Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2025 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) One Vanderbilt Ave., 48th Floor New Y ...

MFA Financial (MFA) Q1 2025 Earnings Call May 06, 2025 11:00 AM ET Company Participants Harold Schwartz - SVP, General Counsel & SecretaryCraig Knutson - CEO and DirectorMichael Roper - CFOBryan Wulfsohn - President & Chief Investment OfficerBose George - Managing DirectorEric Hagen - Managing Director Conference Call Participants Douglas Harter - Equity Research AnalystSteven Delaney - AnalystJason Stewart - Director & Equity Research Analyst Operator Greetings, and welcome to the MFA Financial First Quart ...

MFA Financial (MFA) Q1 2025 Earnings Call May 06, 2025 11:00 AM ET Speaker0 Greetings, and welcome to the MFA Financial First Quarter twenty twenty five Financial Results Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. Please note this conference is being recorded. I will now turn the conference over to our host, Hal Schwartz, General Counsel. Thank you. You may begin. Speaker1 Thank you, operator, and good morning ...

Company Update FIRST QUARTER 2025 Forward-looking statements 2 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," "should," "could," "would," "may," the negative of these words or similar expressions, are intended to identify "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, ...

MFA Financial (MFA) appears an attractive pick, as it has been recently upgraded to a Zacks Rank #2 (Buy). This upgrade is essentially a reflection of an upward trend in earnings estimates -- one of the most powerful forces impacting stock prices.A company's changing earnings picture is at the core of the Zacks rating. The system tracks the Zacks Consensus Estimate -- the consensus measure of EPS estimates from the sell-side analysts covering the stock -- for the current and following years.Since a changing ...

I rate MFA Financial, Inc. (NYSE: NYSE: MFA ) as a Hold for income-focused investors interested in a mortgage real estate investment trust, or mREIT. The most important factors that influence my opinion of the stock are:David A. Johnson is founder and principal of Endurance Capital Management, a New Jersey Limited Liability Company. As an investor entrepreneur, David invests in stocks, bonds, options, ETFs, REITs, real estate, closed end funds and alternative investment funds such as hedge funds and private ...

Financial Performance - The company generated GAAP earnings per share (EPS) of $0.83 and Distributable earnings of $1.57 per basic common share for the year[227]. - For the year ended December 31, 2024, net income available to common stock and participating securities was $86.4 million, or $0.83 per basic share, compared to $47.3 million, or $0.46 per basic share in 2023, reflecting a significant increase of 82.7%[265]. - Basic earnings per common share increased to $0.83 in 2024 from $0.46 in 2023, representing a growth of 80.4%[265]. - Net income for 2024 was $119.25 million, compared to $80.16 million in 2023, marking a year-over-year increase of approximately 48.8%[384]. - The Company reported a net gain on residential whole loans measured at fair value through earnings of $45.99 million in 2024, down from $89.85 million in 2023[384]. - The Company’s net interest income after reversal for credit losses was $204.68 million in 2024, compared to $185.33 million in 2023, an increase of approximately 10.4%[384]. - Other income increased by $22.3 million to $85.428 million in 2024, driven by mark-to-market gains compared to losses in 2023[265]. - The company reported a net gain on derivatives used for risk management purposes of $78.503 million in 2024, compared to a gain of $3.761 million in 2023, reflecting an increase of $74.742 million[264]. Asset and Loan Portfolio - As of December 31, 2024, the company had total assets of approximately $11.4 billion, with $8.8 billion (77%) in residential whole loans[216]. - The residential mortgage asset portfolio increased to approximately $10.5 billion at December 31, 2024, compared to $9.9 billion at December 31, 2023[231]. - The company held $1.5 billion in Securities at fair value as of December 31, 2024, including $1.4 billion in Agency MBS[235]. - The total recorded investment in residential whole loans and REO was $8.9 billion, representing 85.3% of the residential mortgage asset portfolio[234]. - Loan acquisition activity during 2024 totaled $2.6 billion, including $991.5 million in Single-family transitional loans and $1.2 billion in Non-QM loans[234]. - The company originated Business purpose loans with a maximum unpaid principal balance of $1.4 billion in 2024, down from $2.2 billion in 2023[228]. - The company had $2.6 billion of total unpaid principal balance related to asset-backed financing agreements with mark-to-market collateral provisions as of December 31, 2024[320]. Dividends and Shareholder Returns - The company declared dividends of $1.40 per common share during the year[227]. - The company paid $143.9 million in cash dividends on common stock and $32.9 million on preferred stock during 2024[331]. - The dividend payout ratio for Q4 2024 was 0.90, indicating a slight decrease from 0.70 in Q4 2023[299]. - The company repurchased $39.9 million principal amount of Convertible Senior Notes for $39.8 million during the three months ended March 31, 2024[319]. Interest Income and Expense - Total interest income for 2024 was $723.965 million, up from $605.597 million in 2023, marking an increase of $118.368 million[264]. - Interest income on residential whole loans for 2024 increased by $95.7 million, or 17.8%, to $633.6 million compared to $537.9 million for 2023, driven by a yield increase to 6.74% from 6.15%[282]. - Interest expense rose to $521.234 million in 2024 from $429.118 million in 2023, an increase of $92.116 million[264]. - The net interest spread and margin for 2024 were 2.10% and 2.91%, respectively, compared to 2.05% and 2.90% in 2023, showing slight improvements in profitability metrics[268]. Credit Losses and Risk Management - The total allowance for credit losses on residential whole loans held at carrying value was $10.7 million as of December 31, 2024[236]. - The reversal of provision for credit losses on residential whole loans was $3.084 million in 2024, down from $8.853 million in 2023, indicating a decrease of $5.769 million[264]. - The company expects heightened levels of delinquency and credit loss risks in its Business purpose loan portfolio during 2025 due to market conditions[228]. - The company is exposed to credit risk primarily through residential whole loans, with current LTVs estimated to have decreased significantly due to home price appreciation[353]. Financial Position and Liquidity - GAAP total stockholders' equity as of December 31, 2024, was $1,841.8 million, down from $1,899.9 million as of December 31, 2023[301]. - The company had unused financing capacity of approximately $3.8 billion across its financing arrangements as of December 31, 2024[321]. - The company was in compliance with all financial covenants as of December 31, 2024[330]. - Cash, cash equivalents, and restricted cash increased by $113.1 million during 2024, with $424.6 million used in investing activities and $337.6 million provided by financing activities[325]. Market and Economic Conditions - The company expects to continue pledging residential mortgage assets as part of its ongoing financing arrangements[323]. - The fair value of the company's net portfolio is sensitive to interest rate changes, with a projected decrease of $145.8 million (1.28%) for a 100 basis point increase in rates as of December 31, 2024[345]. - The company has a liquidity risk arising from financing long-maturity assets with shorter-term borrowings, which could lead to increased margin calls if asset values decrease[364]. Operational Expenses - Compensation and benefits expenses increased by $1.9 million to $87.7 million for 2024, primarily due to separation and severance-related costs[289]. - Other general and administrative expenses rose by $0.4 million to $44.3 million for 2024, attributed to accelerated depreciation and higher IT infrastructure costs[290]. - Loan servicing and other related operating expenses increased by approximately $1.2 million, or 3.4%, primarily due to higher non-recoverable advances[291].

Financial Data and Key Metrics Changes - As of December 31, GAAP book value was $13.39 per share, and economic book value was $13.93 per share, a decrease of approximately 3.7% from $14.46 at the end of September [17] - The company delivered a total economic return of negative 1.2% for the quarter and positive 5.2% for the year [18] - Distributable earnings for the fourth quarter were $40.8 million or $0.39 per basic common share, up from $0.37 in the third quarter [21] Business Line Data and Key Metrics Changes - The investment portfolio grew by over $1.2 billion in the fourth quarter, with $470 million in non-QM loans carrying a coupon of 7.8% and an LTV of 67% [26] - Lima One originated $235 million of loans in the quarter with an average coupon of 9.5% and LTV of 67%, totaling $1.4 billion in business purpose loans for 2024 [28] Market Data and Key Metrics Changes - The yield curve steepened in the fourth quarter, with two-year yields rising sixty basis points while ten-year rates rose nearly eighty basis points [9] - The company added over $700 million in loans, non-QM and BPL, and over $450 million of agencies during the quarter [10] Company Strategy and Development Direction - The company aims to maintain a strong liquidity position while complementing the volume and timing of loan acquisitions [12] - Management expressed confidence in the leadership team for 2025 and beyond, indicating a focus on growth and operational improvements [15] Management's Comments on Operating Environment and Future Outlook - Management noted that the economy remains resilient, with a strong labor market and persistent inflation [9] - The company expects macroeconomic tailwinds, including a positively sloped yield curve and additional rate cuts, to support business moving forward [24] Other Important Information - The company mourned the passing of Board member Frank Ulrich, highlighting his contributions and impact [11] - Approximately 40% of the 2024 common dividends were treated as a non-taxable return of capital to shareholders, enhancing after-tax dividend yield [18] Q&A Session Summary Question: Current economic return of the portfolio - Management indicated that the economic return is in the low teens, aligning with the economic earnings power of the portfolio [39][40] Question: Increase in delinquency for single-family and multifamily transitional loans - Management explained that higher delinquencies are expected in riskier asset classes, particularly in transitional loans [54][56] Question: Outlook for Lima One - Management confirmed that single-family loans remain the focus, with expectations for growth in 2025, potentially reaching around $1.5 billion [64] Question: Level of unfunded commitments in the Lima One portfolio - Management estimated unfunded commitments to be in the $600 million range, with expectations for funding over the next year [81]

Company Update FOURTH QUARTER 2024 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," "should," "could," "would," "may," the negative of these words or similar expressions, are intended to identify "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, ...

Core Insights - MFA Financial reported revenue of $50.8 million for the quarter ended December 2024, reflecting a year-over-year increase of 9.4% [1] - The earnings per share (EPS) for the quarter was $0.39, down from $0.49 in the same quarter last year [1] - The reported revenue fell short of the Zacks Consensus Estimate of $52.05 million, resulting in a surprise of -2.40% [1] - The company did not deliver an EPS surprise, as the consensus EPS estimate was also $0.39 [1] Financial Performance Metrics - Other interest-earning assets amounted to $0.72 million, significantly below the two-analyst average estimate of $4.45 million [4] - Residential whole loans were reported at $152.77 million, slightly below the average estimate of $155.37 million from two analysts [4] - Cash and cash equivalent investments totaled $5.10 million, compared to the average estimate of $5.47 million based on two analysts [4] - Securities at fair value were valued at $19.75 million, exceeding the average estimate of $18.25 million from two analysts [4] Stock Performance - Shares of MFA Financial have returned +1.1% over the past month, while the Zacks S&P 500 composite has changed by +2.4% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]