MFA Financial, Inc. (NYSE:MFA) today provided its financial
results for the third quarter ended September 30, 2024:
- MFA generated GAAP net income for the third quarter of $40.0
million, or $0.38 per basic common share and $0.37 per diluted
common share.
- Distributable earnings, a non-GAAP financial measure, were
$38.6 million, or $0.37 per basic common share. MFA paid a regular
cash dividend of $0.35 per common share on October 31, 2024.
- GAAP book value at September 30, 2024 was $13.77 per common
share. Economic book value, a non-GAAP financial measure, was
$14.46 per common share.
- Total economic return was 3.3% for the third quarter.
- Net interest spread averaged 2.18% and net interest margin was
3.00%.
- MFA closed the quarter with unrestricted cash of $305.6
million.
“We are pleased to report strong results for the third quarter,”
stated Craig Knutson, MFA’s Chief Executive Officer. “We generated
Distributable earnings of $0.37 per share and our Economic book
value rose approximately 1% to $14.46 per share from $14.34 at June
30. We purchased or originated over $565.2 million of residential
mortgage loans with an average coupon of 9.4%. We also added $294
million of Agency MBS at attractive yields. We completed two loan
securitizations during the quarter and two more subsequent to
quarter-end.”
“With a 50 basis point rate cut at its September meeting, the
Federal Reserve began an easing cycle that should benefit mortgage
REITs and other levered fixed income investors,” Mr. Knutson added.
“This is a welcome development after a challenging period of
restrictive monetary policy and an inverted yield curve. Although
it remains to be seen how long this cycle lasts and how far the Fed
ultimately cuts rates, a return to a more neutral policy rate and
the normalization of the yield curve should both serve as tailwinds
for our business.”
“Finally, we were delighted to announce in late August that
Bryan Wulfsohn will serve as President of MFA and that Lori Samuels
has been named Chief Loan Operations Officer. Bryan and Lori are
exceptionally talented leaders who have each been at MFA for nearly
15 years. We are proud to elevate them into new roles,” concluded
Mr. Knutson.
Q3 2024 Portfolio Activity
- Loan acquisitions were $565.2 million, including $329.0 million
of funded originations of business purpose loans (including draws
on Transitional loans) and $236.2 million of Non-QM loan
acquisitions, bringing MFA’s residential whole loan balance to $9.0
billion.
- Lima One funded $196.0 million of new business purpose loans
with a maximum loan amount of $312.3 million. Further, $132.9
million of draws were funded on previously originated Transitional
loans. Lima One generated $8.9 million of mortgage banking
income.
- MFA added $293.9 million of Agency MBS during the quarter,
bringing its Agency MBS portfolio to $993.5 million.
- Asset dispositions included $241.5 million of single-family
rental (SFR) loans and $16.0 million of credit risk transfer (CRT)
securities. MFA also sold 58 REO properties in the third quarter
for aggregate proceeds of $18.3 million.
- 60+ day delinquencies (measured as a percentage of UPB) for
MFA’s residential loan portfolio increased to 6.7% from 6.5% in the
second quarter.
- MFA completed two loan securitizations during the quarter,
collateralized by $643.4 million UPB of Non-QM and Legacy RPL/NPL
loans, bringing its total securitized debt to approximately $5.3
billion.
- MFA increased its position in interest rate swaps to a notional
amount of approximately $3.5 billion. At September 30, 2024, these
swaps had a weighted average fixed pay interest rate of 1.91% and a
weighted average variable receive interest rate of 4.96%.
- MFA estimates the net effective duration of its investment
portfolio at September 30, 2024 rose to 1.16 from 1.12 at June 30,
2024.
- MFA’s Debt/Net Equity Ratio was 4.8x and recourse leverage was
1.8x at September 30, 2024.
Webcast
MFA Financial, Inc. plans to host a live audio webcast of its
investor conference call on Wednesday, November 6, 2024, at 11:00
a.m. (Eastern Time) to discuss its third quarter 2024 financial
results. The live audio webcast will be accessible to the general
public over the internet at http://www.mfafinancial.com through the
“Webcasts & Presentations” link on MFA’s home page. 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 $4.8 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 table presents MFA’s asset allocation as of
September 30, 2024, and the third quarter 2024 yield on average
interest-earning assets, average cost of funds and net interest
rate spread for the various asset types.
Table 1 - Asset Allocation
At September 30, 2024
Business purpose loans
(1)
Non-QM loans
Legacy RPL/NPL loans
Securities, at fair
value
Other, net (2)
Total
(Dollars in Millions)
Asset Amount
$
3,682
$
4,171
$
1,118
$
1,140
$
756
$
10,867
Receivable/(Payable) for Unsettled
Transactions
—
—
—
(65
)
—
(65
)
Financing Agreements with
Non-mark-to-market Collateral Provisions
(678
)
—
—
—
—
(678
)
Financing Agreements with Mark-to-market
Collateral Provisions
(802
)
(653
)
(309
)
(918
)
(90
)
(2,772
)
Securitized Debt
(1,617
)
(3,030
)
(641
)
—
(1
)
(5,289
)
Senior Notes
—
—
—
—
(183
)
(183
)
Net Equity Allocated
$
585
$
488
$
168
$
157
$
482
$
1,880
Debt/Net Equity Ratio (3)
5.3 x
7.5 x
5.7 x
6.3 x
4.8 x
For the Quarter
Ended September 30, 2024
Yield on Average Interest Earning Assets
(4)
7.91
%
5.47
%
7.75
%
6.48
%
6.71
%
Less Average Cost of Funds (5)
(5.65
)
(3.47
)
(4.08
)
(3.94
)
(4.53
)
Net Interest Rate Spread
2.26
%
2.00
%
3.67
%
2.54
%
2.18
%
(1)
Includes $1.2 billion of Single-family
transitional loans, $1.1 billion of Multifamily transitional loans
and $1.5 billion of Single-family rental loans.
(2)
Includes $305.6 million of cash and cash
equivalents, $197.3 million of restricted cash, $55.9 million of
Other loans and $16.8 million of capital contributions made to loan
origination partners, as well as other assets and other
liabilities.
(3)
Total Debt/Net Equity ratio represents the
sum of borrowings under our financing agreements as a multiple of
net equity allocated.
(4)
Yields reported on our interest earning
assets are calculated based on the interest income recorded and the
average amortized cost for the quarter of the respective asset. At
September 30, 2024, the amortized cost of our Securities, at fair
value, was $1.1 billion. In addition, the yield for residential
whole loans was 6.73%, net of one basis point of servicing fee
expense incurred during the quarter. For GAAP reporting purposes,
such expenses are included in Loan servicing and other related
operating expenses in our statement of operations.
(5)
Average cost of funds includes interest on
financing agreements, Convertible Senior Notes, 8.875% Senior
Notes, 9.00% Senior Notes, and securitized debt. Cost of funding
also includes the impact of the net carry (the difference between
swap interest income received and swap interest expense paid) on
our interest rate swap agreements (or Swaps). While we have not
elected hedge accounting treatment for Swaps and accordingly net
carry is not presented in interest expense in our consolidated
statement of operations, we believe it is appropriate to allocate
net carry to the cost of funding to reflect the economic impact of
our Swaps on the funding costs shown in the table above. For the
quarter ended September 30, 2024, this decreased the overall
funding cost by 131 basis points for our overall portfolio, 131
basis points for our Residential whole loans, 101 basis points for
our Business purpose loans, 175 basis points for our Non-QM loans,
56 basis points for our Legacy RPL/NPL loans and 171 basis points
for our Securities, at fair value.
The following table presents the activity for our residential
mortgage asset portfolio for the three months ended September 30,
2024:
Table 2 - Investment Portfolio Activity Q3 2024
(In Millions)
June 30, 2024
Runoff (1)
Acquisitions (2)
Other (3)
September 30, 2024
Change
Residential whole loans and REO
$
9,294
$
(611
)
$
565
$
(94
)
$
9,154
$
(140
)
Securities, at fair value
863
(18
)
294
1
1,140
277
Totals
$
10,157
$
(629
)
$
859
$
(93
)
$
10,294
$
137
(1)
Primarily includes principal repayments
and sales of REO.
(2)
Includes draws on previously originated
Transitional loans.
(3)
Primarily includes 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 3 - Portfolio Composition/Residential Whole
Loans
Held at Carrying Value
Held at Fair Value
Total
(Dollars in Thousands)
September 30,
2024
December 31, 2023
September 30,
2024
December 31, 2023
September 30,
2024
December 31, 2023
Business purpose loans:
Single-family transitional loans (1)
$
25,382
$
35,467
$
1,127,519
$
1,157,732
$
1,152,901
$
1,193,199
Multifamily transitional loans
—
—
1,058,079
1,168,297
1,058,079
1,168,297
Single-family rental loans
119,153
172,213
1,353,909
1,462,583
1,473,062
1,634,796
Total Business purpose loans
$
144,535
$
207,680
$
3,539,507
$
3,788,612
$
3,684,042
$
3,996,292
Non-QM loans
751,550
843,884
3,421,247
2,961,693
4,172,797
3,805,577
Legacy RPL/NPL loans
467,202
498,671
658,078
705,424
1,125,280
1,204,095
Other loans
—
—
55,909
55,779
55,909
55,779
Allowance for Credit Losses
(10,657
)
(20,451
)
—
—
(10,657
)
(20,451
)
Total Residential whole loans
$
1,352,630
$
1,529,784
$
7,674,741
$
7,511,508
$
9,027,371
$
9,041,292
Number of loans
5,757
6,326
18,837
19,075
24,594
25,401
(1)
Includes $446.5 million and $471.1 million
of loans collateralized by new construction projects at origination
as of September 30, 2024 and December 31, 2023, respectively.
Table 4 - Yields and Average Balances/Residential Whole
Loans
For the Three-Month Period
Ended
September 30, 2024
June 30, 2024
September 30, 2023
(Dollars in Thousands)
Interest
Average Balance
Average Yield
Interest
Average Balance
Average Yield
Interest
Average Balance
Average Yield
Business purpose loans:
Single-family transitional loans
$
28,486
$
1,196,227
9.53
%
$
30,242
$
1,241,300
9.75
%
$
22,259
$
1,003,031
8.88
%
Multifamily transitional loans
23,479
1,145,051
8.20
%
25,291
1,213,450
8.34
%
17,964
924,502
7.77
%
Single-family rental loans
26,333
1,616,723
6.52
%
27,564
1,703,334
6.47
%
24,087
1,639,626
5.88
%
Total business purpose loans
$
78,298
$
3,958,001
7.91
%
$
83,097
$
4,158,084
7.99
%
$
64,310
$
3,567,159
7.21
%
Non-QM loans
58,467
4,279,297
5.47
%
58,749
4,280,761
5.49
%
51,724
4,053,924
5.10
%
Legacy RPL/NPL loans
20,139
1,040,010
7.75
%
23,346
1,070,629
8.72
%
24,018
1,167,872
8.23
%
Other loans
502
67,070
2.99
%
525
67,771
3.10
%
486
71,306
2.73
%
Total Residential whole loans
$
157,406
$
9,344,378
6.74
%
$
165,717
$
9,577,245
6.92
%
$
140,538
$
8,860,261
6.34
%
Table 5 - Net Interest Spread/Residential Whole Loans
For the Three-Month Period
Ended
September 30, 2024
June 30, 2024
September 30, 2023
Business purpose loans
Net Yield (1)
7.91
%
7.99
%
7.21
%
Cost of Funding (2)
5.65
%
5.80
%
5.34
%
Net Interest Spread
2.26
%
2.19
%
1.87
%
Non-QM loans
Net Yield (1)
5.47
%
5.49
%
5.10
%
Cost of Funding (2)
3.47
%
3.55
%
3.22
%
Net Interest Spread
2.00
%
1.94
%
1.88
%
Legacy RPL/NPL loans
Net Yield (1)
7.75
%
8.72
%
8.23
%
Cost of Funding (2)
4.08
%
3.70
%
3.21
%
Net Interest Spread
3.67
%
5.02
%
5.02
%
Total Residential whole loans
Net Yield (1)
6.74
%
6.92
%
6.34
%
Cost of Funding (2)
4.45
%
4.54
%
4.10
%
Net Interest Spread
2.29
%
2.38
%
2.24
%
(1)
Reflects annualized interest income on
Residential whole loans divided by average amortized cost of
Residential whole loans. 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.
Cost of funding shown in the table above includes the impact of the
net carry (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 carry
is not presented in interest expense in our consolidated statement
of operations, we believe it is appropriate to allocate net carry
to the cost of funding to reflect the economic impact of our Swaps
on the funding costs shown in the table above. For the quarter
ended September 30, 2024, this decreased the overall funding cost
by 131 basis points for our Residential whole loans, 101 basis
points for our Business purpose loans, 175 basis points for our
Non-QM loans, and 56 basis points for our Legacy RPL/NPL loans. For
the quarter ended June 30, 2024, this decreased the overall funding
cost by 128 basis points for our Residential whole loans, 92 basis
points for our Business purpose loans, 163 basis points for our
Non-QM loans, and 107 basis points for our Legacy RPL/NPL loans.
For the quarter ended September 30, 2023, this decreased the
overall funding cost by 143 basis points for our Residential whole
loans, 240 basis points for our Business purpose loans, 176 basis
points for our Non-QM loans, and 254 basis points for our Legacy
RPL/NPL loans.
Table 6 - Credit-related Metrics/Residential Whole
Loans
September 30, 2024
Asset Amount
Fair Value
Unpaid Principal Balance
(“UPB”)
Weighted Average Coupon
(1)
Weighted Average Term to
Maturity (Months)
Weighted Average LTV Ratio
(2)
Weighted Average Original FICO
(3)
Aging by UPB
60+ DQ %
60+ LTV (4)
Past Due Days
(Dollars In Thousands)
Current
30-59
60-89
90+
Business purpose loans:
Single-family transitional (4)
$
1,151,733
$
1,152,489
$
1,158,413
10.46
%
6
67
%
748
$
1,021,676
$
41,089
$
6,034
$
89,614
8.3
%
84
%
Multifamily transitional (4)
1,058,079
1,058,079
1,102,732
9.06
%
9
67
%
748
994,102
47,898
10,800
49,932
5.5
%
79
%
Single-family rental
1,472,687
1,474,723
1,505,242
6.43
%
325
68
%
738
1,436,384
16,896
5,180
46,782
3.5
%
103
%
Total Business purpose loans
$
3,682,499
$
3,685,291
$
3,766,387
8.44
%
68
%
$
3,452,162
$
105,883
$
22,014
$
186,328
5.5
%
Non-QM loans
4,171,055
4,145,143
4,264,091
6.26
%
339
64
%
735
4,013,257
100,943
37,025
112,866
3.5
%
65
%
Legacy RPL/NPL loans
1,117,908
1,147,684
1,250,859
5.15
%
255
55
%
647
854,721
128,022
48,794
219,322
21.4
%
63
%
Other loans
55,909
55,909
64,875
3.44
%
323
65
%
757
64,875
—
—
—
—
%
—
%
Residential whole loans, total or weighted
average
$
9,027,371
$
9,034,027
$
9,346,212
6.99
%
64
%
$
8,385,015
$
334,848
$
107,833
$
518,516
6.7
%
(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)
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 LTV are certain low value loans
secured by vacant lots, for which the LTV ratio is not meaningful.
60+ LTV has been calculated on a consistent basis.
(3)
Excludes loans for which no Fair Isaac
Corporation (“FICO”) score is available.
(4)
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, 2024, for certain Single-family and Multifamily Transitional
loans totaling $459.2 million and $568.3 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 the value of our portfolio, including the impact
of Swaps and securitized debt, based on the assets in our
investment portfolio at September 30, 2024. Changes in portfolio
value are measured as the percentage change when comparing the
projected portfolio value to the base interest rate scenario at
September 30, 2024.
Change in Interest Rates
Percentage Change in
Portfolio Value
Percentage Change in
Total Stockholders’ Equity
+100 Basis Point Increase
(1.44
)%
(8.50
)%
+ 50 Basis Point Increase
(0.65
)%
(3.85
)%
Actual at September 30, 2024
—
%
—
%
- 50 Basis Point Decrease
0.51
%
3.04
%
-100 Basis Point Decrease
0.89
%
5.28
%
MFA FINANCIAL, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Per Share
Amounts)
September 30,
2024
December 31,
2023
(unaudited)
Assets:
Residential whole loans, net ($7,674,741
and $7,511,508 held at fair value, respectively) (1)
$
9,027,371
$
9,041,292
Securities, at fair value
1,140,036
746,090
Cash and cash equivalents
305,560
318,000
Restricted cash
197,348
170,211
Other assets
489,531
497,097
Total Assets
$
11,159,846
$
10,772,690
Liabilities:
Financing agreements ($5,097,002 and
$4,633,660 held at fair value, respectively)
$
8,922,502
$
8,536,745
Other liabilities
356,876
336,030
Total Liabilities
$
9,279,378
$
8,872,775
Stockholders’ Equity:
Preferred stock, $0.01 par value; 7.5%
Series B cumulative redeemable; 8,050 shares authorized; 8,000
shares issued and outstanding ($200,000 aggregate liquidation
preference)
$
80
$
80
Preferred stock, $0.01 par value; 6.5%
Series C fixed-to-floating rate cumulative redeemable; 12,650
shares authorized; 11,000 shares issued and outstanding ($275,000
aggregate liquidation preference)
110
110
Common stock, $0.01 par value; 874,300 and
874,300 shares authorized; 102,083 and 101,916 shares issued and
outstanding, respectively
1,021
1,019
Additional paid-in capital, in excess of
par
3,709,534
3,698,767
Accumulated deficit
(1,840,399
)
(1,817,759
)
Accumulated other comprehensive income
10,122
17,698
Total Stockholders’ Equity
$
1,880,468
$
1,899,915
Total Liabilities and Stockholders’
Equity
$
11,159,846
$
10,772,690
(1)
Includes approximately $6.3 billion and
$5.7 billion of Residential whole loans transferred to consolidated
variable interest entities (“VIEs”) at September 30, 2024 and
December 31, 2023, 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
September 30,
Nine Months Ended
September 30,
(In Thousands, Except Per Share
Amounts)
2024
2023
2024
2023
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
Interest Income:
Residential whole loans
$
157,406
$
140,538
$
480,788
$
388,096
Securities, at fair value
14,742
11,945
41,363
29,201
Other interest-earning assets
4,001
2,587
6,341
7,560
Cash and cash equivalent investments
5,825
4,095
17,144
10,863
Interest Income
$
181,974
$
159,165
$
545,636
$
435,720
Interest Expense:
Asset-backed and other collateralized
financing arrangements
$
126,833
$
109,088
$
377,030
$
293,852
Other interest expense
4,516
3,936
16,678
11,853
Interest Expense
$
131,349
$
113,024
$
393,708
$
305,705
Net Interest Income
$
50,625
$
46,141
$
151,928
$
130,015
Reversal/(Provision) for Credit Losses
on Residential Whole Loans
$
1,942
$
1,258
$
3,481
$
977
Reversal/(Provision) for Credit Losses
on Other Assets
—
—
(1,135
)
—
Net Interest Income after
Reversal/(Provision) for Credit Losses
$
52,567
$
47,399
$
154,274
$
130,992
Other Income/(Loss), net:
Net gain/(loss) on residential whole loans
measured at fair value through earnings
$
143,416
$
(132,894
)
$
148,333
$
(134,423
)
Impairment and other net gain/(loss) on
securities and other portfolio investments
22,928
(14,161
)
15,310
(15,799
)
Net gain/(loss) on real estate owned
241
2,409
3,112
8,504
Net gain/(loss) on derivatives used for
risk management purposes
(56,818
)
34,860
9,210
74,103
Net gain/(loss) on securitized debt
measured at fair value through earnings
(75,273
)
36,431
(108,377
)
12,100
Lima One mortgage banking income
8,921
12,109
24,468
32,562
Net realized gain/(loss) on residential
whole loans held at carrying value
—
—
418
—
Other, net
(3,131
)
1,418
61
9,924
Other Income/(Loss), net
$
40,284
$
(59,828
)
$
92,535
$
(13,029
)
Operating and Other Expense:
Compensation and benefits
$
22,417
$
24,051
$
69,632
$
66,452
Other general and administrative
expense
11,430
10,075
34,260
31,272
Loan servicing, financing and other
related costs
8,503
8,989
24,262
26,126
Amortization of intangible assets
800
800
2,400
3,400
Operating and Other Expense
$
43,150
$
43,915
$
130,554
$
127,250
Income/(loss) before income
taxes
$
49,701
$
(56,344
)
$
116,255
$
(9,287
)
Provision for/(benefit from) income
taxes
$
1,518
$
94
$
2,913
$
295
Net Income/(Loss)
$
48,183
$
(56,438
)
$
113,342
$
(9,582
)
Less Preferred Stock Dividend
Requirement
$
8,219
$
8,219
$
24,656
$
24,656
Net Income/(Loss) Available to Common
Stock and Participating Securities
$
39,964
$
(64,657
)
$
88,686
$
(34,238
)
Basic Earnings/(Loss) per Common
Share
$
0.38
$
(0.64
)
$
0.85
$
(0.34
)
Diluted Earnings/(Loss) per Common
Share
$
0.37
$
(0.64
)
$
0.83
$
(0.34
)
Segment Reporting
At September 30, 2024, 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 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:
(In Thousands)
Mortgage- Related
Assets
Lima One
Corporate
Total
Three months ended September 30,
2024
Interest Income
$
101,374
$
77,234
$
3,366
$
181,974
Interest Expense
72,373
54,460
4,516
131,349
Net Interest Income/(Expense)
$
29,001
$
22,774
$
(1,150
)
$
50,625
Reversal/(Provision) for Credit Losses on
Residential Whole Loans
1,942
—
—
1,942
Reversal/(Provision) for Credit Losses on
Other Assets
—
—
—
—
Net Interest Income/(Expense) after
Reversal/(Provision) for Credit Losses
$
30,943
$
22,774
$
(1,150
)
$
52,567
Net gain/(loss) on residential whole loans
measured at fair value through earnings
$
117,957
$
25,459
$
—
$
143,416
Impairment and other net gain/(loss) on
securities and other portfolio investments
24,431
—
(1,503
)
22,928
Net gain on real estate owned
656
(415
)
—
241
Net gain/(loss) on derivatives used for
risk management purposes
(42,823
)
(13,995
)
—
(56,818
)
Net gain/(loss) on securitized debt
measured at fair value through earnings
(53,766
)
(21,507
)
—
(75,273
)
Lima One mortgage banking income
—
8,921
—
8,921
Net realized gain/(loss) on residential
whole loans held at carrying value
—
—
—
—
Other, net
163
(3,757
)
463
(3,131
)
Other Income/(Loss), net
$
46,618
$
(5,294
)
$
(1,040
)
$
40,284
Compensation and benefits
$
—
$
10,757
$
11,660
$
22,417
Other general and administrative
expense
70
5,068
6,292
11,430
Loan servicing, financing and other
related costs
4,297
595
3,611
8,503
Amortization of intangible assets
—
800
—
800
Income/(loss) before income taxes
$
73,194
$
260
$
(23,753
)
$
49,701
Provision for/(benefit from) income
taxes
$
—
$
—
$
1,518
$
1,518
Net Income/(Loss)
$
73,194
$
260
$
(25,271
)
$
48,183
Less Preferred Stock Dividend
Requirement
$
—
$
—
$
8,219
$
8,219
Net Income/(Loss) Available to Common
Stock and Participating Securities
$
73,194
$
260
$
(33,490
)
$
39,964
(Dollars in Thousands)
Mortgage- Related
Assets
Lima One
Corporate
Total
September 30, 2024
Total Assets
$
6,968,000
$
3,831,181
$
360,665
$
11,159,846
December 31, 2023
Total Assets
$
6,370,237
$
4,000,932
$
401,521
$
10,772,690
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. During the third quarter of 2024, the
Company changed the determination of Distributable earnings to
exclude depreciation, for consistency with the reporting of similar
non-cash expenses; this change has been reflected in all periods
presented. 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 Share
Amounts)
September 30, 2024
June 30, 2024
March 31, 2024
December 31, 2023
September 30, 2023
GAAP Net income/(loss) used in the
calculation of basic EPS
$
39,870
$
33,614
$
14,827
$
81,527
$
(64,657
)
Adjustments:
Unrealized and realized gains and losses
on:
Residential whole loans held at fair
value
(143,416
)
(16,430
)
11,513
(224,272
)
132,894
Securities held at fair value
(17,107
)
4,026
4,776
(21,371
)
13,439
Residential whole loans and securities at
carrying value
(7,324
)
(2,668
)
(418
)
332
—
Interest rate swaps
84,629
10,237
(23,182
)
97,400
(9,433
)
Securitized debt held at fair value
71,475
7,597
20,169
108,693
(40,229
)
Investments in loan origination
partners
1,503
1,484
—
254
722
Expense items:
Amortization of intangible assets
800
800
800
800
800
Equity based compensation
2,104
3,899
6,243
3,635
4,447
Securitization-related transaction
costs
3,485
3,009
1,340
2,702
3,217
Depreciation
2,604
822
889
869
841
Total adjustments
(1,247
)
12,776
22,130
(30,958
)
106,698
Distributable earnings
$
38,623
$
46,390
$
36,957
$
50,569
$
42,041
GAAP earnings/(loss) per basic common
share
$
0.38
$
0.32
$
0.14
$
0.80
$
(0.64
)
Distributable earnings per basic common
share
$
0.37
$
0.45
$
0.36
$
0.49
$
0.41
Weighted average common shares for basic
earnings per share
103,647
103,446
103,175
102,266
102,255
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 Share
Amounts)
September 30, 2024
June 30, 2024
March 31, 2024
December 31, 2023
September 30, 2023
GAAP Total Stockholders’ Equity
$
1,880.5
$
1,883.2
$
1,884.2
$
1,899.9
$
1,848.5
Preferred Stock, liquidation
preference
(475.0
)
(475.0
)
(475.0
)
(475.0
)
(475.0
)
GAAP Stockholders’ Equity for book value
per common share
1,405.5
1,408.2
1,409.2
1,424.9
1,373.5
Adjustments:
Fair value adjustment to Residential whole
loans, at carrying value
6.7
(26.8
)
(35.4
)
(35.6
)
(85.3
)
Fair value adjustment to Securitized debt,
at carrying value
64.3
82.3
88.4
95.6
122.5
Stockholders’ Equity including fair value
adjustments to Residential whole loans and Securitized debt held at
carrying value (Economic book value)
$
1,476.5
$
1,463.7
$
1,462.2
$
1,484.9
$
1,410.7
GAAP book value per common share
$
13.77
$
13.80
$
13.80
$
13.98
$
13.48
Economic book value per common share
$
14.46
$
14.34
$
14.32
$
14.57
$
13.84
Number of shares of common stock
outstanding
102.1
102.1
102.1
101.9
101.9
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 and the
performance of the housing, real estate, mortgage finance, 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; 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 MSR-related assets, including
servicing, regulatory and economic risks; 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
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version on businesswire.com: https://www.businesswire.com/news/home/20241106449100/en/
INVESTOR CONTACT:
InvestorRelations@mfafinancial.com 212-207-6488
www.mfafinancial.com MEDIA CONTACT: H/Advisors
Abernathy Tom Johnson 212-371-5999
MFA Financial (NYSE:MFA)
過去 株価チャート
から 12 2024 まで 1 2025
MFA Financial (NYSE:MFA)
過去 株価チャート
から 1 2024 まで 1 2025
