Mfa Financial, Inc. · NYSE:MFA
Mfa Financial — Q4 2013 Earnings Presentation
15 slides from Mfa Financial's earnings presentation, Feb 13, 2014
Slide 1: Fourth Quarter 2013 Earnings Presentation
Fourth Quarter 2013 Earnings Presentation
Slide 2: Forward-looking statements
When used in this press release or other written or oral communications, statements which are not historical in nature, including those containing words such as “will,” “believe,” “expect,” “anticipate,” “estimate,” “plan,” “continue,” “intend,” “should,” “may” or similar expressions, are intended t
Slide 3: Fourth Quarter 2013 Earnings and Dividends
3 Net Income Per Common Share $0.20 Fourth Quarter Dividend $0.20 Estimated Taxable Income Per Common Share $0.20 Estimated Undistributed Taxable Income Per Common Share as of December 31, 2013 $0.17 Fourth Quarter 2013 Earnings and Dividends
Slide 4: MFA's Key Metrics Remained Generally Consistent Throughout 2013
Despite Changing Interest Rates and Prepayment Speeds, MFA’s Key Metrics Remained Generally Consistent Throughout 2013 First Quarter 2013 Second Quarter 2013 Third Quarter 2013 Fourth Quarter 2013 Yield on Interest Earning Assets 4.02% 4.01% 4.05% 4.26% Net Interest Rate Spread 2.32% 2.38% 2.24% 2.3
Slide 5: Book Value Increased in the Fourth Quarter due Primarily to Appreciation of Non-Agency Assets
Book Value Increased in the Fourth Quarter due Primarily to the Appreciation of Non-Agency Assets 5 Book Value per common share as of 9/30/13 $ 7.85 Net Income available to common shareholders 0.20 Q4 Common Dividend declared during the quarter (0.20) Net change in value of Agency MBS (0.09) Net cha
Slide 6: REIT Taxable Income Update
REIT Taxable Income Update 6 MFA has now distributed to stockholders an amount equal to all taxable income for years prior to 2013. We currently estimate that for 2013, MFA’s REIT taxable income was approximately $374 million, while distributions not attributed to prior years was approximately $313
Slide 7: MFA's Interest Rate Sensitivity as Measured by Net Duration, is Below 1.0
MFA’s Interest Rate Sensitivity as Measured by Net Duration, is Below 1.0 Assets Market Value* Average Coupon Duration Non-Agency ARMs (12 months or less MTR) $2,863 2.91% 0.5 Non-Agency Hybrid (12-48 MTR) $621 5.19% 1.1 Non-Agency Fixed Rate $1,500 5.78% 3.5 Agency ARMs (12 months or less MTR) $1,3
Slide 8: Credit Fundamentals on MFA's Non-Agency MBS Continue to Improve
Home price appreciation and mortgage amortization continue to decrease the LTV ratio for many of the mortgages underlying MFA’s Non-Agency portfolio. As a result, we have lowered our estimate of future losses within MFA’s Non-Agency MBS portfolio. Accordingly, in the fourth quarter, MFA transferred
Slide 9: Credit Reserve Reductions: What is the Impact on Financial Statements?
9 Credit Reserve Reductions Increase Future Earnings Credit Reserve reductions increase yields on Non-Agency MBS prospectively Higher yields increase interest income on MFA’s Non-Agency MBS over the remaining life of these assets Total credit reserve transfers over 2012 and 2013 have increased Non-A
Slide 10: LTVs on MFA's Non-Agency MBS Continued to Decline in 2013
10 Weighted average LTV of MFA’s Non-Agency Portfolio continued to trend downward in 2013 The amount of loans in the portfolio that are under water is decreasing Lower LTV’s lessen the likelihood of defaults and simultaneously decrease loss severities Data as of 12/31/13 Source: Loan Performance LTV
Slide 11: Improving Credit: Home Price Appreciation Drives LTVs Down 1
Improving Credit: Home Price Appreciation Drives LTVs Down 11 10.9% of portfolio 5.6% of portfolio 4.8% of portfolio 3.0% of portfolio 2.2% of portfolio MFA Portfolio Top 5 California County Concentrations County % of MFA Non-Agency Portfolio 12 Month Home Price Appreciation Los Angeles 10.9% + 21.0
Slide 12: Improving Credit: Home Price Appreciation Drives LTVs Down 2
Improving Credit: Home Price Appreciation Drives LTVs Down 12 0.9% of portfolio 0.5% of portfolio 0.4% of portfolio 1.1% of portfolio 1.2% of portfolio MFA Portfolio Top 5 Florida County Concentrations County % of MFA Non-Agency Portfolio 12 Month Home Price Appreciation Miami-Dade 1.2% + 10.8% Brow
Slide 13: Improving Credit: Current to 60 Days Delinquency Transition Rate Trended Down
Improving Credit: Current to 60 Days Delinquency Transition Rate for MFA’s Non-Agency Portfolio has Trended Down 13 Source: CoreLogic MFA’s Non-Agency Portfolio Current to 60 Days Delinquency Transition Rate as of December 31, 2013
Slide 14: Improving Credit: Yet Substantial Credit Reserves
Non-Agency Portfolio as of December 31, 2013 Current Face $5,616.0 MFA maintains a substantial credit reserve of $1.0 Billion. Credit assumption changes would impact earnings over time. Dollars in Millions 14 Improving Credit: Yet Substantial Credit Reserves
Slide 15: MFA Financial
MFA FINANCIAL,