MFA Financial, Inc. Announces First Quarter 2025 Financial Results
-
MFA generated GAAP net income to common stockholders and participating securities for the first quarter of
$33.0 million $0.32 $0.31 -
Distributable earnings, a non-GAAP financial measure, were
$30.6 million $0.29 $0.36 -
GAAP book value at March 31, 2025 was
$13.28 $13.84 -
Total economic return was
1.9% for the first quarter. -
MFA closed the quarter with unrestricted cash of
$253.7 million
“We are pleased to report a
“Despite the market volatility since quarter-end, we believe we are well-situated to take advantage of opportunities that may arise in 2025 and beyond,” added Mr. Knutson.
Q1 2025 Portfolio Activity
-
Non-QM loan acquisitions totaled
$383.4 million $4.5 billion -
Lima One funded
$122.3 million $212.8 million $101.2 million $5.4 million -
MFA added
$267.6 million $1.6 billion -
Portfolio runoff was
$645.0 million $69.7 million $24.2 million -
60+ day delinquencies (measured as a percentage of UPB) for MFA’s residential loan portfolio were unchanged at
7.5% . -
MFA completed one loan securitization during the quarter, collateralized by
$305.0 million $5.9 billion -
MFA added
$602.1 million $550.0 million $3.4 billion 2.66% and a weighted average variable receive interest rate of4.41% . - MFA estimates the net effective duration of its investment portfolio at March 31, 2025 declined to 0.96 from 1.02 at December 31, 2024.
- MFA’s Debt/Net Equity Ratio was 5.1x while recourse leverage was 1.8x at March 31, 2025.
Webcast
MFA Financial, Inc. plans to host a live audio webcast of its investor conference call on Tuesday, May 6, 2025, at 11:00 a.m. (Eastern Time) to discuss its first quarter 2025 financial results. The live audio webcast will be accessible to the general public over the internet at http://www.mfafinancial.com. Earnings presentation materials will be posted on the MFA website prior to the conference call and an audio replay will be available on the website following the call.
About MFA Financial, Inc.
MFA Financial, Inc. (NYSE: MFA) is a leading specialty finance company that invests in residential mortgage loans, residential mortgage-backed securities and other real estate assets. Through its wholly-owned subsidiary, Lima One Capital, MFA also originates and services business purpose loans for real estate investors. MFA has distributed
The following table presents MFA’s asset allocation as of March 31, 2025, and the first quarter 2025 yield on average interest-earning assets, average cost of funds and net interest rate spread for the various asset types.
Table 1 - Asset Allocation
At March 31, 2025 |
|
Business purpose
|
|
Non-QM
|
|
Legacy
|
|
Securities, at
|
|
Other,
|
|
Total |
||||||||||||
(Dollars in Millions) |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Asset Amount |
|
$ |
3,137 |
|
|
$ |
4,539 |
|
|
$ |
1,055 |
|
|
$ |
1,790 |
|
|
$ |
716 |
|
|
$ |
11,237 |
|
Receivable/(Payable) for Unsettled Transactions |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(31 |
) |
|
|
— |
|
|
|
(31 |
) |
Financing Agreements with Non-mark-to-market Collateral Provisions |
|
|
(417 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(417 |
) |
Financing Agreements with Mark-to-market Collateral Provisions |
|
|
(583 |
) |
|
|
(650 |
) |
|
|
(50 |
) |
|
|
(1,544 |
) |
|
|
(66 |
) |
|
|
(2,893 |
) |
Securitized Debt |
|
|
(1,613 |
) |
|
|
(3,358 |
) |
|
|
(900 |
) |
|
|
— |
|
|
|
(3 |
) |
|
|
(5,874 |
) |
Senior Notes |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(184 |
) |
|
|
(184 |
) |
Net Equity Allocated |
|
$ |
524 |
|
|
$ |
531 |
|
|
$ |
105 |
|
|
$ |
215 |
|
|
$ |
463 |
|
|
$ |
1,838 |
|
Debt/Net Equity Ratio (3) |
|
5.0 |
x |
|
7.5 |
x |
|
9.0 |
x |
|
7.3 |
x |
|
|
|
5.1 |
x |
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
For the Quarter Ended March 31, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Yield on Average Interest Earning Assets (4) |
|
|
8.09 |
% |
|
|
5.78 |
% |
|
|
7.01 |
% |
|
|
6.07 |
% |
|
|
|
|
6.52 |
% |
||
Less Average Cost of Funds (5) |
|
|
(5.70 |
) |
|
|
(4.31 |
) |
|
|
(3.93 |
) |
|
|
(3.50 |
) |
|
|
|
|
(4.68 |
) |
||
Net Interest Rate Spread |
|
|
2.39 |
% |
|
|
1.47 |
% |
|
|
3.08 |
% |
|
|
2.57 |
% |
|
|
|
|
1.84 |
% |
||
(1) |
|
Includes |
(2) |
|
Includes |
(3) |
|
Total Debt/Net Equity ratio represents the sum of borrowings under our financing agreements as a multiple of net equity allocated. |
(4) |
|
Yields reported on our interest earning assets are calculated based on the interest income recorded and the average amortized cost for the quarter of the respective asset. At March 31, 2025, the amortized cost of our Securities, at fair value, was |
(5) |
|
Average cost of funds includes interest on financing agreements, |
The following table presents the activity for our residential mortgage asset portfolio for the three months ended March 31, 2025:
Table 2 - Investment Portfolio Activity Q1 2025
(In Millions) |
|
December 31, 2024 |
|
Runoff (1) |
|
Acquisitions &
|
|
Other (3) |
|
March 31, 2025 |
|
Change |
|||||||||
Residential whole loans and REO |
|
$ |
8,942 |
|
$ |
(613 |
) |
|
$ |
607 |
|
$ |
(21 |
) |
|
$ |
8,915 |
|
$ |
(27 |
) |
Securities, at fair value |
|
|
1,538 |
|
|
(32 |
) |
|
|
268 |
|
|
16 |
|
|
|
1,790 |
|
|
252 |
|
Totals |
|
$ |
10,480 |
|
$ |
(645 |
) |
|
$ |
875 |
|
$ |
(5 |
) |
|
$ |
10,705 |
|
$ |
225 |
|
(1) |
|
Primarily includes principal repayments and sales of REO. |
(2) |
|
Includes draws on previously originated Transitional loans. |
(3) |
|
Primarily includes sales, changes in fair value and changes in the allowance for credit losses. |
The following tables present information on our investments in residential whole loans:
Table 3 - Portfolio Composition/Residential Whole Loans
|
|
Held at Carrying Value |
|
Held at Fair Value |
|
Total |
||||||||||||||||
(Dollars in Thousands) |
|
March 31,
|
|
December 31,
|
|
March 31,
|
|
December 31,
|
|
March 31,
|
|
December 31,
|
||||||||||
Business purpose loans: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Single-family transitional loans (1) |
|
$ |
15,593 |
|
|
$ |
22,430 |
|
|
$ |
975,425 |
|
$ |
1,078,425 |
|
$ |
991,018 |
|
|
$ |
1,100,855 |
|
Multifamily transitional loans |
|
|
— |
|
|
|
— |
|
|
|
835,049 |
|
|
938,926 |
|
|
835,049 |
|
|
|
938,926 |
|
Single-family rental loans |
|
|
104,123 |
|
|
|
108,203 |
|
|
|
1,208,870 |
|
|
1,248,197 |
|
|
1,312,993 |
|
|
|
1,356,400 |
|
Total Business purpose loans |
|
$ |
119,716 |
|
|
$ |
130,633 |
|
|
$ |
3,019,344 |
|
$ |
3,265,548 |
|
$ |
3,139,060 |
|
|
$ |
3,396,181 |
|
Non-QM loans |
|
|
695,523 |
|
|
|
722,392 |
|
|
|
3,845,030 |
|
|
3,568,694 |
|
|
4,540,553 |
|
|
|
4,291,086 |
|
Legacy RPL/NPL loans |
|
|
447,246 |
|
|
|
457,654 |
|
|
|
614,556 |
|
|
624,895 |
|
|
1,061,802 |
|
|
|
1,082,549 |
|
Other loans |
|
|
— |
|
|
|
— |
|
|
|
53,137 |
|
|
52,073 |
|
|
53,137 |
|
|
|
52,073 |
|
Allowance for Credit Losses |
|
|
(10,194 |
) |
|
|
(10,665 |
) |
|
|
— |
|
|
— |
|
|
(10,194 |
) |
|
|
(10,665 |
) |
Total Residential whole loans |
|
$ |
1,252,291 |
|
|
$ |
1,300,014 |
|
|
$ |
7,532,067 |
|
$ |
7,511,210 |
|
$ |
8,784,358 |
|
|
$ |
8,811,224 |
|
Number of loans |
|
|
5,430 |
|
|
|
5,582 |
|
|
|
18,586 |
|
|
18,588 |
|
|
24,016 |
|
|
|
24,170 |
|
(1) |
Includes |
Table 4 - Yields and Average Balances/Residential Whole Loans
|
|
For the Three-Month Period Ended |
|||||||||||||||||||||||||
|
|
March 31, 2025 |
|
December 31, 2024 |
|
March 31, 2024 |
|||||||||||||||||||||
(Dollars in Thousands) |
|
Interest |
|
Average
|
|
Average
|
|
Interest |
|
Average
|
|
Average
|
|
Interest |
|
Average
|
|
Average
|
|||||||||
Business purpose loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Single-family transitional loans |
|
$ |
25,818 |
|
$ |
1,056,813 |
|
9.77 |
% |
|
$ |
26,733 |
|
$ |
1,125,631 |
|
9.50 |
% |
|
$ |
28,018 |
|
$ |
1,239,558 |
|
9.04 |
% |
Multifamily transitional loans |
|
|
19,954 |
|
|
920,372 |
|
8.67 |
% |
|
|
20,474 |
|
|
1,040,093 |
|
7.87 |
% |
|
|
25,198 |
|
|
1,209,393 |
|
8.33 |
% |
Single-family rental loans |
|
|
22,397 |
|
|
1,395,001 |
|
6.42 |
% |
|
|
23,124 |
|
|
1,474,552 |
|
6.27 |
% |
|
|
27,102 |
|
|
1,746,058 |
|
6.21 |
% |
Total business purpose loans |
|
$ |
68,169 |
|
$ |
3,372,186 |
|
8.09 |
% |
|
$ |
70,331 |
|
$ |
3,640,276 |
|
7.73 |
% |
|
$ |
80,318 |
|
$ |
4,195,009 |
|
7.66 |
% |
Non-QM loans |
|
|
65,264 |
|
|
4,516,610 |
|
5.78 |
% |
|
|
62,885 |
|
|
4,464,657 |
|
5.63 |
% |
|
|
55,861 |
|
|
4,149,257 |
|
5.39 |
% |
Legacy RPL/NPL loans |
|
|
17,379 |
|
|
991,086 |
|
7.01 |
% |
|
|
19,085 |
|
|
1,014,917 |
|
7.52 |
% |
|
|
20,969 |
|
|
1,100,553 |
|
7.62 |
% |
Other loans |
|
|
498 |
|
|
65,130 |
|
3.06 |
% |
|
|
467 |
|
|
66,186 |
|
2.82 |
% |
|
|
517 |
|
|
68,490 |
|
3.02 |
% |
Total Residential whole loans |
|
$ |
151,310 |
|
$ |
8,945,012 |
|
6.77 |
% |
|
$ |
152,768 |
|
$ |
9,186,036 |
|
6.65 |
% |
|
$ |
157,665 |
|
$ |
9,513,309 |
|
6.63 |
% |
Table 5 - Net Interest Spread/Residential Whole Loans
|
|
For the Three-Month Period Ended |
||||
|
|
March 31, 2025 |
|
December 31, 2024 |
|
March 31, 2024 |
Business Purpose Loans |
|
|
|
|
|
|
Net Yield (1) |
|
|
|
|
|
|
Cost of Funding (2) |
|
|
|
|
|
|
Net Interest Spread |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-QM Loans |
|
|
|
|
|
|
Net Yield (1) |
|
|
|
|
|
|
Cost of Funding (2) |
|
|
|
|
|
|
Net Interest Spread |
|
|
|
|
|
|
|
|
|
|
|
|
|
Legacy RPL/NPL Loans |
|
|
|
|
|
|
Net Yield (1) |
|
|
|
|
|
|
Cost of Funding (2) |
|
|
|
|
|
|
Net Interest Spread |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Residential Whole Loans |
|
|
|
|
|
|
Net Yield (1) |
|
|
|
|
|
|
Cost of Funding (2) |
|
|
|
|
|
|
Net Interest Spread |
|
|
|
|
|
|
(1) |
|
Reflects annualized interest income on Residential whole loans divided by average amortized cost of Residential whole loans. Excludes servicing costs. |
(2) |
|
Reflects annualized interest expense divided by average balance of agreements with mark-to-market collateral provisions (repurchase agreements), agreements with non-mark-to-market collateral provisions, and securitized debt. Cost of funding shown in the table above includes the impact of the net carry (the difference between swap interest income received and swap interest expense paid) on our Swaps. While we have not elected hedge accounting treatment for Swaps, and, accordingly, net carry is not presented in interest expense in our consolidated statement of operations, we believe it is appropriate to allocate net carry to the cost of funding to reflect the economic impact of our Swaps on the funding costs shown in the table above. For the quarter ended March 31, 2025, this decreased the overall funding cost by 60 basis points for our Residential whole loans, 45 basis points for our Business purpose loans, 77 basis points for our Non-QM loans, and 31 basis points for our Legacy RPL/NPL loans. For the quarter ended December 31, 2024, this decreased the overall funding cost by 101 basis points for our Residential whole loans, 80 basis points for our Business purpose loans, 136 basis points for our Non-QM loans, and 19 basis points for our Legacy RPL/NPL loans. For the quarter ended March 31, 2024, this decreased the overall funding cost by 132 basis points for our Residential whole loans, 99 basis points for our Business purpose loans, 168 basis points for our Non-QM loans, and 107 basis points for our Legacy RPL/NPL loans. |
Table 6 - Credit-related Metrics/Residential Whole Loans
March 31, 2025
|
|
Asset
|
|
Fair
|
|
Unpaid
|
|
Weighted
|
|
Weighted
|
|
Weighted
|
|
Weighted
|
|
Aging by UPB |
|
60+
|
|
60+
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
Past Due Days |
|
|
||||||||||||||||||||||||
(Dollars In Thousands) |
|
|
|
|
|
|
|
|
Current |
|
|
30-59 |
|
|
60-89 |
|
90+ |
|
|
||||||||||||||||||
Business purpose loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Single-family transitional (4) |
$ |
990,153 |
|
$ |
990,158 |
|
$ |
1,006,280 |
|
10.43 |
% |
|
5 |
|
69 |
% |
|
749 |
|
$ |
871,466 |
|
$ |
17,161 |
|
$ |
11,546 |
|
$ |
106,107 |
|
11.7 |
% |
|
91 |
% |
|
Multifamily transitional (4) |
|
835,049 |
|
|
835,049 |
|
|
875,125 |
|
9.53 |
% |
|
5 |
|
65 |
% |
|
750 |
|
|
775,895 |
|
|
21,128 |
|
|
10,448 |
|
|
67,654 |
|
8.9 |
% |
|
80 |
% |
|
Single-family rental |
|
|
1,312,013 |
|
|
1,313,854 |
|
|
1,355,621 |
|
6.35 |
% |
|
318 |
|
68 |
% |
|
739 |
|
|
1,281,803 |
|
|
19,248 |
|
|
5,376 |
|
|
49,194 |
|
4.0 |
% |
|
99 |
% |
Total business purpose loans |
|
$ |
3,137,215 |
|
$ |
3,139,061 |
|
$ |
3,237,026 |
|
8.48 |
% |
|
|
|
67 |
% |
|
|
|
$ |
2,929,164 |
|
$ |
57,537 |
|
$ |
27,370 |
|
$ |
222,955 |
|
7.7 |
% |
|
|
|
Non-QM loans |
|
|
4,538,626 |
|
|
4,513,712 |
|
|
4,607,963 |
|
6.59 |
% |
|
338 |
|
64 |
% |
|
736 |
|
|
4,296,899 |
|
|
133,178 |
|
|
54,605 |
|
|
123,281 |
|
3.9 |
% |
|
66 |
% |
Legacy RPL/NPL loans |
|
|
1,055,380 |
|
|
1,072,144 |
|
|
1,196,206 |
|
5.14 |
% |
|
250 |
|
55 |
% |
|
647 |
|
|
802,461 |
|
|
136,363 |
|
|
41,766 |
|
|
215,616 |
|
21.5 |
% |
|
63 |
% |
Other loans |
|
|
53,137 |
|
|
53,137 |
|
|
63,214 |
|
3.44 |
% |
|
317 |
|
64 |
% |
|
758 |
|
|
63,214 |
|
|
— |
|
|
— |
|
|
— |
|
— |
% |
|
— |
% |
Residential whole loans, total or weighted average |
$ |
8,784,358 |
|
$ |
8,778,054 |
|
$ |
9,104,409 |
|
7.07 |
% |
|
|
|
64 |
% |
|
|
|
$ |
8,091,738 |
|
$ |
327,078 |
|
$ |
123,741 |
|
$ |
561,852 |
|
7.5 |
% |
|
|
||
(1) |
|
Weighted average is calculated based on the interest bearing principal balance of each loan within the related category. For loans acquired with servicing rights released by the seller, interest rates included in the calculation do not reflect loan servicing fees. For loans acquired with servicing rights retained by the seller, interest rates included in the calculation are net of servicing fees. |
(2) |
|
LTV represents the ratio of the total unpaid principal balance of the loan to the estimated value of the collateral securing the related loan as of the most recent date available, which may be the origination date. Excluded from the calculation of weighted average are certain low value loans secured by vacant lots, for which the LTV ratio is not meaningful. |
(3) |
|
Excludes loans for which no Fair Isaac Corporation (“FICO”) score is available. |
(4) |
|
For Single-family and Multifamily transitional loans, the LTV presented is the ratio of the maximum unpaid principal balance of the loan, including unfunded commitments, to the estimated “after repaired” value of the collateral securing the related loan, where available. At March 31, 2025, for certain Single-family and Multifamily Transitional loans totaling |
Table 7 - Shock Table
The information presented in the following “Shock Table” projects the potential impact of sudden parallel changes in interest rates on our portfolio, including the impact of Swaps and securitized debt and other fixed rate debt, based on the assets in our investment portfolio as of March 31, 2025. All changes in value are measured as the percentage change from the projected portfolio value under the base interest rate scenario as of March 31, 2025.
Change in Interest Rates |
|
Percentage Change in Portfolio Value |
|
Percentage Change in Total
|
||
+100 Basis Point Increase |
|
(1.26 |
)% |
|
(8.02 |
)% |
+ 50 Basis Point Increase |
|
(0.56 |
)% |
|
(3.53 |
)% |
Actual as of March 31, 2025 |
|
— |
% |
|
— |
% |
- 50 Basis Point Decrease |
|
0.40 |
% |
|
2.57 |
% |
-100 Basis Point Decrease |
|
0.66 |
% |
|
4.19 |
% |
MFA FINANCIAL, INC.
CONSOLIDATED BALANCE SHEETS
| (In Thousands, Except Per Share Amounts) |
|
March 31,
|
|
December 31,
|
||||
|
|
(Unaudited) |
|
|
||||
Assets: |
|
|
|
|
||||
Residential whole loans, net ( |
|
$ |
8,784,358 |
|
|
$ |
8,811,224 |
|
Securities, at fair value |
|
|
1,790,285 |
|
|
|
1,537,513 |
|
Cash and cash equivalents |
|
|
253,713 |
|
|
|
338,931 |
|
Restricted cash |
|
|
219,581 |
|
|
|
262,381 |
|
Other assets |
|
|
471,569 |
|
|
|
459,555 |
|
Total Assets |
|
$ |
11,519,506 |
|
|
$ |
11,409,604 |
|
|
|
|
|
|
||||
Liabilities: |
|
|
|
|
||||
Financing agreements ( |
|
$ |
9,367,218 |
|
|
$ |
9,155,461 |
|
Other liabilities |
|
|
313,884 |
|
|
|
412,351 |
|
Total Liabilities |
|
$ |
9,681,102 |
|
|
$ |
9,567,812 |
|
|
|
|
|
|
||||
Stockholders’ Equity: |
|
|
|
|
||||
Preferred stock, |
|
$ |
80 |
|
|
$ |
80 |
|
Preferred stock, |
|
|
110 |
|
|
|
110 |
|
Common stock, |
|
|
1,027 |
|
|
|
1,021 |
|
Additional paid-in capital, in excess of par |
|
|
3,712,924 |
|
|
|
3,711,046 |
|
Accumulated deficit |
|
|
(1,883,953 |
) |
|
|
(1,879,941 |
) |
Accumulated other comprehensive income |
|
|
8,216 |
|
|
|
9,476 |
|
Total Stockholders’ Equity |
|
$ |
1,838,404 |
|
|
$ |
1,841,792 |
|
Total Liabilities and Stockholders’ Equity |
|
$ |
11,519,506 |
|
|
$ |
11,409,604 |
|
(1) |
|
Includes approximately |
MFA FINANCIAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
|
Three Months Ended
|
|||||||
(In Thousands, Except Per Share Amounts) |
|
2025 |
|
2024 |
||||
|
|
(Unaudited) |
|
(Unaudited) |
||||
Interest Income: |
|
|
|
|
||||
Residential whole loans |
|
$ |
151,310 |
|
|
$ |
157,665 |
|
Securities, at fair value |
|
|
24,670 |
|
|
|
12,992 |
|
Other interest-earning assets |
|
|
398 |
|
|
|
1,163 |
|
Cash and cash equivalent investments |
|
|
4,127 |
|
|
|
5,011 |
|
Interest Income |
|
$ |
180,505 |
|
|
$ |
176,831 |
|
|
|
|
|
|
||||
Interest Expense: |
|
|
|
|
||||
Asset-backed and other collateralized financing arrangements |
|
$ |
118,431 |
|
|
$ |
123,442 |
|
Other interest expense |
|
|
4,537 |
|
|
|
5,575 |
|
Interest Expense |
|
$ |
122,968 |
|
|
$ |
129,017 |
|
|
|
|
|
|
||||
Net Interest Income |
|
$ |
57,537 |
|
|
$ |
47,814 |
|
|
|
|
|
|
||||
Reversal/(Provision) for Credit Losses on Residential Whole Loans |
|
$ |
(145 |
) |
|
$ |
460 |
|
Reversal/(Provision) for Credit Losses on Other Assets |
|
|
— |
|
|
|
(1,109 |
) |
Net Interest Income after Reversal/(Provision) for Credit Losses |
|
$ |
57,392 |
|
|
$ |
47,165 |
|
|
|
|
|
|
||||
Other Income/(Loss), net: |
|
|
|
|
||||
Net gain/(loss) on residential whole loans measured at fair value through earnings |
|
$ |
54,380 |
|
|
$ |
(11,513 |
) |
Impairment and other net gain/(loss) on securities and other portfolio investments |
|
|
21,179 |
|
|
|
(4,776 |
) |
Net gain/(loss) on real estate owned |
|
|
(1,508 |
) |
|
|
991 |
|
Net gain/(loss) on derivatives used for risk management purposes |
|
|
(31,055 |
) |
|
|
49,941 |
|
Net gain/(loss) on securitized debt measured at fair value through earnings |
|
|
(21,931 |
) |
|
|
(22,462 |
) |
Lima One mortgage banking income |
|
|
5,437 |
|
|
|
7,928 |
|
Net realized gain/(loss) on residential whole loans held at carrying value |
|
|
(539 |
) |
|
|
418 |
|
Other, net |
|
|
(1,451 |
) |
|
|
1,875 |
|
Other Income/(Loss), net |
|
$ |
24,512 |
|
|
$ |
22,402 |
|
|
|
|
|
|
||||
Operating and Other Expense: |
|
|
|
|
||||
Compensation and benefits |
|
$ |
23,257 |
|
|
$ |
25,468 |
|
Other general and administrative expense |
|
|
10,291 |
|
|
|
11,995 |
|
Loan servicing, financing and other related costs |
|
|
7,252 |
|
|
|
7,042 |
|
Amortization of intangible assets |
|
|
800 |
|
|
|
800 |
|
Operating and Other Expense |
|
$ |
41,600 |
|
|
$ |
45,305 |
|
|
|
|
|
|
||||
Income/(loss) before income taxes |
|
$ |
40,304 |
|
|
$ |
24,262 |
|
Provision for/(benefit from) income taxes |
|
$ |
(872 |
) |
|
$ |
1,049 |
|
Net Income/(Loss) |
|
$ |
41,176 |
|
|
$ |
23,213 |
|
Less Preferred Stock Dividend Requirement |
|
$ |
8,219 |
|
|
$ |
8,219 |
|
Net Income/(Loss) Available to Common Stock and Participating Securities |
|
$ |
32,957 |
|
|
$ |
14,994 |
|
|
|
|
|
|
||||
Basic Earnings/(Loss) per Common Share |
|
$ |
0.32 |
|
|
$ |
0.14 |
|
Diluted Earnings/(Loss) per Common Share |
|
$ |
0.31 |
|
|
$ |
0.14 |
|
Segment Reporting
At March 31, 2025, the Company’s reportable segments include (i) mortgage-related assets and (ii) Lima One. The Corporate column in the table below primarily consists of corporate cash and related interest income, investments in loan originators and related economics, general and administrative expenses not directly attributable to Lima One, interest expense on unsecured convertible senior notes, securitization issuance costs, and preferred stock dividends.
The following tables summarize segment financial information, which in total reconciles to the same data for the Company as a whole:
(In Thousands) |
|
Mortgage-
|
|
Lima One |
|
Corporate |
|
Total |
||||||||
Three months ended March 31, 2025 |
|
|
|
|
|
|
|
|
||||||||
Interest Income |
|
$ |
112,767 |
|
|
$ |
65,272 |
|
|
$ |
2,466 |
|
|
$ |
180,505 |
|
Interest Expense |
|
|
77,361 |
|
|
|
41,070 |
|
|
|
4,537 |
|
|
|
122,968 |
|
Net Interest Income/(Expense) |
|
$ |
35,406 |
|
|
$ |
24,202 |
|
|
$ |
(2,071 |
) |
|
$ |
57,537 |
|
Reversal/(Provision) for Credit Losses on Residential Whole Loans |
|
|
(145 |
) |
|
|
— |
|
|
|
— |
|
|
|
(145 |
) |
Reversal/(Provision) for Credit Losses on Other Assets |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Net Interest Income/(Expense) after Reversal/(Provision) for Credit Losses |
|
$ |
35,261 |
|
|
$ |
24,202 |
|
|
$ |
(2,071 |
) |
|
$ |
57,392 |
|
|
|
|
|
|
|
|
|
|
||||||||
Net gain/(loss) on residential whole loans measured at fair value through earnings |
|
$ |
48,663 |
|
|
$ |
5,717 |
|
|
$ |
— |
|
|
$ |
54,380 |
|
Impairment and other net gain/(loss) on securities and other portfolio investments |
|
|
20,435 |
|
|
|
(9 |
) |
|
|
753 |
|
|
|
21,179 |
|
Net gain on real estate owned |
|
|
69 |
|
|
|
(1,577 |
) |
|
|
— |
|
|
|
(1,508 |
) |
Net gain/(loss) on derivatives used for risk management purposes |
|
|
(25,562 |
) |
|
|
(5,493 |
) |
|
|
— |
|
|
|
(31,055 |
) |
Net gain/(loss) on securitized debt measured at fair value through earnings |
|
|
(17,149 |
) |
|
|
(4,782 |
) |
|
|
— |
|
|
|
(21,931 |
) |
Lima One mortgage banking income |
|
|
— |
|
|
|
5,437 |
|
|
|
— |
|
|
|
5,437 |
|
Net realized gain/(loss) on residential whole loans held at carrying value |
|
|
(539 |
) |
|
|
— |
|
|
|
— |
|
|
|
(539 |
) |
Other, net |
|
|
(745 |
) |
|
|
(1,996 |
) |
|
|
1,290 |
|
|
|
(1,451 |
) |
Other Income/(Loss), net |
|
$ |
25,172 |
|
|
$ |
(2,703 |
) |
|
$ |
2,043 |
|
|
$ |
24,512 |
|
|
|
|
|
|
|
|
|
|
||||||||
Compensation and benefits |
|
$ |
— |
|
|
$ |
9,793 |
|
|
$ |
13,464 |
|
|
$ |
23,257 |
|
Other general and administrative expense |
|
|
8 |
|
|
|
4,376 |
|
|
|
5,907 |
|
|
|
10,291 |
|
Loan servicing, financing and other related costs |
|
|
4,243 |
|
|
|
1,148 |
|
|
|
1,861 |
|
|
|
7,252 |
|
Amortization of intangible assets |
|
|
— |
|
|
|
800 |
|
|
|
— |
|
|
|
800 |
|
Income/(loss) before income taxes |
|
$ |
56,182 |
|
|
$ |
5,382 |
|
|
$ |
(21,260 |
) |
|
$ |
40,304 |
|
Provision for/(benefit from) income taxes |
|
|
— |
|
|
|
— |
|
|
|
(872 |
) |
|
|
(872 |
) |
Net Income/(Loss) |
|
$ |
56,182 |
|
|
$ |
5,382 |
|
|
$ |
(20,388 |
) |
|
$ |
41,176 |
|
|
|
|
|
|
|
|
|
|
||||||||
Less Preferred Stock Dividend Requirement |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
8,219 |
|
|
$ |
8,219 |
|
Net Income/(Loss) Available to Common Stock and Participating Securities |
|
$ |
56,182 |
|
|
$ |
5,382 |
|
|
$ |
(28,607 |
) |
|
$ |
32,957 |
|
(Dollars in Thousands) |
|
Mortgage-
|
|
Lima One |
|
Corporate |
|
Total |
||||
March 31, 2025 |
|
|
|
|
|
|
|
|
||||
Total Assets |
|
$ |
7,874,033 |
|
$ |
3,332,561 |
|
$ |
312,912 |
|
$ |
11,519,506 |
|
|
|
|
|
|
|
|
|
||||
December 31, 2024 |
|
|
|
|
|
|
|
|
||||
Total Assets |
|
$ |
7,395,925 |
|
$ |
3,632,472 |
|
$ |
381,207 |
|
$ |
11,409,604 |
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 earnings is determined by adjusting GAAP net income/(loss) by removing certain unrealized gains and losses, primarily on residential mortgage investments, associated debt, and hedges that are, in each case, accounted for at fair value through earnings, certain realized gains and losses, as well as certain non-cash expenses and securitization-related transaction costs. Realized gains and losses arising from loans sold to third-parties by Lima One shortly after the origination of such loans are included in Distributable earnings. The transaction costs are primarily comprised of costs only incurred at the time of execution of our securitizations and include costs such as underwriting fees, legal fees, diligence fees, bank fees and other similar transaction related expenses. These costs are all incurred prior to or at the execution of our securitizations and do not recur. Recurring expenses, such as servicing fees, custodial fees, trustee fees and other similar ongoing fees are not excluded from Distributable earnings. Management believes that the adjustments made to GAAP earnings result in the removal of (i) income or expenses that are not reflective of the longer term performance of our investment portfolio, (ii) certain non-cash expenses, and (iii) expense items required to be recognized solely due to the election of the fair value option on certain related residential mortgage assets and associated liabilities. Distributable earnings is one of the factors that our Board of Directors considers when evaluating distributions to our shareholders. Accordingly, we believe that the adjustments to compute Distributable earnings specified below provide investors and analysts with additional information to evaluate our financial results.
Distributable earnings should be used in conjunction with results presented in accordance with GAAP. Distributable earnings does not represent and should not be considered as a substitute for net income or cash flows from operating activities, each as determined in accordance with GAAP, and our calculation of this measure may not be comparable to similarly titled measures reported by other companies.
The following table provides a reconciliation of our GAAP net income/(loss) used in the calculation of basic EPS to our non-GAAP Distributable earnings for the quarterly periods below:
|
|
Quarter Ended |
||||||||||||||||||
(In Thousands, Except Per Share Amounts) |
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
|
March 31,
|
||||||||||
GAAP Net income/(loss) used in the calculation of basic EPS |
|
$ |
32,751 |
|
|
$ |
(2,396 |
) |
|
$ |
39,870 |
|
|
$ |
33,614 |
|
|
$ |
14,827 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
||||||||||
Unrealized and realized gains and losses on: |
|
|
|
|
|
|
|
|
|
|
||||||||||
Residential whole loans held at fair value |
|
|
(54,380 |
) |
|
|
102,339 |
|
|
|
(143,416 |
) |
|
|
(16,430 |
) |
|
|
11,513 |
|
Securities held at fair value |
|
|
(20,201 |
) |
|
|
26,273 |
|
|
|
(17,107 |
) |
|
|
4,026 |
|
|
|
4,776 |
|
Residential whole loans and securities at carrying value |
|
|
305 |
|
|
|
— |
|
|
|
(7,324 |
) |
|
|
(2,668 |
) |
|
|
(418 |
) |
Interest rate swaps |
|
|
44,842 |
|
|
|
(46,632 |
) |
|
|
84,629 |
|
|
|
10,237 |
|
|
|
(23,182 |
) |
Securitized debt held at fair value |
|
|
18,575 |
|
|
|
(47,267 |
) |
|
|
71,475 |
|
|
|
7,597 |
|
|
|
20,169 |
|
Other portfolio investments |
|
|
(744 |
) |
|
|
(94 |
) |
|
|
1,503 |
|
|
|
1,484 |
|
|
|
— |
|
Expense items: |
|
|
|
|
|
|
|
|
|
|
||||||||||
Amortization of intangible assets |
|
|
800 |
|
|
|
800 |
|
|
|
800 |
|
|
|
800 |
|
|
|
800 |
|
Equity based compensation |
|
|
6,052 |
|
|
|
1,637 |
|
|
|
2,104 |
|
|
|
3,899 |
|
|
|
6,243 |
|
Securitization-related transaction costs |
|
|
1,696 |
|
|
|
5,252 |
|
|
|
3,485 |
|
|
|
3,009 |
|
|
|
1,340 |
|
Depreciation |
|
|
879 |
|
|
|
938 |
|
|
|
2,604 |
|
|
|
822 |
|
|
|
889 |
|
Total adjustments |
|
|
(2,176 |
) |
|
|
43,246 |
|
|
|
(1,247 |
) |
|
|
12,776 |
|
|
|
22,130 |
|
Distributable earnings |
|
$ |
30,575 |
|
|
$ |
40,850 |
|
|
$ |
38,623 |
|
|
$ |
46,390 |
|
|
$ |
36,957 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
GAAP earnings/(loss) per basic common share |
|
$ |
0.32 |
|
|
$ |
(0.02 |
) |
|
$ |
0.38 |
|
|
$ |
0.32 |
|
|
$ |
0.14 |
|
Distributable earnings per basic common share |
|
$ |
0.29 |
|
|
$ |
0.39 |
|
|
$ |
0.37 |
|
|
$ |
0.45 |
|
|
$ |
0.36 |
|
Weighted average common shares for basic earnings per share |
|
|
103,777 |
|
|
|
103,675 |
|
|
|
103,647 |
|
|
|
103,446 |
|
|
|
103,175 |
|
Reconciliation of GAAP Book Value per Common Share to non-GAAP Economic Book Value per Common Share
“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, rather than the carrying value that is required to be reported under the GAAP accounting model applied to these financial instruments. These adjustments are also reflected in the table below in our end of period stockholders’ equity. Management considers that Economic book value provides investors with a useful supplemental measure to evaluate our financial position as it reflects the impact of fair value changes for all of our investment activities, irrespective of the accounting model applied for GAAP reporting purposes. Economic book value does not represent and should not be considered as a substitute for Stockholders’ Equity, as determined in accordance with GAAP, and our calculation of this measure may not be comparable to similarly titled measures reported by other companies.
The following table provides a reconciliation of our GAAP book value per common share to our non-GAAP Economic book value per common share as of the quarterly periods below:
|
|
Quarter Ended: |
||||||||||||||||||
(In Millions, Except Per Share Amounts) |
|
March 31,
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
|
March 31,
|
||||||||||
GAAP Total Stockholders’ Equity |
|
$ |
1,838.4 |
|
|
$ |
1,841.8 |
|
|
$ |
1,880.5 |
|
|
$ |
1,883.2 |
|
|
$ |
1,884.2 |
|
Preferred Stock, liquidation preference |
|
|
(475.0 |
) |
|
|
(475.0 |
) |
|
|
(475.0 |
) |
|
|
(475.0 |
) |
|
|
(475.0 |
) |
GAAP Stockholders’ Equity for book value per common share |
|
|
1,363.4 |
|
|
|
1,366.8 |
|
|
|
1,405.5 |
|
|
|
1,408.2 |
|
|
|
1,409.2 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
||||||||||
Fair value adjustment to Residential whole loans, at carrying value |
|
|
(6.3 |
) |
|
|
(15.3 |
) |
|
|
6.7 |
|
|
|
(26.8 |
) |
|
|
(35.4 |
) |
Fair value adjustment to Securitized debt, at carrying value |
|
|
63.1 |
|
|
|
70.3 |
|
|
|
64.3 |
|
|
|
82.3 |
|
|
|
88.4 |
|
Stockholders’ Equity including fair value adjustments to Residential whole loans and Securitized debt held at carrying value (Economic book value) |
|
$ |
1,420.2 |
|
|
$ |
1,421.8 |
|
|
$ |
1,476.5 |
|
|
$ |
1,463.7 |
|
|
$ |
1,462.2 |
|
GAAP book value per common share |
|
$ |
13.28 |
|
|
$ |
13.39 |
|
|
$ |
13.77 |
|
|
$ |
13.80 |
|
|
$ |
13.80 |
|
Economic book value per common share |
|
$ |
13.84 |
|
|
$ |
13.93 |
|
|
$ |
14.46 |
|
|
$ |
14.34 |
|
|
$ |
14.32 |
|
Number of shares of common stock outstanding |
|
|
102.7 |
|
|
|
102.1 |
|
|
|
102.1 |
|
|
|
102.1 |
|
|
|
102.1 |
|
Cautionary Note Regarding Forward-Looking Statements
When used in this press release 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, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and, as such, may involve known and unknown risks, uncertainties and assumptions. These forward-looking statements include information about possible or assumed future results with respect to MFA’s business, financial condition, liquidity, results of operations, plans and objectives. Among the important factors that could cause our actual results to differ materially from those projected in any forward-looking statements that we make are: general economic developments and trends, including the current tensions in international trade, and the performance of the labor, housing, real estate, mortgage finance and broader financial markets; inflation, increases in interest rates and changes in the market (i.e., fair) value of MFA’s residential whole loans, MBS, securitized debt and other assets, as well as changes in the value of MFA’s liabilities accounted for at fair value through earnings; the effectiveness of hedging transactions; changes in the prepayment rates on residential mortgage assets, an increase of which could result in a reduction of the yield on certain investments in its portfolio and could require MFA to reinvest the proceeds received by it as a result of such prepayments in investments with lower coupons, while a decrease in which could result in an increase in the interest rate duration of certain investments in MFA’s portfolio making their valuation more sensitive to changes in interest rates and could result in lower forecasted cash flows; credit risks underlying MFA’s assets, including changes in the default rates and management’s assumptions regarding default rates and loss severities on the mortgage loans in MFA’s residential whole loan portfolio; MFA’s ability to borrow to finance its assets and the terms, including the cost, maturity and other terms, of any such borrowings; implementation of or changes in government regulations or programs affecting MFA’s business (including as a result of the current
Category: Earnings
View source version on businesswire.com: https://www.businesswire.com/news/home/20250506774039/en/
INVESTOR CONTACT:
InvestorRelations@mfafinancial.com
212-207-6488
www.mfafinancial.com
MEDIA CONTACT:
H/Advisors Abernathy
Tom Johnson
212-371-5999
Source: MFA Financial, Inc.
