Two Harbors (TWO) Q4 2025 Earnings Call Transcript

Image source: The Motley Fool.

Tuesday, Feb. 3, 2026 astatine 9 a.m. ET

• Chief Executive Officer — William Ross Greenberg

• Chief Financial Officer — William Dellal

• Chief Investment Officer — Nicholas Letica

Need a punctuation from a Motley Fool analyst? Email [email protected]

William Ross Greenberg: Thank you, Maggie. Good morning, everyone, and invited to our 4th fourth net call. I'm precise excited to beryllium capable to talk to you each publically for the archetypal clip astir our precocious announced merger with United Wholesale Mortgage. The rationale for this transaction should beryllium acquainted to astir owe marketplace participants and observers and was particularly fitting fixed our ain past arsenic a company. So fto maine instrumentality a measurement backmost and picture wherefore I accidental that. We are 1 of the first, if not the first, owe REIT to put successful MSR arsenic portion of our plus mix. Obtaining our GSE approvals and authorities licenses to ain and negociate MSR and past buying our archetypal excavation successful 2013.

We started retired utilizing third-party subservicers to work the assets. As our servicing portfolio grew to a definite scale, it became wide to america that we tin extract adjacent much worth from the plus and summation returns by bringing the servicing in-house. Which we did successful 2023 done our acquisition of Roundpoint. The past respective years, truly post-COVID, person highlighted the request for investors to beryllium capable to support their MSR portfolio by providing recapture capabilities. Hence, we spun up a direct-to-consumer lending level successful 2024. However, successful 2025, the owe concern scenery shifted again, standard becoming much important than ever.

It became wide to america that successful bid to win and vie effectively, our origination effort needed to beryllium much, overmuch bigger. This merger brings america unneurotic with the fig 1 owe originator successful the state successful UWM and doubles the size of the MSR portfolio to a pro forma $400 billion. UWM, successful turn, besides benefits from our expertise successful superior markets and plus management, and they tin leverage Roundpoint's best-in-class and low-cost servicing capabilities. In galore ways, this transaction is the culmination of the concern program that we've been aiming astatine for immoderate time. And it creates, I believe, a precise almighty strategical alignment and positions the combined institution for accelerated maturation and enhanced outcomes.

Which should present meaningful upside to shareholders. Now delight conscionable crook to descent three. Our concern portfolio performed good arsenic owe assets importantly outperformed their hedges, and our debased coupon MSR continued to behave arsenic it was designed to do. Earning its carry. For the 4th quarter, we generated full economical instrumentality of affirmative 3.9%. For the afloat calendar twelvemonth 2025, we generated a full economical instrumentality connected publication worth of antagonistic 12.6%. So if you exclude the antecedently recorded litigation colony disbursal of $3.50 per share, we returned a affirmative 12.1%. Mortgage assets person frankincense acold continued to outperform into the archetypal quarter.