What caused TWO's EPS to decline in 2024?

Two Harbors Investment's (TWO) EPS decline in 2024 can be attributed to several key factors: 1. **Revenue Decline**: The company experienced a significant drop in revenue, with a 43% decrease from the second quarter of 2023, totaling $136.8 million. This decline was primarily driven by higher expenses. 2. **Net Income Decrease**: There was a substantial decrease in net income, with a 76% reduction from the second quarter of 2023, resulting in $44.6 million. This decline is reflective of the challenges faced by the company in maintaining profitability amidst rising expenses. 3. **Profit Margin Compression**: The profit margin for TWO decreased notably, dropping from 78% in the second quarter of 2023 to 33%. This compression was largely due to the increased costs, which ate into the company's profit base. 4. **Higher Expenses**: Expenses scaled up significantly, rising from $20.8 million in the second quarter of 2023 to $38.9 million in the second quarter of 2024. These increased expenses include those related to servicing activities, which ate into the company's profitability. In summary, TWO's EPS decline in 2024 was primarily caused by a combination of revenue decline, net income decrease, profit margin compression, and higher expenses. These factors collectively contributed to a challenging financial performance for the company.