Mfa Financial, Inc. · NYSE:MFA
Mfa Financial — Investor Presentation (January 2010)
16 slides from Mfa Financial's investor presentation, Jan 28, 2010
Slide 1: February 2010
February 2010
Slide 2: Forward Looking Statements
Forward Looking Statements Ay AaaZ SM ‘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.” “antiipte, plan,” “continue,” “intend,” “should,” “may” or similar expressions,
Slide 3: MFA Overview
MFA Overview MFA MFA is positioned with the requisite expertise to benefit from existing investment in higher-yielding Agency MBS and the acquisition of Non-Agency RMBS
Slide 4: Experienced Management Team Focused on Residential MBS
Experienced Management Team Focused on Residential MBS. Opportunities Financt @ Proven Management Team and Track Record > Founded in 1997, we are an internally managed REIT with permanent equity capital, positioned with the requisite expertise to benefit from investment in Agency and Non-Agency Resi
Slide 5: The Residential Mortgage Market
The Residential Mortgage Market investment univer: ding ample investment 1 Mortgage Debt Non-Agency Agency Whole Loans $1.7 Trillion $5.1 Trillion ] $3.9 Trillion Source: BNP Paribas and Federal Reserve Z1 Report, September 30, 2009
Slide 6: Continuing to Deliver Solid Results
Continuing to Deliver Solid Results FinaNerat, Ine Recent Financial Performance + Residential MBS focus generating high returns including double- digit ROE and solid book value performance +Third quarter earnings of $0.25 per share represents an ROE of 13.7% +Fourth quarter dividend of $0.27 per sha
Slide 7: Solid Results Throughout the Decade
Solid Results Throughout the Decade Fininoraline 15.7% Annual Return in the Decade 100 Pin 7 Source: Bloomberg Includes reinvestment of dividends
Slide 8: MFA Strategy
MFA Strategy FINANCIAL, INC nent in Residential MBS Including Both gency MBS and Non-Agency MBS + Approximately $1 billion (50% of MFA equity) and $400 million of leverage is utilized in funding $1.4 billion of Non- Agency MBS.* +The majority of MFA’s assets will continue to be whole-pool Agency MBS
Slide 9: MFA Strategy - Agency MBS
MFA Strategy - Agency MBS Exceptionally low Federal Funds rates for an extended period of time January 25, 2010 I-Month LIBOR | 0.23% 1-Month Repo 0.21% 3-Month LIBOR 0.25% 3-Month Repo 0.24% Fed Funds Target | 0.0%-0.25% Agency MBS Spreads have tightened due to Federal Reserve $1.25 trillion Agency
Slide 10: MFA Strategy - Agency MBS: Hybrid and ARM MBS Limit Risk of Rising Rates
MEA Strategy - Agency MBS. Haan Hybrid and ARM MBS Limit 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 Months Until Crater ‘Mamthe 1% Within 12 Months 2% 13 t060 Monts sm 10 *4s of September
Slide 11: MFA Strategy - Repo Capacity Remains Robust
MFA Strategy - Repo Capacity Remains Robust Diverse Counterparty Relationships + MFA maintains strong relationships with numerous leading financial institutions Banc of America Deutsche Bank Mizuho Barclays Goldman Sachs Morgan Stanley BNP Paribas ING Newedge Cantor Fitzgerald Jefferies Pershing Cit
Slide 12: MFA Strategy - Agency MBS Portfolio Positioning for 2010
MEA Strategy - Agency MBS. Haan Positioning Agency MBS Portfolio for the Impact of Potential Price Declines in 2010 While this strategic reduction impacts earnings, we anticipate more attractive investment opportunities may arise later in 2010 as the Federal Reserve completes its Agency MBS purchase
Slide 13: MFA Strategy - Non-Agency MBS
MFA Strategy - Non-Agency MBS* AY aa7 «MFA is actively investing in Non-Agency residential MBS at deeply discounted prices. MFR owns approximately $1.2 billion market value of Non-Agency MBS acquired at an average purchase price of 63% of par. +In addition, MFA continues to hold approximately $200 m
Slide 14: MFA Strategy - Non-Agency MBS
MEA Strategy — Non-Agency MBS +Structural credit enhancement and highly discounted purchase price mitigate the risk of loss of invested principal. «Future potential leverage from Re-REMIC and/or increased usage of Non-Agency Repurchase Agreements could enhance returns. + These high yielding assets a
Slide 15: Uniquely Positioned in Current Environment
Uniquely Positioned in Current Environment MFA is positioned with the requisite expertise to benefit from existing investment in higher-yielding Agency MBS and the acquisition of Non-Agency RMBS
Slide 16: MFA Financial, Inc.
FINANCIAL, INC.