TWO-PB Q1 2026 Earnings Call Summary

Book Value: Decreased to $10.57 per share from $11.13 per share at the end of Q4 2025.
Economic Return: Reported a negative 2.0% for the quarter.
Comprehensive Loss: $24.7 million or $0.24 per share.
Net Interest and Servicing Income: Declined due to lower float earnings and servicing fee collections.
Cash Position: Ended the quarter with over $500 million in cash and $977 million in unused MSR asset financing capacity.

Merger Agreement: Entered a new merger agreement with CrossCountry Mortgage (CCM) at $11.30 per share, up from the initial $10.80. This follows the termination of a prior agreement with UWM.
DTC Platform Growth: Funded $92 million in loans in Q1 2026, maintaining levels from the previous quarter despite rising interest rates.
MSR Activity: High demand for MSR with $93 billion UPB in servicing transfers, although below prior quarters.

Merger Completion: Expected to close in the second half of 2026, with a special shareholder meeting scheduled for May 19, 2026.
Portfolio Returns: Estimated static return on common equity projected between 7.3% to 12.9%, with quarterly static returns per share of $0.19 to $0.34.
Market Conditions: Anticipated continued volatility in interest rates and geopolitical tensions, particularly related to the Middle East conflict.

Economic Environment: Mixed economic indicators, including a rising unemployment rate (4.4%) and increased inflation forecasts, which may affect mortgage rates and housing market dynamics.
Performance Deterioration: Risk assets, including RMBS, faced challenges due to geopolitical tensions, leading to wider spreads and lower performance.
Declining Metrics: Notable declines in net interest income and comprehensive loss indicate potential operational challenges.

Book Value Performance: The hedged MSR strategy performed well, while the hedged securities strategy faced challenges due to increased volatility and hedging costs.
Merger Status: The situation with UWM is effectively concluded, with focus now on completing the merger with CCM.
Financing for Merger: Details regarding the financing package for the merger were not disclosed, with references to publicly available documents for further information.

This summary encapsulates the key points from the earnings call, highlighting both the achievements and challenges faced by TWO-PB in Q1 2026.

TWO-PB — Two Harbors Investment Corp.