Mfa Financial, Inc. · NYSE:MFA
Mfa Financial — Q4 2024 Earnings Presentation
27 slides from Mfa Financial's earnings presentation, Feb 19, 2025
Slide 1: Company Update Fourth Quarter 2024
Company Update FOURTH QUARTER 2024
Slide 2: Forward-looking statements
Q3 2022 Financial Snapshot Forward-looking statements When used in this presentation or other written or oral communications, statements that are not historical in nature, including those containing words such as “will,” “believe,” “expect,” “anticipate,” “estimate,” “plan,” “continue,” “intend,” “s
Slide 3: MFA at a glance
MFA at a glance Leading hybrid mortgage REIT with extensive experience in managing residential mortgage assets through economic cycles Total assets Total equity Dividend yield $11.4B as of Dec. 31, 2024 $1.8Bv as of Dec. 31, 2024 13.1% as of Feb. 14, 2025 Listed on NYSE in Common dividends Loans acq
Slide 4: Q4 2024 financial snapshot
Q4 2024 financial snapshot GAAP Economic Distributable GAAP net income3 book value book value2 earnings4 $13.39 $13.93 $(0.02) $0.39 per common share per common share per common share per common share Total economic Recourse leverage5 Unrestricted cash Q4 dividend return6 1.7x $339M $0.35 (1.2)% per
Slide 5: Q4 2024 & Full-year Highlights
❑ Total economic return of (1.2%) in Q4 and 5.2% for 2024 Q4 2024 & ▪ Economic book value declined by 3.7% in Q4 primarily due to sharp rise in Treasury yields Full-year ▪ Declared $0.35 dividend for Q4 and $1.40 per share throughout 2024 Highlights ❑ Acquired $470M of Non-QM residential mortgage lo
Slide 6: Q4 2024 Investment Activity
❑ Acquired $1.2B of residential loans and securities, bringing MFA’s Investment Portfolio at Dec. 319 Q4 2024 investment portfolio to $10.5B Other $0.4B Investment ▪ Purchased $470M of non-qualified mortgage (Non-QM) loans Agency MBS $1.4B Activity ▪ Lima One funded $259M8 of new business purpose lo
Slide 7: Q4 2024 Liability Highlights
Liabilities ($B) as of Dec. 31 ❑ Our borrowing costs were relatively stable throughout 2024 due to $10.0 Q4 2024 fixed-rate securitizations and interest rate hedges $9.0 Agency Repo Liability ▪ Effective cost of funds declined to 4.47% in Q4 MTM $8.0 MTM Highlights ❑ Issued three securitizations dur
Slide 8: Q4 2024 Interest Rate Swaps
❑ $3.3B interest rate swap position placed primarily in late 2021 and early 2022 Q4 2024 ▪ Weighted average fixed pay rate of 2.20% and variable receive rate of 4.49% 11 at Dec. 31 Interest Rate ▪ Generated net positive swap carry of $25M in Q4 Swaps ▪ Net portfolio duration estimated to be 1.02 at
Slide 9: Q4 2024 Portfolio Credit Metrics
LTV by Loan Product Type12 LTV Distribution12 Q4 2024 67% $5B Portfolio 61% 64% $4B Credit 59% 57% $3B Metrics 51% $2B $1B Non-QM Loans SFR Loans Single-family Multifamily Legacy RPL/NPL Total - Transitional Loans Transitional Loans Loans <60% 60-70% 70-80% 80-90% 90-100% >100 % Portfolio 60+ Delinq
Slide 10: Q4 2024 Lima One Highlights
❑ Origination volume was $236M in Q4 and $1.4B for 20247 Q4 2024 ❑ Single-family Transitional loan originations totaled $168M in Q4 Lima One ▪ $76M of ground-up construction loans Highlights ▪ $61M of rehab (“fix/flip”) loans ▪ $31M of bridge loans ❑ SFR loan originations were $68M ❑ Continued progr
Slide 11: Q4 2024 Non-QM Loans
Portfolio statistics 12/31/24 9/30/24 1 ❑ Non-QM loan portfolio grew to $4.4B UPB Q4 2024 ▪ Acquired $470M of new loans with average LTV of 67% and UPB ($M) $4,409 $4,2641 Average loan balance $509K $511K1 Non-QM average coupon of 7.8% Gross coupon 6.65% 6.40%1 Loans ▪ Sold $141M of seasoned, low co
Slide 12: Q4 2024 Single-family Rental Loans
Portfolio statistics 12/31/24 9/30/24 ❑ SFR loan portfolio declined to $1.4B UPB Q4 2024 ▪ Lima One originated $68M UPB of loans with average LTV of UPB ($M) $1,417 $1,505 d Average loan balance $227K $227K Single-family 69% and average coupon of 7.35% d Gross coupon 6.39% 6.47% d Rental Loans ▪ Sol
Slide 13: Q4 2024 Single-family Transitional Loans
❑ Single-family transitional loan portfolio declined to $1.1B UPB Portfolio statistics 12/31/24 9/30/24 Q4 2024 ▪ Lima One originated $168M of new loans, outweighed by 7 UPB ($M) $1,107 $1,158 d Single-family $228M in loan repayments Maximum loan amount ($M) $1,427 $1,507f Transitional ❑ Issued our
Slide 14: Q4 2024 Multifamily Transitional Loans
❑ Multifamily loan portfolio declined to $977M UPB Portfolio statistics 12/31/24 9/30/24 Q4 2024 ▪ $124M of loan repayments during the quarter UPB ($M) $977 $1,103 d Multifamily ▪ New originations at Lima One remain paused Maximum loan amount ($M) $1,035 $1,173 d Transitional ❑ Intensive and collabo
Slide 15: Q4 2024 Legacy RPL/NPL Loans
❑ 96% of Legacy RPL/NPL loans purchased between 2014-2019 Portfolio statistics 12/31/24 9/30/24 were performing, paid in full (PIF), REO or liquidated at Dec. 31 Q4 2024 UPB ($M) $1,222 $1,2511 76% of loans modified by MFA were either performing or PIF Legacy ▪ Average loan balance $195K $195K1 Gros
Slide 16: Q4 2024 Agency MBS
Portfolio statistics 12/31/24 ❑ Added $463M of Agency MBS, bringing portfolio to $1.4B 9/30/24 Q4 2024 ▪ Purchases consist primarily of low pay-up (premium to TBA price) Current Face $1,404 $977M1 Agency Fair Value $1,393 $993M1 pools that provide some prepayment protection Coupon 5.60% 5.66%1 MBS ▪
Slide 17: Appendix
Appendix 17with Houses James Casebere, Landscape (Dutchess County, NY) #2, 2010 (detail)
Slide 18: MFA Financial Overview
❑ MFA Financial, Inc. (NYSE: MFA) is an internally managed real estate investment trust (REIT) that invests in U.S. residential mortgage loans and mortgage-backed securities MFA Financial ❑ MFA focuses primarily on mortgage subsectors in which it tries to avoid direct competition with banks and gove
Slide 19: Lima One: Leading Nationwide BPL Originator and Servicer
Lima One: Leading Nationwide BPL Originator and Servicer Fully Integrated BPL Platform Product Offerings ❑ Lima One is an industry-leading business purpose lender wholly- ❑ Lima One offers a diverse selection of both short-term and long-term owned by MFA and headquartered in Greenville, S.C. financi
Slide 20: Book Value Potential Upside
Book Value Potential Upside ❑ Economic book value has $1.83 per share of potential upside Potential Upside in Economic Book Value19 $18 ▪ Most of our fixed-rate Non-QM and SFR loans are marked at $4.84 $(1.64) a discount to par due to the impact of higher interest rates $16 $3.47 $1.83 potential ups
Slide 21: MFA-Issued Securitizations Outstanding
MFA-Issued Securitizations Outstanding Original Collateral Current Collateral Bonds Sold Original UPB Sold Outstanding Balance of Bonds Weighted Average Coupon (WAC) WAC of Underlying Securitization Name Loan Product Type Settlement Date Callable Date UPB ($M)20 UPB ($M)20 ($M) (%)21 Sold ($M) of Ou
Slide 22: Select Financial Metrics
Select Financial Metrics Asset Yield Net Interest Spread Distributable Earnings vs. Dividend 2.50% 6.79% 6.71% 2.16% 2.18% $0.50 7.00% 6.46% 6.58% 6.46% 2.13% 2.06% 1.99% 6.00% 2.00% $0.40 5.00% 1.50% $0.30 4.00% 3.00% 1.00% $0.20 2.00% 0.50% $0.10 1.00% 0.00% 0.00% $- Q4 2023 Q1 2024 Q2 2024 Q3 202
Slide 23: Reconciliation of GAAP net income to non-GAAP Distributable earnings
Reconciliation of GAAP net income to non-GAAP Distributable earnings “Distributable earnings” is a non-GAAP financial measure of our operating performance, within the meaning of Regulation G and Item 10(e) of Regulation S-K, as promulgated by the Securities and Exchange Commission. Distributable ear
Slide 24: Reconciliation of GAAP Book Value to Economic Book Value
Reconciliation of GAAP Book Value to Economic Book Value “Economic book value” is a non-GAAP financial measure of our financial position. To calculate our Economic book value, our portfolios of Residential whole loans and securitized debt held at carrying value are adjusted to their fair value, rath
Slide 25: Book Value and Economic Book Value Rollforward
Book Value and Economic Book Value Rollforward GAAP Economic Book value per common share as of 9/30/24 $13.77 $14.46 Net income available to common shareholders (0.02) (0.02) Common stock dividends declared (0.35) (0.35) Fair value changes attributable to residential mortgage securities and other (0
Slide 26: GAAP Segment Reporting
GAAP Segment Reporting (Dollars in millions) Mortgage- Related Assets Lima One Corporate Totald Three months ended December 31, 2024 Interest Income $ 106.2 $ 69.1 $ 3.0 $ 178.31 Interest Expense 76.1 46.9 4.5 127.51 Net Interest Income/(Expense) $ 30.1 $ 22.2 $ (1.5) $ 50.81 (Provision)/Reversal of
Slide 27: Endnotes
1) Purchased value of all residential whole loans acquired by MFA since 2014. 2) Economic book value is a non-GAAP financial measure. Refer to slide 24 for further information regarding the calculation of this measure and a reconciliation to GAAP book value. Endnotes 3) 4) GAAP net income presented