MFA Financial: Navigating Volatility and Opportunity in Q4 2024

As we wrap up the year 2024, let's take a look at MFA Financial's (NYSE:MFA) performance in the fourth quarter and how the company is positioning itself for the future. MFA Financial is a specialty finance company that invests in residential mortgage loans, residential mortgage-backed securities, and other real estate assets. Its targeted investments include principally residential whole loans and residential mortgage securities.

In Q4 2024, MFA Financial generated GAAP net income to common stockholders and participating securities of $(2.3) million, or $(0.02) per basic and diluted common share. Distributable earnings, a non-GAAP financial measure, were $40.8 million, or $0.39 per basic common share. MFA paid a regular cash dividend of $0.35 per common share on January 31, 2025.



GAAP book value at December 31, 2024 was $13.39 per common share, while economic book value, a non-GAAP financial measure, was $13.93 per common share. Total economic return was (1.2)% for the fourth quarter, reflecting the challenging market conditions faced by the company.

MFA Financial's Chief Executive Officer, Craig Knutson, stated that the company took advantage of market conditions to acquire $1.2 billion of loans and securities at attractive levels during the quarter. This included $470 million of Non-QM residential loans at an average coupon of 7.8% and average LTV of 67%. Lima One, MFA's subsidiary, originated $236 million of new business purpose loans. Additionally, MFA purchased $463 million of Agency MBS at spreads that remain historically wide, bringing that portfolio to $1.4 billion at year-end.

MFA Financial's loan acquisition activity in Q4 2024, particularly its focus on Non-QM loans and Agency MBS, aligns with its long-term investment strategy. Non-QM loans often have higher yields and can provide attractive returns for investors like MFA. Agency MBS are backed by government-sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac, providing an additional layer of security. MFA's purchase of Agency MBS at historically wide spreads also indicates an opportunistic approach to investing in these securities when they are attractively priced.



In conclusion, MFA Financial's Q4 2024 earnings snapshot reflects the challenges faced by the company in a volatile market environment. Despite the decline in performance, MFA's strategic acquisitions and focus on higher-yielding assets position the company for future growth. As we look ahead to 2025, MFA Financial is well-positioned to capitalize on opportunities in the mortgage market and continue to deliver value to its shareholders.