	(65,559)
Loss on servicing asset	(47,239)	(35,902)	(91,248)	(72,123)
Gain (loss) on derivative instruments	46,678	(84,207)	62,319	(181,547)
Gain on mortgage loans held-for-sale	704	883	2,756	1,552
Other income	1,735	1,038	3,052	1,799
Total other loss	(245)	(151,018)	(36,230)	(315,878)
Expenses:
Compensation and benefits	23,309	21,469	50,007	48,058
Other operating expenses	28,088	21,307	50,837	41,812
Loss contingency accrual	0	199,935	0	199,935
Total expenses	51,397	242,711	100,844	289,805
Income (loss) before income taxes	68,196	(257,380)	104,548	(336,004)
Provision for income taxes	5,951	1,661	10,019	2,092
Net income (loss)	62,245	(259,041)	94,529	(338,096)
Dividends on preferred stock	(12,866)	(13,239)	(25,673)	(26,425)
Net income (loss) attributable to common stockholders	$ 49,379	$ (272,280)	$ 68,856	$ (364,521)
Basic earnings (loss) per weighted average common share (in usd per share)	$ 0.47	$ (2.62)	$ 0.65	$ (3.51)
Diluted earnings (loss) per weighted average common share (in usd per share)	$ 0.46	$ (2.62)	$ 0.65	$ (3.51)
Comprehensive income (loss):
Net income (loss)	$ 62,245	$ (259,041)	$ 94,529	$ (338,096)
Other comprehensive (loss) income:
Unrealized (loss) gain on available-for-sale securities	(1,458)	50,473	(45,649)	207,645
Other comprehensive (loss) income	(1,458)	50,473	(45,649)	207,645
Comprehensive income (loss)	60,787	(208,568)	48,880	(130,451)
Dividends on preferred stock	(12,866)	(13,239)	(25,673)	(26,425)
Comprehensive income (loss) attributable to common stockholders	$ 47,921	$ (221,807)	$ 23,207	$ (156,876)

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2026	Jun. 30, 2025
Cash Flows From Operating Activities:
Net income (loss)	$ 94,529	$ (338,096)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Amortization of premiums and discounts on investment securities, net	11,399	9,329
Amortization of deferred debt issuance costs on senior notes and convertible senior notes	368	804
Reversal of provision for credit losses on investment securities	(16)	(22)
Realized and unrealized losses on investment securities	13,125	65,581
Loss on servicing asset	89,766	72,123
Realized and unrealized (gains) losses on derivative instruments	(156)	157,130
Gains on mortgage loans held-for-sale	(2,384)	(1,578)
Equity based compensation	5,858	8,455
Loss contingency accrual	0	199,935
Originations and purchases of mortgage loans held-for-sale	(176,294)	(77,539)
Proceeds from sales of mortgage loans held-for-sale	178,383	69,332
Proceeds from repayment of mortgage loans held-for-sale	21	1,369
Net change in assets and liabilities:
Decrease (increase) in accrued interest receivable	6,088	(3,437)
Decrease (increase) in deferred income taxes, net	10,019	(2,965)
Decrease in accrued interest payable	(37,947)	(5,827)
Change in other operating assets and liabilities, net	56,564	56,431
Net cash provided by operating activities	249,323	211,025
Cash Flows From Investing Activities:
Purchases of available-for-sale securities	(1,361,798)	(6,345,479)
Proceeds from sales of available-for-sale securities	2,310,360	5,101,348
Principal payments on available-for-sale securities	404,433	427,842
Purchases of mortgage servicing rights, net of purchase price adjustments	(2,744)	(92,919)
Net proceeds (payments) on derivative instruments	15,707	(257,577)
Payments for reverse repurchase agreements	(1,131,497)	(1,791,523)
Proceeds from reverse repurchase agreements	1,151,676	1,918,911
Increase (decrease) in due to counterparties, net	204,682	(159,241)
Net cash provided by (used in) investing activities	1,590,819	(1,198,638)
Cash Flows From Financing Activities:
Proceeds from repurchase agreements	12,993,320	25,394,522
Principal payments on repurchase agreements	(14,609,030)	(24,416,957)
Proceeds from revolving credit facilities	0	213,000
Principal payments on revolving credit facilities	(56,600)	(221,300)
Proceeds from warehouse facilities	103,490	77,970
Principal payments on warehouse facilities	(108,563)	(70,727)
Proceeds from issuance of senior notes	0	110,778
Repayment of convertible senior notes	(261,883)	0
Proceeds from issuance of common stock, net of offering costs	79	150
Dividends paid on preferred stock	(25,849)	(24,970)
Dividends paid on common stock	(71,987)	(94,197)
Net cash (used in) provided by financing activities	(2,037,023)	968,269
Net decrease in cash, cash equivalents and restricted cash	(196,881)	(19,344)
Cash, cash equivalents and restricted cash at beginning of period	1,061,952	817,641
Cash, cash equivalents and restricted cash at end of period	865,071	798,297
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest	220,047	238,713
Cash (received) paid for income taxes, net	(581)	9,343
Noncash Activities:
Dividends declared but not paid at end of period	48,955	54,195
UWM Termination Fee paid by CCM (see Note 1)	$ 25,400	$ 0

CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands

Jun. 30, 2026

Dec. 31, 2025

ASSETS

Available-for-sale securities, at fair value (amortized cost $5,137,549 and $6,516,016, respectively; allowance for credit losses $360 and $1,609, respectively)

$ 5,091,319

$ 6,514,471

Mortgage servicing rights, at fair value

2,336,324

2,421,910

Mortgage loans held-for-sale, at fair value

12,737

13,630

Cash and cash equivalents

642,691

842,319

Restricted cash

222,380

219,633

Accrued interest receivable

23,141

29,229

Due from counterparties

155,247

379,259

Derivative assets, at fair value

69,366

87,549

Reverse repurchase agreements

136,941

157,120

Other assets

141,323

194,097

Total Assets

^[1]

8,831,469

10,859,217

Liabilities:

Repurchase agreements

5,639,830

7,255,540

Revolving credit facilities

862,771

919,371

Warehouse lines of credit

4,333

9,406

Senior notes

111,350

111,055

Convertible senior notes

261,810

Derivative liabilities, at fair value

1,891

4,254

Due to counterparties

196,484

215,814

Dividends payable

48,955

48,932

Accrued interest payable

43,967

81,914

Other liabilities

177,003

163,194

Total Liabilities

^[1]

7,086,584

9,071,290

Commitments and contingencies (see Note 13)

Stockholders’ Equity:

Preferred stock, par value $0.01 per share; 100,000,000 shares authorized and 24,870,817 shares issued and outstanding ($621,770 liquidation preference)

601,467

Common stock, par value $0.01 per share; 175,000,000 shares authorized and 105,133,008 and 104,806,311 shares issued and outstanding, respectively

1,051

1,048

Additional paid-in capital

5,954,412

5,948,478

Accumulated other comprehensive loss

(45,736)

(87)

Cumulative earnings

1,289,014

1,194,485

Cumulative distributions to stockholders

(6,055,323)

(5,957,464)

Total Stockholders’ Equity

1,744,885

1,787,927

Total Liabilities and Stockholders’ Equity

$ 8,831,469

$ 10,859,217

[1]

The consolidated balance sheets include assets and liabilities of consolidated variable interest entities (“VIEs”). At June 30, 2026 and December 31, 2025, assets of the VIEs totaled $101,575 and $155,807, and liabilities of the VIEs totaled $99,371 and $127,174, respectively. See Note 3 - Variable Interest Entities for additional information.