Company: TWO-PC
Filing Date: 2025-05-29
Form Type: 8-K
Source: 0001104659-25-054261
Chunk: 1

Company: TWO HARBORS INVESTMENT CORP.
Filing Date: 2025-05-29
Form: 8-K
Item: Item 8.01
Chunk 1
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 the extent that the Company did not have a basis on which to terminate
the Management Agreement for cause, and the plaintiffs’ motion for summary judgment was otherwise denied. The Company’s motion
for summary judgment was denied and its counterclaims were dismissed.

For the month ending May 31, 2025, the Company expects to record a
contingency liability and related expense of $198.9 million for the Federal Complaint. This contingency liability is reflective of the
$139.8 million termination fee that the Company believes would have been payable to PRCM Advisers for termination on the basis of
unfair compensation pursuant to Section 13(a)(ii) of the Management Agreement, plus applicable pre-judgment interest on such termination
fee that will have accrued through May 31, 2025. The Company does not expect its consolidated financial statements for the month ending
May 31, 2025 to recognize a contingency liability related to claims under the Federal Complaint for which summary judgment was denied,
as management does not believe that a loss or expense related to such claims is probable or reasonably estimable.

Pursuant to Accounting Standards Codification 450, Contingencies,
the Company accrues an estimated loss contingency liability when it is probable that such a liability has been incurred and the amount
of the loss can be reasonably estimated. The Company evaluates its outstanding legal and regulatory proceedings and other matters each
quarter to assess its loss contingency accruals, and makes adjustments in such accruals, upward or downward, as appropriate, based on
management’s best judgment after consultation with counsel. There is no assurance that the Company’s accruals for loss contingencies
will not need to be adjusted significantly in the future or that, in light of the uncertainties involved in such matters, the ultimate
resolution of these matters will not exceed the accruals that the Company has recorded. The defense or ultimate resolution of these matters
could involve significant monetary costs and could have a significant impact on the Company.

Forward-Looking Statements