Earnings release
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August 6, 2025 MFA Financial, Inc. Announces Second Quarter2025 Financial Results NEW YORK--(BUSINESS WIRE)-- MFA Financial, Inc. (NYSE:MFA) today provided its financialresults for the second quarter ended June 30, 2025: MFA generated GAAP net income to common stockholders and participating securities for thesecond quarter of $22.6 million, or $0.22 per basic and $0.21 per diluted common share.Distributable earnings, a non-GAAP financial measure, were $24.7 million, or $0.24 per basiccommon share. MFA paid a regular cash dividend of $0.36 per common share on July 31, 2025.GAAP book value at June 30, 2025 was $13.12 per common share. Economic book value, anon-GAAP financial measure, was $13.69 per common share.Total economic return was 1.5% for the second quarter.MFA closed the quarter with unrestricted cash of $275.7 million. “We grew our investment portfolio to $10.8 billion during the second quarter,” said Craig Knutson,MFA’s Chief Executive Officer. “We acquired $876 million of residential loans and securities in ourtarget asset classes, including $503 million of Non-QM loans and $131 million of Agency MBS. LimaOne originated $217 million of new Business purpose loans, including $167 million of Single-family Transitional loans with an average coupon of 10.2%. We issued our 18th Non-QM securitization inMay collateralized by $318 million UPB of loans. We also sold $38 million of newly-originated rentalloans and $24 million of delinquent Transitional loans.” “Although our Distributable earnings this quarter were weighed down by credit losses incurred onseveral Business purpose loans, we delivered a positive 1.5% total economic return to stockholders,”added Mr. Knutson. “Finally, our net interest spread rose to 1.98% and our net interest margin rose to2.73%.” Q2 2025 Portfolio Activity MFA’s residential investment portfolio rose to $10.8 billion at June 30, 2025 from $10.7 billion atMarch 31, 2025.Non-QM loan acquisitions totaled $503.0 million, bringing MFA’s Non-QM portfolio to $4.8 billionat June 30, 2025.Lima One funded $138.1 million of new business purpose loans with a maximum loan amount of$216.7 million. Further, $103.7 million of draws were funded on previously originatedTransitional loans. Lima One generated $6.1 million of mortgage banking income.MFA added $131.1 million of Agency MBS during the quarter, bringing its Agency MBS portfolioto $1.7 billion.Portfolio runoff was $774.0 million. Asset dispositions included $38.4 million of newly-originatedSFR loans and $23.7 million of delinquent Transitional loans. MFA also sold 107 REO propertiesin the second quarter for aggregate net proceeds of $21.8 million.60+ day delinquencies (measured as a percentage of UPB) for MFA’s residential loan portfoliodeclined to 7.3% at June 30, 2025 from 7.5% at March 31, 2025.MFA completed one loan securitization during the quarter, collateralized by $318.4 million ofNon-QM loans, bringing its total securitized debt to approximately $5.9 billion.MFA added $268.0 million of interest rate hedges while $125.0 million of swaps matured,bringing its total interest rate derivatives position to a notional amount of $3.5 billion.
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MFA estimates the net effective duration of its investment portfolio at June 30, 2025 rose to 1.00from 0.96 at March 31, 2025.MFA’s Debt/Net Equity Ratio was 5.2x while recourse leverage was 1.8x at June 30, 2025. Webcast MFA Financial, Inc. plans to host a live audio webcast of its investor conference call on Wednesday,August 6, 2025, at 11:00 a.m. (Eastern Time) to discuss its second quarter 2025 financial results. Thelive audio webcast will be accessible to the general public over the internet athttp://www.mfafinancial.com. Earnings presentation materials will be posted on the MFA website priorto 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 residentialmortgage loans, residential mortgage-backed securities and other real estate assets. Through itswholly-owned subsidiary, Lima One Capital, MFA also originates and services business purpose loansfor real estate investors. MFA has distributed $4.9 billion in dividends to stockholders since its initialpublic offering in 1998. MFA is an internally-managed, publicly-traded real estate investment trust. The following tables presents MFA’s asset allocation as of June 30, 2025, and the yield on averageinterest-earning assets, average cost of funds, impact of net Swap carry and net interest rate spreadfor the various asset types. Table 1 - Asset Allocation At June 30, 2025 Non-QMloans Single-familyrentalloans Single-familytransitionalloans Multifamilytransitionalloans LegacyRPL/NPLloans Securities,at fairvalue Other,net (1) Total (Dollars in Millions) Asset Amount $ 4,844 $ 1,291 $ 875 $ 731 $ 1,027 $ 1,830 $ 730 $11,328 Financing Agreements with Non-mark-to-marketCollateral Provisions — (8) (107) (142) — — — (257) Financing Agreements with Mark-to-marketCollateral Provisions (821) (251) (201) (148) (77) (1,602) (61) (3,161) Securitized Debt (3,457) (862) (418) (291) (867) — (9) (5,904) Senior Notes — — — — — — (184) (184) Net Equity Allocated $ 566 $ 170 $ 149 $ 150 $ 83 $ 228 $ 476 $ 1,822 Debt/Net Equity Ratio (2) 7.6 x 6.6 x 4.9 x 3.9 x 11.4 x 7.0 x 5.2 x (1) Includes $275.7 million of cash and cash equivalents, $269.2 million of restricted cash, $51.5 million of Other loans and $20.2 million of capitalcontributions made to loan origination partners, as well as other assets and other liabilities. (2) Total Debt/Net Equity ratio represents the sum of borrowings under our financing agreements as a multiple of net equity allocated. Table 2 - Net Interest Spread For the Three-Month Period Ended June 30, 2025 March 31, 2025 June 30, 2024 Non-QM Loans Net Yield (1) 5.79% 5.78% 5.49% Cost of Funding (2) (5.14)% (5.08)% (5.18)% Impact of net Swap carry (3) 0.70% 0.77% 1.63% Net Interest Spread 1.35% 1.47% 1.94% Business Purpose Loans Net Yield (1) 7.99% 8.09% 7.99% Cost of Funding (2) (6.07)% (6.15)% (6.72)% Impact of net Swap carry (3) 0.42% 0.45% 0.92% Net Interest Spread 2.34% 2.39% 2.19% Legacy RPL/NPL Loans Net Yield (1) 8.69% 7.01% 8.72% Cost of Funding (2) (4.29)% (4.24)% (4.77)% Impact of net Swap carry (3) 0.40% 0.31% 1.07% Net Interest Spread 4.80% 3.08% 5.02% Total Residential Whole Loans Net Yield (1) 6.85% 6.77% 6.92%
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Cost of Funding (2) (5.35)% (5.36)% (5.82)% Impact of net Swap carry (3) 0.58% 0.60% 1.28% Net Interest Spread 2.08% 2.01% 2.38% Securities, at fair value Net Yield (1) 6.60% 6.07% 7.03% Cost of Funding (2) (4.55)% (4.58)% (5.74)% Impact of net Swap carry (3) 1.05% 1.08% 1.90% Net Interest Spread 3.10% 2.57% 3.19% Total Balance Sheet Net Yield (1) 6.66% 6.52% 6.79% Cost of Funding (2) (5.32)% (5.34)% (5.90)% Impact of net Swap carry (3) 0.64% 0.66% 1.27% Net Interest Spread 1.98% 1.84% 2.16% (1) Reflects annualized interest income divided by average amortized cost. Excludes servicing costs. (2) Reflects annualized interest expense divided by average balance of agreements with mark-to-market collateral provisions (repurchaseagreements), agreements with non-mark-to-market collateral provisions, and securitized debt. (3) Reflects the difference between Swap interest income received and Swap interest expense paid on our Swaps. While we have not elected hedgeaccounting treatment for Swaps, and, accordingly, net Swap carry is not presented in interest expense in our consolidated statement of operations,we believe it is appropriate to allocate net Swap carry by asset class to reflect the economic impact of our Swaps on the net interest spread shownin the table above. The following table presents the activity for our residential mortgage asset portfolio for the threemonths ended June 30, 2025: Table 3 - Investment Portfolio Activity Q2 2025 (In Millions) March 31,2025 Runoff(1) Acquisitions &Originations (2) Other(3) June 30,2025 Change Residential whole loans and REO $ 8,915 $ (678) $ 745 $ (27) $ 8,955 $ 40 Securities, at fair value 1,790 (96) 131 5 1,830 40 Total $ 10,705 $ (774) $ 876 $ (22) $ 10,785 $ 80 (1) Primarily includes principal repayments and sales of REO. (2) Includes draws on previously originated Transitional loans. (3) Primarily includes loan 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 4 - Portfolio Composition/Residential Whole Loans Held at Carrying Value Held at Fair Value Total (Dollars in Thousands) June 30,2025 December31,2024 June 30,2025 December 31,2024 June 30,2025 December31,2024 Non-QM loans $ 657,760 $ 722,392 $ 4,187,992 $ 3,568,694 $ 4,845,752 $ 4,291,086 Business purpose loans: Single-family rental loans $ 98,341 $ 108,203 $ 1,194,243 $ 1,248,197 $ 1,292,584 $ 1,356,400 Single-family transitional loans (1) 8,468 22,430 866,733 1,078,425 875,201 1,100,855 Multifamily transitional loans — — 730,774 938,926 730,774 938,926 Total Business purpose loans $ 106,809 $ 130,633 $ 2,791,750 $ 3,265,548 $ 2,898,559 $ 3,396,181 Legacy RPL/NPL loans 436,270 457,654 597,435 624,895 1,033,705 1,082,549 Other loans — — 51,458 52,073 51,458 52,073 Allowance for Credit Losses (9,949) (10,665) — — (9,949) (10,665) Total Residential whole loans $ 1,190,890 $ 1,300,014 $ 7,628,635 $ 7,511,210 $ 8,819,525 $ 8,811,224 Number of loans 5,250 5,582 18,676 18,588 23,926 24,170 (1) Includes $349.1 million and $442.4 million of loans collateralized by new construction projects at origination as of June 30, 2025 and December31, 2024, respectively. Table 5 - Yields and Average Balances/Residential Whole Loans For the Three-Month Period Ended June 30, 2025 March 31, 2025 June 30, 2024 (Dollars in Thousands) Interest AverageBalance AverageYield Interest AverageBalance AverageYield Interest AverageBalance AverageYield Non-QM loans $ 70,267 $4,852,559 5.79% $ 65,264 $4,516,610 5.78% $ 58,749 $4,280,761 5.49% Business purpose loans: Single-family rental loans $ 21,747 $1,349,448 6.45% $ 22,397 $1,395,001 6.42% $ 27,564 $1,703,334 6.47% Single-family transitional loans 23,726 969,259 9.79% 25,818 1,056,813 9.77% 30,242 1,241,300 9.75% Multifamily transitional loans 17,308 824,919 8.39% 19,954 920,372 8.67% 25,291 1,213,450 8.34%
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Total business purpose loans $ 62,781 $3,143,626 7.99% $ 68,169 $3,372,186 8.09% $ 83,097 $4,158,084 7.99% Legacy RPL/NPL loans 21,076 969,699 8.69% 17,379 991,086 7.01% 23,346 1,070,629 8.72% Other loans 444 64,416 2.76% 498 65,130 3.06% 525 67,771 3.10% Total Residential whole loans $154,568 $9,030,300 6.85% $151,310 $8,945,012 6.77% $165,717 $9,577,245 6.92% Table 6 - Credit-related Metrics/Residential Whole Loans June 30, 2025 AssetAmount FairValue UnpaidPrincipalBalance(“UPB”) WeightedAverageCoupon(1) (2) WeightedAverageTerm toMaturity(Months) WeightedAverageLTVRatio (3) WeightedAverageOriginalFICO (4) Aging by UPB 60+DQ % 60+LTV(5) Past Due Days (Dollars InThousands) Current 30-59 60-89 90+ Non-QMloans $4,843,737 $4,823,546 $4,879,953 6.68% 339 64% 737 $4,559,049 $125,528 $ 57,255 $138,121 4.0% 64% Business purpose loans: Single-familyrental $1,291,647 $1,294,127 $1,324,122 6.36% 316 67% 739 $1,259,020 $ 14,987 $ 4,809 $ 45,306 3.8% 92% Single-familytransitional(5) 874,689 874,602 885,983 10.42% 5 68% 750 723,842 46,467 31,854 83,820 13.1% 77% Multifamilytransitional(5) 730,774 730,774 764,810 9.66% 3 64% 751 664,332 37,181 802 62,495 8.3% 73% Totalbusinesspurposeloans $2,897,110 $2,899,503 $2,974,915 8.42% 67% $2,647,194 $ 98,635 $ 37,465 $191,621 7.7% LegacyRPL/NPLloans 1,027,220 1,046,834 1,163,226 5.12% 248 55% 647 806,990 116,800 44,648 194,788 20.6% 63% Other loans 51,458 51,458 61,351 3.43% 314 64% 757 61,351 — — — —% —% Residentialwhole loans,total orweightedaverage $8,819,525 $8,821,341 $9,079,445 7.05% 64% $8,074,584 $340,963 $139,368 $524,530 7.3% (1) Weighted average is calculated based on the interest bearing principal balance of each loan within the related category. For loans acquired withservicing rights released by the seller, interest rates included in the calculation do not reflect loan servicing fees. For loans acquired with servicingrights retained by the seller, interest rates included in the calculation are net of servicing fees. (2) For the quarter ended June 30, 2025, the gross coupon was 10.43% for Single-family transitional loans, 9.67% for Multifamily transitional loans,6.39% for Single-family rental loans, 6.82% for Non-QM loans, and 5.13% for Legacy RPL/NPL loans. For the quarter ended December 31, 2024, thegross coupon was 10.45% for Single-family transitional loans, 9.18% for Multifamily transitional loans, 6.39% for Single-family rental loans, 6.65% forNon-QM loans, and 5.16% for Legacy RPL/NPL loans. (3) 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 themost recent date available, which may be the origination date. Excluded from the calculation of weighted average are certain low value loans securedby vacant lots, for which the LTV ratio is not meaningful. (4) Excludes loans for which no Fair Isaac Corporation (“FICO”) score is available. (5) For Single-family and Multifamily transitional loans, the LTV presented is the ratio of the maximum unpaid principal balance of the loan, includingunfunded commitments, to the estimated “after repaired” value of the collateral securing the related loan, where available. At June 30, 2025, forcertain Single-family and Multifamily Transitional loans totaling $380.2 million and $199.6 million, respectively, an after repaired valuation was notavailable. For these loans, the weighted average LTV is calculated based on the current unpaid principal balance and the as-is value of the collateralsecuring the related loan. Table 7 - Shock Table The information presented in the following “Shock Table” projects the potential impact of suddenparallel changes in interest rates on our portfolio, including the impact of Swaps and securitized debtand other fixed rate debt, based on the assets in our investment portfolio as of June 30, 2025. Allchanges in value are measured as the percentage change from the projected portfolio value under thebase interest rate scenario as of June 30, 2025. Change in Interest Rates Percentage Change in Portfolio Value Percentage Change in TotalStockholders' Equity +100 Basis Point Increase (1.32) % (8.58) % + 50 Basis Point Increase (0.58) % (3.77) % Actual as of June 30, 2025 — % — % - 50 Basis Point Decrease 0.42 % 2.71 % -100 Basis Point Decrease 0.67 % 4.37 % MFA FINANCIAL, INC.CONSOLIDATED BALANCE SHEETS
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(In Thousands, Except Per Share Amounts) June 30,2025 December31, 2024 (Unaudited) Assets: Residential whole loans, net ($7,628,635 and $7,511,210 held at fair value, respectively) (1) $ 8,819,525 $ 8,811,224 Securities, at fair value 1,829,809 1,537,513 Cash and cash equivalents 275,731 338,931 Restricted cash 269,224 262,381 Other assets 480,398 459,555 Total Assets $11,674,687 $11,409,604 Liabilities: Financing agreements ($5,648,623 and $5,516,005 held at fair value, respectively) $ 9,505,802 $ 9,155,461 Other liabilities 346,758 412,351 Total Liabilities $ 9,852,560 $ 9,567,812 Stockholders’ Equity: Preferred stock, $0.01 par value; 7.5% Series B cumulative redeemable; 8,050 shares authorized; 8,000 sharesissued and outstanding ($200,000 aggregate liquidation preference) $ 80 $ 80 Preferred stock, $0.01 par value; 6.5% Series C fixed-to-floating rate cumulative redeemable; 12,650 sharesauthorized; 11,000 shares issued and outstanding ($275,000 aggregate liquidation preference) 110 110 Common stock, $0.01 par value; 874,300 and 874,300 shares authorized; 102,669 and 102,083 shares issued andoutstanding, respectively 1,027 1,021 Additional paid-in capital, in excess of par 3,715,943 3,711,046 Accumulated deficit (1,899,922) (1,879,941) Accumulated other comprehensive income 4,889 9,476 Total Stockholders’ Equity $ 1,822,127 $ 1,841,792 Total Liabilities and Stockholders’ Equity $11,674,687 $11,409,604 (1) Includes approximately $7.1 billion and $6.9 billion of Residential whole loans transferred to consolidated variable interest entities (“VIEs”) atJune 30, 2025 and December 31, 2024, respectively. Such assets can be used only to settle the obligations of each respective VIE. MFA FINANCIAL, INC.CONSOLIDATED STATEMENTS OF OPERATIONS Three Months EndedJune 30, Six Months EndedJune 30, (In Thousands, Except Per Share Amounts) 2025 2024 2025 2024 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Interest Income: Residential whole loans $ 154,568 $ 165,717 $ 305,878 $ 323,382 Securities, at fair value 28,778 13,629 53,448 26,621 Other interest-earning assets 528 1,177 926 2,340 Cash and cash equivalent investments 4,470 6,308 8,597 11,319 Interest Income $ 188,344 $ 186,831 $ 368,849 $ 363,662 Interest Expense: Asset-backed and other collateralized financing arrangements $ 122,523 $ 126,755 $ 240,954 $ 250,197 Other interest expense 4,545 6,587 9,082 12,162 Interest Expense $ 127,068 $ 133,342 $ 250,036 $ 262,359 Net Interest Income $ 61,276 $ 53,489 $ 118,813 $ 101,303 Reversal/(Provision) for Credit Losses on Residential Whole Loans $ (791) $ 1,079 $ (936) $ 1,539 Reversal/(Provision) for Credit Losses on Other Assets — (26) — (1,135) Net Interest Income after Reversal/(Provision) for Credit Losses $ 60,485 $ 54,542 $ 117,877 $ 101,707 Other Income/(Loss), net: Net gain/(loss) on residential whole loans measured at fair value through earnings $ 33,611 $ 16,430 $ 87,991 $ 4,917 Impairment and other net gain/(loss) on securities and other portfolio investments 6,645 (2,842) 27,824 (7,618) Net gain/(loss) on real estate owned (2,911) 1,880 (4,419) 2,871 Net gain/(loss) on derivatives used for risk management purposes (18,251) 16,087 (49,306) 66,028 Net gain/(loss) on securitized debt measured at fair value through earnings (7,105) (10,642) (29,036) (33,104) Lima One mortgage banking income 6,087 7,619 11,524 15,547 Net realized gain/(loss) on residential whole loans held at carrying value (343) — (882) 418 Other, net (5,483) 1,317 (6,934) 3,192 Other Income/(Loss), net $ 12,250 $ 29,849 $ 36,762 $ 52,251 Operating and Other Expense: Compensation and benefits $ 19,308 $ 21,747 $ 42,565 $ 47,215 Other general and administrative expense 10,621 10,835 20,912 22,830
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Loan servicing, financing and other related costs 8,584 8,717 15,836 15,759 Amortization of intangible assets 800 800 1,600 1,600 Operating and Other Expense $ 39,313 $ 42,099 $ 80,913 $ 87,404 Income/(loss) before income taxes $ 33,422 $ 42,292 $ 73,726 $ 66,554 Provision for/(benefit from) income taxes $ 238 $ 346 $ (634) $ 1,395 Net Income/(Loss) $ 33,184 $ 41,946 $ 74,360 $ 65,159 Less Preferred Stock Dividend Requirement $ 10,560 $ 8,218 $ 18,779 $ 16,437 Net Income/(Loss) Available to Common Stock and ParticipatingSecurities $ 22,624 $ 33,728 $ 55,581 $ 48,722 Basic Earnings/(Loss) per Common Share $ 0.22 $ 0.32 $ 0.53 $ 0.47 Diluted Earnings/(Loss) per Common Share $ 0.21 $ 0.32 $ 0.52 $ 0.46 Segment Reporting At June 30, 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 relatedinterest income, investments in loan originators and related economics, general and administrativeexpenses not directly attributable to Lima One, interest expense on unsecured convertible seniornotes, securitization issuance costs, and preferred stock dividends. The following tables summarize segment financial information, which in total reconciles to the samedata for the Company as a whole: (In Thousands) Mortgage-RelatedAssets Lima One Corporate Total Three months ended June 30, 2025 Interest Income $ 125,987 $ 59,830 $ 2,527 $ 188,344 Interest Expense 84,424 38,099 4,545 127,068 Net Interest Income/(Expense) $ 41,563 $ 21,731 $ (2,018) $ 61,276 Reversal/(Provision) for Credit Losses on Residential Whole Loans (791) — — (791) Reversal/(Provision) for Credit Losses on Other Assets — — — — Net Interest Income/(Expense) after Reversal/(Provision) for Credit Losses $ 40,772 $ 21,731 $ (2,018) $ 60,485 Net gain/(loss) on residential whole loans measured at fair value through earnings $ 28,117 $ 5,494 $ — $ 33,611 Impairment and other net gain/(loss) on securities and other portfolio investments 4,007 2 2,636 6,645 Net gain on real estate owned (1,374) (1,537) — (2,911) Net gain/(loss) on derivatives used for risk management purposes (15,289) (2,962) — (18,251) Net gain/(loss) on securitized debt measured at fair value through earnings (8,607) 1,502 — (7,105) Lima One mortgage banking income — 6,087 — 6,087 Net realized gain/(loss) on residential whole loans held at carrying value (343) — — (343) Other, net (2,123) (4,398) 1,038 (5,483) Other Income/(Loss), net $ 4,388 $ 4,188 $ 3,674 $ 12,250 Compensation and benefits $ — $ 9,700 $ 9,608 $ 19,308 Other general and administrative expense (30) 4,867 5,784 10,621 Loan servicing, financing and other related costs 4,790 1,796 1,998 8,584 Amortization of intangible assets — 800 — 800 Income/(loss) before income taxes $ 40,400 $ 8,756 $ (15,734) $ 33,422 Provision for/(benefit from) income taxes — — 238 238 Net Income/(Loss) $ 40,400 $ 8,756 $ (15,972) $ 33,184 Less Preferred Stock Dividend Requirement $ — $ — $ 10,560 $ 10,560 Net Income/(Loss) Available to Common Stock and Participating Securities $ 40,400 $ 8,756 $ (26,532) $ 22,624 (Dollars in Thousands) Mortgage-RelatedAssets Lima One Corporate Total June 30, 2025 Total Assets $ 8,176,258 $ 3,153,196 $ 345,233 $ 11,674,687 December 31, 2024 Total Assets $ 7,395,925 $ 3,632,472 $ 381,207 $ 11,409,604
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Reconciliation of GAAP Net Income to non-GAAP Distributable Earnings “Distributable earnings” is a non-GAAP financial measure of our operating performance, within themeaning of Regulation G and Item 10(e) of Regulation S-K, as promulgated by the Securities andExchange Commission. Distributable earnings is determined by adjusting GAAP net income/(loss) byremoving 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-relatedtransaction costs. Realized gains and losses arising from loans sold to third-parties by Lima Oneshortly after the origination of such loans are included in Distributable earnings. The transaction costsare primarily comprised of costs only incurred at the time of execution of our securitizations andinclude costs such as underwriting fees, legal fees, diligence fees, bank fees and other similartransaction related expenses. These costs are all incurred prior to or at the execution of oursecuritizations and do not recur. Recurring expenses, such as servicing fees, custodial fees, trusteefees and other similar ongoing fees are not excluded from Distributable earnings. Managementbelieves that the adjustments made to GAAP earnings result in the removal of (i) income or expensesthat are not reflective of the longer term performance of our investment portfolio, (ii) certain non-cashexpenses, and (iii) expense items required to be recognized solely due to the election of the fair valueoption on certain related residential mortgage assets and associated liabilities. Distributable earningsis one of the factors that our Board of Directors considers when evaluating distributions to ourshareholders. Accordingly, we believe that the adjustments to compute Distributable earningsspecified below provide investors and analysts with additional information to evaluate our financialresults. 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 incomeor cash flows from operating activities, each as determined in accordance with GAAP, and ourcalculation of this measure may not be comparable to similarly titled measures reported by othercompanies. The following table provides a reconciliation of our GAAP net income/(loss) used in the calculation ofbasic EPS to our non-GAAP Distributable earnings for the quarterly periods below: Quarter Ended (In Thousands, Except Per Share Amounts) June 30,2025 March 31,2025 December 31,2024 September 30,2024 June 30,2024 GAAP Net income/(loss) used in the calculation of basic EPS $ 22,424 $ 32,751 $ (2,396) $ 39,870 $ 33,614 Adjustments: Unrealized and realized gains and losses on: Residential whole loans held at fair value (33,612) (54,380) 102,339 (143,416) (16,430) Securities held at fair value (4,008) (20,201) 26,273 (17,107) 4,026 Residential whole loans and securities at carrying value 343 305 — (7,324) (2,668) Interest rate swaps and ERIS swap futures 32,565 44,842 (46,632) 84,629 10,237 Securitized debt held at fair value 3,712 18,575 (47,267) 71,475 7,597 Other portfolio investments (2,637) (744) (94) 1,503 1,484 Expense items: Amortization of intangible assets 800 800 800 800 800 Equity based compensation 2,274 6,052 1,637 2,104 3,899 Securitization-related transaction costs 1,753 1,696 5,252 3,485 3,009 Depreciation 1,087 879 938 2,604 822 Total adjustments 2,277 (2,176) 43,246 (1,247) 12,776 Distributable earnings $ 24,701 $ 30,575 $ 40,850 $ 38,623 $ 46,390 GAAP earnings/(loss) per basic common share $ 0.22 $ 0.32 $ (0.02) $ 0.38 $ 0.32 Distributable earnings per basic common share $ 0.24 $ 0.29 $ 0.39 $ 0.37 $ 0.45 Weighted average common shares for basic earnings per share 103,705 103,777 103,675 103,647 103,446 Reconciliation of GAAP Book Value per Common Share to non-GAAP Economic Book Valueper Common Share
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“Economic book value” is a non-GAAP financial measure of our financial position. To calculate ourEconomic book value, our portfolios of Residential whole loans and securitized debt held at carryingvalue are adjusted to their fair value, rather than the carrying value that is required to be reportedunder the GAAP accounting model applied to these financial instruments. These adjustments are alsoreflected in the table below in our end of period stockholders’ equity. Management considers thatEconomic book value provides investors with a useful supplemental measure to evaluate our financialposition as it reflects the impact of fair value changes for all of our investment activities, irrespective ofthe accounting model applied for GAAP reporting purposes. Economic book value does not representand should not be considered as a substitute for Stockholders’ Equity, as determined in accordancewith GAAP, and our calculation of this measure may not be comparable to similarly titled measuresreported 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) June 30,2025 March 31,2025 December 31,2024 September 30,2024 June 30,2024 GAAP Total Stockholders’ Equity $ 1,822.1 $ 1,838.4 $ 1,841.8 $ 1,880.5 $ 1,883.2 Preferred Stock, liquidation preference (475.0) (475.0) (475.0) (475.0) (475.0) GAAP Stockholders’ Equity for book value per common share 1,347.1 1,363.4 1,366.8 1,405.5 1,408.2 Adjustments: Fair value adjustment to Residential whole loans, at carryingvalue 1.8 (6.3) (15.3) 6.7 (26.8) Fair value adjustment to Securitized debt, at carrying value 57.1 63.1 70.3 64.3 82.3 Stockholders’ Equity including fair value adjustments toResidential whole loans and Securitized debt held at carryingvalue (Economic book value) $ 1,406.0 $ 1,420.2 $ 1,421.8 $ 1,476.5 $ 1,463.7 GAAP book value per common share $ 13.12 $ 13.28 $ 13.39 $ 13.77 $ 13.80 Economic book value per common share $ 13.69 $ 13.84 $ 13.93 $ 14.46 $ 14.34 Number of shares of common stock outstanding 102.7 102.7 102.1 102.1 102.1 Cautionary Note Regarding Forward-Looking Statements When used in this press release or other written or oral communications, statements that are nothistorical 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 orsimilar expressions, are intended to identify “forward-looking statements” within the meaning ofSection 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities ExchangeAct of 1934, as amended, and, as such, may involve known and unknown risks, uncertainties andassumptions. These forward-looking statements include information about possible or assumed futureresults with respect to MFA’s business, financial condition, liquidity, results of operations, plans andobjectives. Among the important factors that could cause our actual results to differ materially fromthose projected in any forward-looking statements that we make are: general economic developmentsand 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 interestrates and changes in the market (i.e., fair) value of MFA’s residential whole loans, MBS, securitizeddebt and other assets, as well as changes in the value of MFA’s liabilities accounted for at fair valuethrough earnings; the effectiveness of hedging transactions; changes in the prepayment rates onresidential mortgage assets, an increase of which could result in a reduction of the yield on certaininvestments in its portfolio and could require MFA to reinvest the proceeds received by it as a result ofsuch prepayments in investments with lower coupons, while a decrease in which could result in anincrease in the interest rate duration of certain investments in MFA’s portfolio making their valuationmore sensitive to changes in interest rates and could result in lower forecasted cash flows; credit risksunderlying MFA’s assets, including changes in the default rates and management’s assumptionsregarding default rates and loss severities on the mortgage loans in MFA’s residential whole loanportfolio; MFA’s ability to borrow to finance its assets and the terms, including the cost, maturity andother terms, of any such borrowings; implementation of or changes in government regulations orprograms affecting MFA’s business (including as a result of the current U.S. Presidentialadministration); MFA’s estimates regarding taxable income, the actual amount of which is dependent
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on a number of factors, including, but not limited to, changes in the amount of interest income andfinancing costs, the method elected by MFA to accrete the market discount on residential whole loansand the extent of prepayments, realized losses and changes in the composition of MFA’s residentialwhole loan portfolios that may occur during the applicable tax period, including gain or loss on anyMBS disposals or whole loan modifications, foreclosures and liquidations; the timing and amount ofdistributions to stockholders, which are declared and paid at the discretion of MFA’s Board of Directorsand will depend on, among other things, MFA’s taxable income, its financial results and overallfinancial condition and liquidity, maintenance of its REIT qualification and such other factors as MFA’sBoard of Directors deems relevant; MFA’s ability to maintain its qualification as a REIT for federalincome tax purposes; MFA’s ability to maintain its exemption from registration under the InvestmentCompany Act of 1940, as amended (or the “Investment Company Act”), including statementsregarding the concept release issued by the Securities and Exchange Commission (“SEC”) relating tointerpretive issues under the Investment Company Act with respect to the status under the InvestmentCompany Act of certain companies that are engaged in the business of acquiring mortgages andmortgage-related interests; MFA’s ability to continue growing its residential whole loan portfolio, whichis dependent on, among other things, the supply of loans offered for sale in the market; targeted orexpected returns on our investments in recently-originated mortgage loans, the performance of whichis, similar to our other mortgage loan investments, subject to, among other things, differences inprepayment risk, credit risk and financing costs associated with such investments; risks associatedwith the ongoing operation of Lima One Holdings, LLC (including, without limitation, industrycompetition, unanticipated expenditures relating to or liabilities arising from its operation (including,among other things, a failure to realize management’s assumptions regarding expected growth inbusiness purpose loan (BPL) origination volumes and credit risks underlying BPLs, including changesin the default rates and management’s assumptions regarding default rates and loss severities on theBPLs originated by Lima One)); expected returns on MFA’s investments in nonperforming residentialwhole loans (“NPLs”), which are affected by, among other things, the length of time required toforeclose upon, sell, liquidate or otherwise reach a resolution of the property underlying the NPL,home price values, amounts advanced to carry the asset (e.g., taxes, insurance, maintenanceexpenses, etc. on the underlying property) and the amount ultimately realized upon resolution of theasset; risks associated with our investments in loan originators; risks associated with investing in realestate assets generally, including changes in business conditions and the general economy; and otherrisks, uncertainties and factors, including those described in the annual, quarterly and current reportsthat we file with the SEC. These forward-looking statements are based on beliefs, assumptions andexpectations of MFA’s future performance, taking into account information currently available.Readers and listeners are cautioned not to place undue reliance on these forward-looking statements,which speak only as of the date on which they are made. New risks and uncertainties arise over timeand it is not possible to predict those events or how they may affect MFA. Except as required by law,MFA is not obligated to, and does not intend to, update or revise any forward-looking statements,whether as a result of new information, future events or otherwise. Category: Earnings View source version on businesswire.com:https://www.businesswire.com/news/home/20250806943132/en/ INVESTOR CONTACT:InvestorRelations@mfafinancial.com212-207-6488www.mfafinancial.com MEDIA CONTACT:H/Advisors AbernathyTom Johnson212-371-5999 Source: MFA Financial, Inc.