Slide 1: MFA Financial, Inc. September 2010
September 2010 MFA FINANCIAL, INC.
Slide 2: Forward Looking Statements
Forward Looking Statements sinawerae. ive ‘When used in this presentation or other written or oral communications. statements which are not historical in nature. including those containing words such as “believe.” “ continue,” “intend,” “should,” “may” or similar expressions, are intended to identif
Slide 3: MFA is positioned with the requisite expertise to benefit from investment in MBS
MFA is positioned with the requisite expertise to benefit from investment in Agency and Non-Agency Residential MBS
Slide 4: Experienced Management Team Focused on Residential MBS Opportunities
Experienced Management Team Focused on Residential MBS Opportunities >» Non-Agency MBS remain available at deep discounts to par value. >» Agency MBS continue to benefit from a steep yield curve. > Our goal remains to generate double-digit ROEs with appropriate levels of leverage.
Slide 5: Solid Long Term Results
Solid Long Term Results 15.07% Annual Return Since January 2000 60 “100 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Mar-10 Jun-l0 —=uFA ser —SeP Fin Source: Bloomberg Includes reinvestment of dividends
Slide 6: Growth in Book Value Per Share
Growth in Book Value Per Share FINANCIAL, INC 44% Growth in Book Value per Common Share Dollars Per Share over the last 18 Months December 31, 2008 December 31, 2009 June 30,2010
Slide 7: MFA Asset Allocation Strategy
MFA Asset Allocation Strategy Investment in Residential MBS Including Both Agency MBS and Non-Agency MBS* FINANC AL, 1N¢ MFR Legacy Non- AtJune 30, 2010 AgencyMBS MBS (1) _Agency MBS Cash Other, net Total (Sin Million) —_ Amortized cost S$ 6171 $ 103 § 236 «$575 SS BS 8.648 Asset fair value S638 $§
Slide 8: MFA Investment Strategy
MFA Investment Strategy FINANCIAL, INC Higher Yielding Non-Agency MBS generated over 60% of MFA Second Quarter Net Interest Income Wi Non-Agency MBS: $37,657 ml Agency MBS: $21.940 MM Cash: $112 Dollars in Thousands 8 “Includes interest income on Non-Agency MBS and interest expense on repurchase agr
Slide 9: MFA Strategy - Agency MBS
MFA Strategy - Agency MBS MPA Strategically Positioning Agency MBS Portfolio The Agency MBS Portfolio (which is more sensitive to potential increases in prepayments and interest rates) has been reduced from in excess of $10 Billion to a current Target Range of $6 to $6.5 Billion MFA Agency Portfolio
Slide 10: MFA Strategy — Agency MBS
MFA Strategy — Agency MBS MPA MFA is acquiring Agency MBS to replace runoff > The majority of our assets will continue to be whole- pool Agency MBS due to the attractiveness of the asset class and for purposes of our exemption under the Investment Company Act of 1940. > The yield curve remains steep
Slide 11: MFA Strategy — Non-Agency MBS
MFA Strategy — Non-Agency MBS Strategically Increasing Non-Agency MBS Portfolio MFA continues to identify high-yielding Non-Agency MBS at deeply discounted prices MFA Non-Agency Portfolio* = $2,500 Z E 2,008 a $2,000 S a eS = s $1,500 & $1,000 = $500 a 204 o | i December 2008 June 2010 “Includes $44
Slide 12: MFA Strategy - Non-Agency MBS
MFA Strategy - Non-Agency MBS* MEA >Since December 2008, MFA has acquired approximately $1.8 billion market value of Non-Agency MBS. These Non-Agency MBS have an average amortized cost of 65% of par. >In the Second Quarter of 2010, these assets on an unlevered basis generated a loss adjusted yield o
Slide 13: MFA Strategy — MFR Non-Agency MBS
MFA Strategy — MFR Non-Agency MBS FINANCIAL, INC Deeply discounted purchase price, substantial credit reserve and 8.45% credit enhancement mitigate credit risk* MER Portfolio As of June 30, 2010 Current Face $2,501,859 13 Dollars in Thousands “Includes $444 million af Non-Agency MBS underlying MBS F
Slide 14: MFA is positioned with the requisite expertise to benefit from investment in MBS
MFA is positioned with the requisite expertise to benefit from investment in Agency and Non-Agency Residential MBS
Slide 15: MFA Financial, Inc.
MFA FINANCIAL, INC.