• GAAP Book Value: $13.39 per share at December 31, 2024.
• Economic Book Value: $13.93 per share, a decrease of approximately 3.7% from $14.46 at the end of September.
• Total Economic Return: Negative 1.2% for the fourth quarter, positive 5.2% for the year.
• Dividends: $0.35 per share for the fourth quarter, $1.40 per share for the full year.
• GAAP Earnings: $5.9 million or a loss of $0.02 per basic common share for the fourth quarter.
• Distributable Earnings: $40.8 million or $0.39 per basic common share for the fourth quarter.
• Assets Growth: Increased from $10.8 billion to $11.4 billion in 2024.
• Non-QM Loans: $470 million added in the fourth quarter with a coupon of 7.8% and LTV of 67%.
• Lima One Loan Originations: $235 million in the fourth quarter with an average coupon of 9.5% and LTV of 67%.
• Securitizations: Three securitizations in Q4 backed by over $1 billion UPB of loans.
• 60-plus Day Delinquencies: Increased to 7.5% from 6.7% a quarter ago.

• Warning! GuruFocus has detected 5 Warning Signs with MFA.

Release Date: February 19, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• MFA Financial Inc (NYSE:MFA) successfully grew its assets from $10.8 billion to $11.4 billion in 2024, including an increase in its agency book by over $800 million.
• The company executed three securitizations in Q4 2024 on over $1 billion of loans, enhancing its funding profile.
• MFA Financial Inc (NYSE:MFA) maintained a stable recourse leverage of 1.7 times at year-end, indicating a strong financial position.
• The company declared dividends of $0.35 per share for Q4 and $1.40 per share for the full year, with favorable tax treatment for shareholders.
• MFA Financial Inc (NYSE:MFA) reported a positive total economic return of 5.2% for the year 2024, showcasing its ability to generate returns despite market challenges.

Negative Points

• MFA Financial Inc (NYSE:MFA) experienced a modest economic book value decline of approximately 3.7% in Q4 2024.
• The company reported a total economic return of negative 1.2% for Q4 2024, indicating challenges in the quarter.
• MFA Financial Inc (NYSE:MFA) faced higher delinquencies in its portfolio, with 60-plus day delinquencies rising to 7.5% from 6.7% a quarter ago.
• The company's GAAP earnings for Q4 2024 were $5.9 million, resulting in a loss of $0.02 per basic common share.
• MFA Financial Inc (NYSE:MFA) noted that the expiration of interest rate swaps would reduce reported distributable earnings and increase the reported cost of funds.

Q & A Highlights

Q: Can you discuss where you see the current economic return of the portfolio? Does that match the EAD this quarter? And with the swaps rolling off, does that impact the DE? A: (Michael Roper, CFO) The economic return aligns with the DE ROE, which is in the low-teens. The economic earnings power is around 10%. Regarding swaps, they contributed $0.09 to DE in Q4 and are expected to contribute $0.02 in Q1 before rolling off. The DE will decline by the difference between these amounts, but the economic return remains unaffected.

Q: What was behind the increase in delinquencies for single-family and multifamily transitional loans? A: (Bryan Wulfsohn, President & CIO) Delinquencies are higher in these portfolios due to their inherent riskiness. These loans, such as fix and flip or bridge value-add projects, carry additional risk. The short-term nature of these loans can lead to delinquencies if projects aren't completed or sold on time.

Q: What's your outlook for Lima One for the rest of the year, and what product types are you focused on? A: (Bryan Wulfsohn, President & CIO) Single-family transitional and term rental loans remain the focus. We are expanding into the wholesale channel to grow rental loan originations. We expect growth in 2025, with origination potentially reaching around $1.5 billion.

Q: Can you share the level of unfunded commitments in the Lima One portfolio, and when might these commitments be called up? A: (Michael Roper, CFO) The unfunded commitments are approximately $600 million, expected to be funded over the next year. Most loans are in revolving securitizations, which self-fund through paydowns.

Q: What is the return on the Agency MBS that you are putting on? A: (Bryan Wulfsohn, President & CIO) We see hedge returns in the mid-teens for the Agency MBS.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.