• Distributable Earnings: $0.37 per share.

• Book Value: Increased by approximately 1% to $13.77 per common share.

• Economic Return: 3.3% for the quarter.

• GAAP Earnings: $48.2 million or $0.38 per basic common share.

• Dividends Declared: $0.35 per common share.

• Loan Acquisitions: Over $550 million with an average coupon of 9.4%.

• Agency Securities Added: $294 million.

• Single-Family Rental Loans Sold: $236 million in unpaid principal balance.

• Lima One Loan Originations: $329 million of business purpose loans.

• Non-QM Purchases: $236 million with an average coupon of 8.2% and LTV of 64%.

• 60+ Day Delinquencies: Increased to 6.7% from 6.5% in the previous quarter.

• Economic Book Value Post Quarter End: Estimated decrease of 3% to 4% due to higher market interest rates.

• Warning! GuruFocus has detected 4 Warning Sign with MFA.

Release Date: November 06, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• MFA Financial Inc (NYSE:MFA) reported solid third-quarter results with distributable earnings of $0.37 per share and an economic return of 3.3%.

• The company acquired over $550 million in loans with an average coupon of 9.4%, enhancing its portfolio with high-yielding assets.

• MFA successfully utilized securitization to fund assets, closing multiple deals, including its first rated deal for residential transition loans, which improved funding costs.

• The Federal Reserve's rate cut is seen as a positive development, providing a tailwind for MFA's business model in a lower rate environment.

• MFA's management changes, including the promotion of Bryan Wulfsohn to President, reflect a strong and experienced leadership team poised for future growth.

Negative Points

• MFA's economic book value decreased by approximately 3% to 4% post-quarter due to higher market interest rates.

• The company experienced a decline in Lima One's origination volume, attributed to recent management changes and a shift away from multifamily lending.

• MFA reported an increase in 60-plus day delinquencies, particularly in its Non-QM and multifamily loan portfolios.

• The third quarter saw $0.07 of realized credit losses, primarily on transitional loans, impacting distributable earnings.

• Non-recurring separation, severance, and retirement-related charges of approximately $3.3 million affected the company's general and administrative expenses.

Q & A Highlights

Q: Can you clarify the book value comments and how you think about dividend accrual in that context? A: Michael Roper, CFO, explained that the 3% to 4% decrease in book value is as of earlier this morning and is net of the dividend accrual. It's a moving target due to spread and rate volatility.