Company: TWO-PC
Filing Date: 2025-02-18
Form Type: 10-K
Source: 0001465740-25-000083
Chunk: 92

Company: TWO HARBORS INVESTMENT CORP.
Filing Date: 2025-02-18
Form: 10-K
Item: Item 7
Chunk 92
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 offset by lower expenses incurred in connection with the Company’s ongoing litigation with PRCM Advisers. Prior to the acquisition of RoundPoint, we did not directly service mortgage loans; instead, we contracted with appropriately licensed subservicers to handle substantially all servicing functions in the name of the subservicer for the mortgage loans underlying our MSR. These third-party subservicing costs and other servicing expenses directly related to our MSR portfolio are included within the servicing costs line item on our consolidated statements of comprehensive income (loss). Post-acquisition, all servicing-related expenses incurred by RoundPoint are included within the other operating expenses line item on our consolidated statements of comprehensive income (loss).

Income Taxes

During the three and twelve months ended December 31, 2024, we recognized a provision for income taxes of $30.9 million and $46.6 million, respectively. The provision recognized for the three months ended December 31, 2024 was primarily due to net income from MSR servicing and mortgage loan origination activities and net gains recognized on MSR, partially offset by operating expenses incurred in our TRSs. The provision recognized for the year ended December 31, 2024 was primarily due to net income from MSR servicing and mortgage loan origination activities, partially offset by operating expenses incurred in our TRSs. During the three and twelve months ended December 31, 2023, we recognized a benefit from income taxes of $29.3 million and a provision for income taxes of $23.0 million, respectively. The benefit recognized for the three months ended December 31, 2023 was primarily due to net losses recognized on MSR and operating expenses, partially offset by net income from MSR servicing activities in our TRSs. The provision recognized during the year ended December 31, 2023 was primarily due to net income from MSR servicing activities, partially offset by net losses recognized on MSR and operating expenses in our TRSs.

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Other Comprehensive (Loss) Income

The following table provides a summary of the components of other comprehensive (loss) income during the three and twelve months ended December 31, 2024 and 2023:

Three Months EndedYear Ended(in thousands)December 31,December 31,2024202320242023Unrealized (losses) gains on available-for-sale securities$(255,412)$405,935 $(150,672)$(38,584)Realized (gains) losses on sales of available-for-sale securities reclassified to loss on investment securities