Two Harbors Investment Corp. reported its financial results for the three and nine months ended September 30, 2024, highlighting significant changes in revenue, profitability, and strategic developments compared to the previous fiscal period.
For the third quarter of 2024, the company recorded net servicing income of $167.8 million, an increase from $148.7 million in the same period of 2023. However, total expenses surged to $38.6 million from $24.6 million year-over-year. The net loss attributable to common stockholders for Q3 2024 was $(250.3 million), a stark contrast to the net income of $294.1 million reported in Q3 2023. For the nine months ended September 30, 2024, net income was $21.4 million, down from $326.8 million in the prior year.
The company’s total assets decreased to $12.9 billion as of September 30, 2024, from $13.1 billion at the end of 2023. Total liabilities also fell to $10.7 billion from $10.9 billion. Notably, available-for-sale securities increased to $8.5 billion from $8.3 billion during the same period. Total stockholders’ equity decreased to $2.2 billion from $2.2 billion at the end of 2023.
A key strategic development was the acquisition of RoundPoint Mortgage Servicing LLC, effective September 30, 2023, which is expected to enhance control over the mortgage servicing rights (MSR) portfolio and improve cash flows. The acquisition was valued at approximately $44.5 million, with total assets recognized at $80.3 million.
Interest income for the three months ended September 30, 2024, was $112.6 million, down from $123.6 million in Q3 2023. Interest expense also decreased to $154.9 million from $173.1 million year-over-year. The net interest income for Q3 2024 was $(42.3 million), reflecting a net yield of 5.1%. For the nine months ended September 30, 2024, net interest income was $(122.8 million), with a net yield of 5.3%.
The company’s operational expenses rose significantly, with total compensation and benefits for Q3 2024 amounting to $20.2 million, compared to $8.6 million in Q3 2023. The annualized operating expense ratio increased to 7.0% from 4.5% in the prior year.
As of September 30, 2024, Two Harbors had 103.7 million shares of common stock outstanding, an increase from 96.2 million shares a year earlier. The company also repurchased a total of 3.6 million common shares for $208.5 million under its repurchase program, although no shares were repurchased during the third quarter of 2024.
Overall, the financial results reflect a challenging environment for Two Harbors Investment Corp., with significant fluctuations in profitability and operational costs, alongside strategic acquisitions aimed at enhancing its market position.
About TWO HARBORS INVESTMENT CORP.
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