Two Harbors Investment Corp. (NYSE: TWO-PC)

Two Harbors Investment Corp. is a Maryland corporation that invests in, finances, and manages mortgage servicing rights and Agency residential mortgage-backed securities. The company operates as an internally managed real estate investment trust and is listed on the New York Stock Exchange under the symbol TWO. Two Harbors Investment Corp. focuses on managing interest rate and prepayment risk to deliver stable performance across changing market environments.

Two Harbors Investment Corp. generates revenue primarily from contractual servicing fees and interest/float income on custodial deposits related to its mortgage servicing rights portfolio. The company also earns income from interest payments on its Agency residential mortgage-backed securities portfolio. Revenue is derived from servicing activities performed for both owned and third-party mortgage servicing rights, as well as from financing and investment activities in its target asset classes.

The company operates through the following segments: Mortgage Servicing Rights and Agency Residential Mortgage-Backed Securities.

• Mortgage Servicing Rights: This segment involves the right to control the servicing of residential mortgage loans, receive servicing income, and service loans in accordance with applicable laws. Two Harbors Investment Corp. acquires mortgage servicing rights through flow and bulk purchases from third-party originators and through recapture on loans in its portfolio that refinance. The segment also includes mortgage servicing rights originated by its wholly owned subsidiary, RoundPoint Mortgage Servicing LLC. RoundPoint Mortgage Servicing LLC is a nationally recognized servicer of conventional loans and holds approvals from Fannie Mae, Freddie Mac, and Ginnie Mae to service residential mortgage loans.

• Agency Residential Mortgage-Backed Securities: This segment consists of securities whose principal and interest payments are guaranteed by a U. S. government agency or government-sponsored enterprise. Two Harbors Investment Corp. invests in mortgage pass-through certificates, collateralized mortgage obligations, uniform mortgage-backed securities, and to-be-announced forward contracts issued by Fannie Mae, Freddie Mac, or Ginnie Mae. The segment also includes interest-only and inverse interest-only securities backed by single-family and multi-family mortgage loans.

Two Harbors Investment Corp. competes with other REITs, specialty finance companies, banks, mortgage bankers, insurance companies, mutual funds, institutional investors, and asset management firms in acquiring its target assets. The company differentiates itself through its expertise in managing interest rate and prepayment risk, its integrated platform combining mortgage servicing rights and Agency residential mortgage-backed securities, and its focus on delivering stable performance across market cycles. Two Harbors Investment Corp. maintains a moderate risk profile by balancing its portfolio to offset risks between its mortgage servicing rights and Agency residential mortgage-backed securities holdings.

Two Harbors Investment Corp. serves homeowners, investors in mortgage-backed securities, and third-party clients for whom it acts as a subservicer. The company provides servicing for mortgage loans underlying its own mortgage servicing rights portfolio as well as for mortgage servicing rights owned by third parties. Two Harbors Investment Corp. also engages with originators and investors in the secondary market for its origination and financing activities related to mortgage loans and mortgage servicing rights.