Company: TWO-PC
Filing Date: 2025-10-28
Form Type: 10-Q
Source: 0001465740-25-000152
Chunk: 107

Company: TWO HARBORS INVESTMENT CORP.
Filing Date: 2025-10-28
Form: 10-Q
Item: Item 1
Chunk 107
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 ended September 30, 2025, our restricted and unrestricted cash balance increased approximately $88.6 million to $886.9 million at September 30, 2025. The cash movements can be summarized by the following:

•Cash flows from operating activities. For the three months ended September 30, 2025, operating activities decreased our cash balances by approximately $239.2 million, primarily driven by our financial results for the quarter and the payment of the $375.0 million settlement related to the resolution of our litigation with PRCM Advisers. 

•Cash flows from investing activities. For the three months ended September 30, 2025, investing activities increased our cash balances by approximately $2.1 billion, driven by net sales of and principal payments received on AFS securities, net sales of MSR and net proceeds from reverse repurchase agreements, partially offset by a decrease in amounts due to counterparties and net payments for derivative instruments.

•Cash flows from financing activities. For the three months ended September 30, 2025, financing activities decreased our cash balance by approximately $1.8 billion, primarily driven by net paydowns on our repurchase agreement, revolving credit facility and warehouse line of credit financing, as well as the payment of dividends.

Recently Issued Accounting Standards

Refer to Note 2 - Basis of Presentation and Significant Accounting Policies of the notes to the consolidated financial statements included in Part I, Item 1 of this Form 10-Q.

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Inflation

Our assets and liabilities are financial in nature. As a result, changes in interest rates and other factors impact our performance far more than does inflation, although inflation rates can often have a meaningful influence over the direction of interest rates. Our financial statements are prepared in accordance with U.S. GAAP and dividends are based upon net ordinary income and capital gains as calculated for tax purposes; in each case, our results of operations and reported assets, liabilities and equity are measured with reference to historical cost or fair value without considering inflation.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We seek to manage our risks related to the credit quality of our assets, interest rates, liquidity, prepayment speeds and market value while providing an opportunity to stockholders to realize more stable performance, relative to RMBS portfolios without MSR, across changing market environments. Although we do not seek to avoid risk completely, we believe that risk can be quantified from historical experience, and we seek to manage our risk levels in order to earn