Company: TWO-PC
Filing Date: 2025-10-28
Form Type: 10-Q
Source: 0001465740-25-000152
Chunk: 93

Company: TWO HARBORS INVESTMENT CORP.
Filing Date: 2025-10-28
Form: 10-Q
Item: Item 1
Chunk 93
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Nine Months EndedSeptember 30,September 30,(dollars in thousands)2025202420252024Compensation and benefits:Non-cash equity compensation expenses$1,544$1,610$9,999$9,336All other compensation and benefits19,76318,57059,36658,617Total compensation and benefits$21,307$20,180$69,365$67,953Other operating expenses:Certain operating expenses (1)$4,066$101$6,926$675All other operating expenses18,98518,30457,93756,481Total other operating expenses$23,051$18,405$64,863$57,156Annualized operating expense ratio9.7 %7.0 %8.9 %7.5 %Annualized operating expense ratio, excluding non-cash equity compensation and certain operating expenses (1)8.5 %6.7 %7.8 %6.9 %

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(1)Certain operating expenses predominantly consists of expenses incurred in connection with the Company’s litigation with PRCM Advisers, as discussed within Note 14 to the consolidated financial statements, included under Part I, Item 1 of this Quarterly Report on Form 10-Q. 

The increase in total operating expenses during the three and nine months ended September 30, 2025, as compared to the same periods in 2024, was primarily driven by higher expenses incurred in connection with the resolution of the Company’s litigation with PRCM Advisers, as well as slightly higher compensation and benefits and other operating expenses. The increase in our annualized operating expense ratios was primarily driven by the lower average equity balances in the denominator as a result of comprehensive losses incurred and dividends declared during the three and nine months ended September 30, 2025. 

Litigation Settlement Expense

During the three and nine months ended September 30, 2025, we recognized litigation settlement expense of $175.1 million and $375.0 million, respectively, which was recorded in connection with the resolution of our litigation with PRCM Advisers. For further details regarding the litigation settlement recognized, refer to Note 14 - Commitments and Contingencies to the consolidated financial statements, included in this Quarterly Report on Form 10-Q.

Income Taxes

During the three and nine months ended September 30, 2025, we recognized a provision for income taxes of $1.2 million and $3