Company: TWO-PC
Filing Date: 2025-02-18
Form Type: 10-K
Source: 0001465740-25-000083
Chunk: 91

Company: TWO HARBORS INVESTMENT CORP.
Filing Date: 2025-02-18
Form: 10-K
Item: Item 7
Chunk 91
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 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 and twelve months ended December 31, 2024 and 2023:

Three Months EndedYear EndedDecember 31,December 31,(dollars in thousands)2024202320242023Compensation and benefits:Non-cash equity compensation expenses$1,610 $1,613 $10,946 $10,976 All other compensation and benefits20,190 19,684 78,807 41,889 Total compensation and benefits$21,800 $21,297 $89,753 $52,865 Other operating expenses:Certain operating expenses (1)$39 $3,408 $714 $26,356 All other operating expenses19,046 20,551 75,527 35,957 Total other operating expenses$19,085 $23,959 $76,241 $62,313 Annualized operating expense ratio7.7 %8.6 %7.6 %5.2 %Annualized operating expense ratio, excluding non-cash equity compensation and certain operating expenses (1)7.4 %7.6 %7.0 %3.5 %

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(1)Certain operating expenses predominantly consists of expenses incurred in connection with the Company’s ongoing litigation with PRCM Advisers, as discussed within Note 18 to the consolidated financial statements, included under Item 1 of this Annual Report on Form 10-K. It also includes certain transaction expenses incurred in connection with the Company’s acquisition of RoundPoint.

The decrease in total operating expenses during the three months ended December 31, 2024, as compared to the same period in 2023, was driven by lower expenses incurred in connection with the Company’s ongoing litigation with PRCM Advisers as well as operational efficiencies implemented throughout 2024, partially offset by slightly higher compensation and benefits expenses. The increase in total operating expenses during the year ended December 31, 2024, as compared to the same period in 2023, was driven by the addition of RoundPoint’s compensation, benefits, operating and loan level expenses, partially