Two Harbors Investment Corp. announced its financial results for the second quarter ended June 30, 2025, reporting a book value of $12.14 per common share, a decrease from $14.66 at March 31, 2025. This translated to a negative 14.5% quarterly economic return.
The company reported a GAAP net loss of $(272,280) thousand, or $(2.62) per basic common share, and earnings available for distribution (EAD) of $29,545 thousand, or $0.28 per share. A significant factor was a $199.9 million ($1.92 per share) loss contingency accrual related to ongoing litigation with PRCM Advisers.
Interest income slightly increased to $117.08 million from $115.95 million in Q2 2024, while interest expense decreased to $136.70 million from $154.21 million. Net servicing income, however, declined to $155.97 million from $171.54 million in the prior year quarter, mainly due to MSR portfolio runoff and reduced float income.
The economic debt-to-equity ratio increased to 7.0x at quarter-end, inclusive of the litigation accrual. Excluding the accrual, this ratio would be approximately 6.3x, remaining within management's target range of 5x to 8x.
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