Company: TWO-PC
Filing Date: 2025-04-29
Form Type: 10-Q
Source: 0001465740-25-000104
Chunk: 89

Company: TWO HARBORS INVESTMENT CORP.
Filing Date: 2025-04-29
Form: 10-Q
Item: Item 1
Chunk 89
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 and 2024:

Three Months EndedMarch 31,(in thousands)20252024TBAs$29,478 $(59,180)Futures(29,763)108,936 Options on futures(19)(127)Inverse interest-only securities1,752 (2,030)Gain on other derivative instruments$1,448 $47,599 

For further details regarding our use of derivative instruments and related activity, refer to Note 9 - Derivative Instruments and Hedging Activities to the consolidated financial statements, included in this Quarterly Report on Form 10-Q.

Gain (Loss) On Mortgage Loans Held-For-Sale

The following table provides a summary of the total net realized and unrealized gains (losses) recognized on mortgage loans held-for-sale and the related derivative instruments used to manage exposure to market risks primarily associated with fluctuations in interest rate risks related to our origination pipeline during the three months ended March 31, 2025 and 2024:

Three Months EndedMarch 31,(in thousands)20252024Mortgage loans held-for-sale$525 $(3)Interest rate lock commitments312 — Forward mortgage loan sale commitments(168)— Gain (loss) on mortgage loans held-for-sale$669 $(3)

Late in the second quarter of 2024, RoundPoint began operating its in-house, direct-to-consumer originations platform. Prior to the launch of originations, our mortgage loans held-for-sale consisted of a small number of loans purchased from the collateral underlying our MSR.

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Expenses

The following table presents the components of expenses for the three months ended March 31, 2025 and 2024:

Three Months EndedMarch 31,(dollars in thousands)20252024Compensation and benefits:Non-cash equity compensation expenses$6,523$6,083All other compensation and benefits20,06620,446Total compensation and benefits$26,589$26,529Other operating expenses:Certain operating expenses (1)$106$1,198All other operating expenses20,39919,854Total other operating expenses$20,505$21,052Annualized operating expense ratio8.7 %8.5 %Annualized operating expense ratio, excluding non-cash equity compensation and certain operating expenses (1)7.5 %7.2 %

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(1)Certain operating expenses predominantly consists of expenses incurred in connection with the Company’s ongoing litigation with PRCM Advis