Two Harbors Investment Corp. (NYSE:TWO) Q4 2018 Earnings Conference Call Transcript

Feb 07, 2019 • 09:00 am ET


Two Harbors Investment Corp. (NYSE:TWO) Q4 2018 Earnings Conference Call Transcript


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Good morning. My name is Marian, and I'll be your conference facilitator. At this time, I would like to welcome everyone to Two Harbors Fourth Quarter 2018 Financial Results Conference Call. (Operator Instructions) Today's conference is being recorded.

I would now like to turn the conference over to Maggie Field with Investor Relations for Two Harbors.

Margaret Field

Thank you, and good morning, everyone. Thank you for joining our call to discuss Two Harbors Fourth Quarter 2018 Financial Results. With me on the call this morning are Tom Siering, our President and CEO; Mary Riskey, our CFO; and Bill Roth, our CIO.

After my introductory comments, Tom will provide an overview of our quarterly and annual results, Mary will highlight key items from our financials and Bill will review our portfolio performance and strategy. The press release and financial tables associated with today's call were filed yesterday with the SEC. If you do not have a copy, you may find them on our website or on the SEC's website at

In our earnings release and slides, which are now posted on the Investor Relations section of our website, we have provided a reconciliation of GAAP to non-GAAP financial measures. We urge you to review this information in conjunction with today's call. I would also like to mention that this call is being webcast and may be accessed on our website in the same location.

Before I turn the call over to Tom, I would like to remind you that remarks made by management during this conference call and the supporting slides may include forward-looking statements. Forward-looking statements are based on the current beliefs and expectations of management, and actual results may be materially different because of a variety of risks and other factors. Such statements are typically associated with words such as anticipate, expect, estimate and believe, or other such words. We caution investors not to rely unduly on forward-looking statements.

Two Harbors describes these risks and uncertainties in its annual report on Form 10-K for the fiscal year ended December 31, 2017, and in other filings it makes or may make with the SEC from time to time, which are available in the Investor Relations section of Two Harbors website and on the SEC's website at Except as may be required by law, Two Harbors does not update forward-looking statements and expressly disclaims any obligation to do so.

I will now turn the call over to Tom.

Thomas Siering

Thank you, Maggie, and good morning, everyone. We hope that you had a chance to review our earnings press release and presentation that we issued last night.

Please turn to Slide 3 to review our results. This quarter, despite our best risk management and hedging efforts, our book value declined to $13.11 per share. The greatest impact to our book value resulted from spread widening on higher coupon agency securities, which is primarily what we own in our rates strategy. While this book value performance was below our expectations, we believe there is