Slide 1: May 2009
May 2009 MFA FINANCIAL, INC
Slide 2: Forward Looking Statements
Forward Looking Statements FINANCIAL, Ie ‘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 si
Slide 3: MFA Overview
MFA Overview MFA provides attractive returns through appropriately leveraged investments in high- quality hybrid and adjustable- rate mortgage-backed securities
Slide 4: Interest Rates Remain Near Historic Lows
Interest Rates Remain Near Historic Lows Short-term interest rates are exceptionally low May 8, 2009 Fed Funds Target | 0 - 0.25% 1-Month LIBOR 0.37% 1-MonthRepo _| 0.45 - 0.50% 3-Month LIBOR 0.94% 3-Month Repo _| 0.60 - 0.65% Liquidity While repo remains available to MFA from multiple counterpartie
Slide 5: 2.00% 700% 6.00% 5.00% 400% 3.00% 200% 1.00% 0.00% SS eve P OP dS
2.00% 700% 6.00% 5.00% 400% 55 3.00% 200% 1.00% 0.00% SS eve P OP dS Pah SPS age Gr age eg ae gee Ce We re [Wet Yeon Interest Eaming Aavets —Coet of Runde Seer Poe
Slide 6: Funding Cost Continues to Decline Faster Than Asset Yield
Funding Cost Continues to Decline Faster Than Asset Yield AN While MFA Portfolio Yield Currently Remains Near 5.0%, the Cost of Funds is in a Downward Trend
Slide 7: Well Positioned to Withstand Current Economic Environment
Well Positioned to Withstand Current Economic Environment MEA Lower leverage and Increased liquidity *Leverage: Debt-to-Equity Multiple of 6.0:1 *Liquidity: $648 million consisting of $406 million Cash $157 million Unpledged Agency MBS $85 million Excess Collateral with Counterparties
Slide 8: Continuing to Deliver Solid Results
/ Continuing to Deliver Solid Results N TFA. March 31, 2009 Financial Results March 31, 2009 Book Value: First Quarter 2009 ROE: First Quarter 2009 EPS: First Quarter 2009 Dividend Per Share: Current Dividend Yield
Slide 9: Focus Remains Hybrid/ARM MBS
Focus Remains Hybrid/ARM MBS.. MP A Strategy Built Around Hybrid and ARM MBS “? @ After initial fixed term, Geater than 60 Within 12 : s Months coupons reset based on Se 7 i ‘ short-term interest rates 7 @ Less price risk due to adjustability of coupon 13 to 60 Months 57% Effective Duration: 0.24 (1
Slide 10: But Selectively Adding Non-Agency MBS Assets
... But Selectively Adding Non-Agency MBS Assets MIA «In 2009, we have not purchased Agency MBS while the Federal Reserve implements its $1.25 trillion purchase program. -We are investing in senior most tranches of Non-Agency residential MBS at deeply discounted prices to generate loss-adjusted yiel
Slide 11: Loss Adjusted Returns For a Representative Non-Agency Security
Loss Adjusted Returns For a Representative Non-Agency Security M FHASI 07-AR1 1A1 (Price = $58) +2007 Vintage Jumbo 5/1s + 5.83% Coupon + S&P/Fitch Ratings: AAA *-/BBB *- +749 Average FICO + 7.99% Credit Enhancement Es Stressed Case Optimistic Case Yield 9.0% 16.4% 25.1% Voluntary Prepayment Rate 4%
Slide 12: Non-Agency Risk Adjusted Returns Currently Very Appealing
Non-Agency Risk Adjusted Returs Currently Very Appealing Incremental Acquisition of Senior MBS Assets MEA Incremental Acquisition of Agency MBS Assets Credit Asset Yield Leverage ROE Prepayments Qualifying REIT Asset Qualifying 1940 Act 55% Test Asset ‘Structural Protection ~ Credit Enhancement Disc
Slide 13: Summary
Summary MEA +The majority of MFA’s assets will continue to be Agency hybrid MBS «MER portfolio complements our Agency portfolio and reduces prepayment risk + Strategically positioned portfolio to maintain appropriate leverage and liquidity in current environment +MFA can generate attractive returns
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