Two Harbors Investment Corp. (NYSE: TWO), a real estate investment trust that invests in residential mortgage-backed securities (RMBS), residential mortgage loans, mortgage servicing rights (MSR) and other financial assets, today announced its financial results for the quarter ended December 31, 2013.
- Book value was $10.56 per diluted common share, representing a 4.5% (2) return on book value, after accounting for a dividend of $0.26 per share.
- Delivered Comprehensive Income of $171.4 million, or $0.47 per diluted weighted average common share. Comprehensive Income for the year ended December 31, 2013 was $327.3 million, a return on average equity of 8.5%, or $0.93 per diluted weighted average common share.
- Reported Core Earnings of $76.4 million, or $0.21 per diluted weighted average common share.
- Generated an aggregate yield of 4.3% in the portfolio, driven primarily by Agency RMBS, Agency Derivatives and MSR yield of 3.2%.
- Completed a bulk acquisition of MSR from Flagstar Bank, FSB (Flagstar), a subsidiary of Flagstar Bancorp, Inc., and initiated a flow sale arrangement with PHH Mortgage Corporation (PHH) to acquire MSR on newly originated residential mortgage loans.
- Announced that TH Insurance Holdings Company LLC (TH Insurance), a wholly owned subsidiary of the company, was approved for membership in the Federal Home Loan Bank of Des Moines (FHLB), providing a diversified funding source and increased portfolio flexibility through a variety of products and services provided by the FHLB.
“Two Harbors delivered strong return on book value of 10.4% (1) in 2013 despite a challenging backdrop, which is a testament to our portfolio management and risk mitigation strategies,” stated Thomas Siering, Two Harbors’ President and Chief Executive Officer. “Importantly, we also reported significant achievements related to our new investment initiatives this year, which we believe will create franchise value and drive attractive long-term returns for our stockholders.”
(1) Return on book value for the year ended December 31, 2013 is defined as the decrease in book value per diluted share, from December 31, 2012 to December 31, 2013 of $0.98, plus dividends declared of $2.18 per share, including the Silver Bay common stock dividend amounting to $1.01 per share, divided by December 31, 2012 diluted book value of $11.54 per share.