Two Harbors Investment Corp. (TWO): Business Model Canvas [Dec-2025 Updated]

You're looking past the dividend yield to understand the actual mechanics of Two Harbors Investment Corp. (TWO), and what you find is a sophisticated operation centered on Mortgage Servicing Rights (MSRs) and Agency RMBS. This isn't passive investing; it's an active balancing act where they manage a $14.4 billion portfolio, finance it through short-term repurchase agreements, and even run their own subservicing shop, RoundPoint, to capture extra fees. We've mapped out their entire Business Model Canvas, showing you exactly how they generate that $395 million trailing revenue while navigating costs like the recent $175.1 million litigation expense, so you can see the precise engine driving their shareholder returns. Keep reading to see the nine core components of their strategy.

Two Harbors Investment Corp. (TWO) - Canvas Business Model: Key Partnerships

The Key Partnerships for Two Harbors Investment Corp. center on financing, asset acquisition, and operational execution, all critical for managing its Agency RMBS and MSR portfolio.

Agency RMBS Repurchase Agreement Counterparties

Two Harbors Investment Corp. maintains a broad network for financing its Agency RMBS holdings, which mitigates single-point failure risk. You should note the required figure here, which reflects the targeted relationship structure as of late 2025.

• 18 distinct counterparties for Agency RMBS repurchase agreements.

The financing structure relies on these agreements, which are generally short-term debt, often bearing interest rates based on an index plus a spread. Lenders generally advance approximately 95% to 97% of the market value of the Agency RMBS financed, implying a haircut of 3% to 5%.

GSE Affiliations for MSR Ownership and Management

The ownership and management of Mortgage Servicing Rights (MSR) are deeply tied to the Government-Sponsored Enterprises (GSEs). TH MSR Holdings, a wholly owned subsidiary, has the necessary approvals from Fannie Mae and Freddie Mac to own and manage MSR. Furthermore, the operational arm, RoundPoint Mortgage Servicing LLC, also holds approvals from both Fannie Mae and Freddie Mac to service residential mortgage loans.

Capital Market Transaction Facilitators

Raising capital and managing equity distribution involve specific investment banking relationships. For instance, in the second quarter of 2025, Two Harbors Investment Corp. issued $115.0 million aggregate principal amount of 9.375% Senior Notes due 2030 through an underwritten offering, securing net proceeds of $110.8 million. Agreements show ongoing relationships, such as the Amended and Restated Equity Distribution Agreement with Citizens JMP Securities, LLC, dated September 19, 2025.

Here's a look at the recent MSR transaction activity involving originators and sellers:

You can see the scale of the MSR business is substantial; for example, the MSR portfolio had a weighted average gross coupon rate of 3.58% as of September 30, 2025.

Derivative Hedging Counterparties

Interest rate and spread hedging is managed through derivative counterparties. As of June 30, 2025, the total portfolio, including Agency RMBS, MSR, and other investment securities, was comprised of $11.4 billion, which included their associated notional debt hedges. This hedging activity is crucial for managing the risk associated with the core assets.

• The portfolio uses derivative instruments, such as To-Be-Announced (TBA) securities, which as of June 30, 2025, held a $3.0 billion bond equivalent value of net long positions.
• The cost of financing, which includes derivatives like interest rate swaps, was (0.9%) of the annualized yield in a prior period, showing the cost structure of these partnerships.

Finance: draft 13-week cash view by Friday.

Two Harbors Investment Corp. (TWO) - Canvas Business Model: Key Activities

You're looking at the core actions Two Harbors Investment Corp. (TWO) takes to run its business, which centers on mortgage servicing rights (MSR) and Agency residential mortgage-backed securities (Agency RMBS). These activities are how they deploy capital and manage the associated risks.

Active management of a $14.4 billion portfolio of MSRs and Agency RMBS.

The management team actively balances the investment portfolio, which as of June 30, 2025, comprised $11.4 billion of Agency RMBS, MSR, and other investment securities, along with associated notional debt hedges. They also held $3.0 billion bond equivalent value of net long to-be-announced securities (TBAs) at that time. The strategy is built around this core asset base, aiming for attractive risk-adjusted total return.

Key portfolio metrics as of June 30, 2025, for the MSR portion include:

The Agency RMBS portfolio is largely weighted toward fixed-rate securities guaranteed by Fannie Mae, Freddie Mac, or Ginnie Mae, which helps reduce credit risk exposure.

Securing short-term financing via repurchase agreements and revolving credit facilities.

Financing the assets is a constant, critical activity. Two Harbors Investment Corp. uses a mix of funding sources to support its portfolio, especially the MSR assets. As of the end of the second quarter of 2025, the company had $1,800,000,000 of outstanding borrowings under bilateral facilities specifically for MSR financing. Honestly, managing this leverage is key to their returns.

Financing capacity details from Q2 2025:

• Unused MSR asset financing capacity: $837 million.
• Available capacity for servicing advances: $1 million.

The company also issued $115.0 million aggregate principal amount of 9.375% Senior Notes due 2030 during the quarter, generating net proceeds of $110.8 million.

Operating the RoundPoint subservicing platform for loan administration.

Through its subsidiary, RoundPoint Mortgage Servicing LLC, Two Harbors Investment Corp. operates a significant servicing platform. This vertical integration allows for greater control over the MSR portfolio and operational efficiencies. For the three months ended June 30, 2025, Net Servicing Income was $155.97 million.

The servicing operation also supports loan recapture efforts, which is an activity in itself. The company settled $6.6 billion UPB (Unpaid Principal Balance) of MSR through various acquisitions and recapture during the second quarter of 2025.

Executing complex interest rate and basis hedging strategies.

Managing interest rate and prepayment risk is central to the Two Harbors Investment Corp. model, using derivatives to hedge the portfolio. TBA dollar roll income is the non-GAAP economic equivalent to holding and financing Agency RMBS using short-term repurchase agreements. The company actively adjusts its derivative positions, which included the addition of some lower-cost interest rate payer swaps, Treasury futures, and SOFR futures during the second quarter of 2025.

The activity involves managing the risk profile against market movements:

• Current coupon nominal spreads widened by three basis points to 171 in Q2 2025.
• Option-adjusted spreads finished 12 basis points wider at 81 basis points in Q2 2025.

Direct-to-consumer loan origination for MSR recapture and portfolio growth.

This activity directly supports MSR management by recapturing loans that might otherwise refinance away from their servicing. In the second quarter of 2025, Two Harbors Investment Corp. funded $48.6 million UPB in first lien loans through this platform. This represented a 68% increase from the $29.0 million UPB funded in the first quarter of 2025.

Origination activity for the second quarter of 2025:

For context, in the full year 2024, the company funded $64.3 million UPB in first lien loans and brokered $40.2 million UPB in second lien loans through this platform.

Two Harbors Investment Corp. (TWO) - Canvas Business Model: Key Resources

You're looking at the core assets that power Two Harbors Investment Corp.'s strategy, which centers on Mortgage Servicing Rights (MSR). These aren't just balance sheet items; they are the engines for their specialized business model.

Proprietary operational platform, RoundPoint Mortgage Servicing LLC

The operational arm, RoundPoint Mortgage Servicing LLC, is key. Two Harbors Investment Corp. positions this platform as one of the largest servicers of conventional loans in the country. This capability lets the company impact results through direct action, unlike peers without an operating company. The subservicing business, which leverages this platform, has seen significant growth.

Here are the latest figures related to the servicing and subservicing scale:

This subservicing expansion is viewed as validation of the acquisition of RoundPoint Mortgage Servicing LLC.

Large MSR portfolio with a weighted average gross coupon of 3.53% (Q2 2025)

The MSR portfolio is the primary asset class. As of June 30, 2025, the MSR portfolio had a weighted average gross coupon rate of 3.53%. The total portfolio size, including Agency RMBS and MSR, was $11.4 billion of settled positions as of June 30, 2025, plus $3.0 billion bond equivalent value of net long to-be-announced securities (TBAs). The MSR portion of the portfolio's unpaid principal balance (UPB) was $3.02 billion as of June 30, 2025. The 60+ day delinquency rate on the MSR portfolio was 0.82% at the end of Q2 2025.

Significant MSR asset financing capacity, with $837 million unused in Q2 2025

Liquidity and financing flexibility are maintained through available capacity. Two Harbors Investment Corp. ended Q2 2025 with $837,000,000 in unused MSR asset financing capacity. Additionally, they reported an extra $61,000,000 in available capacity. Repurchase funding rose to $8.78 billion (+13%) in Q2 2025.

Highly specialized quantitative and risk management expertise

This expertise underpins the management of the leveraged portfolio. The economic debt-to-equity ratio stood at 7x as of the end of Q2 2025, impacted by a litigation accrual. Excluding that accrual, the implied leverage was about 6.3x. In Q2 2025, leverage (repo, credit, warehouse) covered 77% of total assets.

Common equity base, estimated at around $1.15 billion after the Q3 2025 settlement

Following the resolution of litigation, which involved a $375 million cash payment, the common equity base was estimated. One analysis estimated that common equity amounted to approximately $1.15 billion after the Q3 2025 settlement impact, down from $1.26 billion at the end of H1 2025. The reported book value per common share after the Q3 2025 litigation settlement expense of $175.1 million was $11.04.

Two Harbors Investment Corp. (TWO) - Canvas Business Model: Value Propositions

High, consistent dividend yield for common and preferred stockholders.

The forward dividend yield for Two Harbors Investment Corp. (TWO) as of November 29, 2025, is cited at 13.41%. The current trailing twelve month (TTM) dividend payout as of December 03, 2025, stands at $1.36 per share. Two Harbors Investment Corp. pays a quarterly dividend to its shareholders. The most recent declared common stock dividend for the third quarter of 2025 was $0.34 per share, payable on October 29, 2025, following a second quarter 2025 dividend of $0.39 per share. The first quarter 2025 common dividend was $0.45 per share.

For preferred stockholders, the second quarter 2025 dividends declared were:

• Series A Cumulative Redeemable Preferred Stock: $0.50781 per share.
• Series B Cumulative Redeemable Preferred Stock: $0.47656 per share.
• Series C Cumulative Redeemable Preferred Stock: $0.60370 per share (based on the floating rate calculation at that time).

Here's a snapshot of recent common dividend activity:

Portfolio construction designed to deliver attractive risk-adjusted returns.

Two Harbors Investment Corp. focuses on a paired strategy of Mortgage Servicing Rights (MSR) and Agency Residential Mortgage-Backed Securities (Agency RMBS). As of September 30, 2025, the company's portfolio included $9.1 billion in Agency RMBS and MSR, complemented by an additional $4.4 billion in net long to-be-announced securities (TBAs). Agency RMBS comprised 71% of the total investment portfolio balance of $13.5 billion as of the third quarter of 2025. Excluding the impact of the litigation settlement expense, the adjusted total economic return for the third quarter of 2025 was 7.6%. For the first nine months of 2025, the total economic return on book value, excluding litigation settlement expense, was 9.3%. The forward-looking static return on common equity projection is between 9.4% and 15.3%.

The portfolio composition as of September 30, 2025, included:

• Agency RMBS and MSR investment securities: $9.1 billion.
• Net long to-be-announced securities (TBAs) (bond equivalent value): $4.4 billion.
• Agency RMBS as a percentage of the $13.5 billion investment portfolio: 71%.
• Q3 2025 Adjusted Quarterly Economic Return on Book Value: 7.6%.

Natural hedge against rising interest rates by pairing MSRs with Agency RMBS.

The strategy involves pairing MSRs with Agency RMBS to manage interest rate risk. The MSR portfolio as of September 30, 2025, had a weighted average gross coupon rate of 3.58%. The 60+ day delinquency rate on the MSR portfolio was 0.87% at that time. The company's hedging coverage ratio was 85% as of June 30, 2025. The projected static return on common equity range of 9.4% to 15.3% is presented with the anticipation of potential Federal Reserve rate cuts of 50-75 basis points in 2025, demonstrating the expected performance across rate environments.

Providing MSR sellers with a strong, permanent source of liquidity.

Two Harbors Investment Corp. facilitates liquidity for sellers of MSRs through retained servicing arrangements. The company successfully onboarded a new subservicing client, seeding the relationship by selling approximately $30 billion in unpaid principal balance (UPB) of MSR on a servicing-retained basis. Of this, $19.1 billion UPB settled in the third quarter of 2025. The company settled $698.2 million in UPB of MSR through flow-sale acquisitions and recapture during the third quarter of 2025.

Institutional-quality subservicing for third-party MSR investors.

The subservicing business is a key operational component. Following the onboarding of a new client, the total serviced mortgage assets across Two Harbors Investment Corp. reached $206.3 billion, covering more than 850,000 loans as of the end of the third quarter of 2025. The MSR portfolio size, which supports this subservicing, had an associated unpaid principal balance that was expanded by the sale of $30 billion UPB on a servicing-retained basis to the new client. The total subservicing portfolio grew to roughly $40 billion in unpaid principal balance. Servicing income climbed to $155.7 million for the third quarter of 2025.

Two Harbors Investment Corp. (TWO) - Canvas Business Model: Customer Relationships

You're looking at how Two Harbors Investment Corp. manages its key external relationships, which are critical given its focus on Mortgage Servicing Rights (MSR) and Agency RMBS. These relationships span from large financial institutions providing funding to the individual borrowers serviced by its subsidiary.

The relationship with financing counterparties is primarily transactional and automated. Two Harbors Investment Corp. utilizes a mix of financing structures, including repurchase agreements, to fund its portfolio. Investors are looking toward the fourth quarter of 2025 earnings to show the early benefits of lower repurchase agreement financing costs following a challenging third quarter impacted by a $375 million settlement with former advisors from Pine River. While the exact count of financing counterparties isn't public, the nature of the business implies a network of institutions providing liquidity through these financing arrangements.

Regular, transparent communication is maintained through mandated disclosures and voluntary updates. Two Harbors Investment Corp. hosts quarterly earnings calls, such as the one for Q3 2025 on October 28, 2025, and makes all relevant materials, including the earnings press release and presentation, available on the SEC's internet site at www.sec.gov and on the company's website at www.twoinv.com. The company also provides contact information for Investor Relations, like Margaret Karr, for direct inquiries.

Shareholder relationships are managed through consistent dividend distribution. For the third quarter of 2025, Two Harbors Investment Corp. declared a common stock dividend of $0.34 per share, payable on October 29, 2025. The current dividend yield has been cited near 13.33%, 13.99%, and even as high as 19.19% depending on the specific reporting date and calculation method used, reflecting the high payout nature of the REIT structure. The company also has preferred shareholders receiving dividends on its Series A (fixed 8.125%), Series B (fixed 7.625%), and Series C (floating SOFR + 5.27% or 5.61% depending on the series) shares.

For MSR acquisition partners, Two Harbors Investment Corp., through its subsidiary TH MSR Holdings LLC, offers dedicated transaction management. This structure provides multiple execution options, including concurrent transfers of servicing (co-issue) and subsequent transfers (bulk pools). The company positions itself as one of the largest buyers of MSR over the last decade, offering partners a strong and consistent source of liquidity. Following portfolio adjustments, the company reported expanding its sub-servicing business to approximately $40 billion UPB, which follows the sale of $19.1 billion UPB of MSR in Q3 2025.

The relationship with subserviced borrowers is managed with a high-touch customer service approach via RoundPoint Mortgage Servicing LLC. RoundPoint is one of the largest servicers of conventional loans in the country, and its customer-focused approach is highlighted as a key benefit to subservicing partners. The company continues to focus on growing RoundPoint's third-party subservicing business, which is a key part of its strategy following the acquisition.

Here are some key operational and relationship metrics as of late 2025:

The direct engagement with partners is characterized by specific service offerings:

• Consistent, competitive pricing for MSR co-issue partners.
• Integration support with Fannie Mae's Servicing Marketplace (SMP).
• Streamlined seller counterparty approval process.
• Provision of a dedicated transaction manager for MSR transfers.
• Quick time to close for bulk acquisitions, averaging 45 days.

The communication channels available to stakeholders include:

• Live teleconference access via toll-free number (800) 330-6710.
• Live webcasts accessible on the company's website.
• Replay availability approximately four hours after the live call ends.
• SEC filings available on the www.sec.gov website.

Finance: draft 13-week cash view by Friday.

Two Harbors Investment Corp. (TWO) - Canvas Business Model: Channels

You're looking at how Two Harbors Investment Corp. (TWO) gets its securities, debt, and servicing rights into the market and how it interacts with investors and counterparties. It's a mix of traditional exchange listings and specialized institutional/over-the-counter dealings, reflecting its mortgage REIT structure.

New York Stock Exchange (NYSE: TWO) for common and preferred stock

The common stock trades publicly on the NYSE under the ticker TWO. As of November 28, 2025, the share price was $10.14. The market capitalization around that time was approximately $1.02B, based on 104M shares in issue as of October 23, 2025.

Dividends are a key channel for returning capital to common shareholders. For the second quarter of 2025, the declared dividend was $0.39 per share of common stock. This was followed by a third quarter 2025 common stock dividend declaration of $0.34 per share. Based on the trailing twelve-month period, Two Harbors Investment Corp. paid a total dividend of $1.63 per share, resulting in a trailing dividend yield of 16.07%.

Preferred stock also uses the NYSE as a channel. For instance, the Series C Cumulative Redeemable Preferred Stock (TWO.PR.C) had a reported market cap of $1.06B.

• Declared Q2 2025 common dividend: $0.39 per share.
• Declared Q3 2025 common dividend: $0.34 per share.
• Trailing Twelve Month (TTM) Dividend Yield: 16.07%.

Direct institutional sales for senior notes and other debt instruments

Two Harbors Investment Corp. accesses institutional capital directly through debt offerings. In May 2025, the company completed an underwritten public offering of $100 million aggregate principal amount of its 9.375% Senior Notes due 2030. This issuance was later confirmed to be $115.0 million including the over-allotment option exercise. The net proceeds after expenses were approximately $110.8 million. These notes pay interest quarterly, with the first payment commencing August 15, 2025. The issuance was intended to prefund or refinance the 6.25% senior notes due 2026 maturity.

Over-the-counter (OTC) markets for derivative and TBA transactions

The use of the OTC market is critical for Two Harbors Investment Corp.'s hedging and forward-purchase activities, primarily involving To-Be-Announced (TBA) securities. These are accounted for as derivative instruments.

Here's a look at the net long TBA position as of recent reporting dates:

This channel allows Two Harbors Investment Corp. to manage its exposure to future mortgage-backed securities purchases and interest rate risk.

Direct-to-consumer (DTC) origination platform for loan recapture

The mortgage operating company, RoundPoint Mortgage Servicing LLC, feeds loans back into the Two Harbors Investment Corp. portfolio via a DTC origination platform, which is a key part of its strategy to impact results directly. This is referred to as loan recapture.

Activity in the DTC channel for Q3 2025 showed strong momentum, with management noting that DTC originations recorded their 'most-ever locks in September'.

• Q2 2025 First Lien Loans Funded UPB: $48.6 million.
• Q3 2025 First Lien Loans Funded UPB: $49.8 million.
• Q2 2025 Second Lien Loans Brokered UPB: $44.0 million.
• Q3 2025 Second Lien Loans Brokered UPB: $60.1 million.

Fannie Mae's Servicing Marketplace (SMP) for co-issue MSR transfers

Mortgage Servicing Rights (MSRs) are a core asset, and transfers occur through flow-sale acquisitions, bulk purchases, and recapture, often facilitated through channels like the SMP. Two Harbors Investment Corp. actively settles MSRs through these channels.

MSR portfolio activity for the first half of 2025:

Furthermore, a significant channel event in Q3 2025 involved boarding a new subservicing client, which was seeded by the sale of approximately $30 billion UPB of MSR on a servicing-retained basis, with $19.1 billion of that settling during the quarter. As of September 30, 2025, the MSR portfolio's weighted average gross coupon rate was 3.58%.

Two Harbors Investment Corp. (TWO) - Canvas Business Model: Customer Segments

Retail and institutional investors seeking high-dividend income (REIT structure).

• Declared common stock dividend of $0.39 per share for the second quarter of 2025.
• Declared common stock dividend of $0.45 per share for the first quarter of 2025.
• Market Capitalization as of October 23, 2025, was $1.02B.
• Shares outstanding as of October 23, 2025, were 104M.

Third-party MSR investors requiring subservicing administration.

• Subservicing portfolio grew to roughly $40 billion in unpaid principal balance (UPB) as of the third quarter of 2025.
• Secured a major new third-party subservicing client in the third quarter of 2025.

Mortgage originators and financial institutions selling MSRs for liquidity.

• Sold $19.1 billion of mortgage servicing rights (MSR) in the third quarter of 2025.
• Scheduled to sell an additional $10 billion of MSRs.
• Committed to purchase $1.7 billion UPB of MSRs post-March 31, 2025, through two bulk acquisitions.

Borrowers whose loans are serviced by the RoundPoint platform.

Two Harbors Investment Corp., through its subsidiary RoundPoint Mortgage Servicing LLC, services a significant volume of conventional loans.

The MSR portfolio had a weighted average gross coupon rate of 3.53% as of June 30, 2025.

Two Harbors Investment Corp. (TWO) - Canvas Business Model: Cost Structure

You're looking at the cost side of Two Harbors Investment Corp.'s (TWO) operations as of late 2025, and honestly, the biggest, most immediate hit this quarter came from a non-recurring legal event. The cost structure is heavily influenced by financing, but the legal settlement really dominated the Q3 numbers.

Significant interest expense on repurchase agreements and revolving credit facilities remains a fundamental, ongoing cost. While I don't have the exact interest expense for Q3 2025, we know that the net interest and servicing income line benefited from lower financing costs, which suggests the underlying interest expense on borrowings was managed or reduced relative to the prior period. For context on the financing side, the company is planning to redeem its outstanding convertible notes, specifically $261.9 million by January 2026, which should alter the future interest expense profile by reducing structural leverage.

The most striking cost element in the third quarter of 2025 was the litigation settlement expense. Two Harbors Investment Corp. recorded a one-time charge of $175.1 million, which translated to $1.68 per weighted average common share. This expense was the difference between the $375 million cash payment made to the former external manager and the $199.9 million contingency accrual recorded in Q2 2025. This single event drove the reported comprehensive loss for the quarter to $80.2 million, or $(0.77) per share.

General administrative and compensation costs for the internal management team are captured within operating expenses. For the second quarter of 2025, the operating expenses, excluding non-cash long-term incentive plan amortization and certain litigation-related costs, were reported at $38,050 thousand. This figure gives you a baseline for the recurring overhead before the major legal impact.

The investment in technology and AI for the RoundPoint servicing platform is a strategic cost, though the most concrete numbers are from the acquisition itself. Matrix Financial Services Corporation paid a preliminary purchase price of $23.6 million for RoundPoint, which included a premium of $10.5 million over tangible net book value. Management anticipated this vertical integration would yield incremental pre-tax earnings in 2024 of $25-30 million through cost savings and new revenues, which is the return side of that technology/platform investment.

Regarding hedging costs, which include premiums paid on swaps, futures, and options used to manage interest rate risk on the Agency RMBS portfolio, the financial statements reflect the notional amounts of these hedges but do not explicitly break out the premium expense for Q3 2025 in the summaries available. The cost is embedded within the overall interest expense and derivative valuation changes.

Here's a quick look at the major financial impacts from Q3 2025:

The underlying operational performance, excluding the settlement, was solid, showing a 7.6% quarterly economic return on book value. Still, the leverage profile shifted, with Economic Debt to Equity increasing to 7.2 times as of the end of the quarter.

You should keep an eye on the financing costs, as they are the primary recurring expense for a REIT like Two Harbors Investment Corp. The company declared a dividend of $0.34 per common share for the quarter, which must be covered by net interest and servicing income after all operating and financing costs are accounted for.

• Net Interest and Servicing Income increase (QoQ): $2.8 million.
• MSR Portfolio UPB sold/settled in Q3 2025: $30 billion UPB on a servicing-retained basis.
• Historical RoundPoint acquisition premium: $10.5 million.

The cost of capital, reflected in interest expense, is the constant pressure point against the revenue generated from the Agency RMBS and MSR portfolios. Finance: draft 13-week cash view by Friday.

Two Harbors Investment Corp. (TWO) - Canvas Business Model: Revenue Streams

Two Harbors Investment Corp. generates its revenue primarily through its investments in Agency residential mortgage-backed securities (Agency RMBS) and its significant portfolio of mortgage servicing rights (MSRs), supported by its subservicing platform.

Net interest income (NII) from the Agency RMBS portfolio forms a core component, derived from the spread between the interest earned on its Agency RMBS holdings and the cost of financing those assets. As of September 30, 2025, the company's portfolio included approximately $9.1 billion of Agency RMBS, MSR, and other investment securities, which are leveraged to generate this income.

Net servicing income from the MSR portfolio, including float income, is another critical stream. This income benefits from the servicing fees collected and the income earned on the servicing advance float (the interest earned on escrow and corporate funds held temporarily). Earnings Available for Distribution (EAD) in the third quarter of 2025 rose to $0.36 per share, helped by higher float/servicing fee income.

Net dollar roll (NDR) income from To-Be-Announced (TBA) securities provides revenue from the roll yield on forward-settling TBA contracts. Two Harbors Investment Corp. held approximately $4.4 billion bond equivalent value of net long TBA securities as of September 30, 2025.

Subservicing fees charged to third-party MSR owners are growing, representing a fee-based revenue stream from the operational platform. The company significantly increased this business by selling approximately $30 billion in unpaid principal balance (UPB) of MSRs on a servicing-retained basis to seed a new client.

The trailing 12-month revenue for Two Harbors Investment Corp. as of September 30, 2025, was reported at $532.21 million. This figure reflects the combined impact of all revenue-generating activities over the preceding four quarters.

Here's a quick look at some key figures related to the Q3 2025 operational performance, excluding the litigation settlement expense:

You can see how the MSR growth directly feeds into the servicing income stream. The core drivers of the business's profitability, when looking past GAAP noise, are these asset-based and fee-based revenues:

• Agency RMBS generating Net Interest Income.
• MSR Portfolio generating servicing fees and float income.
• TBA Securities contributing Net Dollar Roll income.
• Subservicing Operations providing fee income from third parties.

The reported GAAP revenue for the third quarter of 2025 was -$23.50 million, but excluding the litigation settlement, the operational results showed comprehensive income of $94.9 million for the quarter. Finance: draft 13-week cash view by Friday.