Slide 1: May 2013
May 2013 FINANCIAL, INC
Slide 2: Forward-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 “will,” “believe,” “expect,” “anticipate,” “estimate,” “plan,” “continue,” “intend,” “should,” “may” or similar expressions, are intended to
Slide 3: MFA is an internally managed REIT
MFA is an internally managed REIT that seeks to deliver shareholder value through both the generation of distributable income and through asset performance linked to improvement in residential mortgage credit fundamentals. MFA Financial, Inc. 3
Slide 4: Our Strategy is to Identify the Best Investment Opportunities Throughout the Residential MBS Universe
Non-Agency MBS selection is driven by credit analysis and expected return. Agency MBS selection is driven by analysis of interest rate sensitivity, prepayment exposure and expected return. Book value per common share was $8.84 as of March 31, 2013, compared to $8.99 at December 31, 2012. Excluding t
Slide 5: MFA has a Long Track Record of Delivering Attractive Shareholder Returns
MFA has a Long Track Record of Delivering Attractive Shareholder Returns* Source: Bloomberg *Through March 31, 2013. Includes reinvestment of dividends. 17.3 % Annual Return since January 2000 727.8% Total Stockholder Return since January 2000 5
Slide 6: MFA Asset Allocation Strategy
MFA Asset Allocation Strategy Investment in Residential MBS Including both Agency MBS and Non-Agency MBS 6 (1) Information presented with respect to Non-Agency MBS and related financings (which includes repurchase agreements) and resulting totals are presented on a non-GAAP basis. Includes $46.6 mil
Slide 7: MFA Strategy - Agency MBS
MFA Strategy - Agency MBS Lower Duration Assets that Either Reset or are Fixed for 15 Years or Less 63% Hybrid 37% 15-Year Fixed Low Premium Exposure Agency Portfolio average amortized cost of 103.4% Runoff of High Cost Funding During 2013, approximately $960 million notional amount of existing swap
Slide 8: MFA Strategy - Non-Agency MBS: Significant Investment in Non-Agency MBS
MFA owns approximately $5.4 billion market value ($6.3 billion face amount) of Non-Agency MBS, with an average amortized cost of 73% of par. In the first quarter, these assets generated a loss-adjusted yield of 6.80% on an unlevered basis. We have lowered our estimate of future losses within MFA’s N
Slide 9: MFA Strategy - Non-Agency MBS
Non-Agency MBS universe continues to shrink providing technical support for existing assets MFA Strategy - Non-Agency MBS * Source: CoreLogic, 1010Data 9
Slide 10: Non-Agency MBS – 20 Largest Positions
*Data as of March 31, 2013. FICO scores and percentage amortizing as of deal origination date. Non-Agency MBS – 20 Largest Positions* MFA’s Non-Agency yields are based on projections that assume defaults well in excess of currently delinquent mortgages 10 % of Total Portfolio Collateral Type FICO WA
Slide 11: MFA Strategy – Non-Agency MBS: home price appreciation drivers
11 A combination of low mortgage rates, rising multifamily rents, limited housing supply, capital flows into own-to-rent purchases and demographic driven U.S. household formation, has led to price appreciation on a nationwide basis. MFA Strategy – Non-Agency MBS *includes distressed sales Source: Co
Slide 12: MFA Strategy – Non-Agency MBS: California concentrations
MFA Strategy – Non-Agency MBS 12 10.8% of portfolio 5.8% of portfolio 4.8% of portfolio 3.3% of portfolio 2.3% of portfolio Source: CoreLogic, 1010 data HPA=Home Price Appreciation Data as of February 2013 MFA Portfolio Top 5 California County Concentrations County % of MFA Non-Agency Portfolio 12 M
Slide 13: MFA Strategy – Non-Agency MBS: Florida concentrations
13 0.9% of portfolio 0.5% of portfolio 0.5% of portfolio 1.1% of portfolio 1.2% of portfolio MFA Portfolio Top 5 Florida County Concentrations County % of MFA Non-Agency Portfolio 12 Month Home Price Appreciation Miami-Dade 1.2% + 10.5% Broward 1.1% + 9.8% Palm Beach 0.9% + 10.9% Orange 0.5% + 12.3%
Slide 14: MFA Strategy – Non-Agency MBS: Non-Agency Portfolio
MFA Strategy – Non-Agency MBS 14 Non-Agency Portfolio As of March 31, 2013 Current Face $6,313.1 We maintain a substantial credit reserve of $1.3 Billion. Credit assumption changes would impact earnings over time. Dollars in Millions
Slide 15: MFA Financial, Inc. summary
MFA Financial, Inc. Strategy is to identify the best investment opportunities within the Residential MBS universe. Internally managed. 17.3% annual return and 727.8% total return since 2000 (including reinvestment of dividends). Significant $5.4 billion market value investment in Non-Agency MBS sect