Earnings release
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November 4, 2026 MFA Financial, Inc. Announces Third Quarter2026 Financial Results NEW YORK--(BUSINESS WIRE)-- MFA Financial, Inc. (NYSE:MFA) today provided its financial resultsfor the third quarter ended September 30, 2026: Third Quarter 2026 Financial Results: MFA incurred a GAAP net loss to common stockholders and participating securities for the thirdquarter of $(122.4) million, or $(1.19) per basic and diluted common share.Distributable earnings, a non-GAAP financial measure, were $26.4 million, or $0.26 per basiccommon share. Distributable earnings prior to realized credit losses, a non-GAAP financialmeasure, were $45.3 million, or $0.44 per share.GAAP book value at September 30, 2026 was $11.12 per common share. Economic book value,a non-GAAP financial measure, was $11.44 per common share.Total economic return was (10.6)% for the third quarter.MFA closed the quarter with $119.5 million of unrestricted cash and $241.2 million of unpledgedAgency MBS.MFA paid a regular cash dividend of $0.36 per common share on October 30, 2026. “The third quarter was challenging for mortgage investors with Treasury yields spiking across the curveand heightened volatility sending spreads wider,” said Craig Knutson, MFA’s Chief Executive Officer.“While we were not immune to these market movements, we purchased Non-QM loans and AgencyMBS at attractive levels while further reducing our legacy multifamily exposure. We look forward todeploying capital into a higher yielding environment moving forward.” “We acquired $1.6 billion of assets during the quarter, including a $750 million rotation within ourAgency MBS portfolio into higher coupon bonds,” added Bryan Wulfsohn, President and ChiefInvestment Officer. “We also re-securitized $447 million of seasoned NPL collateral after calling a priorissuance, unlocking $40 million of capital and additional financing capacity.” Q3 2026 Portfolio Activity MFA’s residential investment portfolio was $12.8 billion at September 30, 2026 compared to$13.0 billion at June 30, 2026.MFA purchased $884.2 million and sold $750.3 million of Agency MBS during the quarter. Afterportfolio runoff and market value changes, MFA’s Agency MBS position declined to $3.9 billion.MFA also maintained its forward contracts in the “to-be-announced” (TBA) market with a notionalamount of $478.0 million at September 30, 2026.Non-QM loan acquisitions totaled $480.5 million, bringing MFA’s Non-QM portfolio to $5.8 billionat September 30, 2026.Lima One funded $166.1 million of new business purpose loans with a maximum loan amount of$287.8 million. In addition, $88.4 million of draws were funded on previously originatedTransitional loans. Lima One generated $7.4 million of mortgage banking income.Portfolio runoff was $614.0 million. Asset dispositions included $94.8 million of proceeds fromrecently-originated single-family rental (SFR) loans, generating a $2.4 million gain on sale. MFAalso sold 62 REO properties in the third quarter for aggregate net proceeds of $20.5 million.60+ day delinquencies (measured as a percentage of UPB) for MFA’s residential loan portfoliodecreased to 6.7% at September 30, 2026 from 7.0% at June 30, 2026.
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MFA completed one securitization during the quarter collateralized by $446.5 million UPB ofloans, bringing its total securitized debt to approximately $5.9 billion.MFA added a net $357.2 million of new interest rate hedges and estimates the net effectiveduration of its investment portfolio was 1.09 years.MFA’s Debt/Net Equity Ratio was 7.1x while recourse leverage was 3.4x at September 30, 2026. Succession Plan As previously announced, Craig Knutson will retire as Chief Executive Officer, effective June 30, 2027.Mr. Knutson is expected to remain on the Board of Directors following his retirement and will stand forreelection to the Board at MFA’s 2027 annual meeting of stockholders. Bryan Wulfsohn will join theBoard on January 1, 2027 and become Chief Executive Officer on July 1, 2027. In addition, AndrewKail will join MFA as Senior Vice President and Chief Investment Officer, effective January 1, 2027. Webcast MFA Financial, Inc. plans to host a live audio webcast of its investor conference call on Wednesday,November 4, 2026, at 11:00 a.m. (Eastern Time) to discuss its third quarter 2026 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 over $5 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 present MFA’s asset allocation as of September 30, 2026, and the yield onaverage interest-earning assets, average cost of funds, impact of net Swap carry and net interest ratespread for the various asset types. Table 1 - Asset Allocation At September 30, 2026 Non-QMloans Single-familyrentalloans Single-familytransitionalloans Multifamilytransitionalloans SeasonedRPL/NPLloans AgencyMBS Other,net (1) Total (Dollars in Millions) Asset Amount $ 5,760 $ 1,057 $ 678 $ 263 $ 880 $ 3,923 $ 585 $13,146 Net Receivable/(Payable) for UnsettledTransactions — — — — — (10) — (10) Financing Agreements with Non-mark-to-marketCollateral Provisions — (9) (47) (3) — — — (59) Financing Agreements with Mark-to-marketCollateral Provisions (1,029) (75) (323) (194) (46) (3,523) (112) (5,302) Securitized Debt (4,109) (862) (198) — (740) — (31) (5,940) Senior Notes and Other secured financing — — — — — — (219) (219) Net Equity Allocated $ 622 $ 111 $ 110 $ 66 $ 94 $ 390 $ 223 $ 1,616 Debt/Net Equity Ratio (2) 8.3x 8.5x 5.2x 3.0x 8.4x 9.1x 7.1x (1) Includes $119.5 million of cash and cash equivalents, $207.3 million of restricted cash, $54.4 million of other securities, $44.7 million of Otherloans and $21.1 million of capital contributions 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 September 30, 2026 June 30, 2026 September 30, 2025 Non-QM Loans Net Yield (1) 5.86% 5.79% 5.95% Cost of Funding (2) (5.14)% (5.09)% (5.21)%
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Impact of net Swap carry (3) 0.29% 0.28% 0.62% Net Interest Spread 1.01% 0.98% 1.36% Business Purpose Loans Net Yield (1) 7.50% 7.24% 7.91% Cost of Funding (2) (5.40)% (5.42)% (6.03)% Impact of net Swap carry (3) 0.24% 0.29% 0.49% Net Interest Spread 2.34% 2.11% 2.37% Seasoned RPL/NPL Loans Net Yield (1) 7.52% 7.74% 8.55% Cost of Funding (2) (4.06)% (4.26)% (4.32)% Impact of net Swap carry (3) 0.29% 0.36% 0.52% Net Interest Spread 3.75% 3.84% 4.75% Total Residential Whole Loans Net Yield (1) 6.39% 6.33% 6.82% Cost of Funding (2) (5.08)% (5.08)% (5.36)% Impact of net Swap carry (3) 0.28% 0.29% 0.58% Net Interest Spread 1.59% 1.54% 2.04% Securities, at fair value Net Yield (1) 5.41% 5.41% 5.79% Cost of Funding (2) (3.81)% (3.78)% (4.50)% Impact of net Swap carry (3) 0.62% 0.57% 1.05% Net Interest Spread 2.22% 2.20% 2.34% Total Balance Sheet Net Yield (1) 6.01% 5.98% 6.50% Cost of Funding (2) (4.76)% (4.77)% (5.29)% Impact of net Swap carry (3) 0.38% 0.37% 0.65% Net Interest Spread 1.63% 1.58% 1.86% (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 ofoperations, we believe it is appropriate to allocate net Swap carry by asset class to reflect the economic impact of our Swaps on the net interestspread shown in the table above. The following table presents the activity for our residential mortgage asset portfolio for the threemonths ended September 30, 2026: Table 3 - Investment Portfolio Activity Q3 2026 (In Millions) June 30,2026 Runoff (1) Acquisitions &Originations (2) Other (3) September 30,2026 Change Residential whole loans and REO $ 8,896 $ (534) $ 735 $ (283) $ 8,814 $ (82) Securities, at fair value 4,147 (80) 884 (973) 3,978 (169) Total $ 13,043 $ (614) $ 1,619 $ (1,256) $ 12,792 $ (251) (1) Primarily includes principal repayments and sales of REO. (2) Includes draws on previously originated Transitional loans. (3) Primarily includes sales of residential whole loans and securities, 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) September 30,2026 December 31,2025 September 30,2026 December 31,2025 September 30,2026 December 31,2025 Non-QM loans $ 502,529 $ 593,213 $ 5,259,245 $ 4,753,480 $ 5,761,774 $ 5,346,693 Business purpose loans: Single-family rental loans $ 72,058 $ 88,112 $ 986,036 $ 1,147,234 $ 1,058,094 $ 1,235,346 Single-family transitional loans(1) 6,013 7,051 672,444 711,294 678,457 718,345 Multifamily transitional loans — — 263,448 489,637 263,448 489,637 Total Business purpose loans $ 78,071 $ 95,163 $ 1,921,928 $ 2,348,165 $ 1,999,999 $ 2,443,328 Seasoned RPL/NPL loans 384,963 414,676 500,355 564,340 885,318 979,016 Other loans — — 44,738 51,022 44,738 51,022 Allowance for Credit Losses (7,953) (9,705) — — (7,953) (9,705) Total Residential whole loans $ 957,610 $ 1,093,347 $ 7,726,266 $ 7,717,007 $ 8,683,876 $ 8,810,354
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Number of loans 4,506 4,941 18,778 18,824 23,284 23,765 (1)Includes $348.4 million and $300.2 million of loans collateralized by new construction projects at origination as of September 30, 2026 andDecember 31, 2025, respectively. Table 5 - Yields and Average Balances/Residential Whole Loans For the Three-Month Period Ended September 30, 2026 June 30, 2026 September 30, 2025 (Dollars in Thousands) Interest AverageBalance AverageYield Interest AverageBalance AverageYield Interest AverageBalance AverageYield Non-QM loans $ 87,245 $5,959,103 5.86% $ 83,019 $5,735,430 5.79% $ 76,742 $5,162,278 5.95% Business purpose loans: Single-family rentalloans $ 17,892 $1,143,035 6.26% $ 18,190 $1,199,977 6.06% $ 21,637 $1,302,703 6.64% Single-familytransitional loans 15,771 683,932 9.22% 16,168 683,649 9.46% 19,155 835,895 9.17% Multifamily transitionalloans 6,877 334,267 8.23% 7,056 405,227 6.97% 15,402 704,298 8.75% Total business purposeloans $ 40,540 $2,161,234 7.50% $ 41,414 $2,288,853 7.24% $ 56,194 $2,842,896 7.91% Seasoned RPL/NPL loans 15,850 843,368 7.52% 16,748 865,419 7.74% 20,086 939,653 8.55% Other loans 430 59,166 2.90% 443 59,903 2.96% 479 62,786 3.05% Total Residential wholeloans $ 144,065 $9,022,871 6.39% $ 141,624 $8,949,605 6.33% $ 153,501 $9,007,613 6.82% Table 6 - Credit-related Metrics/Residential Whole Loans September 30, 2026 Aging by UPB Past Due Days (Dollars InThousands) AssetAmount Fair Value UnpaidPrincipalBalance(“UPB”) WeightedAverageCoupon(1) (2) WeightedAverageTerm toMaturity(Months) WeightedAverageLTVRatio (3) WeightedAverageOriginalFICO (4) Current 30-59 60-89 90+ 60+DQ% 60+LTV(5) Non-QMloans $5,760,356 $5,736,465 $5,905,880 6.71% 336 64% 741 $5,513,287 $130,656 $ 54,963 $206,974 4.4% 67% Business purpose loans: Single-familyrental $1,057,222 $1,057,305 $1,105,465 6.34% 302 65% 740 $1,049,963 $ 24,563 $ 2,686 $ 28,253 2.8% 64% Single-familytransitional(5) 678,052 678,325 692,847 9.93% 7 68% 756 597,146 21,141 3,966 70,594 10.8% 84% Multifamilytransitional(5) 263,448 263,448 298,916 10.04% 1 95% 751 211,256 16,887 8,755 62,018 23.7% 156% Totalbusinesspurposeloans $1,998,722 $1,999,078 $2,097,228 8.07% 70% $1,858,365 $ 62,591 $ 15,407 $160,865 8.4% SeasonedRPL/NPLloans 880,060 880,365 1,016,119 5.08% 239 52% 646 747,447 97,192 39,152 132,328 16.9% 58% Other loans 44,738 44,738 56,643 3.44% 299 62% 758 56,275 — 368 — 0.6% 61% Residentialwhole loans,total orweightedaverage $8,683,876 $8,660,646 $9,075,870 6.84% 64% $8,175,374 $290,439 $109,890 $500,167 6.7% (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. Certain Transitional Loans contain contractualfeatures which increase the loan’s interest rate following an event of default. The weighted average coupon presented is calculated based oneach loan’s coupon rate without regard to post-default rate adjustments. (2) For the quarter ended September 30, 2026, the gross coupon was 6.83% for Non-QM loans, 6.37% for Single-family rental loans, 9.94% forSingle-family transitional loans, 10.06% for Multifamily transitional loans, and 5.09% for Seasoned 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 loanssecured by 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 that are less than 90 days delinquent, the LTV presented is generally the ratio of the maximumunpaid principal balance of the loan, including unfunded commitments, to the estimated “after repaired” value of the collateral securing the related
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loan, as of the most recent date available, which may be the origination date. For Single-family and Multifamily transitional loans that are 90 ormore days delinquent, as well as certain performing loans for which an after repaired valuation was not available, the LTV presented is the ratioof the current unpaid principal balance of the loan to the estimated as-is value of the collateral securing the related loan as of the most recentdate available, which may be the origination date. 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 September 30, 2026. Allchanges in value are measured as the percentage change from the projected portfolio value under thebase interest rate scenario as of September 30, 2026. Change in Interest Rates Percentage Change inNet Portfolio Value Percentage Change inTotal Stockholders'Equity +100 Basis Point Increase (1.25)% (10.87)% + 50 Basis Point Increase (0.58)% (5.09)% Actual as of September 30, 2026 —% —% - 50 Basis Point Decrease 0.50% 4.41% -100 Basis Point Decrease 0.93% 8.12% MFA FINANCIAL, INC.CONSOLIDATED BALANCE SHEETS (In Thousands, Except Per Share Amounts) September 30, 2026 December 31, 2025 (Unaudited) Assets: Residential whole loans, net ($7,726,266 and $7,717,007 held at fair value, respectively) (1) $ 8,683,876 $ 8,810,354 Securities, at fair value 3,977,565 3,360,280 Cash and cash equivalents 119,548 213,211 Restricted cash 207,318 173,457 Other assets 552,981 489,147 Total Assets $ 13,541,288 $ 13,046,449 Liabilities: Financing agreements ($5,545,908 and $5,956,057 held at fair value, respectively) $ 11,520,131 $ 10,940,014 Other liabilities 405,448 278,740 Total Liabilities $ 11,925,579 $ 11,218,754 Stockholders’ Equity: Preferred stock, $0.01 par value; 7.5% Series B cumulative redeemable; 12,050 and 12,050shares authorized, respectively; 8,296 and 8,125 shares issued and outstanding, respectively($207,402 and $203,132 aggregate liquidation preference, respectively) $ 83 $ 81 Preferred stock, $0.01 par value; 6.5% Series C fixed-to-floating rate cumulative redeemable;16,650 and 16,650 shares authorized, respectively; 11,386 and 11,286 shares issued andoutstanding, respectively ($284,648 and $282,148 aggregate liquidation preference,respectively) 114 113 Common stock, $0.01 par value; 866,300 and 866,300 shares authorized, respectively;101,041 and 101,663 shares issued and outstanding, respectively 1,010 1,017 Additional paid-in capital, in excess of par 3,720,085 3,718,350 Accumulated deficit (2,106,827) (1,895,541) Accumulated other comprehensive income 1,244 3,675 Total Stockholders’ Equity $ 1,615,709 $ 1,827,695 Total Liabilities and Stockholders’ Equity $ 13,541,288 $ 13,046,449 (1)Includes approximately $6.9 billion and $7.6 billion of Residential whole loans transferred to consolidated variable interest entities (“VIEs”) atSeptember 30, 2026 and December 31, 2025, respectively. Such assets can be used only to settle the obligations of each respective VIE. MFA FINANCIAL, INC.CONSOLIDATED STATEMENTS OF OPERATIONS Three Months EndedSeptember 30, Nine Months EndedSeptember 30, (In Thousands, Except Per Share Amounts) 2026 2025 2026 2025 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Interest Income: Residential whole loans $ 144,065 $ 153,501 $ 429,130 $ 460,490 Securities, at fair value 57,050 27,708 155,573 81,156 Other interest-earning assets 469 515 1,441 1,441 Cash and cash equivalent investments 2,323 4,278 7,486 12,875
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Interest Income $ 203,907 $ 186,002 $ 593,630 $ 555,962 Interest Expense: Asset-backed and other collateralized financing arrangements $ 137,441 $ 124,403 $ 398,486 $ 365,357 Other interest expense 5,062 4,598 14,956 13,680 Interest Expense $ 142,503 $ 129,001 $ 413,442 $ 379,037 Net Interest Income $ 61,404 $ 57,001 $ 180,188 $ 176,925 Reversal/(Provision) for Credit Losses on Residential Whole Loans $ (45) $ (276) $ 259 $ (1,212) Reversal/(Provision) for Credit Losses on Other Assets — — — — Net Interest Income after Reversal/(Provision) for Credit Losses $ 61,359 $ 56,725 $ 180,447 $ 175,713 Other Income/(Loss), net: Net gain/(loss) on residential whole loans measured at fair value throughearnings $ (203,991) $ 31,241 $ (288,605) $ 105,690 Impairment and other net gain/(loss) on securities and other portfolioinvestments (223,303) 18,004 (265,423) 45,828 Net gain/(loss) on real estate owned (2,788) 300 (7,260) (4,119) Net gain/(loss) on derivatives 158,845 200 235,532 (49,106) Net gain/(loss) on securitized debt measured at fair value through earnings 115,540 (24,646) 160,653 (53,682) Lima One mortgage banking income 7,418 5,383 22,422 15,796 Net realized gain/(loss) on residential whole loans held at carrying value — — — (882) Other, net 2,409 266 9,588 6,874 Other Income/(Loss), net $ (145,870) $ 30,748 $ (133,093) $ 66,399 Operating and Other Expense: Compensation and benefits $ 15,892 $ 18,185 $ 56,043 $ 60,750 Other general and administrative expense 7,742 10,769 33,058 31,681 Loan servicing, financing and other related costs 3,445 10,216 23,429 26,052 Amortization of intangible assets 100 300 700 1,900 Operating and Other Expense $ 27,179 $ 39,470 $ 113,230 $ 120,383 Income/(loss) before income taxes $ (111,690) $ 48,003 $ (65,876) $ 121,729 Provision for/(benefit from) income taxes $ — $ (101) $ — $ (735) Net Income/(Loss) $ (111,690) $ 48,104 $ (65,876) $ 122,464 Less Preferred Stock Dividend Requirement $ 10,682 $ 10,834 $ 31,665 $ 29,613 Net Income/(Loss) Available to Common Stock and ParticipatingSecurities $ (122,372) $ 37,270 $ (97,541) $ 92,851 Basic Earnings/(Loss) per Common Share $ (1.19) $ 0.36 $ (0.95) $ 0.89 Diluted Earnings/(Loss) per Common Share $ (1.19) $ 0.35 $ (0.95) $ 0.87 Segment Reporting At September 30, 2026, 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 senior notes,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 September 30, 2026 Interest Income $ 163,073 $ 39,457 $ 1,377 $ 203,907 Interest Expense 113,973 23,945 4,585 142,503 Net Interest Income/(Expense) $ 49,100 $ 15,512 $ (3,208) $ 61,404 Reversal/(Provision) for Credit Losses on Residential WholeLoans (45) — — (45) Reversal/(Provision) for Credit Losses on Other Assets — — — — Net Interest Income/(Expense) after Reversal/(Provision) forCredit Losses $ 49,055 $ 15,512 $ (3,208) $ 61,359
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Net gain/(loss) on residential whole loans measured at fair valuethrough earnings $ (157,729) $ (46,262) $ — $ (203,991) Impairment and other net gain/(loss) on securities and otherportfolio investments (223,345) 42 — (223,303) Net gain on real estate owned 478 (3,266) — (2,788) Net gain/(loss) on derivatives 144,175 14,670 — 158,845 Net gain/(loss) on securitized debt measured at fair value throughearnings 92,940 22,600 — 115,540 Lima One mortgage banking income — 7,418 — 7,418 Net realized gain/(loss) on residential whole loans held atcarrying value — — — — Other, net 329 1,044 1,036 2,409 Other Income/(Loss), net $ (143,152) $ (3,754) $ 1,036 $ (145,870) Compensation and benefits $ — $ 8,486 $ 7,406 $ 15,892 Other general and administrative expense — 4,071 3,671 7,742 Loan servicing, financing and other related costs 92 1,568 1,785 3,445 Amortization of intangible assets — 100 — 100 Income/(loss) before income taxes $ (94,189) $ (2,467) $ (15,034) $ (111,690) Provision for/(benefit from) income taxes — — — — Net Income/(Loss) $ (94,189) $ (2,467) $ (15,034) $ (111,690) Less Preferred Stock Dividend Requirement $ — $ — $ 10,682 $ 10,682 Net Income/(Loss) Available to Common Stock and ParticipatingSecurities $ (94,189) $ (2,467) $ (25,716) $ (122,372) (Dollars in Thousands) Mortgage-RelatedAssets Lima One Corporate Total September 30, 2026 Total Assets $ 11,178,381 $ 2,213,296 $ 149,611 $ 13,541,288 December 31, 2025 Total Assets $ 10,128,088 $ 2,632,740 $ 285,621 $ 13,046,449 Reconciliation of GAAP Net Income to non-GAAP Distributable Earnings and non-GAAPDistributable Earnings Prior to Realized Credit Losses “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. Beginning in the first quarter of 2026, losses/(gains) recognized inGAAP Net income/(loss) related to the extinguishment of debt were also included in the adjustmentsfor Securitized debt held at fair value and Securitization-related transaction costs. Prior periods havebeen revised to reflect the current presentation. TBA dollar roll income, which represents the economicequivalent of interest income earned on Agency MBS, less an implied financing cost, is also included inDistributable Earnings. Recurring expenses, such as servicing fees, custodial fees, trustee fees andother similar ongoing fees are not excluded from Distributable earnings. Management believes that theadjustments made to GAAP earnings result in the removal of (i) income or expenses that are notreflective 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 oncertain related residential mortgage assets and associated liabilities. Distributable earnings is one ofthe 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 provideinvestors and analysts with additional information to evaluate our financial results.
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Beginning in the first quarter of 2026, we have also reported a non-GAAP “Distributable earnings priorto realized credit losses” metric, whereby an adjustment is made to reported Distributable earnings toexclude realized credit losses, net of recoveries for all residential whole loans held at fair value. Priorperiods have been revised to reflect the current presentation. Management believes Distributableearnings prior to realized credit losses provides users of our financial statements with meaningfulinformation to consider in addition to Net income/(loss) and cash flows from operating activities inaccordance with GAAP. Distributable earnings prior to realized credit losses is one of the factors thatour Board of Directors considers when evaluating distributions to our shareholders. As the timing of arealized credit loss on a loan can differ significantly from when the initial fair value adjustment withrespect to a loan is reflected in GAAP net income/(loss), management believes that adjustingDistributable earnings for the realized credit losses described above can help readers betterunderstand the operating results of our business prior to the impact of realized credit losses, as well asevaluate and compare the performance of our Company and our peers. Distributable earnings and Distributable earnings prior to realized credit losses should be used inconjunction with results presented in accordance with GAAP. Distributable earnings and Distributableearnings prior to realized credit losses do not represent and should not be considered as a substitutefor net income or cash flows from operating activities, each as determined in accordance with GAAP,and our calculation of these measures may not be comparable to similarly titled measures reported byother companies. The following table provides a reconciliation of our GAAP net income/(loss) used in the calculation ofbasic EPS to our non-GAAP Distributable earnings and non-GAAP Distributable Earnings Prior toRealized Credit Losses for the quarterly periods below: Quarter Ended (In Thousands, Except Per Share Amounts) September 30,2026 June 30,2026 March 31,2026 December 31,2025 September 30,2025 GAAP Net income/(loss) used in the calculation of basicEPS $ (122,681) $ 35,930 $ (11,726) $ 43,402 $ 37,082 Adjustments: Unrealized and realized gains and losses on: Residential whole loans held at fair value 185,053 21,016 34,761 (4,405) (41,293) Securities held at fair value 223,345 4,362 38,872 (16,297) (18,466) Residential whole loans and securities at carryingvalue — — — — — Derivative instruments (148,801) (34,508) (21,344) 657 14,826 Securitized debt held at fair value (117,198) (27,296) (22,901) (1,586) 21,303 Other portfolio investments (42) (512) (601) 582 462 Other adjustments: TBA dollar roll income 2,022 985 — — — Amortization of intangible assets 100 300 300 300 300 Equity based compensation 2,105 2,214 6,329 1,880 1,861 Securitization-related transaction costs 1,697 4,100 3,926 2,584 3,712 Depreciation 777 5,647 3,466 1,045 1,328 Total adjustments 149,058 (23,692) 42,808 (15,240) (15,967) Distributable earnings $ 26,377 $ 12,238 $ 31,082 $ 28,162 $ 21,115 Adjustment – realized credit losses on Residential wholeloans at fair value, net of recoveries 18,939 24,463 4,373 3,003 10,052 Distributable earnings prior to realized credit losses $ 45,316 $ 36,701 $ 35,455 $ 31,165 $ 31,167 GAAP earnings/(loss) per basic common share $ (1.19) $ 0.35 $ (0.11) $ 0.42 $ 0.36 Distributable earnings per basic common share $ 0.26 $ 0.12 $ 0.30 $ 0.27 $ 0.20 Distributable earnings prior to realized credit losses perbasic common share $ 0.44 $ 0.35 $ 0.34 $ 0.30 $ 0.30 Weighted average common shares for basic earnings pershare 103,368 103,674 104,253 103,061 103,683 Reconciliation of GAAP Book Value per Common Share to non-GAAP Economic Book Value perCommon Share “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 carrying
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value 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) September 30,2026 June 30,2026 March 31,2026 December 31,2025 September 30,2025 GAAP Total Stockholders’ Equity $ 1,615.7 $ 1,776.1 $ 1,779.4 $ 1,827.7 $ 1,821.5 Preferred Stock, liquidation preference (492.0) (491.6) (489.3) (485.3) (479.9) GAAP Stockholders’ Equity for book value per commonshare 1,123.7 1,284.5 1,290.1 1,342.4 1,341.6 Adjustments: Fair value adjustment to Residential whole loans, atcarrying value (23.2) 2.4 7.6 10.1 8.7 Fair value adjustment to Securitized debt, at carrying value 55.9 47.5 45.2 45.7 48.5 Stockholders’ Equity including fair value adjustments toResidential whole loans and Securitized debt held atcarrying value (Economic book value) $ 1,156.4 $ 1,334.4 $ 1,342.9 $ 1,398.2 $ 1,398.8 GAAP book value per common share $ 11.12 $ 12.71 $ 12.70 $ 13.20 $ 13.13 Economic book value per common share $ 11.44 $ 13.20 $ 13.22 $ 13.75 $ 13.69 Number of shares of common stock outstanding 101.0 101.1 101.6 101.7 102.2 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 of Section27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of1934, 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. administration); MFA’sestimates regarding taxable income, the actual amount of which is dependent on a number of factors,including, but not limited to, changes in the amount of interest income and financing costs, the methodelected by MFA to accrete the market discount on residential whole loans and the extent of
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prepayments, realized losses and changes in the composition of MFA’s residential whole loanportfolios that may occur during the applicable tax period, including gain or loss on any MBS disposalsor whole loan modifications, foreclosures and liquidations; the timing and amount of distributions tostockholders, which are declared and paid at the discretion of MFA’s Board of Directors and willdepend on, among other things, MFA’s taxable income, its financial results and overall financialcondition and liquidity, maintenance of its REIT qualification and such other factors as MFA’s Board ofDirectors deems relevant; MFA’s ability to maintain its qualification as a REIT for federal income taxpurposes; MFA’s ability to maintain its exemption from registration under the Investment Company Actof 1940, as amended (or the Investment Company Act), including statements regarding the conceptrelease issued by the Securities and Exchange Commission (“SEC”) relating to interpretive issuesunder the Investment Company Act with respect to the status under the Investment Company Act ofcertain companies that are engaged in the business of acquiring mortgages and mortgage-relatedinterests; MFA’s ability to continue growing its residential whole loan portfolio, which is dependent on,among other things, the supply of loans offered for sale in the market; targeted or expected returns onour investments in recently-originated mortgage loans, the performance of which is, similar to our othermortgage loan investments, subject to, among other things, differences in prepayment risk, credit riskand financing costs associated with such investments; risks associated with the ongoing operation ofLima One Holdings, LLC (including, without limitation, industry competition, unanticipated expendituresrelating to or liabilities arising from its operation (including, among other things, a failure to realizemanagement’s assumptions regarding expected growth in business purpose loan (BPL) originationvolumes and credit risks underlying BPLs, including changes in the default rates and management’sassumptions regarding default rates and loss severities on the BPLs originated by Lima One));expected returns on MFA’s investments in nonperforming residential whole loans (“NPLs”), which areaffected by, among other things, the length of time required to foreclose upon, sell, liquidate orotherwise reach a resolution of the property underlying the NPL, home price values, amountsadvanced to carry the asset (e.g., taxes, insurance, maintenance expenses, etc. on the underlyingproperty) and the amount ultimately realized upon resolution of the asset; risks associated with ourinvestments in loan originators; risks associated with investing in real estate assets generally, includingchanges in business conditions and the general economy; and other risks, uncertainties and factors,including those described in the annual, quarterly and current reports that we file with the SEC. Theseforward-looking statements are based on beliefs, assumptions and expectations of MFA’s futureperformance, taking into account information currently available. Readers and listeners are cautionednot to place undue reliance on these forward-looking statements, which speak only as of the date onwhich they are made. New risks and uncertainties arise over time and it is not possible to predict thoseevents or how they may affect MFA. Except as required by law, MFA is not obligated to, and does notintend 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/20261104771913/en/ INVESTOR CONTACT:InvestorRelations@mfafinancial.com212-207-6488www.mfafinancial.com MEDIA CONTACT:H/Advisors AbernathySydney Isaacs713-343-0427 Source: MFA Financial, Inc.