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MFA Financial, Inc. Announces Second Quarter 2025 Financial Results

NEW YORK--(BUSINESS WIRE)-- MFA Financial, Inc. (NYSE:MFA) today provided its financial results for the second quarter ended June 30, 2025:

• MFA generated GAAP net income to common stockholders and participating securities for the second 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 basic common 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, a non-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.

鈥淲e grew our investment portfolio to $10.8 billion during the second quarter,鈥� said Craig Knutson, MFA鈥檚 Chief Executive Officer. 鈥淲e acquired $876 million of residential loans and securities in our target asset classes, including $503 million of Non-QM loans and $131 million of Agency MBS. Lima One 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 18^th Non-QM securitization in May collateralized by $318 million UPB of loans. We also sold $38 million of newly-originated rental loans and $24 million of delinquent Transitional loans.鈥�

鈥淎lthough our Distributable earnings this quarter were weighed down by credit losses incurred on several Business purpose loans, we delivered a positive 1.5% total economic return to stockholders,鈥� added Mr. Knutson. 鈥淔inally, our net interest spread rose to 1.98% and our net interest margin rose to 2.73%.鈥�

Q2 2025 Portfolio Activity

• MFA鈥檚 residential investment portfolio rose to $10.8 billion at June 30, 2025 from $10.7 billion at March 31, 2025.
• Non-QM loan acquisitions totaled $503.0 million, bringing MFA鈥檚 Non-QM portfolio to $4.8 billion at 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 originated Transitional 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 portfolio to $1.7 billion.
• Portfolio runoff was $774.0 million. Asset dispositions included $38.4 million of newly-originated SFR loans and $23.7 million of delinquent Transitional loans. MFA also sold 107 REO properties in the second quarter for aggregate net proceeds of $21.8 million.
• 60+ day delinquencies (measured as a percentage of UPB) for MFA鈥檚 residential loan portfolio declined 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 of Non-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.
• MFA estimates the net effective duration of its investment portfolio at June 30, 2025 rose to 1.00 from 0.96 at March 31, 2025.
• MFA鈥檚 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. The live audio webcast will be accessible to the general public over the internet at . 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 $4.9 billion in dividends to stockholders since its initial public offering in 1998. MFA is an internally-managed, publicly-traded real estate investment trust.

The following tables presents MFA鈥檚 asset allocation as of June 30, 2025, and the yield on average interest-earning assets, average cost of funds, impact of net Swap carry and net interest rate spread for the various asset types.

Table 1 - Asset Allocation

Table 2 - Net Interest Spread

The following table presents the activity for our residential mortgage asset portfolio for the three months ended June 30, 2025:

Table 3 - Investment Portfolio Activity Q2 2025

The following tables present information on our investments in residential whole loans:

Table 4 - Portfolio Composition/Residential Whole Loans

Table 5 - Yields and Average Balances/Residential Whole Loans

Table 6 - Credit-related Metrics/Residential Whole Loans

Table 7 - Shock Table

The information presented in the following 鈥淪hock Table鈥� 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 June 30, 2025. All changes in value are measured as the percentage change from the projected portfolio value under the base interest rate scenario as of June 30, 2025.

Segment Reporting

At June 30, 2025, the Company鈥檚 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:

Reconciliation of GAAP Net Income to non-GAAP Distributable Earnings

鈥淒istributable earnings鈥� 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. AG真人官方ized 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:

Reconciliation of GAAP Book Value per Common Share to non-GAAP Economic Book Value per Common Share

鈥淓conomic book value鈥� 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鈥� 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鈥� 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: