NEW YORK--(BUSINESS WIRE)--February 18, 2026--
MFA Financial, Inc. (NYSE:MFA) today provided its financial results for the fourth quarter and full year ended December 31, 2025:
Fourth Quarter 2025 Financial Results:
-- MFA generated GAAP net income to common stockholders and participating
securities for the fourth quarter of $43.6 million, or $0.42 per basic
and diluted common share.
-- Distributable earnings, a non-GAAP financial measure, were $27.8
million, or $0.27 per basic common share. MFA paid a regular cash
dividend of $0.36 per common share on January 30, 2026.
-- GAAP book value at December 31, 2025 was $13.20 per common share.
Economic book value, a non-GAAP financial measure, was $13.75 per common
share.
-- Total economic return was 3.1% for the fourth quarter.
-- MFA closed the quarter with unrestricted cash of $213.2 million.
Full Year 2025 Highlights:
-- GAAP net income to common stockholders and participating securities was
$136.5 million, or $1.31 per basic common share and $1.30 per diluted
common share, up from $86.4 million, or $0.83 per basic common share and
$0.82 per diluted common share, in 2024.
-- Distributable earnings, a non-GAAP financial measure, were $104.0
million, or $1.00 per common share in 2025. MFA paid quarterly dividends
of $0.36 per common share throughout 2025, totaling $1.44 per share.
-- Total economic return was 9.0% for 2025.
-- Loan acquisition activity of $2.7 billion during 2025 included $1.8
billion of Non-QM loans, $655.7 million of Single-family transitional
loans (including draws), $235.4 million of Single-family rental (SFR)
loans and $14.8 million of draws on previously originated Multifamily
transitional loans.
-- MFA completed five securitizations in 2025 collateralized by $1.8
billion unpaid principal balance $(UPB)$ of Non-QM loans.
-- 60+ day delinquencies (measured as a percentage of UPB) for MFA's
residential loan portfolio declined to 7.1% at December 31, 2025 from
7.5% at December 31, 2024.
-- MFA purchased $2.1 billion of Agency MBS throughout 2025.
-- Net interest income rose to $231.1 million from $202.7 million in
2024.
-- Lima One mortgage banking income totaled $22.8 million.
-- MFA repurchased 1,026,117 shares of common stock during 2025.
"We continued to execute on our strategic initiatives during the fourth quarter," said Craig Knutson, MFA's Chief Executive Officer. "We acquired $1.2 billion of Agency MBS and $443 million of Non-QM loans, and Lima One originated $226 million of new business purpose loans. We deployed approximately $100 million of excess cash on our balance sheet into our target asset classes. In addition, we continued to reduce operating expenses, resolve non-performing loans, grow the Lima One sales force and repurchase our common stock at accretive levels. These efforts resulted in a total economic return of 3.1% for the quarter and 9.0% for the year."
Reflecting on the year, Bryan Wulfsohn, President and Chief Investment Officer, added: "We made approximately $4.8 billion of investments in our target asset classes throughout 2025. We significantly grew our Non-QM loan and Agency MBS portfolios, and we profitably sold $219 million of newly-originated rental term loans to third-party investors. Although our Distributable earnings this year were weighed down by credit losses realized on certain legacy business purpose loans, we believe our investment portfolio is well-positioned to deliver strong returns moving forward."
Q4 2025 Portfolio Activity
-- MFA's residential investment portfolio rose to $12.3 billion at
December 31, 2025 from $11.2 billion at September 30, 2025.
-- MFA added $1.2 billion of Agency MBS during the quarter, bringing its
Agency MBS position to $3.3 billion.
-- Non-QM loan acquisitions totaled $443.5 million, bringing MFA's Non-QM
portfolio to $5.3 billion at December 31, 2025.
-- Lima One funded $145.3 million of new business purpose loans with a
maximum loan amount of $226.4 million. Further, $69.5 million of draws
were funded on previously originated Transitional loans. Lima One
generated $5.7 million of mortgage banking income.
-- Portfolio runoff was $735.0 million. Asset dispositions included $45.4
million of newly-originated SFR loans, $24.6 million of credit risk
transfer $(CRT)$ securities and $4.0 million of delinquent Transitional
loans. MFA also sold 114 REO properties in the fourth quarter for
aggregate net proceeds of $22.4 million.
-- 60+ day delinquencies (measured as a percentage of UPB) for MFA's
residential loan portfolio increased to 7.1% at December 31, 2025 from
6.8% at September 30, 2025.
-- MFA completed one loan securitization during the quarter collateralized
by $445.9 million UPB of Non-QM loans, bringing its total securitized
debt to approximately $6.3 billion.
-- MFA added a net $706.9 million of new interest rate hedges, maintaining
the estimated net effective duration of its investment portfolio at 0.98
years.
-- MFA's Debt/Net Equity Ratio was 6.0x while recourse leverage was 2.5x
at December 31, 2025.
New Stock Repurchase Program
MFA also announced today that its Board of Directors has authorized a new $200 million stock repurchase program for the Company's common stock, which will be in effect through the end of 2028. The new program supersedes the Company's prior repurchase program, which expired at the end of 2025.
The new stock repurchase program does not require the purchase of any minimum number of shares. The timing and extent to which MFA repurchases its shares will depend upon, among other things, market conditions, share price, liquidity, regulatory requirements and other factors, and repurchases may be commenced or suspended at any time without prior notice. Acquisitions under the stock repurchase program may be made in the open market, through privately negotiated transactions or block trades or other means, in accordance with applicable securities laws (including, in MFA's discretion, through the use of one or more plans adopted under Rule 10b5-1 promulgated under the Securities Exchange Act of 1934, as amended).
Webcast
MFA Financial, Inc. plans to host a live audio webcast of its investor conference call on Wednesday, February 18, 2026, at 11:00 a.m. (Eastern Time) to discuss its fourth quarter 2025 financial results. The live audio webcast will be accessible to the general public over the internet at http://www.mfafinancial.com. Earnings presentation materials will be posted on the MFA website prior to the conference call and an audio replay will be available on the website following the call.
About MFA Financial, Inc.
MFA Financial, Inc. (NYSE: MFA) is a leading specialty finance company that invests in residential mortgage loans, residential mortgage-backed securities and other real estate assets. Through its wholly-owned subsidiary, Lima One Capital, MFA also originates and services business purpose loans for real estate investors. MFA has distributed 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 December 31, 2025, and the yield on average interest-earning assets, average cost of funds, impact of net Swap carry and net interest rate spread for the various asset types.
Table 1 - Asset Allocation
Single-family Multifamily Legacy Other,
Non-QM Single-family transitional transitional RPL/NPL Agency net
At December 31, 2025 loans rental loans loans loans loans MBS (1) Total
---------------------- -------- ----------------- ----------------- ---------------- --------- -------- ------ ----------
(Dollars in Millions)
Asset Amount $ 5,345 $ 1,234 $ 717 $ 490 $ 973 $ 3,303 $ 706 $12,768
Financing Agreements
with
Non-mark-to-market
Collateral Provisions -- (7) (47) (28) -- -- -- (82)
Financing Agreements
with Mark-to-market
Collateral Provisions (537) (263) (198) (189) (79) (2,938) (109) (4,313)
Securitized Debt (4,204) (788) (367) (159) (812) -- (6) (6,336)
Senior Notes and Other
secured financing -- -- -- -- -- -- (209) (209)
------ --- ------- --- --- ------ ---- ----- ----- ---- ------ ---- ------
Net Equity Allocated $ 604 $ 176 $ 105 $ 114 $ 82 $ 365 $ 382 $ 1,828
====== === ======= === === ====== ==== ===== ===== ==== ====== ==== ======
Debt/Net Equity Ratio 7.8x 6.0x 5.8x 3.3x 10.9x 8.0x 6.0x
(2)
======= ============ === =========== ==== ========= ===== ======== ======= =======
(1) Includes $213.2 million of cash and cash equivalents, $173.5 million of
restricted cash, $57.1 million of other securities, $51.0 million of
Other loans and $20.2 million of capital contributions made to loan
origination partners, as well as other assets and other liabilities.
(2) Total Debt/Net Equity ratio represents the sum of borrowings under our
financing agreements as a multiple of net equity allocated.
Table 2 - Net Interest Spread
For the Three-Month Period Ended
----------------------------------------------------
December 31, September 30, December 31,
2025 2025 2024
---------------- ---------------- ----------------
Non-QM Loans
Net Yield (1) 5.96% 5.95% 5.63%
Cost of Funding
(2) (5.13)% (5.21)% (5.12)%
Impact of net Swap
carry (3) 0.49% 0.62% 1.36%
---------------- ---------------- ----------------
Net Interest
Spread 1.32% 1.36% 1.87%
Business Purpose
Loans
Net Yield (1) 7.50% 7.88% 7.73%
Cost of Funding
(2) (5.82)% (6.03)% (6.39)%
Impact of net Swap
carry (3) 0.44% 0.49% 0.80%
---------------- ---------------- ----------------
Net Interest
Spread 2.12% 2.34% 2.14%
Legacy RPL/NPL
Loans
Net Yield (1) 7.42% 8.55% 7.52%
Cost of Funding
(2) (4.29)% (4.32)% (4.23)%
Impact of net Swap
carry (3) 0.48% 0.52% 0.19%
---------------- ---------------- ----------------
Net Interest
Spread 3.61% 4.75% 3.48%
Total Residential
Whole Loans
Net Yield (1) 6.53% 6.81% 6.65%
Cost of Funding
(2) (5.23)% (5.36)% (5.51)%
Impact of net Swap
carry (3) 0.48% 0.58% 1.01%
---------------- ---------------- ----------------
Net Interest
Spread 1.78% 2.03% 2.15%
Securities, at
fair value
Net Yield (1) 5.56% 5.79% 6.05%
Cost of Funding
(2) (4.18)% (4.50)% (5.02)%
Impact of net Swap
carry (3) 0.79% 1.05% 1.68%
---------------- ---------------- ----------------
Net Interest
Spread 2.17% 2.34% 2.71%
Total Balance
Sheet
Net Yield (1) 6.20% 6.50% 6.64%
Cost of Funding
(2) (5.05)% (5.29)% (5.78)%
Impact of net Swap
carry (3) 0.54% 0.65% 1.24%
---------------- ---------------- ----------------
Net Interest
Spread 1.69% 1.86% 2.10%
================ ================ ================
(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 December 31, 2025:
Table 3 - Investment Portfolio Activity Q4 2025
Acquisitions
&
September Runoff Originations Other December
(In Millions) 30, 2025 (1) (2) (3) 31, 2025 Change
-------------- ---------- ------ ------------- ----- --------- ---------
Residential
whole loans
and REO $ 8,952 $(618) $ 658 $(47) $ 8,945 $ (7)
Securities, at
fair value 2,260 (117) 1,228 (11) 3,360 1,100
--------- ---- ------------ --- -------- -----
Total $ 11,212 $(735) $ 1,886 $(58) $ 12,305 $1,093
========= ==== ============ === ======== =====
(1) Primarily includes principal repayments and sales of REO.
(2) Includes draws on previously originated Transitional loans.
(3) Primarily includes loan sales, changes in fair value and changes in the
allowance for credit losses.
The following tables present information on our investments in residential whole loans:
Table 4 - Portfolio Composition/Residential Whole Loans
Held at Carrying Value Held at Fair Value Total
------------------------ ---------------------- --------------------------
December December December December December December 31,
(Dollars in Thousands) 31, 2025 31, 2024 31, 2025 31, 2024 31, 2025 2024
Non-QM loans $ 593,213 $ 722,392 $4,753,480 $3,568,694 $5,346,693 $4,291,086
Business purpose loans:
Single-family rental
loans $ 88,112 $ 108,203 $1,147,234 $1,248,197 $1,235,346 $1,356,400
Single-family
transitional loans
(1) 7,051 22,430 711,294 1,078,425 718,345 1,100,855
Multifamily
transitional loans -- -- 489,637 938,926 489,637 938,926
--------- --------- --------- --------- --------- ---------
Total Business purpose
loans $ 95,163 $ 130,633 $2,348,165 $3,265,548 $2,443,328 $3,396,181
Legacy RPL/NPL loans 414,676 457,654 564,340 624,895 979,016 1,082,549
Other loans -- -- 51,022 52,073 51,022 52,073
Allowance for Credit
Losses (9,705) (10,665) -- -- (9,705) (10,665)
--------- --------- --------- --------- --------- ---------
Total Residential whole
loans $1,093,347 $1,300,014 $7,717,007 $7,511,210 $8,810,354 $8,811,224
========= ========= ========= ========= ========= =========
Number of loans 4,941 5,582 18,824 18,588 23,765 24,170
(1) Includes $300.2 million and $442.4 million of loans collateralized by
new construction projects at origination as of December 31, 2025 and
December 31, 2024, respectively.
Table 5 - Yields and Average Balances/Residential Whole Loans
For the Three-Month Period Ended
-------------------------------------------------------------------------------------------
December 31, 2025 September 30, 2025 December 31, 2024
----------------------------- ----------------------------- -----------------------------
Average Average Average Average Average Average
(Dollars in Thousands) Interest Balance Yield Interest Balance Yield Interest Balance Yield
Non-QM loans $ 79,960 $5,369,775 5.96% $ 76,742 $5,162,278 5.95% $ 62,885 $4,464,657 5.63%
Business purpose loans:
Single-family rental
loans $ 19,611 $1,265,698 6.20% $ 21,636 $1,302,703 6.64% $ 23,124 $1,474,552 6.27%
Single-family
transitional loans 17,398 768,729 9.05% 18,991 835,895 9.09% 26,733 1,125,631 9.50%
Multifamily
transitional loans 12,123 586,047 8.27% 15,356 704,298 8.72% 20,474 1,040,093 7.87%
------- --------- ------- ------- --------- ------- ------- --------- -------
Total business purpose
loans $ 49,132 $2,620,474 7.50% $ 55,983 $2,842,896 7.88% $ 70,331 $3,640,276 7.73%
Legacy RPL/NPL loans 16,933 912,422 7.42% 20,086 939,653 8.55% 19,085 1,014,917 7.52%
Other loans 418 61,696 2.71% 479 62,786 3.05% 467 66,186 2.82%
------- --------- ------- ------- --------- ------- ------- --------- -------
Total Residential whole
loans $146,443 $8,964,367 6.53% $153,290 $9,007,613 6.81% $152,768 $9,186,036 6.65%
======= ========= ======= ======= ========= ======= ======= ========= =======
Table 6 - Credit-related Metrics/Residential Whole Loans
December 31, 2025
-----------------------------------------------------------------------------------------------------------------------------------------------------------
Aging by UPB
-------- -------- -------- -------- ---------------------------------------- ----- ----
Past Due Days
----------------------------
Weighted Weighted Weighted
Unpaid Weighted Average Average Average
Principal Average Term to LTV Original 60+ 60+
Asset Fair Balance Coupon Maturity Ratio FICO DQ LTV
(Dollars In Thousands) Amount Value ("UPB") (1) (2) (Months) (3) (4) Current 30-59 60-89 90+ % (5)
------------------------ ---------- ---------- ---------- -------- -------- -------- -------- ---------- -------- -------- -------- ----- ----
Non-QM loans $5,344,968 $5,332,533 $5,322,321 6.74% 337 64% 738 $4,929,485 $170,509 $ 47,154 $175,173 4.2% 64%
Business purpose loans:
Single-family rental $1,234,428 $1,237,464 $1,246,745 6.34% 311 66% 740 $1,193,041 $ 22,309 $ 4,165 $ 27,230 2.5% 68%
Single-family
transitional (5) 717,303 717,702 732,059 10.31% 6 69% 750 599,798 48,180 2,535 81,546 11.5% 83%
Multifamily
transitional (5) 489,637 489,637 531,804 10.17% 1 64% 749 399,686 44,523 32,905 54,690 16.5% 68%
--------- --------- --------- --------- ------- ------- -------
Total business purpose
loans $2,441,368 $2,444,803 $2,510,608 8.31% 66% $2,192,525 $115,012 $ 39,605 $163,466 8.1%
Legacy RPL/NPL loans 972,996 992,120 1,097,698 5.09% 245 54% 646 757,826 125,621 47,620 166,631 19.5% 60%
Other loans 51,022 51,022 59,283 3.43% 308 63% 757 59,283 -- -- -- --% --%
--------- --------- --------- --------- ------- ------- -------
Residential whole loans,
total or weighted
average $8,810,354 $8,820,478 $8,989,910 6.98% 64% $7,939,119 $411,142 $134,379 $505,270 7.1%
========= ========= ========= ========= ======= ======= =======
(1) Weighted average is calculated based on the interest bearing principal
balance of each loan within the related category. For loans acquired
with servicing rights released by the seller, interest rates included
in the calculation do not reflect loan servicing fees. For loans
acquired with servicing rights retained by the seller, interest rates
included in the calculation are net of servicing fees.
(2) For the quarter ended December 31, 2025, the gross coupon was 6.88% for
Non-QM loans, 6.37% for Single-family rental loans, 10.32% for
Single-family transitional loans, 10.18% for Multifamily transitional
loans, and 5.10% for Legacy RPL/NPL loans.
(3) LTV represents the ratio of the total unpaid principal balance of the
loan to the estimated value of the collateral securing the related loan
as of the most recent date available, which may be the origination
date. Excluded from the calculation of weighted average are certain low
value loans secured by vacant lots, for which the LTV ratio is not
meaningful.
(4) Excludes loans for which no Fair Isaac Corporation ("FICO") score is
available.
(5) For Single-family and Multifamily transitional loans, the LTV presented
is the ratio of the maximum unpaid principal balance of the loan,
including unfunded commitments, to the estimated "after repaired" value
of the collateral securing the related loan, where available. At
December 31, 2025, for certain Single-family and Multifamily
Transitional loans totaling $270.9 million and $121.1 million,
respectively, an after repaired valuation was not available. For these
loans, the weighted average LTV is calculated based on the current
unpaid principal balance and the as-is value of the collateral securing
the related loan.
Table 7 - Shock Table
The information presented in the following "Shock Table" projects the potential impact of sudden parallel changes in interest rates on our portfolio, including the impact of Swaps and securitized debt and other fixed rate debt, based on the assets in our investment portfolio as of December 31, 2025. All changes in value are measured as the percentage change from the projected portfolio value under the base interest rate scenario as of December 31, 2025.
Percentage Change in
Percentage Change in Total Stockholders'
Change in Interest Rates Net Portfolio Value Equity
------------------------ ---------------------- -----------------------
+100 Basis Point Increase (1.35)% (9.58)%
+ 50 Basis Point Increase (0.58)% (4.15)%
Actual as of December
31, 2025 --% --%
- 50 Basis Point Decrease 0.40% 2.85%
-100 Basis Point Decrease 0.62% 4.42%
MFA FINANCIAL, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Per Share December 31, December 31,
Amounts) 2025 2024
----------------------------------- --------------- -----------------
Assets:
Residential whole loans, net
($7,717,007 and $7,511,210 held at
fair value, respectively) (1) $ 8,810,354 $ 8,811,224
Securities, at fair value 3,360,280 1,537,513
Cash and cash equivalents 213,211 338,931
Restricted cash 173,457 262,381
Other assets 489,147 459,555
---------- ----------
Total Assets $ 13,046,449 $ 11,409,604
========== ==========
Liabilities:
Financing agreements ($5,956,057 and
$5,516,005 held at fair value,
respectively) $ 10,940,014 $ 9,155,461
Other liabilities 278,740 412,351
---------- ----------
Total Liabilities $ 11,218,754 $ 9,567,812
---------- ----------
Stockholders' Equity:
Preferred stock, $0.01 par value;
7.5% Series B cumulative
redeemable; 12,050 and 8,050 shares
authorized, respectively; 8,125 and
8,000 shares issued and
outstanding, respectively ($203,132
and $200,000 aggregate liquidation
preference, respectively) $ 81 $ 80
Preferred stock, $0.01 par value;
6.5% Series C fixed-to-floating
rate cumulative redeemable; 16,650
and 12,650 shares authorized,
respectively; 11,286 and 11,000
shares issued and outstanding,
respectively ($282,148 and $275,000
aggregate liquidation preference,
respectively) 113 110
Common stock, $0.01 par value;
866,300 and 874,300 shares
authorized, respectively; 101,663
and 102,083 shares issued and
outstanding, respectively 1,017 1,021
Additional paid-in capital, in
excess of par 3,718,350 3,711,046
Accumulated deficit (1,895,541) (1,879,941)
Accumulated other comprehensive
income 3,675 9,476
---------- ----------
Total Stockholders' Equity $ 1,827,695 $ 1,841,792
---------- ----------
Total Liabilities and
Stockholders' Equity $ 13,046,449 $ 11,409,604
========== ==========
(1) Includes approximately $7.6 billion and $6.9 billion of Residential
whole loans transferred to consolidated variable interest entities
("VIEs") at December 31, 2025 and December 31, 2024, respectively. Such
assets can be used only to settle the obligations of each respective
VIE.
MFA FINANCIAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Twelve Months Ended
December 31, December 31,
---------------------------- ----------------------
(In Thousands, Except
Per Share Amounts) 2025 2024 2025 2024
--------------------- -------- -------- ------- -------
(Unaudited) (Unaudited)
Interest Income:
Residential whole
loans $ 146,443 $ 152,768 $605,611 $633,556
Securities, at fair
value 40,102 19,746 121,258 61,110
Other interest-earning
assets 523 717 1,964 7,058
Cash and cash
equivalent
investments 3,356 5,097 16,231 22,241
-------- -------- ------- -------
Interest Income $ 190,424 $ 178,328 $745,064 $723,965
-------- -------- ------- -------
Interest Expense:
Asset-backed and other
collateralized
financing
arrangements $ 130,192 $ 122,996 $495,549 $500,026
Other interest expense 4,751 4,530 18,431 21,208
-------- -------- ------- -------
Interest Expense $ 134,943 $ 127,526 $513,980 $521,234
-------- -------- ------- -------
Net Interest Income $ 55,481 $ 50,802 $231,084 $202,731
-------- -------- ------- -------
Reversal/(Provision)
for Credit Losses on
Residential Whole
Loans $ 276 $ (398) $ (936) $ 3,084
Reversal/(Provision)
for Credit Losses on
Other Assets -- -- -- (1,135)
-------- -------- ------- -------
Net Interest Income
after
Reversal/(Provision)
for Credit Losses $ 55,757 $ 50,404 $230,148 $204,680
Other Income/(Loss),
net:
Net gain/(loss) on
residential whole
loans measured at
fair value through
earnings $ 4,405 $ (102,339) $133,689 $ 45,994
Impairment and other
net gain/(loss) on
securities and other
portfolio
investments 15,715 (26,179) 61,543 (10,869)
Net gain/(loss) on
real estate owned (2,641) 24 (6,760) 3,136
Net gain/(loss) on
derivatives used for
risk management
purposes 13,562 69,293 (35,544) 78,503
Net gain/(loss) on
securitized debt
measured at fair
value through
earnings (1,534) 43,564 (55,216) (64,813)
Lima One mortgage
banking income 5,730 8,477 22,848 32,944
Net realized
gain/(loss) on
residential whole
loans held at
carrying value -- -- (882) 418
Other, net (2,003) 52 (18,723) 115
-------- -------- ------- -------
Other
Income/(Loss),
net $ 33,234 $ (7,108) $100,955 $ 85,428
-------- -------- ------- -------
Operating and Other
Expense:
Compensation and
benefits $ 16,919 $ 18,021 $ 77,669 $ 87,654
Other general and
administrative
expense 10,059 9,993 41,740 44,254
Loan servicing,
financing and other
related costs 7,394 11,044 33,446 35,306
Amortization of
intangible assets 300 800 2,200 3,200
-------- -------- ------- -------
Operating and Other
Expense $ 34,672 $ 39,858 $155,055 $170,414
-------- -------- ------- -------
Income/(loss) before
income taxes $ 54,319 $ 3,438 $176,048 $119,694
Provision for/(benefit
from) income taxes $ -- $ (2,471) $ (735) $ 443
-------- -------- ------- -------
Net Income/(Loss) $ 54,319 $ 5,909 $176,783 $119,251
Less Preferred Stock
Dividend Requirement $ 10,705 $ 8,219 $ 40,318 $ 32,875
-------- -------- ------- -------
Net Income/(Loss)
Available to
Common Stock and
Participating
Securities $ 43,614 $ (2,310) $136,465 $ 86,376
======== ======== ======= =======
Basic Earnings/(Loss)
per Common Share $ 0.42 $ (0.02) $ 1.31 $ 0.83
======== ======== ======= =======
Diluted
Earnings/(Loss) per
Common Share $ 0.42 $ (0.02) $ 1.30 $ 0.82
======== ======== ======= =======
Segment Reporting
At December 31, 2025, the Company's reportable segments include (i) mortgage-related assets and (ii) Lima One. The Corporate column in the table below primarily consists of corporate cash and related interest income, investments in loan originators and related economics, general and administrative expenses not directly attributable to Lima One, interest expense on unsecured senior notes, securitization issuance costs, and preferred stock dividends.
The following tables summarize segment financial information, which in total reconciles to the same data for the Company as a whole:
Mortgage-
Related
(In Thousands) Assets Lima One Corporate Total
--------------------- --------- -------- --------- -----------
Three months ended
December 31, 2025
Interest Income $140,273 $48,152 $ 1,999 $190,424
Interest Expense 99,401 30,982 4,560 134,943
------- ------ ------- -------
Net Interest
Income/(Expense) $ 40,872 $17,170 $ (2,561) $ 55,481
------- ------ ------- -------
Reversal/(Provision)
for Credit Losses on
Residential Whole
Loans 276 -- -- 276
Reversal/(Provision)
for Credit Losses on
Other Assets -- -- -- --
------- ------ ------- -------
Net Interest
Income/(Expense)
after
Reversal/(Provision)
for Credit Losses $ 41,148 $17,170 $ (2,561) $ 55,757
------- ------ ------- -------
Net gain/(loss) on
residential whole
loans measured at
fair value through
earnings $ 13,223 $(8,818) $ -- $ 4,405
Impairment and other
net gain/(loss) on
securities and other
portfolio
investments 15,712 3 -- 15,715
Net gain on real
estate owned 794 (3,435) -- (2,641)
Net gain/(loss) on
derivatives used for
risk management
purposes 11,933 1,629 -- 13,562
Net gain/(loss) on
securitized debt
measured at fair
value through
earnings (3,175) 1,641 -- (1,534)
Lima One mortgage
banking income -- 5,730 -- 5,730
Net realized
gain/(loss) on
residential whole
loans held at
carrying value -- -- -- --
Other, net (72) (1,514) (417) (2,003)
------- ------ ------- -------
Other Income/(Loss),
net $ 38,415 $(4,764) $ (417) $ 33,234
------- ------ ------- -------
Compensation and
benefits $ -- $ 9,081 $ 7,838 $ 16,919
Other general and
administrative
expense -- 4,529 5,530 10,059
Loan servicing,
financing and other
related costs 3,694 1,417 2,283 7,394
Amortization of
intangible assets -- 300 -- 300
------- ------ ------- -------
Income/(loss) before
income taxes $ 75,869 $(2,921) $(18,629) $ 54,319
Provision
for/(benefit from)
income taxes -- -- -- --
------- ------ ------- -------
Net Income/(Loss) $ 75,869 $(2,921) $(18,629) $ 54,319
Less Preferred Stock
Dividend Requirement $ -- $ -- $ 10,705 $ 10,705
------- ------ ------- -------
Net Income/(Loss)
Available to Common
Stock and
Participating
Securities $ 75,869 $(2,921) $(29,334) $ 43,614
======= ====== ======= =======
Mortgage-
Related
(Dollars in Thousands) Assets Lima One Corporate Total
----------------------- ----------- ---------- ----------- -----------
December 31, 2025
Total Assets $10,128,088 $2,632,740 $ 285,621 $13,046,449
========== ========= ======= ==========
December 31, 2024
Total Assets $ 7,395,925 $3,632,472 $ 381,207 $11,409,604
========== ========= ======= ==========
Reconciliation of GAAP Net Income to non-GAAP Distributable Earnings
"Distributable earnings" is a non-GAAP financial measure of our operating performance, within the meaning of Regulation G and Item 10(e) of Regulation S-K, as promulgated by the Securities and Exchange Commission. Distributable earnings is determined by adjusting GAAP net income/(loss) by removing certain unrealized gains and losses, primarily on residential mortgage investments, associated debt, and hedges that are, in each case, accounted for at fair value through earnings, certain realized gains and losses, as well as certain non-cash expenses and securitization-related transaction costs. Realized gains and losses arising from loans sold to third-parties by Lima One shortly after the origination of such loans are included in Distributable earnings. The transaction costs are primarily comprised of costs only incurred at the time of execution of our securitizations and include costs such as underwriting fees, legal fees, diligence fees, bank fees and other similar transaction related expenses. These costs are all incurred prior to or at the execution of our securitizations and do not recur. Recurring expenses, such as servicing fees, custodial fees, trustee fees and other similar ongoing fees are not excluded from Distributable earnings. Management believes that the adjustments made to GAAP earnings result in the removal of (i) income or expenses that are not reflective of the longer term performance of our investment portfolio, (ii) certain non-cash expenses, and (iii) expense items required to be recognized solely due to the election of the fair value option on certain related residential mortgage assets and associated liabilities. Distributable earnings is one of the factors that our Board of Directors considers when evaluating distributions to our shareholders. Accordingly, we believe that the adjustments to compute Distributable earnings specified below provide investors and analysts with additional information to evaluate our financial results.
Distributable earnings should be used in conjunction with results presented in accordance with GAAP. Distributable earnings does not represent and should not be considered as a substitute for net income or cash flows from operating activities, each as determined in accordance with GAAP, and our calculation of this measure may not be comparable to similarly titled measures reported by other companies.
The following table provides a reconciliation of our GAAP net income/(loss) used in the calculation of basic EPS to our non-GAAP Distributable earnings for the quarterly periods below:
Quarter Ended
-------------------------------------------------------
(In Thousands, Except Per December September June 30, March 31, December
Share Amounts) 31, 2025 30, 2025 2025 2025 31, 2024
------------------------------ --------- --------- --------- --------- -----------
GAAP Net income/(loss) used in
the calculation of basic EPS $ 43,402 $ 37,082 $ 22,424 $ 32,751 $ (2,396)
Adjustments:
Unrealized and realized
gains and losses on:
Residential whole loans
held at fair value (4,405) (41,293) (33,612) (54,380) 102,339
Securities held at fair
value (14,313) (17,310) (4,008) (20,201) 26,273
Residential whole loans
and securities at
carrying value (1,399) (668) 343 305 --
Interest rate swaps and
ERIS swap futures 657 14,826 32,565 44,842 (46,632)
Securitized debt held at
fair value (1,586) 21,303 3,712 18,575 (47,267)
Other portfolio
investments (3) (26) (2,637) (744) (94)
Expense items:
Amortization of
intangible assets 300 300 800 800 800
Equity based
compensation 1,880 1,861 2,274 6,052 1,637
Securitization-related
transaction costs 2,188 3,550 1,753 1,696 5,252
Depreciation 1,045 1,328 1,087 879 938
------- ------- ------- ------- -------
Total adjustments (15,636) (16,129) 2,277 (2,176) 43,246
------- ------- ------- ------- -------
Distributable earnings $ 27,766 $ 20,953 $ 24,701 $ 30,575 $ 40,850
======= ======= ======= ======= =======
GAAP earnings/(loss) per basic
common share $ 0.42 $ 0.36 $ 0.22 $ 0.32 $ (0.02)
======= ======= ======= ======= =======
Distributable earnings per
basic common share $ 0.27 $ 0.20 $ 0.24 $ 0.29 $ 0.39
======= ======= ======= ======= =======
Weighted average common shares
for basic earnings per share 103,061 103,683 103,705 103,777 103,675
======= ======= ======= ======= =======
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 December September June 30, March 31, December
Share Amounts) 31, 2025 30, 2025 2025 2025 31, 2024
--------------- --------- --------- --------- --------- -----------
GAAP Total
Stockholders'
Equity $1,827.7 $1,821.5 $1,822.1 $1,838.4 $1,841.8
Preferred Stock,
liquidation
preference (485.3) (479.9) (475.0) (475.0) (475.0)
------- ------- ------- ------- -------
GAAP
Stockholders'
Equity for book
value per
common share 1,342.4 1,341.6 1,347.1 1,363.4 1,366.8
Adjustments:
Fair value
adjustment to
Residential
whole loans, at
carrying value 10.1 8.7 1.8 (6.3) (15.3)
Fair value
adjustment to
Securitized
debt, at
carrying value 45.7 48.5 57.1 63.1 70.3
------- ------- ------- ------- -------
Stockholders'
Equity
including fair
value
adjustments to
Residential
whole loans and
Securitized
debt held at
carrying value
(Economic book
value) $1,398.2 $1,398.8 $1,406.0 $1,420.2 $1,421.8
======= ======= ======= ======= =======
GAAP book value
per common
share $ 13.20 $ 13.13 $ 13.12 $ 13.28 $ 13.39
======= ======= ======= ======= =======
Economic book
value per
common share $ 13.75 $ 13.69 $ 13.69 $ 13.84 $ 13.93
======= ======= ======= ======= =======
Number of shares
of common stock
outstanding 101.7 102.2 102.7 102.7 102.1
Cautionary Note Regarding Forward-Looking Statements
When used in this press release or other written or oral communications, statements that are not historical in nature, including those containing words such as "will," "believe," "expect," "anticipate," "estimate," "plan," "continue," "intend," "should," "could," "would," "may," the negative of these words or similar expressions, are intended to identify "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and, as such, may involve known and unknown risks, uncertainties and assumptions. These forward-looking statements include information about possible or assumed future results with respect to MFA's business, financial condition, liquidity, results of operations, plans and objectives. Among the important factors that could cause our actual results to differ materially from those projected in any forward-looking statements that we make are: general economic developments and trends, including the current tensions in international trade, a potential prolonged U.S. government shutdown, and the performance of the labor, housing, real estate, mortgage finance and broader financial markets; inflation, increases in interest rates and changes in the market (i.e., fair) value of MFA's residential whole loans, MBS, securitized debt and other assets, as well as changes in the value of MFA's liabilities accounted for at fair value through earnings; the
effectiveness of hedging transactions; changes in the prepayment rates on residential mortgage assets, an increase of which could result in a reduction of the yield on certain investments in its portfolio and could require MFA to reinvest the proceeds received by it as a result of such prepayments in investments with lower coupons, while a decrease in which could result in an increase in the interest rate duration of certain investments in MFA's portfolio making their valuation more sensitive to changes in interest rates and could result in lower forecasted cash flows; credit risks underlying MFA's assets, including changes in the default rates and management's assumptions regarding default rates and loss severities on the mortgage loans in MFA's residential whole loan portfolio; MFA's ability to borrow to finance its assets and the terms, including the cost, maturity and other terms, of any such borrowings; implementation of or changes in government regulations or programs affecting MFA's business (including as a result of the current U.S. 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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CONTACT: INVESTOR CONTACT:
InvestorRelations@mfafinancial.com
212-207-6488
www.mfafinancial.com
MEDIA CONTACT:
H/Advisors Abernathy
Sydney Isaacs
713-343-0427
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