DEF: Two Harbors Investment Corp. Announces 2025 Annual Meeting and Proxy Statement

Two Harbors Investment Corp. invites stockholders to its 2025 Annual Meeting on May 14, 2025, to vote on director elections, executive compensation, and auditor ratification.

Summary

• Two Harbors Investment Corp. will hold its 2025 Annual Meeting of Stockholders virtually on May 14, 2025.
• Stockholders of record as of March 19, 2025, are eligible to vote.
• The meeting agenda includes the election of eight directors, an advisory vote on executive compensation, and the ratification of Ernst & Young LLP as the independent auditor.
• In 2024, the company grew its MSR portfolio through the settlement of $9.2 billion in UPB of MSR.
• RoundPoint Mortgage Servicing LLC launched a direct-to-consumer recapture originations platform, funding $64.3 million UPB in first lien loans and brokering $40.2 million UPB in second lien loans.
• The company generated a 2024 total economic return on common book value of 7.0%, including total dividends declared of $1.80 per common share.
• Two Harbors repurchased 485,609 shares of preferred stock and $10.0 million principal amount of convertible senior notes due 2026.
• The company launched its new brand, referring to itself simply as 'TWO', reflective of its evolution as an MSR-focused REIT.

Sentiment

Score: 6

Explanation: The document presents a mixed sentiment. While it highlights positive achievements like MSR portfolio growth and dividend payouts, it also acknowledges challenges in the market and a decrease in book value. The overall tone is cautiously optimistic.

Positives

• The company delivered a 2024 total economic return on common book value of 7.0%.
• The company declared total dividends of $1.80 per common share in 2024.
• The company actively managed its capital structure through the repurchase of preferred stock and convertible senior notes.
• RoundPoint Mortgage Servicing LLC launched a direct-to-consumer recapture originations platform, funding $64.3 million UPB in first lien loans and brokering $40.2 million UPB in second lien loans.
• The company grew its MSR portfolio through the settlement of $9.2 billion in UPB of MSR.

Negatives

• The company reported book value of $14.47 at December 31, 2024, compared to $15.21 at December 31, 2023.

Risks

• The company acknowledges the challenging and volatile investment landscape for interest rate and mortgage spread sensitive assets.
• Interest rates and mortgage spread volatility remained elevated through 2024, driven by persistent inflationary pressures, ongoing geopolitical instability, and shifting market expectations around the Federal Reserve's policy trajectory.
• The company's REIT structure limits its ability to grow its book value and equity capital base through the reinvestment of retained earnings.

Future Outlook

The company is forging a path that emphasizes the financial investment in MSR, an asset class where they can more meaningfully impact their results through their actions and are very excited about the growth opportunities ahead.

Management Comments

• We value the views of our stockholders and look forward to continuing our dialogue on the priorities for the company.
• We have highlighted the company's achievements and shared our outlook in the Letter to Stockholders included in our 2024 Annual Report.
• We are satisfied with our performance in 2024 given that our portfolio has less mortgage spread duration than RMBS portfolios without MSR.
• We have built our portfolio with the intent of delivering high-quality returns over the long-term, despite interim interest rate and spread volatility.

Industry Context

The company operates in the real estate investment trust (REIT) sector, specifically focusing on mortgage servicing rights (MSR) and Agency residential mortgage-backed securities (RMBS). The company's strategy is to deliver more stable performance, relative to RMBS portfolios without MSR, across changing market environments.

Comparison to Industry Standards

• The company benchmarks its executive compensation against a peer group of internally-managed mortgage REITs and financial services companies.
• The company's performance is measured against a peer group of mortgage REITs with similar assets, investment strategies, or organizational structures.
• The company uses total economic return (TER) as a key measure of financial performance, which is a common metric used by investors and research analysts in the residential mortgage REIT sector.

Stakeholder Impact

• Stockholders are encouraged to participate in the Annual Meeting and vote on the proposals.
• The company's performance and strategic decisions impact its employees, business partners, customers, and communities.
• The company is committed to strengthening local communities through the support of charitable organizations allied with the housing sector.

Next Steps

• Stockholders are encouraged to vote on the proposals outlined in the Proxy Statement.
• The company will hold its Annual Meeting on May 14, 2025, to discuss and vote on the proposals.

Key Dates

Keywords

proxy statement, annual meeting, mortgage servicing rights, MSR, directors, executive compensation, Ernst & Young, auditor, RoundPoint, RMBS, dividends, stock repurchase, corporate governance, REIT