NEW YORK--(BUSINESS WIRE)--May 05, 2026--
MFA Financial, Inc. (NYSE:MFA) today provided its financial results for the first quarter ended March 31, 2026:
First Quarter 2026 Financial Results:
-- MFA generated a GAAP net loss to common stockholders and participating
securities for the first quarter of $(11.4) million, or $(0.11) per basic
and diluted common share.
-- Distributable earnings, a non-GAAP financial measure, were $31.1
million, or $0.30 per basic common share. Distributable earnings prior to
realized credit losses, a non-GAAP financial measure, were $35.5 million,
or $0.34 per basic common share. MFA paid a regular cash dividend of
$0.36 per common share on April 30, 2026.
-- GAAP book value at March 31, 2026 was $12.70 per common share. Economic
book value, a non-GAAP financial measure, was $13.22 per common share.
-- Total economic return was (1.2)% for the first quarter.
-- MFA closed the quarter with $221.6 million of unrestricted cash and
$174.8 million of unpledged Agency MBS.
"We continued to make progress on our strategic initiatives during the first quarter of 2026 despite volatile market conditions and geopolitical developments," said Craig Knutson, MFA's Chief Executive Officer. "We grew our investment portfolio to $12.5 billion, issued two Non-QM securitizations and resolved $163 million of previously delinquent loans. We also announced our Manhattan office relocation that is expected to save $4 million annually. This quarter, we introduced a new non-GAAP measure of Distributable earnings prior to realized credit losses to provide additional clarity on our operating earnings without short term volatility from runoff transitional loan resolutions. Finally, we again repurchased over 500,000 shares of our common stock at accretive levels."
"We acquired over $1 billion of residential mortgage assets during the quarter," added Bryan Wulfsohn, President and Chief Investment Officer. "Mortgage banking income generated by Lima One rose to $7.7 million, up 34% from the fourth quarter of 2025. We profitably sold $81 million of new single-family rental loans to third-party investors. With Lima's origination pipeline at its highest level since 2024, we believe the business is well-positioned for success this year."
Q1 2026 Portfolio Activity
-- MFA's residential investment portfolio rose to $12.5 billion at March
31, 2026 from $12.3 billion at December 31, 2025.
-- MFA purchased $392.8 million of Agency MBS during the quarter, bringing
its Agency MBS position to $3.5 billion. In addition, MFA entered into
forward contracts in the "to-be-announced" (TBA) market with a notional
amount of $300.0 million to acquire additional Agency MBS.
-- Non-QM loan acquisitions totaled $470.6 million, bringing MFA's Non-QM
portfolio to $5.5 billion at March 31, 2026.
-- Lima One funded $130.2 million of new business purpose loans with a
maximum loan amount of $219.3 million. Further, $70.4 million of draws
were funded on previously originated Transitional loans. Lima One
generated $7.7 million of mortgage banking income.
-- Portfolio runoff was $698.0 million. Asset dispositions included $80.9
million of newly-originated single-family rental (SFR) loans. MFA also
sold 68 REO properties in the first quarter for aggregate net proceeds of
$18.2 million.
-- 60+ day delinquencies (measured as a percentage of UPB) for MFA's
residential loan portfolio increased to 7.8% at March 31, 2026 from 7.1%
at December 31, 2025. Subsequent to quarter-end, delinquencies declined
to 7.3%.
-- MFA completed two loan securitizations during the quarter
collateralized by $757.2 million UPB of Non-QM loans, bringing its total
securitized debt to approximately $6.3 billion.
-- MFA added a net $685.1 million of new interest rate hedges, maintaining
the estimated net effective duration of its investment portfolio at 0.96
years.
-- MFA's Debt/Net Equity Ratio was 6.3x while recourse leverage was 2.7x
at March 31, 2026.
Webcast
MFA Financial, Inc. plans to host a live audio webcast of its investor conference call on Tuesday, May 5, 2026, at 11:00 a.m. (Eastern Time) to discuss its first quarter 2026 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 over $5 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 March 31, 2026, 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 Agency net
At March 31, 2026 loans rental loans loans loans loans MBS (1) Total
---------------------- -------- ----------------- ----------------- ---------------- --------- -------- ------ ----------
(Dollars in Millions)
Asset Amount $ 5,530 $ 1,195 $ 658 $ 407 $ 943 $ 3,529 $ 677 $12,939
Receivable/(Payable)
for Unsettled
Transactions -- -- -- -- -- (42) -- (42)
Financing Agreements
with
Non-mark-to-market
Collateral Provisions -- (17) (30) (18) -- -- -- (65)
Financing Agreements
with Mark-to-market
Collateral Provisions (574) (247) (249) (211) (79) (3,095) (118) (4,573)
Securitized Debt (4,362) (755) (285) (77) (786) -- (6) (6,271)
Senior Notes and Other
secured financing -- -- -- -- -- -- (209) (209)
------ ------ ----- ----- ------ ----- ----- ---- ------ ---- ------
Net Equity Allocated $ 594 $ 176 $ 94 $ 101 $ 78 $ 392 $ 344 $ 1,779
====== ====== ===== ===== ====== ===== ===== ==== ====== ==== ======
Debt/Net Equity Ratio 8.3 x 5.8 x 6.0 x 3.0 x 11.1 8.0 x 6.3 x
(2) x
======= ========== ===== ========= ====== ========= ===== ===== ======= =======
(1) Includes $221.6 million of cash and cash equivalents, $189.2 million of
restricted cash, $56.5 million of other securities, $50.4 million of
Other loans and $20.6 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
---------------------------------------------------------
March 31, 2026 December 31, 2025 March 31, 2025
------------------- ------------------ ----------------
Non-QM Loans
Net Yield (1) 5.90 % 5.96 % 5.78 %
Cost of
Funding (2) (5.07)% (5.13)% (5.08)%
Impact of net
Swap carry
(3) 0.36 % 0.49 % 0.77 %
------------ --- ------------ ----------
Net Interest
Spread 1.19 % 1.32 % 1.47 %
Business
Purpose
Loans
Net Yield (1) 7.12 % 7.50 % 8.09 %
Cost of
Funding (2) (5.54)% (5.82)% (6.15)%
Impact of net
Swap carry
(3) 0.32 % 0.44 % 0.45 %
------------ --- ------------ ----------
Net Interest
Spread 1.90 % 2.12 % 2.39 %
Legacy
RPL/NPL
Loans
Net Yield (1) 7.93 % 7.42 % 7.01 %
Cost of
Funding (2) (4.27)% (4.29)% (4.24)%
Impact of net
Swap carry
(3) 0.36 % 0.48 % 0.31 %
------------ --- ------------ ----------
Net Interest
Spread 4.02 % 3.61 % 3.08 %
Total
Residential
Whole Loans
Net Yield (1) 6.42 % 6.53 % 6.77 %
Cost of
Funding (2) (5.09)% (5.23)% (5.36)%
Impact of net
Swap carry
(3) 0.35 % 0.48 % 0.60 %
------------ --- ------------ ----------
Net Interest
Spread 1.68 % 1.78 % 2.01 %
Securities,
at fair
value
Net Yield (1) 5.47 % 5.56 % 6.07 %
Cost of
Funding (2) (3.84)% (4.18)% (4.58)%
Impact of net
Swap carry
(3) 0.56 % 0.79 % 1.08 %
------------ --- ------------ ----------
Net Interest
Spread 2.19 % 2.17 % 2.57 %
Total
Balance
Sheet
Net Yield (1) 6.08 % 6.20 % 6.52 %
Cost of
Funding (2) (4.84)% (5.05)% (5.34)%
Impact of net
Swap carry
(3) 0.40 % 0.54 % 0.66 %
------------ --- ------------ ----------
Net Interest
Spread 1.64 % 1.69 % 1.84 %
============ === ============ ==========
(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 March 31, 2026:
Table 3 - Investment Portfolio Activity Q1 2026
Acquisitions
& March
December Runoff Originations Other 31,
(In Millions) 31, 2025 (1) (2) (3) 2026 Change
-------------- --------- ------ ------------- ------ ------- ----------
Residential
whole loans
and REO $ 8,945 $(570) $ 671 $(124) $ 8,922 $ (23)
Securities, at
fair value 3,360 (128) 393 (39) 3,586 226
-------- ---- ------------ ---- ------ ---
Total $ 12,305 $(698) $ 1,064 $(163) $12,508 $ 203
======== ==== ============ ==== ====== ===
(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
------------------------ ---------------------- --------------------------
March 31, December March 31, December March 31, December 31,
(Dollars in Thousands) 2026 31, 2025 2026 31, 2025 2026 2025
Non-QM loans $ 559,568 $ 593,213 $4,971,820 $4,753,480 $5,531,388 $5,346,693
Business purpose loans:
Single-family rental
loans $ 81,553 $ 88,112 $1,115,056 $1,147,234 $1,196,609 $1,235,346
Single-family
transitional loans
(1) 7,044 7,051 651,669 711,294 658,713 718,345
Multifamily
transitional loans -- -- 406,610 489,637 406,610 489,637
--------- --------- --------- --------- --------- ---------
Total Business purpose
loans $ 88,597 $ 95,163 $2,173,335 $2,348,165 $2,261,932 $2,443,328
Legacy RPL/NPL loans 405,158 414,676 544,276 564,340 949,434 979,016
Other loans -- -- 50,383 51,022 50,383 51,022
Allowance for Credit
Losses (9,437) (9,705) -- -- (9,437) (9,705)
--------- --------- --------- --------- --------- ---------
Total Residential whole
loans $1,043,886 $1,093,347 $7,739,814 $7,717,007 $8,783,700 $8,810,354
========= ========= ========= ========= ========= =========
Number of loans 4,789 4,941 18,876 18,824 23,665 23,765
(1) Includes $293.2 million and $300.2 million of loans collateralized by
new construction projects at origination as of March 31, 2026 and
December 31, 2025, respectively.
Table 5 - Yields and Average Balances/Residential Whole Loans
For the Three-Month Period Ended
----------------------------------------------------------------------------------------------------
March 31, 2026 December 31, 2025 March 31, 2025
-------------------------------- -------------------------------- --------------------------------
Average Average Average Average Average Average
(Dollars in Thousands) Interest Balance Yield Interest Balance Yield Interest Balance Yield
Non-QM loans $ 81,539 $5,526,191 5.90% $ 79,960 $5,369,775 5.96% $ 65,264 $4,516,610 5.78%
Business purpose loans:
Single-family rental
loans $ 19,513 $1,237,745 6.31% $ 19,611 $1,265,698 6.20% $ 22,397 $1,395,001 6.42%
Single-family
transitional loans 15,554 702,710 8.85% 17,398 768,729 9.05% 25,818 1,056,813 9.77%
Multifamily
transitional loans 8,449 504,127 6.70% 12,123 586,047 8.27% 19,954 920,372 8.67%
------- --------- ---- --- ------- --------- ---- --- ------- --------- ---- ---
Total business purpose
loans $ 43,516 $2,444,582 7.12% $ 49,132 $2,620,474 7.50% $ 68,169 $3,372,186 8.09%
Legacy RPL/NPL loans 17,573 886,001 7.93% 16,933 912,422 7.42% 17,379 991,086 7.01%
Other loans 463 60,608 3.06% 418 61,696 2.71% 498 65,130 3.06%
------- --------- ---- --- ------- --------- ---- --- ------- --------- ---- ---
Total Residential whole
loans $143,091 $8,917,382 6.42% $146,443 $8,964,367 6.53% $151,310 $8,945,012 6.77%
======= ========= ==== === ======= ========= ==== === ======= ========= ==== ===
Table 6 - Credit-related Metrics/Residential Whole Loans
March 31, 2026
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Aging by UPB
----- -------- -------- ---------------------------------------- ---- ---
Past Due Days
----------------------------
Weighted Weighted
Unpaid Average Average
Principal Weighted Term to Weighted Original
Asset Balance Average Coupon Maturity Average LTV FICO 60+
(Dollars In Thousands) Amount Fair Value ("UPB") (1) (2) (Months) Ratio (3) (4) Current 30-59 60-89 90+ 60+ DQ % LTV (5)
------------------------ ---------- ---------- ---------- --------------- -------- ------------ -------- ---------- ------- ------- -------- -------- --------
Non-QM loans $5,529,980 $5,516,866 $5,523,570 6.73% 337 64% 739 $5,155,462 $144,082 $ 56,001 $168,025 4.1% 65%
Business purpose loans:
Single-family rental $1,195,847 $1,198,564 $1,207,006 6.32% 308 66% 740 $1,151,373 $ 23,905 $ 4,376 $ 27,352 2.6% 68%
Single-family
transitional (5) 657,557 658,032 673,850 10.24% 6 68% 751 547,992 19,455 16,980 89,423 15.8% 82%
Multifamily
transitional (5) 406,610 406,610 458,228 10.22% 1 83% 748 300,737 19,998 55,999 81,494 30.0% 126%
--------- --------- --------- --------- ------- ------- -------
Total business purpose
loans $2,260,014 $2,263,206 $2,339,084 8.22% 70% $2,000,102 $ 63,358 $ 77,355 $198,269 11.8%
Legacy RPL/NPL loans 943,323 960,882 1,067,717 5.08% 243 53% 646 760,712 103,744 44,596 158,665 19.0% 59%
Other loans 50,383 50,383 58,879 3.43% 305 63% 757 57,574 1,305 -- -- --% --%
--------- --------- --------- --------- ------- ------- -------
Residential whole loans,
total or weighted
average $8,783,700 $8,791,337 $8,989,250 6.92% 64% $7,973,850 $312,489 $177,952 $524,959 7.8%
========= ========= ========= ========= ======= ======= =======
(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. Certain
Transitional Loans contain contractual features which increase the
loan's interest rate following an event of default. The weighted
average coupon presented is calculated based on each loan's coupon rate
without regard to post-default rate adjustments.
(2) For the quarter ended March 31, 2026, the gross coupon was 6.86% for
Non-QM loans, 6.35% for Single-family rental loans, 10.25% for
Single-family transitional loans, 10.23% for Multifamily transitional
loans, and 5.09% 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 that are less than
90 days delinquent, the LTV presented is generally 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, as of the most recent date available, which
may be the origination date. For Single-family and Multifamily
transitional loans that are 90 or more days delinquent, as well as
certain performing loans for which an after repaired valuation was not
available, the LTV presented is the ratio of 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 recent date
available, which may be the origination date.
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 March 31, 2026. All changes in value are measured as the percentage change from the projected portfolio value under the base interest rate scenario as of March 31, 2026.
Change in Percentage Change in Net Percentage Change in Total
Interest Rates Portfolio Value Stockholders' Equity
--------------- -------------------------- ----------------------------
+100 Basis
Point
Increase (1.27)% (9.69)%
+ 50 Basis
Point
Increase (0.56)% (4.24)%
Actual as of
March 31,
2026 --% --%
- 50 Basis
Point
Decrease 0.40% 3.05%
-100 Basis
Point
Decrease 0.64% 4.90%
MFA FINANCIAL, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Per Share March 31, December 31,
Amounts) 2026 2025
------------------------------------ ------------ -----------------
(Unaudited)
Assets:
Residential whole loans, net
($7,739,814 and $7,717,007 held at
fair value, respectively) (1) $ 8,783,700 $ 8,810,354
Securities, at fair value 3,585,879 3,360,280
Cash and cash equivalents 221,573 213,211
Restricted cash 189,238 173,457
Other assets 449,181 489,147
---------- ----------
Total Assets $13,229,571 $ 13,046,449
========== ==========
Liabilities:
Financing agreements ($5,920,250 and
$5,956,057 held at fair value,
respectively) $11,117,578 $ 10,940,014
Other liabilities 332,636 278,740
---------- ----------
Total Liabilities $11,450,214 $ 11,218,754
---------- ----------
Stockholders' Equity:
Preferred stock, $0.01 par value;
7.5% Series B cumulative redeemable;
12,050 and 12,050 shares authorized,
respectively; 8,186 and 8,125 shares
issued and outstanding, respectively
($204,643 and $203,132 aggregate
liquidation preference,
respectively) $ 82 $ 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 and outstanding,
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; 101,596
and 101,663 shares issued and
outstanding, respectively 1,016 1,017
Additional paid-in capital, in excess
of par 3,719,034 3,718,350
Accumulated deficit (1,943,811) (1,895,541)
Accumulated other comprehensive
income 2,922 3,675
---------- ----------
Total Stockholders' Equity $ 1,779,357 $ 1,827,695
---------- ----------
Total Liabilities and
Stockholders' Equity $13,229,571 $ 13,046,449
========== ==========
(1) Includes approximately $7.4 billion and $7.6 billion of Residential
whole loans transferred to consolidated variable interest entities
("VIEs") at March 31, 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 Ended
March 31,
------------------------------
(In Thousands, Except Per Share
Amounts) 2026 2025
--------------------------------------- -------- --------
(Unaudited) (Unaudited)
Interest Income:
Residential whole loans $ 143,091 $ 151,310
Securities, at fair value 45,753 24,670
Other interest-earning assets 491 398
Cash and cash equivalent investments 2,591 4,127
-------- --------
Interest Income $ 191,926 $ 180,505
-------- --------
Interest Expense:
Asset-backed and other collateralized
financing arrangements $ 127,811 $ 118,431
Other interest expense 4,925 4,537
-------- --------
Interest Expense $ 132,736 $ 122,968
-------- --------
Net Interest Income $ 59,190 $ 57,537
-------- --------
Reversal/(Provision) for Credit Losses
on Residential Whole Loans $ 242 $ (145)
Reversal/(Provision) for Credit Losses
on Other Assets -- --
-------- --------
Net Interest Income after
Reversal/(Provision) for Credit Losses $ 59,432 $ 57,392
Other Income/(Loss), net:
Net gain/(loss) on residential whole
loans measured at fair value through
earnings $ (34,761) $ 54,380
Impairment and other net gain/(loss) on
securities and other portfolio
investments (38,270) 21,179
Net gain/(loss) on real estate owned (2,981) (1,508)
Net gain/(loss) on derivatives used for
risk management purposes 30,726 (31,055)
Net gain/(loss) on securitized debt
measured at fair value through
earnings 19,845 (21,931)
Lima One mortgage banking income 7,660 5,437
Net realized gain/(loss) on residential
whole loans held at carrying value -- (539)
Other, net 1,896 (1,451)
-------- --------
Other Income/(Loss), net $ (15,885) $ 24,512
-------- --------
Operating and Other Expense:
Compensation and benefits $ 22,159 $ 23,257
Other general and administrative expense 12,154 10,291
Loan servicing, financing and other
related costs 9,918 7,252
Amortization of intangible assets 300 800
-------- --------
Operating and Other Expense $ 44,531 $ 41,600
-------- --------
Income/(loss) before income taxes $ (984) $ 40,304
Provision for/(benefit from) income
taxes $ -- $ (872)
-------- --------
Net Income/(Loss) $ (984) $ 41,176
Less Preferred Stock Dividend
Requirement $ 10,424 $ 8,219
-------- --------
Net Income/(Loss) Available to Common
Stock and Participating Securities $ (11,408) $ 32,957
======== ========
Basic Earnings/(Loss) per Common Share $ (0.11) $ 0.32
======== ========
Diluted Earnings/(Loss) per Common Share $ (0.11) $ 0.31
======== ========
Segment Reporting
At March 31, 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 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
March 31, 2026
Interest Income $ 148,188 $ 42,137 $ 1,601 $191,926
Interest Expense 101,262 26,906 4,568 132,736
--- --------- ---- ------- ------- -------
Net Interest
Income/(Expense) $ 46,926 $ 15,231 $ (2,967) $ 59,190
--- --------- ---- ------- ------- -------
Reversal/(Provision)
for Credit Losses on
Residential Whole
Loans 242 -- -- 242
Reversal/(Provision)
for Credit Losses on
Other Assets -- -- -- --
--- --------- ---- ------- ------- -------
Net Interest
Income/(Expense)
after
Reversal/(Provision)
for Credit Losses $ 47,168 $ 15,231 $ (2,967) $ 59,432
--- --------- ---- ------- ------- -------
Net gain/(loss) on
residential whole
loans measured at
fair value through
earnings $ (24,237) $(10,524) $ -- $(34,761)
Impairment and other
net gain/(loss) on
securities and other
portfolio
investments (38,688) 13 405 (38,270)
Net gain on real
estate owned 383 (3,364) -- (2,981)
Net gain/(loss) on
derivatives used for
risk management
purposes 28,064 2,662 -- 30,726
Net gain/(loss) on
securitized debt
measured at fair
value through
earnings 16,134 3,711 -- 19,845
Lima One mortgage
banking income -- 7,660 -- 7,660
Net realized
gain/(loss) on
residential whole
loans held at
carrying value -- -- -- --
Other, net 929 (2,901) 3,868 1,896
--- --------- ---- ------- ------- -------
Other Income/(Loss),
net $ (17,415) $ (2,743) $ 4,273 $(15,885)
--- --------- --- ------- ------- -------
Compensation and
benefits $ -- $ 8,882 $ 13,277 $ 22,159
Other general and
administrative
expense -- 4,313 7,841 12,154
Loan servicing,
financing and other
related costs 3,609 2,354 3,955 9,918
Amortization of
intangible assets -- 300 -- 300
--- --------- ---- ------- ------- -------
Income/(loss) before
income taxes $ 26,144 $ (3,361) $(23,767) $ (984)
Provision
for/(benefit from)
income taxes -- -- -- --
--- --------- ---- ------- ------- -------
Net Income/(Loss) $ 26,144 $ (3,361) $(23,767) $ (984)
Less Preferred Stock
Dividend Requirement $ -- $ -- $ 10,424 $ 10,424
--- --------- ---- ------- ------- -------
Net Income/(Loss)
Available to Common
Stock and
Participating
Securities $ 26,144 $ (3,361) $(34,191) $(11,408)
=== ========= ==== ======= ======= =======
Mortgage-Related
(Dollars in Thousands) Assets Lima One Corporate Total
----------------------- ----------------- ---------- ----------- -----------
March 31, 2026
Total Assets $ 10,507,268 $2,469,863 $ 252,440 $13,229,571
================ ========= ======= ==========
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-GAAP Distributable Earnings Prior to Realized Credit Losses
"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. Beginning in the first quarter of 2026, losses/(gains) recognized in GAAP Net income/(loss) related to the extinguishment of debt were also included in the adjustments for Securitized debt held at fair value and Securitization-related transaction costs. Prior periods have been revised to reflect the current presentation. 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.
Beginning in the first quarter of 2026, we have also reported a non-GAAP "Distributable earnings prior to realized credit losses" metric, whereby an adjustment is made to reported Distributable earnings to exclude realized credit losses, net of recoveries for all residential whole loans held at fair value. Prior periods have been revised to reflect the current presentation. Management believes Distributable earnings prior to realized credit losses provides users of our financial statements with meaningful information to consider in addition to Net income/(loss) and cash flows from operating activities in accordance with GAAP. Distributable earnings prior to realized credit losses is one of the factors that our Board of Directors considers when evaluating distributions to our shareholders. As the timing of a realized credit loss on a loan can differ significantly from when the initial fair value adjustment with respect to a loan is reflected in GAAP net income/(loss), management believes that adjusting Distributable earnings for the realized credit losses described above can help readers better understand the operating results of our business prior to the impact of realized credit losses, as well as evaluate and compare the performance of our Company and our peers.
Distributable earnings and Distributable earnings prior to realized credit losses should be used in conjunction with results presented in accordance with GAAP. Distributable earnings and Distributable earnings prior to realized credit losses do 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 these measures 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 and non-GAAP Distributable Earnings Prior to Realized Credit Losses for the quarterly periods below:
Quarter Ended
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(In Thousands, Except Per March 31, December September June 30, March 31,
Share Amounts) 2026 31, 2025 30, 2025 2025 2025
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GAAP Net income/(loss) used in
the calculation of basic EPS $(11,726) $ 43,402 $ 37,082 $ 22,424 $ 32,751
Adjustments:
Unrealized and realized
gains and losses on:
Residential whole loans
held at fair value 34,761 (4,405) (41,293) (33,612) (54,380)
Securities held at fair
value 38,872 (14,898) (17,798) (4,008) (20,201)
Residential whole loans
and securities at
carrying value -- (1,399) (668) 343 305
Interest rate swaps and
ERIS swap futures (20,007) 657 14,826 32,565 44,842
Securitized debt held at
fair value (22,901) (1,586) 21,303 3,712 18,575
Other portfolio
investments (1,938) 582 462 (2,637) (744)
Expense items:
Amortization of
intangible assets 300 300 300 800 800
Equity based
compensation 6,329 1,880 1,861 2,274 6,052
Securitization-related
transaction costs 3,926 2,584 3,712 1,890 1,768
Depreciation 3,466 1,045 1,328 1,087 879
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Total adjustments 42,808 (15,240) (15,967) 2,414 (2,104)
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Distributable earnings $ 31,082 $ 28,162 $ 21,115 $ 24,838 $ 30,647
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Adjustment -- realized
credit losses on
Residential whole loans at
fair value, net of
recoveries 4,373 3,003 10,052 9,812 3,731
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Distributable earnings prior
to realized credit losses $ 35,455 $ 31,165 $ 31,167 $ 34,650 $ 34,378
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GAAP earnings/(loss) per basic
common share $ (0.11) $ 0.42 $ 0.36 $ 0.22 $ 0.32
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Distributable earnings per
basic common share $ 0.30 $ 0.27 $ 0.20 $ 0.24 $ 0.30
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Distributable earnings prior
to realized credit losses per
basic common share $ 0.34 $ 0.30 $ 0.30 $ 0.33 $ 0.33
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Weighted average common shares
for basic earnings per share 104,253 103,061 103,683 103,705 103,777
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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:
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(In Millions,
Except Per March 31, December September June 30, March 31,
Share Amounts) 2026 31, 2025 30, 2025 2025 2025
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GAAP Total
Stockholders'
Equity $1,779.4 $1,827.7 $1,821.5 $1,822.1 $1,838.4
Preferred Stock,
liquidation
preference (489.3) (485.3) (479.9) (475.0) (475.0)
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GAAP
Stockholders'
Equity for book
value per
common share 1,290.1 1,342.4 1,341.6 1,347.1 1,363.4
Adjustments:
Fair value
adjustment to
Residential
whole loans, at
carrying value 7.6 10.1 8.7 1.8 (6.3)
Fair value
adjustment to
Securitized
debt, at
carrying value 45.2 45.7 48.5 57.1 63.1
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Stockholders'
Equity
including fair
value
adjustments to
Residential
whole loans and
Securitized
debt held at
carrying value
(Economic book
value) $1,342.9 $1,398.2 $1,398.8 $1,406.0 $1,420.2
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GAAP book value
per common
share $ 12.70 $ 13.20 $ 13.13 $ 13.12 $ 13.28
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Economic book
value per
common share $ 13.22 $ 13.75 $ 13.69 $ 13.69 $ 13.84
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Number of shares
of common stock
outstanding 101.6 101.7 102.2 102.7 102.7
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 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. 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; the failure to realize the expected expense savings resulting from the anticipated relocation of our corporate headquarters in New York City; 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
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CONTACT: INVESTOR CONTACT:
InvestorRelations@mfafinancial.com
212-207-6488
www.mfafinancial.com
MEDIA CONTACT:
H/Advisors Abernathy
Sydney Isaacs
713-343-0427
(END) Dow Jones Newswires
May 05, 2026 08:30 ET (12:30 GMT)
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