Company: TWO-PC
Filing Date: 2025-04-29
Form Type: 10-Q
Source: 0001465740-25-000104
Chunk: 90

Company: TWO HARBORS INVESTMENT CORP.
Filing Date: 2025-04-29
Form: 10-Q
Item: Item 1
Chunk 90
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ers, as discussed within Note 17 to the consolidated financial statements, included under Item 1 of this Quarterly Report on Form 10-Q. 

The decrease in total operating expenses during the three months ended March 31, 2025, as compared to the same period in 2024, was driven by lower expenses incurred in connection with the Company’s ongoing litigation with PRCM Advisers, partially offset by slightly higher operating expenses. 

Income Taxes

During the three months ended March 31, 2025, we recognized a provision for income taxes of $0.4 million, which was primarily due to net income from MSR servicing and mortgage loan origination activities, partially offset by net losses recognized on MSR and operating expenses incurred in our TRSs. During the three months ended March 31, 2024, we recognized a provision from income taxes of $12.0 million, which was primarily due to net income from MSR servicing activity and net gains recognized on MSR, partially offset by operating expenses incurred on our TRSs.

Other Comprehensive Income (Loss)

The following table provides a summary of the components of other comprehensive income (loss) during the three months ended March 31, 2025 and 2024:

Three Months EndedMarch 31,(in thousands)20252024Unrealized gains (losses) on available-for-sale securities$110,220 $(109,658)Realized losses on sales of available-for-sale securities reclassified to loss on investment securities46,952 6,580 Other comprehensive income (loss)$157,172 $(103,078)

With our accounting treatment for AFS securities, unrealized fluctuations in the market values of AFS securities, excluding certain AFS securities for which we have elected the fair value option and securities with an allowance for credit losses, are recorded directly to stockholders’ equity through other comprehensive income (loss). Additionally, we reclassify unrealized gains and losses on AFS securities in accumulated other comprehensive loss to net (loss) income upon the recognition of any realized gains and losses on sales as individual securities are sold. Fluctuations in other comprehensive income (loss) are driven by changes in fair value assumptions and the reclassification of unrealized gains and losses to realized gains and losses upon sale.

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Financial Condition

The following table presents significant components of our balance sheet as of March 31, 2025 and December 31, 2024:

(in thousands)March 31,2025December 31, 202