Mfa Financial, Inc. · NYSE:MFA
Mfa Financial — MFA Mortgage Investments — Investor Presentation (November 2006)
13 slides from Mfa Financial's investor presentation, Nov 13, 2006
Slide 1: MFA Mortgage Investments, Inc.
MIA MORTGAGE INVESTMENTS, INC.
Slide 2: Forward-Looking Statements
MFA ward-Looking Statements When used in this presentation or other written or oral communications, statements which are not historical in nature, including those containing words such as “anticipate,” “estimate,” “should,” “expect,” “believe,” “intend” and similar expressions, are intended to ident
Slide 3: MFA Overview
MEA Overview MFA MEA invests on a leveraged basis in high-quality hybrid and adjustable-rate mortgage-backed securities.
Slide 4: Current Interest Rate Environment
Current Interest Rate Environment MFA On October 25, 2006: FOMC held federal funds rate at 5.25% for its third consecutive meeting Previously: FOMC had increased federal funds rate by 25 basis points at each of its last 17 meetings Per FOMC: readings on core inflation have been elevated although inf
Slide 5: Inverted Yield Curve
Inverted Yield Curve U.S. Treasury Curves 5.2 5.0 4.8 TN 4.6 44 4.2 4.0 + 1 1 1 3Month 6Month 2Year 3 Year 5Year 10Year Yield (%) Maturity — 12/30/2005 ——11/6/2006 Source: Bloomberg MFA 4
Slide 6: Current Interest Rate Environment
Current Interest Rate Environment Due to the impact of... ¢ Increases of Fed Funds from 1.00% to 5.25% * The inverted yield curve An initial fixed rate period for hybrid MBS ...we currently anticipate that MFA’s fourth quarter earnings per share will approximate its third quarter earnings per share.
Slide 7: Investment Strategy
Investment Strategy . Approximately 99% of the Company’s assets are issued or guaranteed by Fannie Mac, Freddie Mac High credit quality or Ginnie Mae, rated “AAA”, related receivables or cash “ * Assets are liquid and easy to finance Coupons reset based on short-term interest rates Hybrid and one-ye
Slide 8: Current MBS Assets
Current MBS Assets MBS by Time to Reset or Prepayment* (as of September 30, 2006) Greater than 60 45% Reset Months 14% Estimated Prepays 37 to 60 Months 1% ee 18% 25 to 36 Months. % Within 12 Months 59% 13 to 24 Months 13% * Applying a 25% constant prepayment rate ("CPR") MFA 7
Slide 9: MFA Interest Spread Over Time
MEA Interest Spread Over Time MFA 10.00% 9.00% 8.00% 7.00% 6.00% ~ 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% PPMMOP HPSS SPP A Kew? [Nat Yield on Interest Earning Assets—— Cost of Funds
Slide 10: Playbook for Current Interest Rate Environment
Playbook for Current Interest Rate Environment MFA Invest opportunistically as spreads become attractive $ Billion 3.0 Dec-04 Mar-05 Jun-05 — Sep-05—Dec-05.— Mar-06 Market Value of MBS Portfolio Jun-06 Sep-06
Slide 11: Increasing Portfolio Yield
Increasing Portfolio Yield MFA Positive Impact of New Investments on Portfolio Yield 6.0%. 5.5% 5.0% 45% 4.0% 4 3.5% Jan-06 —Feb-06 = Mar-06—Apr06—May-06—Jun-06Juk06——Aug-06 Sep-06 [—Vield on Assets Acquired in 2006 ——=Yield on Assets Acquired Prior to 2006 —Total Portfolo 10
Slide 12: Poised to Benefit From Opportunities in the MBS Marketplace
Poised to Benefit From Opportunities in the MBS Marketplace »We anticipate non-agency MBS will be negatively impacted as housing prices decline. «As MBS are impacted by increased delinquencies, defaults and credit losses, mortgage investors will demand higher yields, widening available spreads. »MFA
Slide 13: Slide 13
MFA Mortgage Investments — Investor Presentation (November 2006) on 6ix