Mfa Financial, Inc. · NYSE:MFA
Mfa Financial — MFA Mortgage Investments — Shareholder Meeting (May 2006)
14 slides from Mfa Financial's shareholder meeting presentation, May 23, 2006
Slide 1: Annual Stockholder Meeting May 25, 2006
MIA MORTGAGEINVESTMENTS, INC. Annual Stockholder Meeting May 25, 2006
Slide 2: Forward-Looking Statements
Forward-Looking Statements MFA 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 id
Slide 3: MFA Overview
MFA 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 + Target Federal Funds Rate is 5.00% + The U.S. Federal Open Market Committee has increased the target federal funds rate by 25 basis points at each of its last 16 meetings. - FOMC statement of May 10, 2006 indicates some further policy firming may yet be needed to
Slide 5: Flattening Yield Curve
Flattening Yield Curve MFA Yield (%) rs an U.S. Treasury Curves 3Month 6Month 2 Year 3 Year 5 Year Maturity — 12/31/2005 —— 5/22/2006 10 Year Source: Bloomberg
Slide 6: Refinancing Index chart
R -— = o E > iS = o mt a o ep S op — = REFI Index SA -9007/T/S P9007/T/€ -9007/T/T rsooc/c/ TT rS007/T/6 rSooc/e/L rsO00T/T/S pSO0T/T/E rSO007/7/T rrooc/c/11 rh007/T/6 3000 2800 2600 2400 2200 2000 1800 1600 1400 1200 POOT/ T/L w Source: Bloomberg MFA
Slide 7: Investment Strategy
Investment Strategy MFA High credit quality Hybrid and one-year ARM MBS Maintain conservative assets-to-equity ratio Approximately 99% of the Company’s assets are issued or guaranteed by Fannie Mac, Freddie Mac or Ginnie Mae, rated “AAA”, related receivables or cash ‘? Assets are liquid and easy to
Slide 8: Second Quarter 2006 Portfolio Repositioning
Second Quarter 2006 Portfolio Repositioning MFA On May 17, 2006, MFA announced the sale of approximately $1 billion of MBS with realized losses of approximately $25 million Sale of lower-yielding assets increases MFA’s portfolio spreads Asset-to-equity ratio is reduced from 7X to less than 6X ona pr
Slide 9: Current MBS Assets
Current MBS Assets Assets by Time to Reset or Prepayment* (As of March 31, 2006) 64% Reset 37 to 60 Months 25t036Months 79, — 4% 13 to 24 Months 16% Within 12 Months 73% 25% constant prepayment rate (“CPR”) MFA “wn :
Slide 10: MFA Interest Spread Over Time
MEA Interest Spread Over Time 10.00% 9.00% 8.00% 7.00% 6.00% [ee N 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% Mar-00 Sep-00 Mar-O1 Sep-O1 Mar-02 Sep-02 Mar-03 Sep-03 Mar-04 Sep-04 Mar-05 Sep-05 Mar-06 -— Net Vield on Interest Earning Assets —— Cost of Funds MFA 9
Slide 11: Playbook for Fed Tightening and a Flattening Yield Curve
Playbook for Fed Tightening and a Flattening Yield Curve - If available spreads are not compelling, reduce the MBS portfolio size. 7.0 65 6.0 55 $ Billion 5.0 45 4.0 Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-08 MFA 10
Slide 12: Playbook for Fed Tightening and a Flattening Yield Curve
Playbook for Fed Tightening and a Flattening Yield Curve Opportunistically Repurchase Shares + 4,000,000 share repurchase program announced in 2005 + Through April 28, 2006, MFA had repurchased 3,191,200 shares at a weighted average cost per share of $5.90 + On May 3, 2006, share repurchase program
Slide 13: Playbook for Fed Tightening and a Flattening Yield Curve
Playbook for Fed Tightening and a Flattening Yield Curve + We anticipate non-agency MBS bonds will be negatively impacted as housing price increases moderate or possibly decline -As mortgage bonds are impacted by increased delinquencies, defaults and credit losses, bond investors will demand higher
Slide 14: MFA Mortgage Investments, Inc.
MEA MORTGAGEINVESTMENTS, INC. 13
MFA Mortgage Investments — Shareholder Meeting (May 2006) on 6ix