Slide 1: MFA Financial, Inc. – May 11, 2010
May 11, 2010 MFA FINANCIAL, INC.
Slide 2: Forward Looking Statements
Forward Looking Statements Ay AaaZ S When used in this presentation or other written or oral communications, statements which are not historical in nature, including those containing words such as “believe,” “expect.” “anticipate,” “estimate,” “plan,” “continue,” “intend, “should,” “may” or similar
Slide 3: MFA Overview
MFA Overview MEA MFA is positioned to benefit from investment in both Agency and Non-Agency Residential MBS
Slide 4: Experienced Management Team Focused on Residential MBS Opportunities
Experienced Management Team Focused on Residential MBS Opportunities AiNaSctat, we > Non-Agency MBS are available at deep discounts to par value. > Agency MBS continue to benefit from a steep yield curve. > Debt-to-Equity multiple reduced to 2.7x as of March 31, 2010. > Our goal remains to generate
Slide 5: The Residential Mortgage Market
~ The Residential Mortgage Market ME aN ortgage Debt $10.7 Trillion Non-Agency Agency Whole Loans $1.7 Trillion § $5.1 Trillion ff] $3.9 Trillion
Slide 6: Solid Long Term Results
Solid Long Term Results “100 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Mar-10 MFA sap — sap Financials Source: Bloomberg Includes reinvestment of dividends FinaXera
Slide 7: Continuing to Deliver Results in 2010
Continuing to Deliver Results in 2010 etre athe Our investments in Residential MBS continue to generate high returns including double-digit ROEs and solid book value er formance > First Quarter 2010 ROE was 14.8% while our First Quarter Core ROE was 12.2%. >First Quarter 2010 dividend of $0.24 cents
Slide 8: Growth in Book Value Per Share
~ Growth in Book Value Per Share ME A Book Value Per Share 45% Growth in Book Value per Share over the last 15 Months 9.00 8.00 7.00 6.00 5.00 4.00 3.00 2.00 Dollars Per Share 1.00 0.00 12/31/2008 12/31/2009 3/31/2010
Slide 9: MFA Investment Strategy
MFA Investment Strategy Finakera Investment in Residential MBS Including Both Agency MBS and Non-Agency MBS MFA ASSETS * ‘The majority of MFA’s assets will continue to be whole-pool Agency MBS due to attractiveness of the asset class and for purposes 30.81 $0.02 of our exemption under the Agency MBS
Slide 10: MFA Asset Allocation Strategy
MFA Asset Allocation Strategy Finaner A Agency MER Legacy Non- AtMarch 31, 2010 MBS MBS (1) Agency MBS Cash (Sin Millions Amortized Cost $5,948 s 1.346 s 250 s 808 Market Value S 6.156 s 1,528 s 205 s 808 Less Repo Financing (5,318) (902) 115 = = Equity Allocated (2) 3 BS s 626 3 90 3 Evy Debt/Equit
Slide 11: Agency MBS
gency MBS M 7 A MFA Strategy - / Primary Focus on Hybrid and ARM MBS Limits Risk of Rising Interest Rates > After initial fixed term, coupons reset based on short-term interest rates > Less price risk due to adjustability of coupon Coupon Reset or Assumed Prepayment* Greater than 60 Months “As of Ma
Slide 12: MFA Strategy - Agency MBS
MEA MFA Strategy - Agency MBS FNANCTAL, INC Strategically Positioning Agency MBS Portfolio The Agency MBS Portfolio (which is more interest rate sensitive) has been reduced over time from in excess of $10 Billion to a Target Range of $6 to $7 Billion MEA Agency Portfolio s20 g| 99 S| sso a S| s60 Pa
Slide 13: MFA Strategy — Agency MBS
MFA Strategy — Agency MBS FINANCIAL, INC In the Second Quarter 2010, MFA is acquiring Agency MBS in excess of runoff > The $1.25 Trillion Federal Reserve Agency MBS purchase program has been completed. > Incremental spreads on Agency MBS are approximately 200 basis points. » The yield curve remains
Slide 14: MFA Strategy - Non-Agency MBS
MFA Strategy - Non-Agency MBS* Ay AaaZ S >MFA is actively investing in Non-Agency residential MBS at deeply discounted prices. MFR** owns approximately $1.5 billion market value of Non-Agency MBS acquired at an average purchase price of 65% of par. >In the First Quarter of 2010, these assets on an u
Slide 15: MFA Strategy - Non Agency MBS
~ MFA Strategy - Non Agency MBS ME A FINANCIAL, INC Deeply discounted purchase price, substantial credit reserve and 9.4% credit enhancement mitigate credit risk* MER Portfolio § Amounts in Thousands Cumrent Face $2,109,257 *As of March 31, 2010. 15 "Includes $422 million of Non-Agency MBS underlyin
Slide 16: MFA Strategy — Non-Agency MBS
~ MFA Strategy —- Non-Agency MBS ME A FINANCIAL, INC Strategically Increasing Non-Agency MBS Portfolio MFA continues to identify high-yielding Non-Agency MBS at deeply discounted prices MFA Non-Agency Portfolio* é Yt 12/31/2008 3/31/2010 16 "Includes $422 million of Ne -Agency MBS underlying MBS For
Slide 17: Uniquely Positioned in Current Environment
~ Uniquely Positioned in Current Environment ME A MFA is positioned with the requisite expertise to benefit from investment in Agency and Non-Agency Residential MBS
Slide 18: MFA Financial, Inc.
MFA FINANCIAL, INC_