MFA Financial, Inc. Announces Third Quarter 2025 Financial Results

MFA Financial, Inc. (NYSE:MFA) today provided its financial results for the third quarter ended September 30, 2025:

• MFA generated GAAP net income to common stockholders and participating securities for the third quarter of $37.3 million, or $0.36 per basic and $0.35 per diluted common share.
• Distributable earnings, a non-GAAP financial measure, were $21.0 million, or $0.20 per basic common share. MFA paid a regular cash dividend of $0.36 per common share on October 31, 2025.
• GAAP book value at September 30, 2025 was $13.13 per common share. Economic book value, a non-GAAP financial measure, was $13.69 per common share.
• Total economic return was 2.6% for the third quarter.
• MFA closed the quarter with unrestricted cash of $305.2 million.

“We made meaningful progress across our business during the third quarter,” stated Craig Knutson, MFA’s Chief Executive Officer. “We acquired $1.2 billion of residential mortgage assets, including $453 million of Non-QM loans and $473 million of Agency MBS at attractive yields. Lima One grew its origination volume by 20% to $260 million, including $200 million of new transitional loans with an average coupon of 10%. We securitized $721 million of Non-QM loans and profitably sold $66 million of newly-originated rental loans. We also resolved $223 million of previously delinquent loans, reducing the delinquency rate across our entire loan portfolio to 6.8%.”

“While our Distributable earnings were again impacted by credit losses realized on certain legacy business purpose loans, we are taking steps to improve returns in future quarters,” added Mr. Knutson. “We have begun deploying excess cash into our target asset classes and implementing cost reductions that are expected to reduce run-rate G&A expenses by 7-10% from 2024 levels. In addition, we repurchased nearly 500,000 shares of common stock during the third quarter at a significant discount to book value. These actions, among others, are aimed at bolstering our earnings moving forward.”

Q3 2025 Portfolio Activity

• MFA’s residential investment portfolio rose to $11.2 billion at September 30, 2025 from $10.8 billion at June 30, 2025.
• Non-QM loan acquisitions totaled $452.8 million, bringing MFA’s Non-QM portfolio to $5.1 billion at September 30, 2025.
• Lima One funded $148.5 million of new business purpose loans with a maximum loan amount of $260.2 million. Further, $77.4 million of draws were funded on previously originated Transitional loans. Lima One generated $5.6 million of mortgage banking income.
• MFA added $472.8 million of Agency MBS during the quarter, bringing its Agency MBS portfolio to $2.2 billion.
• Portfolio runoff was $674.4 million. Asset dispositions included $65.8 million of newly-originated SFR loans and $15.1 million of delinquent Transitional loans. MFA also sold 84 REO properties in the third quarter for aggregate net proceeds of $27.3 million.
• 60+ day delinquencies (measured as a percentage of UPB) for MFA’s residential loan portfolio declined to 6.8% at September 30, 2025 from 7.3% at June 30, 2025.
• MFA completed two loan securitizations during the quarter, collateralized by $721.5 million of Non-QM loans, bringing its total securitized debt to approximately $6.4 billion.
• MFA added a net $284.1 million of new interest rate hedges, reducing the estimated net effective duration of its investment portfolio at September 30, 2025 to 0.98 from 1.00 at June 30, 2025.
• MFA’s Debt/Net Equity Ratio was 5.5x while recourse leverage was 1.9x at September 30, 2025.

Webcast

MFA Financial, Inc. plans to host a live audio webcast of its investor conference call on Thursday, November 6, 2025, at 11:00 a.m. (Eastern Time) to discuss its third 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 $5.0 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 September 30, 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

Table 2 - Net Interest Spread

The following table presents the activity for our residential mortgage asset portfolio for the three months ended September 30, 2025:

Table 3 - Investment Portfolio Activity Q3 2025

The following tables present information on our investments in residential whole loans:

Table 4 - Portfolio Composition/Residential Whole Loans

Table 5 - Yields and Average Balances/Residential Whole Loans

Table 6 - Credit-related Metrics/Residential Whole Loans

September 30, 2025

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 September 30, 2025. All changes in value are measured as the percentage change from the projected portfolio value under the base interest rate scenario as of September 30, 2025.

Segment Reporting

At September 30, 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:

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:

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:

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, the 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. Presidential 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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