Mfa Financial, Inc. · NYSE:MFA
Mfa Financial — Investor Presentation (September 2013)
17 slides from Mfa Financial's investor presentation, Sep 13, 2013
Slide 1: MFA Financial, September 2013
MFA FINANCIAL, September 2013
Slide 2: Forward-looking statements
When used in this press release 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 t
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: Strategy to Identify the Best Investment Opportunities Across Residential MBS
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. Our Strategy is to Identify the Best Investment Opportunities Throughout the Residential MBS Universe 4
Slide 5: Long Track Record of Delivering Attractive Shareholder Returns
MFA has a Long Track Record of Delivering Attractive Shareholder Returns* Source: Bloomberg *Through June 30, 2013. Includes reinvestment of dividends. 16.3% Annual Return since January 2000 668.4% 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 $43.7 mil
Slide 7: The Value of MBS Assets is Impacted by Interest Rates and Other Factors
7 The Value of MBS Assets is Impacted by Interest Rates and Other Factors Discounted Non-Agency MBS prices are primarily impacted by: Agency MBS prices are primarily impacted by:
Slide 8: Interest Rate Strategy
8 Interest Rate Strategy MFA’s estimated effective duration, which is the measure of price sensitivity to changes in interest rates, has been reduced from approximately 1.70% as of June 30, 2013 to approximately 0.90% as of August 31, 2013. This has been achieved through: The addition of longer term
Slide 9: MFA's Interest Rate Sensitivity
9 MFA’s Interest Rate Sensitivity Assets Market Value Average Coupon Duration Non-Agency ARMs (12 months or less MTR) $2,958 3.09% 0.5 Non-Agency Hybrid (12-48 MTR) $655 5.19% 1.0 Non-Agency Fixed Rate $1,524 5.81% 3.5 Agency ARMs (12 months or less MTR) $1,203 2.92% 0.9 Agency ARMs (12-120 MTR) $3,
Slide 10: Significant Investment in Non-Agency MBS
MFA owns approximately $5.3 billion market value ($6.3 billion face amount) of Non-Agency MBS, with an average amortized cost of 74% of par. In the second quarter, these assets generated a loss-adjusted yield of 7.15% on an unlevered basis. Over the past year, we have lowered our estimate of future
Slide 11: Non-Agency MBS universe continues to shrink
Non-Agency MBS universe continues to shrink providing technical support for existing assets MFA Strategy - Non-Agency MBS * Source: CoreLogic, 1010Data 11
Slide 12: Non-Agency MBS – 20 Largest Positions
Data as of June 30, 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 12 % of Total Portfolio Collateral Type FICO WALA
Slide 13: Home price appreciation on a nationwide basis
13 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 14: Top 5 California County Concentrations
MFA Strategy – Non-Agency MBS 14 10.7% of portfolio 5.6% of portfolio 4.8% of portfolio 3.2% of portfolio 2.2% of portfolio Source: CoreLogic, 1010 data HPA=Home Price Appreciation Data as of June 2013 MFA Portfolio Top 5 California County Concentrations County % of MFA Non-Agency Portfolio 12 Month
Slide 15: Top 5 Florida County Concentrations
15 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% + 11.8% Broward 1.1% + 12.9% Palm Beach 0.9% + 11.4% Orange 0.5% + 15.7
Slide 16: Non-Agency Portfolio and Credit Reserve
MFA Strategy – Non-Agency MBS 16 Non-Agency Portfolio As of June 30, 2013 Current Face $6,288.8 We maintain a substantial credit reserve of $1.2 Billion. Credit assumption changes would impact earnings over time. Dollars in Millions
Slide 17: MFA Financial, Inc. summary
MFA Financial, Inc. Strategy is to identify the best investment opportunities within the Residential MBS universe. Internally managed. 16.3% annual return and 668.4% total return since 2000 (including reinvestment of dividends). Significant $5.3 billion market value investment in Non-Agency MBS sect
MFA Financial — Investor Presentation (September 2013) on 6ix