Two Harbors Investment Corp. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Earnings Per Share

Earnings Per Share

9 Months Ended

Sep. 30, 2021

The following table presents a reconciliation of the earnings (loss) and shares used in calculating basic and diluted earnings (loss) per share for the three and nine months ended September 30, 2021 and 2020:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands, except share data)	2021		2020		2021		2020
Basic Earnings (Loss) Per Share:


Net income (loss)	$	66,324	$	201,914	$	188,521	$	(1,841,306)


Dividends on preferred stock	13,748		18,950		44,711		56,851
Dividends and undistributed earnings allocated to participating restricted stock units	200		—		532		—
Net income (loss) attributable to common stockholders, basic	$	52,376	$	182,964	$	143,278	$	(1,898,157)
Basic weighted average common shares	307,773,420		273,705,785		285,192,353		273,567,998
Basic earnings (loss) per weighted average common share	$	0.17	$	0.67	$	0.50	$	(6.94)
Diluted Earnings (Loss) Per Share:
Net income (loss) attributable to common stockholders, basic	$	52,376	$	182,964	$	143,278	$	(1,898,157)
Reallocation impact of undistributed earnings to participating restricted stock units	(13)		—		(24)		—

Interest expense attributable to convertible notes (1)	4,848		4,812		12,755		—
Net income (loss) attributable to common stockholders, diluted	$	57,211	$	187,776	$	156,009	$	(1,898,157)
Basic weighted average common shares	307,773,420		273,705,785		285,192,353		273,567,998
Effect of dilutive shares issued in an assumed vesting of performance share units	—		—		240,759		—
Effect of dilutive shares issued in an assumed conversion	38,956,653		18,171,150		34,533,003		—
Diluted weighted average common shares	346,730,073		291,876,935		319,966,115		273,567,998
Diluted earnings (loss) per weighted average common share	$	0.17	$	0.64	$	0.49	$	(6.94)

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(1)If applicable, includes a nondiscretionary adjustment for the assumed change in the management fee calculation.

For the three and nine months ended September 30, 2021, participating RSUs were included in the calculations of basic and diluted earnings per share under the two-class method since it was more dilutive than the alternative treasury stock method.

For the three months ended September 30, 2021, excluded from the calculation of diluted earnings per share is the effect of adding 438,396 weighted average common share equivalents related to the assumed vesting of outstanding PSUs, as their inclusion would be antidilutive. For the nine months ended September 30, 2021, the assumed vesting of outstanding PSUs was included in the calculation of diluted earnings per share under the two-class method since it was more dilutive than the alternative treasury stock method.

For the three and nine months ended September 30, 2021, excluded from the calculation of diluted earnings per share is the effect of adding back $2.4 million and $8.0 million of interest expense and 9,087,092 and 14,314,176 weighted average common share equivalents, respectively, related to the assumed conversion of the Company’s convertible senior notes, as their inclusion would be antidilutive. For the nine months ended September 30, 2020, excluded from the calculation of diluted earnings per share is the effect of adding back $14.3 million of interest expense, net of a nondiscretionary adjustment for the assumed change in the management fee calculation, and 18,171,150 weighted average common share equivalents related to the assumed conversion of the Company’s convertible senior notes, as their inclusion would be antidilutive.