Two Harbors Investment Corp. (NYSE: TWO) has officially announced the completion of its acquisition of Roundpoint Mortgage Servicing Llc through its subsidiary, Matrix Financial Services Corporation (“Matrix”). This strategic move, finalized on October 2, 2023, marks a significant step for Two Harbors in expanding its capabilities within the mortgage servicing sector. RoundPoint will now operate as a wholly-owned subsidiary of Matrix, retaining its existing servicing licenses and operational infrastructure.
This acquisition is projected to bring substantial financial benefits to Two Harbors, with anticipated pre-tax earnings increases of $25-30 million in 2024. These gains are expected to stem from a combination of new revenue streams and cost efficiencies achieved through the vertical integration of self-servicing functionalities. By incorporating RoundPoint’s established platform, Two Harbors aims to exert greater control over its Mortgage Servicing Rights (MSR) portfolio, enhancing its operational agility and responsiveness within the market.
Bill Greenberg, President and CEO of Two Harbors, expressed enthusiasm about the acquisition, stating, “This is an exciting and transformative acquisition for our company. RoundPoint’s highly experienced team and best-in-class operational platform is an excellent fit with Two Harbors. We believe this acquisition will add significant value for stakeholders of Two Harbors through increased cashflows, operational efficiencies and the ability to participate more fully in the mortgage finance space as opportunities arise.”
The initial purchase consideration for RoundPoint was $23.6 million. This figure comprises RoundPoint’s tangible net book value plus a premium of $10.5 million, adjusted for certain closing conditions. The final purchase price remains subject to standard post-closing adjustments. The acquisition was legally advised by Jones Day, acting as counsel for Two Harbors throughout the transaction.
Strategic Advantages of Acquiring RoundPoint Mortgage Servicing LLC
The acquisition of RoundPoint Mortgage Servicing LLC is poised to deliver several key strategic advantages to Two Harbors Investment Corp.:
- Enhanced Earnings Potential: The projected $25-30 million increase in pre-tax earnings for 2024 underscores the immediate financial uplift expected from this acquisition. This boost is attributed to the synergistic integration of RoundPoint’s servicing operations into Two Harbors’ existing framework.
- Greater Control Over MSR Portfolio: Self-servicing capabilities gained through RoundPoint provide Two Harbors with direct oversight and management of its MSR portfolio. This enhanced control is crucial for optimizing asset performance and mitigating risks in the dynamic mortgage market.
- Platform for Future Growth: RoundPoint’s established servicing platform presents Two Harbors with a robust foundation for future expansion. There are significant opportunities to leverage RoundPoint’s infrastructure to grow its third-party subservicing business and explore additional ventures within the broader mortgage finance landscape.
Forward-Looking Perspective
While the acquisition of RoundPoint Mortgage Servicing LLC is expected to yield considerable benefits, Two Harbors Investment Corp. has included a cautionary note regarding forward-looking statements in their announcement. Statements regarding anticipated earnings, future opportunities, and the projected benefits of the acquisition are subject to risks, uncertainties, and assumptions that could cause actual results to differ materially from current expectations. Investors are advised to consult Two Harbors’ filings with the SEC for a comprehensive understanding of these potential risks and uncertainties.
About Two Harbors Investment Corp.
Two Harbors Investment Corp., a Maryland corporation, operates as a real estate investment trust (REIT) specializing in residential mortgage-backed securities (RMBS), mortgage servicing rights (MSR), and other financial assets. Headquartered in St. Louis Park, MN, Two Harbors is publicly traded on the NYSE under the ticker symbol TWO.
Further Information
For additional details about Two Harbors Investment Corp. and the acquisition of RoundPoint Mortgage Servicing LLC, interested parties can visit the company’s website at www.twoharborsinvestment.com or the Securities and Exchange Commission’s website at www.sec.gov. Direct inquiries can also be made to Two Harbors Investment Corp. at their corporate address or via telephone.
