NEW YORK--(BUSINESS WIRE)--November 06, 2025--
MFA Financial, Inc. (NYSE:MFA) today provided its financial results for the third quarter ended September 30, 2025:
-- MFA generated GAAP net income to common stockholders and participating
securities for the third quarter of $37.3 million, or $0.36 per basic and
$0.35 per diluted common share.
-- Distributable earnings, a non-GAAP financial measure, were $21.0 million,
or $0.20 per basic common share. MFA paid a regular cash dividend of
$0.36 per common share on October 31, 2025.
-- GAAP book value at September 30, 2025 was $13.13 per common share.
Economic book value, a non-GAAP financial measure, was $13.69 per common
share.
-- Total economic return was 2.6% for the third quarter.
-- MFA closed the quarter with unrestricted cash of $305.2 million.
"We made meaningful progress across our business during the third quarter," stated Craig Knutson, MFA's Chief Executive Officer. "We acquired $1.2 billion of residential mortgage assets, including $453 million of Non-QM loans and $473 million of Agency MBS at attractive yields. Lima One grew its origination volume by 20% to $260 million, including $200 million of new transitional loans with an average coupon of 10%. We securitized $721 million of Non-QM loans and profitably sold $66 million of newly-originated rental loans. We also resolved $223 million of previously delinquent loans, reducing the delinquency rate across our entire loan portfolio to 6.8%."
"While our Distributable earnings were again impacted by credit losses realized on certain legacy business purpose loans, we are taking steps to improve returns in future quarters," added Mr. Knutson. "We have begun deploying excess cash into our target asset classes and implementing cost reductions that are expected to reduce run-rate G&A expenses by 7-10% from 2024 levels. In addition, we repurchased nearly 500,000 shares of common stock during the third quarter at a significant discount to book value. These actions, among others, are aimed at bolstering our earnings moving forward."
Q3 2025 Portfolio Activity
-- MFA's residential investment portfolio rose to $11.2 billion at September
30, 2025 from $10.8 billion at June 30, 2025.
-- Non-QM loan acquisitions totaled $452.8 million, bringing MFA's Non-QM
portfolio to $5.1 billion at September 30, 2025.
-- Lima One funded $148.5 million of new business purpose loans with a
maximum loan amount of $260.2 million. Further, $77.4 million of draws
were funded on previously originated Transitional loans. Lima One
generated $5.6 million of mortgage banking income.
-- MFA added $472.8 million of Agency MBS during the quarter, bringing its
Agency MBS portfolio to $2.2 billion.
-- Portfolio runoff was $674.4 million. Asset dispositions included $65.8
million of newly-originated SFR loans and $15.1 million of delinquent
Transitional loans. MFA also sold 84 REO properties in the third quarter
for aggregate net proceeds of $27.3 million.
-- 60+ day delinquencies (measured as a percentage of UPB) for MFA's
residential loan portfolio declined to 6.8% at September 30, 2025 from
7.3% at June 30, 2025.
-- MFA completed two loan securitizations during the quarter, collateralized
by $721.5 million of Non-QM loans, bringing its total securitized debt to
approximately $6.4 billion.
-- MFA added a net $284.1 million of new interest rate hedges, reducing the
estimated net effective duration of its investment portfolio at September
30, 2025 to 0.98 from 1.00 at June 30, 2025.
-- MFA's Debt/Net Equity Ratio was 5.5x while recourse leverage was 1.9x at
September 30, 2025.
Webcast
MFA Financial, Inc. plans to host a live audio webcast of its investor conference call on Thursday, November 6, 2025, at 11:00 a.m. (Eastern Time) to discuss its third 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 $5.0 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 present MFA's asset allocation as of September 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
Single-family Multifamily Legacy Other,
Non-QM Single-family transitional transitional RPL/NPL Securities, net
At September 30, 2025 loans rental loans loans loans loans at fair value (1) Total
---------------------- -------- ----------------- ----------------- ---------------- ------- --------------- ------ ----------
(Dollars in Millions)
Asset Amount $ 5,121 $ 1,246 $ 791 $ 604 $1,000 $ 2,260 $ 759 $11,781
Receivable/(Payable)
for Unsettled
Transactions -- -- -- -- -- (117) -- (117)
Financing Agreements
with
Non-mark-to-market
Collateral Provisions -- (11) (77) (78) -- -- -- (166)
Financing Agreements
with Mark-to-market
Collateral Provisions (576) (239) (178) (115) (78) (1,878) (64) (3,128)
Securitized Debt (3,975) (825) (421) (288) (838) -- (7) (6,354)
Senior Notes and Other
secured financing -- -- -- -- -- -- (194) (194)
------ --- ------- --- --- ------ ---- ----- ----- ----- ------- ---- ------
Net Equity Allocated $ 570 $ 171 $ 115 $ 123 $ 84 $ 265 $ 494 $ 1,822
====== === ======= === === ====== ==== ===== ===== ===== ======= ==== ======
Debt/Net Equity Ratio 8.0x 6.3x 5.9x 3.9x 10.9x 7.5x 5.5x
(2)
======= ============ === =========== ==== ========= ===== ====== =========== =======
(1) Includes $305.2 million of cash and cash equivalents, $231.8 million of
restricted cash, $51.9 million of Other loans and $20.2 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, September 30,
2025 June 30, 2025 2024
----------------- ------------- -----------------
Non-QM Loans
Net Yield (1) 5.95% 5.79% 5.47%
Cost of Funding (2) (5.21)% (5.14)% (5.22)%
Impact of net Swap
carry (3) 0.62% 0.70% 1.75%
----------------- ------------- -----------------
Net Interest Spread 1.36% 1.35% 2.00%
Business Purpose
Loans
Net Yield (1) 7.88% 7.99% 7.91%
Cost of Funding (2) (6.03)% (6.07)% (6.66)%
Impact of net Swap
carry (3) 0.49% 0.42% 1.01%
----------------- ------------- -----------------
Net Interest Spread 2.34% 2.34% 2.26%
Legacy RPL/NPL
Loans
Net Yield (1) 8.55% 8.69% 7.75%
Cost of Funding (2) (4.32)% (4.29)% (4.64)%
Impact of net Swap
carry (3) 0.52% 0.40% 0.56%
----------------- ------------- -----------------
Net Interest Spread 4.75% 4.80% 3.67%
Total Residential
Whole Loans
Net Yield (1) 6.81% 6.85% 6.74%
Cost of Funding (2) (5.36)% (5.35)% (5.76)%
Impact of net Swap
carry (3) 0.58% 0.58% 1.31%
----------------- ------------- -----------------
Net Interest Spread 2.03% 2.08% 2.29%
Securities, at
fair value
Net Yield (1) 5.79% 6.60% 6.48%
Cost of Funding (2) (4.50)% (4.55)% (5.65)%
Impact of net Swap
carry (3) 1.05% 1.05% 1.71%
----------------- ------------- -----------------
Net Interest Spread 2.34% 3.10% 2.54%
Total Balance
Sheet
Net Yield (1) 6.50% 6.66% 6.71%
Cost of Funding (2) (5.29)% (5.32)% (5.84)%
Impact of net Swap
carry (3) 0.65% 0.64% 1.31%
----------------- ------------- -----------------
Net Interest Spread 1.86% 1.98% 2.18%
================= ============= =================
(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 (repurchase
agreements), 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 hedge
accounting 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 shown in the table above.
The following table presents the activity for our residential mortgage asset portfolio for the three months ended September 30, 2025:
Table 3 - Investment Portfolio Activity Q3 2025
Acquisitions
June &
30, Runoff Originations Other September
(In Millions) 2025 (1) (2) (3) 30, 2025 Change
-------------- ------- ------ ------------- ----- ---------- ----------
Residential
whole loans
and REO $ 8,955 $(631) $ 679 $(51) $ 8,952 $ (3)
Securities, at
fair value 1,830 (43) 473 -- 2,260 430
------ ---- ------------ --- --------- ---
Total $10,785 $(674) $ 1,152 $(51) $ 11,212 $ 427
====== ==== ============ === ========= ===
(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
------------------------ ---------------------- --------------------------
September December September December September December 31,
(Dollars in Thousands) 30, 2025 31, 2024 30, 2025 31, 2024 30, 2025 2024
Non-QM loans $ 615,461 $ 722,392 $4,507,465 $3,568,694 $5,122,926 $4,291,086
Business purpose loans:
Single-family rental
loans $ 92,023 $ 108,203 $1,154,572 $1,248,197 $1,246,595 $1,356,400
Single-family
transitional loans
(1) 7,051 22,430 785,028 1,078,425 792,079 1,100,855
Multifamily
transitional loans -- -- 604,144 938,926 604,144 938,926
--------- --------- --------- --------- --------- ---------
Total Business purpose
loans $ 99,074 $ 130,633 $2,543,744 $3,265,548 $2,642,818 $3,396,181
Legacy RPL/NPL loans 424,517 457,654 581,719 624,895 1,006,236 1,082,549
Other loans -- -- 51,937 52,073 51,937 52,073
Allowance for Credit
Losses (10,083) (10,665) -- -- (10,083) (10,665)
--------- --------- --------- --------- --------- ---------
Total Residential whole
loans $1,128,969 $1,300,014 $7,684,865 $7,511,210 $8,813,834 $8,811,224
========= ========= ========= ========= ========= =========
Number of loans 5,069 5,582 18,647 18,588 23,716 24,170
(1) Includes $323.0 million and $442.4 million of loans collateralized by
new construction projects at origination as of September 30, 2025 and
December 31, 2024, respectively.
Table 5 - Yields and Average Balances/Residential Whole Loans
For the Three-Month Period Ended
-------------------------------------------------------------------------------------------
September 30, 2025 June 30, 2025 September 30, 2024
----------------------------- ----------------------------- -----------------------------
Average Average Average Average Average Average
(Dollars in Thousands) Interest Balance Yield Interest Balance Yield Interest Balance Yield
Non-QM loans $ 76,742 $5,162,278 5.95% $ 70,267 $4,852,559 5.79% $ 58,467 $4,279,297 5.47%
Business purpose loans:
Single-family rental
loans $ 21,636 $1,302,703 6.64% $ 21,747 $1,349,448 6.45% $ 26,333 $1,616,723 6.52%
Single-family
transitional loans 18,991 835,895 9.09% 23,726 969,259 9.79% 28,486 1,196,227 9.53%
Multifamily
transitional loans 15,356 704,298 8.72% 17,308 824,919 8.39% 23,479 1,145,051 8.20%
------- --------- ------- ------- --------- ------- ------- --------- -------
Total business purpose
loans $ 55,983 $2,842,896 7.88% $ 62,781 $3,143,626 7.99% $ 78,298 $3,958,001 7.91%
Legacy RPL/NPL loans 20,086 939,653 8.55% 21,076 969,699 8.69% 20,139 1,040,010 7.75%
Other loans 479 62,786 3.05% 444 64,416 2.76% 502 67,070 2.99%
------- --------- ------- ------- --------- ------- ------- --------- -------
Total Residential whole
loans $153,290 $9,007,613 6.81% $154,568 $9,030,300 6.85% $157,406 $9,344,378 6.74%
======= ========= ======= ======= ========= ======= ======= ========= =======
Table 6 - Credit-related Metrics/Residential Whole Loans
September 30, 2025
Aging by UPB
----------------------------------------
Past Due Days
----------------------------
Weighted Weighted
Unpaid Weighted Average Weighted Average
Principal Average Term to Average Original 60+
Asset Fair Balance Coupon Maturity LTV Ratio FICO 60+ LTV
(Dollars In Thousands) Amount Value ("UPB") (1) (2) (Months) (3) (4) Current 30-59 60-89 90+ DQ % (5)
------------------------ ---------- ---------- ---------- --------- --------- --------- -------- ---------- -------- -------- -------- ----- ---
Non-QM loans $5,120,744 $5,105,895 $5,120,904 6.72% 338 64% 738 $4,780,553 $130,895 $ 47,995 $161,461 4.1% 64%
Business purpose loans:
Single-family rental $1,245,766 $1,248,466 $1,267,818 6.33% 313 67% 740 $1,208,637 $ 18,900 $ 4,056 $ 36,225 3.2% 94%
Single-family
transitional (5) 791,019 791,443 804,252 10.39% 6 69% 749 667,779 33,374 18,293 84,806 12.8% 78%
Multifamily
transitional (5) 604,144 604,144 635,928 9.94% 3 64% 752 533,567 55,599 6,210 40,552 7.4% 67%
--------- --------- --------- --------- ------- ------- -------
Total business purpose
loans $2,640,929 $2,644,053 $2,707,998 8.38% 67% $2,409,983 $107,873 $ 28,559 $161,583 7.0%
Legacy RPL/NPL loans 1,000,224 1,020,640 1,128,259 5.10% 246 54% 647 794,824 116,852 41,589 174,994 19.2% 62%
Other loans 51,937 51,937 60,963 3.43% 311 63% 757 60,586 377 -- -- --% --%
--------- --------- --------- --------- ------- ------- -------
Residential whole loans,
total or weighted
average $8,813,834 $8,822,525 $9,018,124 7.02% 64% $8,045,946 $355,997 $118,143 $498,038 6.8%
========= ========= ========= ========= ======= ======= =======
(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) For the quarter ended September 30, 2025, the gross coupon was 6.86%
for Non-QM loans, 6.36% for Single-family rental loans, 10.40% for
Single-family transitional loans, 9.95% for Multifamily transitional
loans, and 5.11% 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 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.
(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,
including unfunded commitments, to the estimated "after repaired" value
of the collateral securing the related loan, where available. At
September 30, 2025, for certain Single-family and Multifamily
Transitional loans totaling $324.0 million and $143.5 million,
respectively, an after repaired valuation was not available. For these
loans, the weighted average LTV is calculated based on the current
unpaid principal balance and the as-is value of the collateral securing
the related loan.
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 September 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 September 30, 2025.
Percentage Change in
Percentage Change in Total Stockholders'
Change in Interest Rates Portfolio Value Equity
------------------------ ---------------------- -----------------------
+100 Basis Point Increase (1.26)% (8.33)%
+ 50 Basis Point Increase (0.56)% (3.71)%
Actual as of September
30, 2025 --% --%
- 50 Basis Point Decrease 0.42% 2.79%
-100 Basis Point Decrease 0.70% 4.66%
MFA FINANCIAL, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Per Share September 30, December 31,
Amounts) 2025 2024
---------------------------------- ---------------- -----------------
(Unaudited)
Assets:
Residential whole loans, net
($7,684,865 and $7,511,210 held at
fair value, respectively) (1) $ 8,813,834 $ 8,811,224
Securities, at fair value 2,259,657 1,537,513
Cash and cash equivalents 305,172 338,931
Restricted cash 231,797 262,381
Other assets 487,021 459,555
----------- ----------
Total Assets $ 12,097,481 $ 11,409,604
=========== ==========
Liabilities:
Financing agreements ($5,952,579
and $5,516,005 held at fair value,
respectively) $ 9,841,991 $ 9,155,461
Other liabilities 433,979 412,351
----------- ----------
Total Liabilities $ 10,275,970 $ 9,567,812
----------- ----------
Stockholders' Equity:
Preferred stock, $0.01 par value;
7.5% Series B cumulative
redeemable; 12,050 and 8,050
shares authorized, respectively;
8,072 and 8,000 shares issued and
outstanding, respectively
($201,802 and $200,000 aggregate
liquidation preference,
respectively) $ 81 $ 80
Preferred stock, $0.01 par value;
6.5% Series C fixed-to-floating
rate cumulative redeemable; 16,650
and 12,650 shares authorized,
respectively; 11,123 and 11,000
shares issued and outstanding,
respectively ($278,064 and
$275,000 aggregate liquidation
preference, respectively) 111 110
Common stock, $0.01 par value;
866,300 and 874,300 shares
authorized, respectively; 102,196
and 102,083 shares issued and
outstanding, respectively 1,022 1,021
Additional paid-in capital, in
excess of par 3,716,912 3,711,046
Accumulated deficit (1,900,942) (1,879,941)
Accumulated other comprehensive
income 4,327 9,476
----------- ----------
Total Stockholders' Equity $ 1,821,511 $ 1,841,792
----------- ----------
Total Liabilities and
Stockholders' Equity $ 12,097,481 $ 11,409,604
=========== ==========
(1) Includes approximately $7.6 billion and $6.9 billion of Residential
whole loans transferred to consolidated variable interest entities
("VIEs") at September 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 Ended Nine Months Ended
September 30, September 30,
---------------------------- ------------------------------
(In Thousands, Except
Per Share Amounts) 2025 2024 2025 2024
--------------------- -------- -------- -------- --------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Interest Income:
Residential whole
loans $ 153,290 $ 157,406 $ 459,168 $ 480,788
Securities, at fair
value 27,708 14,742 81,156 41,363
Other interest-earning
assets 515 4,001 1,441 6,341
Cash and cash
equivalent
investments 4,278 5,825 12,875 17,144
-------- -------- -------- --------
Interest Income $ 185,791 $ 181,974 $ 554,640 $ 545,636
-------- -------- -------- --------
Interest Expense:
Asset-backed and other
collateralized
financing
arrangements $ 124,403 $ 126,833 $ 365,357 $ 377,030
Other interest expense 4,598 4,516 13,680 16,678
-------- -------- -------- --------
Interest Expense $ 129,001 $ 131,349 $ 379,037 $ 393,708
-------- -------- -------- --------
Net Interest Income $ 56,790 $ 50,625 $ 175,603 $ 151,928
-------- -------- -------- --------
Reversal/(Provision)
for Credit Losses on
Residential Whole
Loans $ (276) $ 1,942 $ (1,212) $ 3,481
Reversal/(Provision)
for Credit Losses on
Other Assets -- -- -- (1,135)
-------- -------- -------- --------
Net Interest Income
after
Reversal/(Provision)
for Credit Losses $ 56,514 $ 52,567 $ 174,391 $ 154,274
Other Income/(Loss),
net:
Net gain/(loss) on
residential whole
loans measured at
fair value through
earnings $ 41,293 $ 143,416 $ 129,284 $ 148,333
Impairment and other
net gain/(loss) on
securities and other
portfolio
investments 18,004 22,928 45,828 15,310
Net gain/(loss) on
real estate owned 300 241 (4,119) 3,112
Net gain/(loss) on
derivatives used for
risk management
purposes 200 (56,818) (49,106) 9,210
Net gain/(loss) on
securitized debt
measured at fair
value through
earnings (24,646) (75,273) (53,682) (108,377)
Lima One mortgage
banking income 5,594 8,921 17,118 24,468
Net realized
gain/(loss) on
residential whole
loans held at
carrying value -- -- (882) 418
Other, net (9,786) (3,131) (16,720) 61
-------- -------- -------- --------
Other
Income/(Loss),
net $ 30,959 $ 40,284 $ 67,721 $ 92,535
-------- -------- -------- --------
Operating and Other
Expense:
Compensation and
benefits $ 18,185 $ 22,417 $ 60,750 $ 69,632
Other general and
administrative
expense 10,769 11,430 31,681 34,260
Loan servicing,
financing and other
related costs 10,216 8,503 26,052 24,262
Amortization of
intangible assets 300 800 1,900 2,400
-------- -------- -------- --------
Operating and Other
Expense $ 39,470 $ 43,150 $ 120,383 $ 130,554
-------- -------- -------- --------
Income/(loss) before
income taxes $ 48,003 $ 49,701 $ 121,729 $ 116,255
Provision for/(benefit
from) income taxes $ (101) $ 1,518 $ (735) $ 2,913
-------- -------- -------- --------
Net Income/(Loss) $ 48,104 $ 48,183 $ 122,464 $ 113,342
Less Preferred Stock
Dividend Requirement $ 10,834 $ 8,219 $ 29,613 $ 24,656
-------- -------- -------- --------
Net Income/(Loss)
Available to
Common Stock and
Participating
Securities $ 37,270 $ 39,964 $ 92,851 $ 88,686
======== ======== ======== ========
Basic Earnings/(Loss)
per Common Share $ 0.36 $ 0.38 $ 0.89 $ 0.85
======== ======== ======== ========
Diluted
Earnings/(Loss) per
Common Share $ 0.35 $ 0.37 $ 0.87 $ 0.83
======== ======== ======== ========
Segment Reporting
At September 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 related interest income, investments in loan originators and related economics, general and administrative expenses 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 same data for the Company as a whole:
Mortgage-
Related
(In Thousands) Assets Lima One Corporate Total
--------------------- --------- -------- --------- -----------
Three months ended
September 30, 2025
Interest Income $128,336 $54,710 $ 2,745 $185,791
Interest Expense 89,849 34,599 4,553 129,001
------- ------ ------- -------
Net Interest
Income/(Expense) $ 38,487 $20,111 $ (1,808) $ 56,790
------- ------ ------- -------
Reversal/(Provision)
for Credit Losses on
Residential Whole
Loans (276) -- -- (276)
Reversal/(Provision)
for Credit Losses on
Other Assets -- -- -- --
------- ------ ------- -------
Net Interest
Income/(Expense)
after
Reversal/(Provision)
for Credit Losses $ 38,211 $20,111 $ (1,808) $ 56,514
------- ------ ------- -------
Net gain/(loss) on
residential whole
loans measured at
fair value through
earnings $ 34,969 $ 6,324 $ -- $ 41,293
Impairment and other
net gain/(loss) on
securities and other
portfolio
investments 17,978 26 -- 18,004
Net gain on real
estate owned 1,691 (1,391) -- 300
Net gain/(loss) on
derivatives used for
risk management
purposes 163 37 -- 200
Net gain/(loss) on
securitized debt
measured at fair
value through
earnings (22,267) (2,379) -- (24,646)
Lima One mortgage
banking income -- 5,594 -- 5,594
Net realized
gain/(loss) on
residential whole
loans held at
carrying value -- -- -- --
Other, net (1,114) (8,814) 142 (9,786)
------- ------ ------- -------
Other Income/(Loss),
net $ 31,420 $ (603) $ 142 $ 30,959
------- ------ ------- -------
Compensation and
benefits $ -- $ 9,271 $ 8,914 $ 18,185
Other general and
administrative
expense -- 5,237 5,532 10,769
Loan servicing,
financing and other
related costs 4,550 1,911 3,755 10,216
Amortization of
intangible assets -- 300 -- 300
------- ------ ------- -------
Income/(loss) before
income taxes $ 65,081 $ 2,789 $(19,867) $ 48,003
Provision for/(benefit
from) income taxes -- -- (101) (101)
------- ------ ------- -------
Net Income/(Loss) $ 65,081 $ 2,789 $(19,766) $ 48,104
Less Preferred Stock
Dividend Requirement $ -- $ -- $ 10,834 $ 10,834
------- ------ ------- -------
Net Income/(Loss)
Available to Common
Stock and
Participating
Securities $ 65,081 $ 2,789 $(30,600) $ 37,270
======= ====== ======= =======
Mortgage-
Related
(Dollars in Thousands) Assets Lima One Corporate Total
----------------------- ---------- ---------- ----------- -----------
September 30, 2025
Total Assets $8,844,673 $2,884,551 $ 368,257 $12,097,481
========= ========= ======= ==========
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 September June 30, March 31, December September
Share Amounts) 30, 2025 2025 2025 31, 2024 30, 2024
----------------------------- --------- --------- --------- --------- ------------
GAAP Net income/(loss) used in
the calculation of basic EPS $ 37,082 $ 22,424 $ 32,751 $ (2,396) $ 39,870
Adjustments:
Unrealized and realized
gains and losses on:
Residential whole loans
held at fair value (41,293) (33,612) (54,380) 102,339 (143,416)
Securities held at fair
value (17,310) (4,008) (20,201) 26,273 (17,107)
Residential whole loans
and securities at
carrying value (668) 343 305 -- (7,324)
Interest rate swaps and
ERIS swap futures 14,826 32,565 44,842 (46,632) 84,629
Securitized debt held at
fair value 21,303 3,712 18,575 (47,267) 71,475
Other portfolio
investments (26) (2,637) (744) (94) 1,503
Expense items:
Amortization of
intangible assets 300 800 800 800 800
Equity based
compensation 1,861 2,274 6,052 1,637 2,104
Securitization-related
transaction costs 3,550 1,753 1,696 5,252 3,485
Depreciation 1,328 1,087 879 938 2,604
------- ------- ------- ------- --------
Total adjustments (16,129) 2,277 (2,176) 43,246 (1,247)
------- ------- ------- ------- --------
Distributable earnings $ 20,953 $ 24,701 $ 30,575 $ 40,850 $ 38,623
======= ======= ======= ======= ========
GAAP earnings/(loss) per basic
common share $ 0.36 $ 0.22 $ 0.32 $ (0.02) $ 0.38
======= ======= ======= ======= ========
Distributable earnings per
basic common share $ 0.20 $ 0.24 $ 0.29 $ 0.39 $ 0.37
======= ======= ======= ======= ========
Weighted average common shares
for basic earnings per share 103,683 103,705 103,777 103,675 103,647
======= ======= ======= ======= ========
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 September June 30, March 31, December September
Share Amounts) 30, 2025 2025 2025 31, 2024 30, 2024
--------------- --------- --------- --------- --------- -----------
GAAP Total
Stockholders'
Equity $1,821.5 $1,822.1 $1,838.4 $1,841.8 $1,880.5
Preferred Stock,
liquidation
preference (479.9) (475.0) (475.0) (475.0) (475.0)
------- ------- ------- ------- -------
GAAP
Stockholders'
Equity for book
value per
common share 1,341.6 1,347.1 1,363.4 1,366.8 1,405.5
Adjustments:
Fair value
adjustment to
Residential
whole loans, at
carrying value 8.7 1.8 (6.3) (15.3) 6.7
Fair value
adjustment to
Securitized
debt, at
carrying value 48.5 57.1 63.1 70.3 64.3
------- ------- ------- ------- -------
Stockholders'
Equity
including fair
value
adjustments to
Residential
whole loans and
Securitized
debt held at
carrying value
(Economic book
value) $1,398.8 $1,406.0 $1,420.2 $1,421.8 $1,476.5
======= ======= ======= ======= =======
GAAP book value
per common
share $ 13.13 $ 13.12 $ 13.28 $ 13.39 $ 13.77
======= ======= ======= ======= =======
Economic book
value per
common share $ 13.69 $ 13.69 $ 13.84 $ 13.93 $ 14.46
======= ======= ======= ======= =======
Number of shares
of common stock
outstanding 102.2 102.7 102.7 102.1 102.1
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, the U.S. government shutdown, 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 U.S. Presidential administration); MFA's estimates 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 method elected by MFA to accrete the market discount on residential whole loans and the extent of prepayments, realized losses and changes in the composition of MFA's residential whole loan portfolios that may occur during the applicable tax period, including gain or loss on any MBS disposals or whole loan modifications, foreclosures and liquidations; the timing and amount of distributions to stockholders, which are declared and paid at the discretion of MFA's Board of Directors and will depend on, among other things, MFA's taxable income, its financial results and overall financial condition and liquidity, maintenance of its REIT qualification and such other factors as MFA's Board of Directors deems relevant; MFA's ability to maintain its qualification as a REIT for federal income tax purposes; MFA's ability to maintain its exemption from registration under the Investment Company Act of 1940, as amended (or the "Investment Company Act"), including statements regarding the concept release issued by the Securities and Exchange Commission ("SEC") relating to interpretive issues under the Investment Company Act with respect to the
status under the Investment Company Act of certain companies that are engaged in the business of acquiring mortgages and mortgage-related interests; 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 on our investments in recently-originated mortgage loans, the performance of which is, similar to our other mortgage loan investments, subject to, among other things, differences in prepayment risk, credit risk and financing costs associated with such investments; risks associated with the ongoing operation of Lima One Holdings, LLC (including, without limitation, industry competition, unanticipated expenditures relating to or liabilities arising from its operation (including, among other things, a failure to realize management's assumptions regarding expected growth in business purpose loan (BPL) origination volumes and credit risks underlying BPLs, including changes in the default rates and management's assumptions 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 are affected by, among other things, the length of time required to foreclose 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, maintenance expenses, etc. on the underlying property) and the amount ultimately realized upon resolution of the asset; risks associated with our investments in loan originators; risks associated with investing in real estate assets generally, including changes 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. These forward-looking statements are based on beliefs, assumptions and expectations 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 time and 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/20251106025069/en/
CONTACT: INVESTOR CONTACT:
InvestorRelations@mfafinancial.com
212-207-6488
www.mfafinancial.com
MEDIA CONTACT:
H/Advisors Abernathy
Tom Johnson
212-371-5999
(END) Dow Jones Newswires
November 06, 2025 08:30 ET (13:30 GMT)
Comments