Mfa Financial, Inc. · NYSE:MFA
Mfa Financial — Investor Presentation (September 2014)
17 slides from Mfa Financial's investor presentation, Sep 29, 2014
Slide 1: MFA Financial, Inc. September 2014
MEA FINANCIAL, INC September 2014
Slide 2: Forward Looking Statements
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
Slide 3: MFA Financial, Inc.
MFA Financial, Inc. 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. 3
Slide 4: MFA has a Long Track Record of Delivering Attractive Shareholder Returns
MFA has a Long Track Record of Delivering Attractive Shareholder Returns 4 16.2% Annual Return since January 2000 (14.5 years) 786.7% Total Stockholder Return since January 2000 Source: Bloomberg As of June 30, 2014 Includes reinvestment of dividends.
Slide 5: Investment Update as of August 31, 2014
Investment Update as of August 31, 2014 5 By pursuing a wider residential mortgage investment strategy, we continue to generate attractive net interest rate spreads and earnings without increasing interest rate exposure. We have substantially grown our holdings of MBS backed by re-performing/non-per
Slide 6: 2014 Update
2014 Update 6 MFA continues to generate consistent and attractive results in this low interest rate environment. Second quarter EPS and dividend per share of $0.20. Third quarter dividend per share of $0.20 declared on September 17, 2014. Positioned for a more flexible monetary policy by the Federal
Slide 7: Despite Changing Interest Rates and Varying Prepayment Speeds, MFA's Key Metrics Remain Generally Consistent
Despite Changing Interest Rates and Varying Prepayment Speeds, MFA’s Key Metrics Remain Generally Consistent 7 Second Quarter 2013 Third Quarter 2013 Fourth Quarter 2013 First Quarter 2014 Second Quarter 2014 Yield on Interest Earning Assets 4.01% 4.05% 4.26% 4.32% 4.26% Net Interest Rate Spread 2.3
Slide 8: MFA's Interest Rate Sensitivity as Measured by Net Duration, Remains Below 1.0
MFA’s Interest Rate Sensitivity as Measured by Net Duration, Remains Below 1.0 8 Assets Market Value* Average Coupon Duration Legacy Non-Agency ARMs (12 months or less MTR) $2,658 2.49% 0.5 Legacy Non-Agency Hybrid (12-48 MTR) $690 5.16% 1.0 RPL/NPL Securities $782 3.37% 1.9 Legacy Non-Agency Fixed
Slide 9: Investment in Residential Mortgage Assets Including Agency MBS, Legacy Non-Agency MBS, RPL/NPL MBS and Whole Loans
Investment in Residential Mortgage Assets Including Agency MBS, Legacy Non-Agency MBS, RPL/NPL MBS and Credit Sensitive Residential Whole Loans 9 Information with respect to Legacy Non-Agency MBS and RPL/NPL MBS, related repurchase agreement borrowings and resulting totals is presented on a non-GAAP
Slide 10: Credit Fundamentals on MFA's Legacy Non-Agency MBS Continue to Improve
Credit Fundamentals on MFA’s Legacy Non-Agency MBS Continue to Improve Home price appreciation and mortgage amortization continue to decrease the LTV ratio for many of the mortgages underlying MFA’s legacy Non-Agency MBS portfolio. As a result, we have lowered our estimate of future losses within MF
Slide 11: LTVs on MFA's Legacy Non-Agency MBS Continue to Decline
LTVs on MFA’s Legacy Non-Agency MBS Continue to Decline 11 Weighted average LTVs of MFA’s legacy Non-Agency Portfolio continue to trend downward. The amount of loans in the portfolio that are underwater is decreasing. Lower LTVs lessen the likelihood of defaults and simultaneously decrease loss seve
Slide 12: Moderating Home Price Growth
12 Moderating Home Price Growth Home price growth is moderating to a more healthy growth rate. Prices still remain below their previous peak. Source: CoreLogic June 30, 2014
Slide 13: LTV Breakdown of Non-Delinquent Mortgage Loans Underlying MFA's Legacy Non-Agency MBS
LTV Breakdown of Non-Delinquent Mortgage Loans Underlying MFA’s Legacy Non-Agency MBS 13 These loans are up to date on all required mortgage payments. Underlying loans are more than eight years seasoned on average. Source: CoreLogic June 30, 2014
Slide 14: Improving Credit: Current to Days Delinquency Transition Rate for Legacy Non-Agency Portfolio
Improving Credit: Current to 60 Days Delinquency Transition Rate for MFA’s Legacy Non-Agency Portfolio has Trended Down 14 MFA’s legacy Non-Agency Portfolio Current to 60 Days Delinquency Transition Rate as of August 31, 2014 Source: CoreLogic
Slide 15: Credit Reserve of $982 Million on a Current Face of $5.46 Billion
15 Credit Reserve of $982 Million on a Current Face of $5.46 Billion Through August 31, 2014 MFA’s annualized loss run-rate is currently running below $100 MM. Future estimated losses are due to: Realized losses from liquidations of defaulted loans. Principal losses from the use of principal to pay
Slide 16: RPL/NPL MBS Portfolio as of August 31, 2014
RPL/NPL MBS Portfolio as of August 31, 2014 16 MFA has significantly increased its position in senior RPL/NPL MBS adding $740 MM this year. Low duration Deal structures contain a coupon step-up of 300 basis points after 36 months. Issuer can call bonds after 12 months. Expected weighted average live
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