MFA Financial, Inc. · NYSE:MFA
MFA Financial — MFA Mortgage Investments — Investor Presentation (May 2007)
15 slides from MFA Financial's investor presentation, May 8, 2007
Slide 1: MFA Mortgage Investments, Inc.
MEA MORTGAGEINVESTMENTS, INC.
Slide 2: Forward-Looking Statements
Forward-Looking Statements MFA When used in this presentation or other written or oral communications, statements which are not historical in nature, including those containing words such as “anticipate,” “estimate.” “should,” “expect,” “believe,” “intend” and similar expressions, are intended to id
Slide 3: MFA Overview
MFA Overview MFA MEA invests on a leveraged basis in high-quality hybrid and adjustable-rate mortgage-backed securities
Slide 4: Current Interest Rate Environment
Current Interest Rate Environment The Yield Curve is inverted. Despite an increase in federal funds from 1.00% to 5.25%, the ten-year treasury rate is approximately 4.65% Newly originated ARMs are generally 5/1 or 7/1 hybrids with initial fixed rate terms approximately 25 basis points lower than 30-
Slide 5: Inverted Yield Curve
Inverted Yield Curve U.S. Treasury Curves 5.2 5 f) =™ Pa 4.6 = 4.4 - 4.2 5 4.0 7 T 1 1 3 Month 6 Month 2 Year 3 Year 5 Year 10 Year Yield (%) Maturity —— 12/30/2005 —— 12/29/2006 ———5/2/2007 Source: Bloomberg MFA 4
Slide 6: Current Interest Rate Environment
Current Interest Rate Environment Due to the impact of... ¢ Increases of Fed Funds from 1.00% to 5.25% ¢ The inverted yield curve ¢ An initial fixed rate period for hybrid MBS ...MFA’s spread remains below its historical average. However, MFA has been able to raise the common dividend from $0.05 in
Slide 7: Investment Strategy
Investment Strategy High credit quality ¢ Approximately 99% of MFA’s assets are agency MBS, other AAA-rated MBS, related ° dd) receivables and cash ¢ Assets are liquid and easy to finance MFA (1) As of March 31, 2007
Slide 8: Investment Strategy
Investment Strategy Hybrid and ARM MBS ¢ After initial fixed term, coupons reset based on short-term interest rates ¢ Less price risk due to adjustability of coupon ¢ Repricing gap between assets and liabilities is approximately 8 months assuming a prepayment rate of 25% CPR” MFA (1) As of March 31,
Slide 9: Investment Strategy
Investment Strategy Maintain conservative debt-to-equity ratio Leverage limits set by discipline ¢ Flexibility to opportunistically take advantage of market conditions ¢ Currently anticipate increasing debt-to-equity (1) ratio from 8.3:1 to approximately 9.5:1 MFA (1) As of March 31, 2007 8
Slide 10: Current MBS Assets
Current MBS Assets MFA MBS by Time to Reset or Prepayment* Greater than 60 Months Baya Resce ’ 4% 19% Estimated Prepays EC _ets—C“(‘_’SCOCG 37 to 60 Months 0, 2% Within 12 Months 44% 25 to 36 Months 13% 13 to 24 Months 15% (1) As of March 31, 2007 * Applying a 25% constant prepayment rate ("CPR") 9
Slide 11: Interest Spread Over Time
Interest Spread Over Time 10.00% + 9.00% 8.00% ; 7.00% — ‘ —_" . -0.03% 6.00% =n“ s.0N \ aw Average: 1.06% 4.00% NX “smx€@—momV. 3.00% 4 2.00% 1.00% _ eee 0.00% +——.— a SSSIS SES SLES LSE LS PP HLL SE LHS r FFA FE Koh gh pF wel gh ph yo oh Qh ye oF PF SF HP ye Sat y es [——net Yield on Interest Earni
Slide 12: Increasing Portfolio Yield
Increasing Portfolio Yield MFA Positive Impact of New Investments on Portfolio Yield Jan-06 Feb-06 Mar-06 Apr-O6 May-06 Jun-06 Jul-O6 Aug-06 Sep-06 Oct-06 Nov06 Dec-06 Jan-07 Feb-07 Mar-07 — Yield on Assets Acquired Prior to 2006 —— Yield on Assets Acquired After 2006 —Total Portfolio Cost of Funds
Slide 13: Poised to Benefit From Opportunities in the MBS Marketplace
Poised to Benefit From Opportunities in the MBS Marketplace MFA ¢ MFA is positioned to take advantage of higher yields as they become available. ¢ MFA believes that non-agency MBS rated below “AAA” will continue to be negatively impacted as housing prices decline. ¢ As MBS are impacted by increased
Slide 14: Investment Highlight Summary
Investment Highlight Summary MFA 99% “AAA” Portfolio While not straight line due to seasonality of prepays, MFA asset yield is expected to trend up ¢MEFEA interest expense already reflects prior Fed Fund increases ¢ Potential for higher spread investment upon return to normal yield curve 13
Slide 15: MFA Mortgage Investments, Inc.
MEA MORTGAGE INVESTMENTS, INC.
MFA Mortgage Investments — Investor Presentation (May 2007) on 6ix