NEW YORK--(BUSINESS WIRE)--August 05, 2026--
MFA Financial, Inc. (NYSE:MFA) today provided its financial results for the second quarter ended June 30, 2026:
Second Quarter 2026 Financial Results:
-- MFA generated GAAP net income to common stockholders and participating
securities for the second quarter of $36.2 million, or $0.35 per basic
common share and $0.34 per diluted common share.
-- Distributable earnings, a non-GAAP financial measure, were $12.2
million, or $0.12 per basic common share. Distributable earnings prior to
realized credit losses, a non-GAAP financial measure, were $36.7 million,
or $0.35 per basic common share.
-- GAAP book value at June 30, 2026 was $12.71 per common share. Economic
book value, a non-GAAP financial measure, was $13.20 per common share.
-- Total economic return was 2.6% for the second quarter.
-- MFA closed the quarter with $141.2 million of unrestricted cash and
$294.1 million of unpledged Agency MBS.
-- MFA paid a regular cash dividend of $0.36 per common share on July 31,
2026.
"We grew our investment portfolio, protected book value and made further progress on our strategic initiatives during the second quarter," said Craig Knutson, MFA's Chief Executive Officer. "Originations at Lima One grew by 44% to $316 million. We securitized or re-securitized over $800 million of loans. We resolved nearly $200 million of previously delinquent loans, driving our portfolio-wide default rate down to 7.0% from 7.8% at March 31. Although Distributable earnings were weighed down by realized losses incurred on several legacy multifamily loans, DE prior to realized credit losses rose to 35 cents, which we believe better reflects the underlying earnings power of our portfolio."
"We acquired over $1.6 billion of residential mortgage assets during the quarter," added Bryan Wulfsohn, President and Chief Investment Officer. "We purchased $462 million of Non-QM loans and increased our Agency MBS position to $4.1 billion. We sold $94 million of newly-originated SFR loans to third-party investors, generating $2.3 million in gain-on-sale income. Finally, we again repurchased over 500,000 shares of our common stock, bringing cumulative repurchases to 2 million shares since last year."
Q2 2026 Portfolio Activity
-- MFA's residential investment portfolio rose to $13.0 billion at June
30, 2026 from $12.5 billion at March 31, 2026.
-- MFA purchased $714.4 million of Agency MBS during the quarter, bringing
its Agency MBS position to $4.1 billion. MFA also entered into forward
contracts in the "to-be-announced" (TBA) market with a notional amount of
$178.0 million to acquire additional Agency MBS, bringing its TBA
position to a notional amount of $478.0 million at June 30, 2026.
-- Non-QM loan acquisitions totaled $462.3 million, bringing MFA's Non-QM
portfolio to $5.7 billion at June 30, 2026.
-- Lima One funded $184.7 million of new business purpose loans with a
maximum loan amount of $315.8 million. In addition, $84.9 million of
draws were funded on previously originated Transitional loans. Lima One
generated $8.4 million of mortgage banking income.
-- Portfolio runoff was $781.0 million. Asset dispositions included $94.5
million of newly-originated single-family rental (SFR) loans. MFA also
sold 76 REO properties in the second quarter for aggregate net proceeds
of $30.7 million.
-- 60+ day delinquencies (measured as a percentage of UPB) for MFA's
residential loan portfolio decreased to 7.0% at June 30, 2026 from 7.8%
at March 31, 2026.
-- MFA completed two loan securitizations during the quarter
collateralized by $817.4 million UPB of loans, bringing its total
securitized debt to approximately $6.2 billion.
-- MFA added a net $538.1 million of new interest rate hedges and
estimates the net effective duration of its investment portfolio was 0.94
years.
-- MFA's Debt/Net Equity Ratio was 6.6x while recourse leverage was 3.0x
at June 30, 2026.
Webcast
MFA Financial, Inc. plans to host a live audio webcast of its investor conference call on Wednesday, August 5, 2026, at 11:00 a.m. (Eastern Time) to discuss its second 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 June 30, 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 Seasoned Other,
Non-QM Single-family transitional transitional RPL/NPL Agency net
At June 30, 2026 loans rental loans loans loans loans MBS (1) Total
---------------------- ------- --------------- --------------- -------------- ---------- ------- ------ -------
(Dollars in Millions)
Asset Amount $ 5,671 $ 1,153 $ 654 $ 321 $ 920 $ 4,091 $ 619 $13,429
Financing Agreements
with
Non-mark-to-market
Collateral Provisions -- (16) (41) (14) -- -- -- (71)
Financing Agreements
with Mark-to-market
Collateral Provisions (683) (111) (314) (223) (78) (3,641) (115) (5,165)
Securitized Debt (4,356) (891) (200) -- (754) -- (2) (6,203)
Senior Notes and Other
secured financing -- -- -- -- -- -- (214) (214)
------ ----------- ----------- ---------- ------ ------ ---- ------
Net Equity Allocated $ 632 $ 135 $ 99 $ 84 $ 88 $ 450 $ 288 $ 1,776
====== =========== =========== ========== ====== ====== ==== ======
Debt/Net Equity Ratio 8.0 x 7.5 x 5.6 x 2.8 x 9.5 x 8.1 x 6.6 x
(2)
======= =============== =============== ============== ========== ======= =======
(1) Includes $141.2 million of cash and cash equivalents, $169.0 million of
restricted cash, $56.0 million of other securities, $49.1 million of
Other loans and $21.1 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
-----------------------------------------------------
June 30, 2026 March 31, 2026 June 30, 2025
------------------ ---------------- ---------------
Non-QM Loans
Net Yield (1) 5.79% 5.90% 5.79%
Cost of Funding
(2) (5.09)% (5.07)% (5.14)%
Impact of net
Swap carry (3) 0.28% 0.36% 0.70%
------------ --- ---------- --- ----------
Net Interest
Spread 0.98% 1.19% 1.35%
Business Purpose
Loans
Net Yield (1) 7.12% 7.12% 7.99%
Cost of Funding
(2) (5.42)% (5.54)% (6.07)%
Impact of net
Swap carry (3) 0.29% 0.32% 0.42%
------------ --- ---------- --- ----------
Net Interest
Spread 1.99% 1.90% 2.34%
Seasoned RPL/NPL
Loans
Net Yield (1) 7.74% 7.93% 8.69%
Cost of Funding
(2) (4.26)% (4.27)% (4.29)%
Impact of net
Swap carry (3) 0.36% 0.36% 0.40%
------------ --- ---------- --- ----------
Net Interest
Spread 3.84% 4.02% 4.80%
Total
Residential
Whole Loans
Net Yield (1) 6.30% 6.42% 6.85%
Cost of Funding
(2) (5.08)% (5.09)% (5.35)%
Impact of net
Swap carry (3) 0.29% 0.35% 0.58%
------------ --- ---------- --- ----------
Net Interest
Spread 1.51% 1.68% 2.08%
Securities, at
fair value
Net Yield (1) 5.41% 5.47% 6.60%
Cost of Funding
(2) (3.78)% (3.84)% (4.55)%
Impact of net
Swap carry (3) 0.57% 0.56% 1.05%
------------ --- ---------- --- ----------
Net Interest
Spread 2.20% 2.19% 3.10%
Total Balance
Sheet
Net Yield (1) 5.96% 6.08% 6.66%
Cost of Funding
(2) (4.77)% (4.84)% (5.32)%
Impact of net
Swap carry (3) 0.37% 0.40% 0.64%
------------ --- ---------- --- ----------
Net Interest
Spread 1.56% 1.64% 1.98%
============ === ========== === ==========
(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 June 30, 2026:
Table 3 - Investment Portfolio Activity Q2 2026
Acquisitions
March & June
31, Runoff Originations Other 30,
(In Millions) 2026 (1) (2) (3) 2026 Change
-------------- ------- ------ ------------- ------ ------- ----------
Residential
whole loans
and REO $ 8,922 $(632) $ 732 $(126) $ 8,896 $ (26)
Securities, at
fair value 3,586 (149) 714 (4) 4,147 561
------ ---- ------------ ---- ------ ---
Total $12,508 $(781) $ 1,446 $(130) $13,043 $ 535
====== ==== ============ ==== ====== ===
(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
------------------------ ---------------------- --------------------------
June 30, December June 30, December June 30, December 31,
(Dollars in Thousands) 2026 31, 2025 2026 31, 2025 2026 2025
Non-QM loans $ 530,198 $ 593,213 $5,141,822 $4,753,480 $5,672,020 $5,346,693
Business purpose loans:
Single-family rental
loans $ 78,747 $ 88,112 $1,075,637 $1,147,234 $1,154,384 $1,235,346
Single-family
transitional loans
(1) 7,044 7,051 648,719 711,294 655,763 718,345
Multifamily
transitional loans -- -- 320,882 489,637 320,882 489,637
--------- --------- --------- --------- --------- ---------
Total Business purpose
loans $ 85,791 $ 95,163 $2,045,238 $2,348,165 $2,131,029 $2,443,328
Seasoned RPL/NPL loans 396,206 414,676 528,951 564,340 925,157 979,016
Other loans -- -- 49,054 51,022 49,054 51,022
Allowance for Credit
Losses (9,393) (9,705) -- -- (9,393) (9,705)
--------- --------- --------- --------- --------- ---------
Total Residential whole
loans $1,002,802 $1,093,347 $7,765,065 $7,717,007 $8,767,867 $8,810,354
========= ========= ========= ========= ========= =========
Number of loans 4,661 4,941 18,772 18,824 23,433 23,765
(1) Includes $311.7 million and $300.2 million of loans collateralized by
new construction projects at origination as of June 30, 2026 and
December 31, 2025, respectively.
Table 5 - Yields and Average Balances/Residential Whole Loans
For the Three-Month Period Ended
-------------------------------------------------------------------------------------------------
June 30, 2026 March 31, 2026 June 30, 2025
------------------------------- ------------------------------- -------------------------------
Average Average Average Average Average Average
(Dollars in Thousands) Interest Balance Yield Interest Balance Yield Interest Balance Yield
Non-QM loans $ 83,019 $5,735,430 5.79% $ 81,539 $5,526,191 5.90% $ 70,267 $4,852,559 5.79%
Business purpose loans:
Single-family rental
loans $ 18,151 $1,199,977 6.05% $ 19,513 $1,237,745 6.31% $ 21,747 $1,349,448 6.45%
Single-family
transitional loans 15,817 683,649 9.25% 15,554 702,710 8.85% 23,726 969,259 9.79%
Multifamily
transitional loans 6,773 405,227 6.69% 8,449 504,127 6.70% 17,308 824,919 8.39%
------- --------- ----- ------- --------- ----- ------- --------- -----
Total business purpose
loans $ 40,741 $2,288,853 7.12% $ 43,516 $2,444,582 7.12% $ 62,781 $3,143,626 7.99%
Seasoned RPL/NPL loans 16,748 865,419 7.74% 17,573 886,001 7.93% 21,076 969,699 8.69%
Other loans 443 59,903 2.96% 463 60,608 3.06% 444 64,416 2.76%
------- --------- ----- ------- --------- ----- ------- --------- -----
Total Residential whole
loans $140,951 $8,949,605 6.30% $143,091 $8,917,382 6.42% $154,568 $9,030,300 6.85%
======= ========= ===== ======= ========= ===== ======= ========= =====
Table 6 - Credit-related Metrics/Residential Whole Loans
June 30, 2026
---------------------------------------------------------------------------------------------------------------------------------------------------------------------
Aging by UPB
------ -------- --- -------- ---------------------------------------- ---- ---
Past Due Days
----------------------------
Weighted Weighted
Unpaid Weighted Average Weighted Average
Principal Average Term to Average Original 60+ 60+
Asset Fair Balance Coupon Maturity LTV FICO DQ LTV
(Dollars In Thousands) Amount Value ("UPB") (1) (2) (Months) Ratio (3) (4) Current 30-59 60-89 90+ % (5)
------------------------ ---------- ---------- ---------- ---------- -------- ---------- -------- ---------- ------- ------- -------- -------- -------
Non-QM loans $5,670,728 $5,655,660 $5,684,786 6.70% 336 64% 740 $5,290,874 $153,057 $ 53,291 $187,564 4.2% 66%
Business purpose loans:
Single-family rental $1,153,464 $1,155,689 $1,166,676 6.35% 306 66% 741 $1,113,690 $ 23,882 $ 1,644 $ 27,460 2.5% 65%
Single-family
transitional (5) 654,221 654,585 671,699 10.09% 6 68% 754 559,111 20,782 13,167 78,639 13.7% 85%
Multifamily
transitional (5) 320,882 320,882 360,373 10.09% 2 90% 750 269,854 2,439 -- 88,080 24.4% 160%
--------- --------- --------- --------- ------- ------- -------
Total business purpose
loans $2,128,567 $2,131,156 $2,198,748 8.11% 70% $1,942,655 $ 47,103 $ 14,811 $194,179 9.5%
Seasoned RPL/NPL loans 919,518 934,422 1,042,205 5.07% 241 53% 646 756,263 105,823 35,606 144,513 17.3% 60%
Other loans 49,054 49,054 57,968 3.43% 302 62% 757 57,464 504 -- -- --% --%
--------- --------- --------- --------- ------- ------- -------
Residential whole loans,
total or weighted
average $8,767,867 $8,770,292 $8,983,707 6.85% 64% $8,047,256 $306,487 $103,708 $526,256 7.0%
========= ========= ========= ========= ======= ======= =======
(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 June 30, 2026, the gross coupon was 6.82% for
Non-QM loans, 6.37% for Single-family rental loans, 10.10% for
Single-family transitional loans, 10.10% for Multifamily transitional
loans, and 5.08% for Seasoned 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 June 30, 2026. All changes in value are measured as the percentage change from the projected portfolio value under the base interest rate scenario as of June 30, 2026.
Percentage Change in
Change in Interest Percentage Change in Total Stockholders'
Rates Net Portfolio Value Equity
---------------------- ---------------------- ---------------------
+100 Basis Point
Increase (1.29)% (10.34)%
+ 50 Basis Point
Increase (0.56)% (4.48)%
Actual as of June 30,
2026 --% --%
- 50 Basis Point
Decrease 0.39% 3.09%
-100 Basis Point
Decrease 0.60% 4.80%
MFA FINANCIAL, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Per Share June 30, December 31,
Amounts) 2026 2025
------------------------------------ ------------ -----------------
(Unaudited)
Assets:
Residential whole loans, net
($7,765,065 and $7,717,007 held at
fair value, respectively) (1) $ 8,767,868 $ 8,810,354
Securities, at fair value 4,147,194 3,360,280
Cash and cash equivalents 141,193 213,211
Restricted cash 169,029 173,457
Other assets 428,408 489,147
---------- ----------
Total Assets $13,653,692 $ 13,046,449
========== ==========
Liabilities:
Financing agreements ($5,812,397 and
$5,956,057 held at fair value,
respectively) $11,653,885 $ 10,940,014
Other liabilities 223,719 278,740
---------- ----------
Total Liabilities $11,877,604 $ 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; 8,278 and 8,125 shares
issued and outstanding, respectively
($206,960 and $203,132 aggregate
liquidation preference,
respectively) $ 83 $ 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; 101,088
and 101,663 shares issued and
outstanding, respectively 1,011 1,017
Additional paid-in capital, in excess
of par 3,718,716 3,718,350
Accumulated deficit (1,945,991) (1,895,541)
Accumulated other comprehensive
income 2,155 3,675
---------- ----------
Total Stockholders' Equity $ 1,776,088 $ 1,827,695
---------- ----------
Total Liabilities and
Stockholders' Equity $13,653,692 $ 13,046,449
========== ==========
(1) Includes approximately $7.2 billion and $7.6 billion of Residential
whole loans transferred to consolidated variable interest entities
("VIEs") at June 30, 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 Six Months Ended
June 30, June 30,
---------------------------- ------------------------------
(In Thousands, Except
Per Share Amounts) 2026 2025 2026 2025
--------------------- -------- -------- -------- --------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Interest Income:
Residential whole
loans $ 140,951 $ 154,568 $ 284,042 $ 305,878
Securities, at fair
value 52,770 28,778 98,523 53,448
Other interest-earning
assets 481 528 972 926
Cash and cash
equivalent
investments 2,572 4,470 5,163 8,597
-------- -------- -------- --------
Interest Income $ 196,774 $ 188,344 $ 388,700 $ 368,849
-------- -------- -------- --------
Interest Expense:
Asset-backed and other
collateralized
financing
arrangements $ 133,234 $ 122,523 $ 261,045 $ 240,954
Other interest expense 4,969 4,545 9,894 9,082
-------- -------- -------- --------
Interest Expense $ 138,203 $ 127,068 $ 270,939 $ 250,036
-------- -------- -------- --------
Net Interest Income $ 58,571 $ 61,276 $ 117,761 $ 118,813
-------- -------- -------- --------
Reversal/(Provision)
for Credit Losses on
Residential Whole
Loans $ 62 $ (791) $ 304 $ (936)
Reversal/(Provision)
for Credit Losses on
Other Assets -- -- -- --
-------- -------- -------- --------
Net Interest Income
after
Reversal/(Provision)
for Credit Losses $ 58,633 $ 60,485 $ 118,065 $ 117,877
Other Income/(Loss),
net:
Net gain/(loss) on
residential whole
loans measured at
fair value through
earnings $ (45,480) $ 23,799 $ (84,613) $ 74,449
Impairment and other
net gain/(loss) on
securities and other
portfolio
investments (3,850) 6,645 (42,120) 27,824
Net gain/(loss) on
real estate owned (1,491) (2,911) (4,472) (4,419)
Net gain/(loss) on
derivatives 44,625 (18,251) 76,686 (49,306)
Net gain/(loss) on
securitized debt
measured at fair
value through
earnings 25,268 (7,105) 45,113 (29,036)
Lima One mortgage
banking income 8,367 6,087 16,027 11,524
Net realized
gain/(loss) on
residential whole
loans held at
carrying value -- (343) -- (882)
Other, net 2,246 4,329 7,179 6,608
-------- -------- -------- --------
Other
Income/(Loss),
net $ 29,685 $ 12,250 $ 13,800 $ 36,762
-------- -------- -------- --------
Operating and Other
Expense:
Compensation and
benefits $ 17,992 $ 19,308 $ 40,151 $ 42,565
Other general and
administrative
expense 13,162 10,621 25,316 20,912
Loan servicing,
financing and other
related costs 10,066 8,584 19,984 15,836
Amortization of
intangible assets 300 800 600 1,600
-------- -------- -------- --------
Operating and Other
Expense $ 41,520 $ 39,313 $ 86,051 $ 80,913
-------- -------- -------- --------
Income/(loss) before
income taxes $ 46,798 $ 33,422 $ 45,814 $ 73,726
Provision for/(benefit
from) income taxes $ -- $ 238 $ -- $ (634)
-------- -------- -------- --------
Net Income/(Loss) $ 46,798 $ 33,184 $ 45,814 $ 74,360
Less Preferred Stock
Dividend Requirement $ 10,559 $ 10,560 $ 20,983 $ 18,779
-------- -------- -------- --------
Net Income/(Loss)
Available to
Common Stock and
Participating
Securities $ 36,239 $ 22,624 $ 24,831 $ 55,581
======== ======== ======== ========
Basic Earnings/(Loss)
per Common Share $ 0.35 $ 0.22 $ 0.23 $ 0.53
======== ======== ======== ========
Diluted
Earnings/(Loss) per
Common Share $ 0.34 $ 0.21 $ 0.23 $ 0.52
======== ======== ======== ========
Segment Reporting
At June 30, 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 June
30, 2026
Interest Income $ 155,380 $ 39,909 $ 1,485 $ 196,774
Interest Expense 108,287 25,339 4,577 138,203
---------- --------- ------- ----------
Net Interest
Income/(Expense) $ 47,093 $ 14,570 $ (3,092) $ 58,571
---------- --------- ------- ----------
Reversal/(Provision) for
Credit Losses on
Residential Whole
Loans 62 -- -- 62
Reversal/(Provision)
for Credit Losses on
Other Assets -- -- -- --
---------- --------- ------- ----------
Net Interest
Income/(Expense) after
Reversal/(Provision)
for Credit Losses $ 47,155 $ 14,570 $ (3,092) $ 58,633
---------- --------- ------- ----------
Net gain/(loss) on
residential whole loans
measured at fair value
through earnings $ (26,768) $ (18,712) $ -- $ (45,480)
Impairment and other net
gain/(loss) on
securities and other
portfolio investments (4,362) 11 501 (3,850)
Net gain on real estate
owned 534 (2,025) -- (1,491)
Net gain/(loss) on
derivatives 40,009 4,616 -- 44,625
Net gain/(loss) on
securitized debt
measured at fair value
through earnings 20,843 4,425 -- 25,268
Lima One mortgage
banking income -- 8,367 -- 8,367
Net realized
gain/(loss) on
residential whole loans
held at carrying value -- -- -- --
Other, net (326) 1,685 887 2,246
---------- --------- ------- ----------
Other Income/(Loss), net $ 29,930 $ (1,633) $ 1,388 $ 29,685
---------- --------- ------- ----------
Compensation and
benefits $ -- $ 8,926 $ 9,066 $ 17,992
Other general and
administrative expense -- 4,086 9,076 13,162
Loan servicing,
financing and other
related costs 3,780 2,169 4,117 10,066
Amortization of
intangible assets -- 300 -- 300
---------- --------- ------- ----------
Income/(loss) before
income taxes $ 73,305 $ (2,544) $(23,963) $ 46,798
Provision for/(benefit
from) income taxes -- -- -- --
---------- --------- ------- ----------
Net Income/(Loss) $ 73,305 $ (2,544) $(23,963) $ 46,798
Less Preferred Stock
Dividend Requirement $ -- $ -- $ 10,559 $ 10,559
---------- --------- ------- ----------
Net Income/(Loss)
Available to Common
Stock and Participating
Securities $ 73,305 $ (2,544) $(34,522) $ 36,239
========== ========= ======= ==========
Mortgage-
Related
(Dollars in Thousands) Assets Lima One Corporate Total
----------------------- ------------ ----------- --------- --------------
June 30, 2026
Total Assets $11,186,791 $2,299,954 $166,947 $13,653,692
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December 31, 2025
Total Assets $10,128,088 $2,632,740 $285,621 $13,046,449
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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. TBA dollar roll income, which represents the economic equivalent of interest income earned on Agency MBS, less an implied financing cost, is also included in Distributable Earnings. 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 June 30, March 31, December September June 30,
Share Amounts) 2026 2026 31, 2025 30, 2025 2025
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GAAP Net income/(loss) used in
the calculation of basic EPS $ 35,930 $(11,726) $ 43,402 $ 37,082 $ 22,424
Adjustments:
Unrealized and realized
gains and losses on:
Residential whole loans
held at fair value 21,016 34,761 (4,405) (41,293) (33,612)
Securities held at fair
value 4,362 38,872 (14,898) (17,798) (4,008)
Residential whole loans
and securities at
carrying value -- -- (1,399) (668) 343
Derivative instruments (34,508) (21,344) 657 14,826 32,565
Securitized debt held at
fair value (27,296) (22,901) (1,586) 21,303 3,712
Other portfolio
investments (512) (601) 582 462 (2,637)
Other adjustments:
TBA dollar roll income 985 -- -- -- --
Amortization of
intangible assets 300 300 300 300 800
Equity based
compensation 2,214 6,329 1,880 1,861 2,274
Securitization-related
transaction costs 4,100 3,926 2,584 3,712 1,890
Depreciation 5,647 3,466 1,045 1,328 1,087
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Total adjustments (23,692) 42,808 (15,240) (15,967) 2,414
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Distributable earnings $ 12,238 $ 31,082 $ 28,162 $ 21,115 $ 24,838
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Adjustment -- realized
credit losses on
Residential whole loans at
fair value, net of
recoveries 24,463 4,373 3,003 10,052 9,812
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Distributable earnings prior
to realized credit losses $ 36,701 $ 35,455 $ 31,165 $ 31,167 $ 34,650
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GAAP earnings/(loss) per basic
common share $ 0.35 $ (0.11) $ 0.42 $ 0.36 $ 0.22
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Distributable earnings per
basic common share $ 0.12 $ 0.30 $ 0.27 $ 0.20 $ 0.24
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Distributable earnings prior
to realized credit losses per
basic common share $ 0.35 $ 0.34 $ 0.30 $ 0.30 $ 0.33
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Weighted average common shares
for basic earnings per share 103,674 104,253 103,061 103,683 103,705
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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 June 30, March 31, December September June 30,
Share Amounts) 2026 2026 31, 2025 30, 2025 2025
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GAAP Total
Stockholders'
Equity $1,776.1 $1,779.4 $1,827.7 $1,821.5 $1,822.1
Preferred Stock,
liquidation
preference (491.6) (489.3) (485.3) (479.9) (475.0)
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GAAP
Stockholders'
Equity for book
value per
common share 1,284.5 1,290.1 1,342.4 1,341.6 1,347.1
Adjustments:
Fair value
adjustment to
Residential
whole loans, at
carrying value 2.4 7.6 10.1 8.7 1.8
Fair value
adjustment to
Securitized
debt, at
carrying value 47.5 45.2 45.7 48.5 57.1
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Stockholders'
Equity
including fair
value
adjustments to
Residential
whole loans and
Securitized
debt held at
carrying value
(Economic book
value) $1,334.4 $1,342.9 $1,398.2 $1,398.8 $1,406.0
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GAAP book value
per common
share $ 12.71 $ 12.70 $ 13.20 $ 13.13 $ 13.12
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Economic book
value per
common share $ 13.20 $ 13.22 $ 13.75 $ 13.69 $ 13.69
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Number of shares
of common stock
outstanding 101.1 101.6 101.7 102.2 102.7
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; 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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www.mfafinancial.com
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