MFA Financial (MFA) 2024 Southwest IDEAS Conference summary

Company Background and Evolution

• Founded in 1998 as a mortgage REIT, initially focused on agency securities before shifting to residential credit post-2008 financial crisis.

• Built expertise by acquiring distressed securities at discounts, then transitioned to buying and managing distressed residential loans from 2013 to 2020.

• Expanded into non-qualified mortgages (non-QM) and business purpose loans as market conditions evolved and regulations changed.

• Acquired Lima One Capital in 2021 to vertically integrate origination and servicing of business purpose loans for real estate investors nationwide.

• Distributed over $4.8 billion in dividends since inception.

Strategic Overview and Business Model

• Operates as an internally managed REIT focused on U.S. residential mortgage loans and mortgage-backed securities, avoiding direct competition with banks and GSEs by targeting specific mortgage subsectors.

• Invests in non-qualified mortgage loans, re-performing/non-performing loans, and residential mortgage-backed securities.

• Operates a leading residential credit securitization platform with $9.8B of issuance since inception.

Portfolio Composition and Performance

• Residential mortgage portfolio totals $10.3B, diversified by product type, with non-QM loans over $4B and business purpose loans exceeding $3B.

• Agency MBS position grew to $993M, with renewed investment as spreads widened.

• Average non-QM loan balance is $600,000 with a 56% LTV, and portfolio LTVs by product type range from 51% to 68%.

• Delinquency rates are low, with a total 60+ day delinquency rate of 6.7% in Q3 2024, and high borrower equity reduces loss risk.

• Distributable earnings last quarter were $0.37 per share, supporting a 12–13% dividend yield.