MFA

Image source: The Motley Fool. Wednesday, Aug. 5, 2026 at 11:00 a.m. ET General Counsel - Harold Schwartz Chief Executive Officer - Craig Knutson Chief Financial Officer - Michael Roper President and Chief Investment Officer - Bryan Wulfsohn Operator: Greetings. Welcome to the MFA Financial, Inc. Announces Second Quarter 2026 Financial Results Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to Hal Schwartz, General Counsel at MFA Financial. Thank you. Hal, you may begin. Harold Schwartz: Thank you, operator, and good morning, everyone. The information discussed on this conference call today may contain or refer to forward-looking statements regarding MFA Financial, Inc., which reflect management's beliefs, expectations and assumptions as to MFA's future performance and operations. When used, statements that are not historical in nature, including those containing words such as will, believe, expect, anticipate, estimate, should, could, would or similar expressions are intended to identify forward-looking statements. All forward-looking statements speak only as of the date on which they are made. These types of statements are subject to various known and unknown risks, uncertainties, assumptions and other factors, including those described in MFA's annual report on Form 10-K for the year ended December 31, 2025, and other reports that it may file from time to time with the Securities and Exchange Commission. These risks, uncertainties and other factors could cause MFA's actual results to differ materially from those projected, expressed or implied in any forward-looking statements it makes. For additional information regarding MFA's use of forward-looking statements, please see the relevant disclosure in the press release announcing MFA's second quarter 2026 financial results. Thank you for your time. I would now like to turn this call over to MFA's CEO, Craig Knutson. Craig Knutson: Thank you, Hal. Good morning, everyone, and thank you for joining us for MFA Financial's Second Quarter 2026 Earnings Call. With me today are Bryan Wulfsohn, our President and Chief Investment Officer; Mike Roper, our Chief Financial Officer; and other members of our senior management team. I will offer some general remarks on the macroeconomic and political landscapes and will then provide an update on MFA's business initiatives and portfolio activities. I'll then turn the call over to Mike, followed by Bryan before we open up the call for questions. Moving to market conditions. We entered April with markets still absorbing the geopolitical shock that ended the first quarter. After ending March at $118 per barrel, oil traded below $100 per barrel for much of April before spiking back to $118 at the end of April and then trading lower over the last 2 months of the quarter, closing out just below $73 per barrel at the end of June. In the rates market, while volatility dampened considerably, rates themselves rose modestly higher during the quarter. The MOVE index closed out the first quarter around 100, but was in the mid-60s by the middle of April, spiked briefly in mid-May and then closed the quarter in the low 70s. The curve flattened materially during the quarter. 2-year treasury yields rose 40 basis points and 10 years sold off about 15 basis points, with the 210 spread flattening from 52 to 29 basis points. Kevin Warsh chaired his first set of FOMC meetings in mid-June, and his tone at the press conference was more hawkish than many had expected. Inflation data remains elevated, payroll numbers continue to be strong and markets are now expecting a Fed funds increase later this year. The mortgage market remained constructive through the second quarter with spreads tightening modestly and securitization markets were well bid. Obviously, Kevin Warsh's second press conference last week did not go as well as his first, but I personally think the financial press was more upset than the markets. I remember when Alan Greenspan was the Fed chair, and he elevated Fed speak to a unique level of incomprehensibility. Through the second quarter market volatility, MFA delivered a solid quarter and made real progress on the strategic initiatives we laid out for you earlier last year -- or late last year. Economic book value was essentially unchanged. We again declared a $0.36 dividend, and we generated a total economic return of positive 2.6% for the quarter. First, we continue to prudently deploy capital and grow the balance sheet. Our investment portfolio ended the quarter at approximately $13 billion, up from $12.5 billion at March 31 and roughly 20% larger than a year ago, with growth concentrated in Agency MBS at what we believe remain attractive spreads. Second, and this was the defining effort of the quarter, we significantly accelerated the resolution of delinquent assets. We resolved approximately $200 million of previously delinquent loans during the quarter, and our 60-plus day delinquency rate declined from 7.8% to 7.0%. Mike will walk through how these resolutions flow through our earnings metrics, and Bryan will provide more detail on the progress. But the headline is simple. We are converting unproductive assets back into earning capital, and we're doing it faster. Thirdly, Lima's momentum continued to build with origination volume up nearly 45% from the first quarter. The efforts expended throughout much of last year to improve technology and add salespeople are beginning to pay off. Fourth, we completed the exit of our former corporate headquarters and continue to bring down our expense base. Mike will quantify the run rate savings for you. And finally, we continue to repurchase common stock at a significant discount to economic book value, buying back over 500,000 shares during the quarter, funded largely by issuance of preferred stock through our ATM program. Taken together, a stable book value, a growing portfolio, a shrinking problem asset book and a reacceleration of origination franchise and a leaner expense base. We believe the earnings power of this portfolio is becoming increasingly visible as the legacy credit noise recedes. I'd like to turn the call over to Mike now to discuss our financial results. Michael Roper: Thanks, Craig, and good morning, everyone. At June 30, GAAP book value was $12.71 per share and economic book value was $13.20 per share, each effectively unchanged from the end of the first quarter. MFA again paid a common dividend of $0.36 and delivered a quarterly total economic return of 2.6% Second quarter GAAP net income was approximately $46.8 million or $0.35 per basic common share. Net interest income, including TBA dollar roll income for the quarter was $59.6 million, a modest increase from $59.2 million in the first quarter. Lima One mortgage banking income rose to $8.4 million in connection with the significant growth in origination that Craig referenced earlier. G&A expenses totaled $31.2 million, including approximately $5 million of accelerated noncash depreciation expense associated with our former corporate headquarters. Those assets are now fully depreciated, and we expect run rate G&A to average approximately $26 million to $27 million per quarter over the remainder of the year. This run rate reflects the cumulative impact of our expense reduction initiatives and a decline of more than $6 million a quarter from the 2024 quarterly average of $33 million. Moving to our distributable earnings. DE for the quarter was $12.2 million or $0.12 per share. The decline in our DE was driven by $24.5 million of realized credit losses on fair value loans as we resolved approximately $200 million of previously delinquent assets during the quarter. As we've discussed on prior calls, DE recognizes these losses only at resolution, while the economics are already embedded in our GAAP results and our book value from prior periods. Including the reversal of these previously recognized mark-to-market losses in our GAAP results, these same loans contributed $9.6 million of positive earnings for the quarter. DE prior to realized credit losses, the new metric we introduced last quarter was $36.7 million or $0.35 per share, up from $0.34 per share last quarter. As a reminder, our Q1 results included approximately $0.03 of nonrecurring benefit related to the early termination of the lease for our former corporate headquarters. Excluding that onetime item in the first quarter, DE prior to realized credit losses improved by $0.04 per share or approximately 14% sequentially, which we believe highlights the improving earnings power of the portfolio. Though we're disappointed with the credit charges realized this quarter, the benefits of moving nonperforming loans off the books are significant. We redeployed capital into new mid-teen ROE assets. We reduced servicing, legal and other carrying costs, and we reduced the uncertainty of our future earnings. We currently expect realized credit losses to remain elevated in the third quarter, though below the level in Q2 before moderating significantly as we move into the end of the year and into the first half of 2027. We continue to expect that our DE will begin to reconverge with the level of our common dividend as those credit losses subside to more normalized levels. Finally, subsequent to quarter end, we estimate that our economic book value has decreased by approximately 2% since the end of the second quarter, driven by higher market interest rates and modestly wider spreads. I'd now like to turn the call over to Bryan, who will discuss our investment portfolio and Lima One. Bryan Wulfsohn: Thanks, Mike. We had a productive quarter expanding our investment portfolio, reducing our legacy multifamily exposure, issuing and managing our securitizations and growing Lima One. I'll touch on each of these. Starting with non-QM, which remains our biggest asset class at $5.7 billion. We acquired $462 million of non-QM loans with an average coupon of 6.9% and an LTV of 67%. We continue to source loans from long-standing relationships with a select group of originators. Loans are acquired through flow and mini bulk transactions and are diligent carefully by our experienced investment team. Credit performance remained strong with a default rate just over 4%. We issued our 24th non-QM securitization during the quarter, selling nearly $300 million of bonds at an average cost of just over 5.5%. The loans in that deal carry a weighted average coupon of 6.75%. Separately, we resecuritized over $500 million of single-family rental loans after calling 3 prior issuances, unlocking $48 million of cash and financing capacity while reducing mark-to-market recourse leverage. This is the second consecutive quarter that we've re-levered older deals in order to unlock capital. Moving to our agency portfolio. During the quarter, we purchased over $700 million of agency bonds and grew that book to $4.1 billion. We again focus on low pay-up spec pools, although we did further increase our TBA position nearly $500 million. Should market conditions remain favorable, we intend to continue to roll this TBA position, generating drop income that is economically equivalent to the net carry from owning pools. Agencies now comprise nearly 1/3 of our investment portfolio, and we believe they are an attractive complement to our credit assets. That said, their liquidity profile affords us the ability to dial that book up or down depending on market prices and opportunities elsewhere in the business. Turning to Lima One. We are pleased to report that origination volume at Lima One rose by 44% during the quarter to $316 million. This included $220 million of new short-term transitional loans and $96 million of 30-year rental loans. As a reminder, originations had dropped over the past 2 years as we overhaul Lima's underwriting process and made significant personnel changes across the organization. Those changes are beginning to bear fruit across the business. Credit performance on more recent production at Lima One continues to be encouraging with delinquency on recent vintages tracking meaningfully better than earlier years. We also invested heavily in technology improvements and rebuilt Lima's sales force. As we communicated in May, submissions have grown and Lima's origination pipeline has reached levels not seen since 2024. While origination is inherently lumpy and won't grow in a straight line, the direction is decidedly higher. We are excited about Lima's prospects as the team works hard to continuously improve the business. Finally, we made substantial progress resolving nonperforming assets during Q2. As Craig mentioned, the delinquency rate across our entire loan portfolio declined by 80 basis points to 7%. In particular, we continue to shrink our legacy multifamily book, resolving $65 million of delinquent loans and reducing the portfolio to $360 million, less than half the size of the portfolio from a year ago. Multifamily transitional loans now comprises just 2% of our investment portfolio. Overall, the quarter reflected strong progress on several fronts. We added $1.6 billion of our target assets at expected ROEs in the mid-teens, funded in part by optimizing our securitizations to unlock capital while further reducing our reliance on mark-to-market borrowings against credit assets. Lima One grew both in volume and profitability, and we cut delinquencies across the loan portfolio meaningfully. Taken together, these actions leave us with a bigger and higher-yielding portfolio, better structured financing and a growing origination platform that we believe positions us well to build value from here. And with that, we'll turn the call over to the operator for questions. Operator: [Operator Instructions] Our first question is from Bose George with KBW. Bose George: Just on the remaining multifamily -- just the time frame on resolving the remaining multifamily loans? I didn't know if you said that. And also the current -- the equity you have remaining, that $84 million, what's the EAD on just that piece? Bryan Wulfsohn: So I'll answer the first and pass it over to Mike to answer the second. We believe that really we're probably a few quarters away from resolving the portfolio. Things -- there are loans that are still paying that are extended, and we're giving time for the owners of those properties to resolve their loans through either refinance or sale of the property. And then the loans that are delinquent, we can work through rather quickly to acquire the property and sell that subsequently. So really, in terms of resolving the entire thing, I think we're probably a few quarters away. But the material losses, credit losses are really here in the next quarter. Michael Roper: And then Bose, to understand your question directly, are you asking what the impact would be if we were to redeploy that full $84 million? Or are you asking what the lossless portion of the book generated for the quarter? Bose George: Yes. Just trying to understand the impact of the redeployment. Like is that a negative EAD at the moment? Or is that 0? Or yes, just like -- yes, but trying to calculate the benefit of the redeployment. Michael Roper: Sure. So if you account for all the sort of nonperforming assets in that book and then obviously, the credit losses, that obviously would go away if we were to liquidate the rest of the book. Thinking about the $84 million deployed at like a mid-teens ROE, you're talking about a marginal, call it, $14 million, $15 million a year of additional earnings. And clearly, there is going to be normalized losses on that, not the heightened credit losses we see today. Bose George: Okay. Okay. Great. And then on the agency, just given the -- what's happening with agency spreads, how do you see the risk reward in that market? And then just where do you see the best risk reward for deploying incremental capital? Bryan Wulfsohn: Yes. I mean we still see agencies are attractive given spreads have widened, say, 8 to 10 bps since the quarter. I still think it's sort of mid-teens ROEs are achievable. Really, our highest ROE business is still growth at Lima One in terms of origination, the double-digit type coupons financed at, say, 6% to 7% offers a very good spread and very high ROEs. So that's still the most attractive. But non-QM continues to be attractive as well. So that -- which ROEs are really in the mid-teens there, too. So we're really pressing on all fronts, deploying the additional capital. And obviously, things can change quarter-to-quarter, and we'll reallocate depending on where spreads and ROEs move. Operator: Our next question is from Mikhail Goberman with Citizens JMP. Mikhail Goberman: Just wanted to get your thoughts on potential further improvements in operating leverage, expense reduction going forward. I know you guys are doing good work with the changeover in the corporate headquarters and all that. Just your general thoughts on expenses going forward. And also the second part of the question, with regards to Lima One, I know you've touched on Lima One already. Just what kind of -- in terms of the products that Lima One is offering, just thoughts on that and how you see the third quarter shaping up for Lima One in terms of maybe continuing the really good momentum you saw in the second quarter? Michael Roper: Yes. I'll take the first part of your question, and maybe Bryan can take the second part there. On the G&A expenses, we provided the guidance in the prepared remarks really because there's been a lot of noise as we sort of work through those initiatives that we've talked about for some time now. I think a lot of those sort of onetime blips, if you will, in the expenses are sort of reaching a point of normalization. With that said, we continuously evaluate the business for opportunities to be more efficient. And clearly, we're committed to expense discipline across the business, including Lima One. There's a couple of smaller items that will continue to flush through over the remainder of the year, including some expected savings from AI initiatives across the firm. But I think most of the big ticket items are sort of accounted for at this point in terms of the run rate G&A. Bryan Wulfsohn: And as it relates to Lima One, given the nature of the housing stock being fairly high priced, we have been focusing more on the ground-up construction space because that's where the opportunity is for investors. And that's where we've seen sort of the materiality of the production out of Lima, that in addition to some bridge loans. But really in terms of volumes for the third quarter. We see a strong pipeline today. We saw good submissions in July, but there's still sort of a couple of months left of the quarter. We're sort of -- it's unclear. We do expect there to be growth. But as I sort of mentioned in the earlier remarks, I'm not sure it's going to be the same jump that we saw from Q1 to Q2 because there's also some seasonality impacts when you go from the earlier in the year, the winter months into the spring and summer. Operator: [Operator Instructions] We have reached the end of the question-and-answer session. If you would like to -- I would like to turn the floor back over to Craig Knutson for closing comments. Craig Knutson: Thank you. Well, thanks, everyone, for your interest in MFA Financial, and we look forward to speaking with you again in November when we announce third quarter results. Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation. 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Interested in MFA Financial, Inc.? Here are five stocks we like better. Book value remained stable in Q2, with GAAP book value at $12.71 per share and economic book value at $13.20; MFA maintained its $0.36 dividend and generated a 2.6% total economic return. Distributable earnings fell to $0.12 per share because of $24.5 million in realized credit losses tied to resolving roughly $200 million of delinquent assets. Management expects losses to remain elevated in Q3 before declining toward year-end and into early 2027. The investment portfolio grew to approximately $13 billion, while delinquency rates improved and Lima One originations surged 44% sequentially to $316 million, supported by stronger technology, underwriting and sales capabilities. MFA Financial (NYSE:MFA) reported second-quarter 2026 results marked by stable book value, portfolio growth and accelerated resolution of delinquent loans, while realized credit losses continued to weigh on distributable earnings. Chief Executive Officer Craig Knutson said the company delivered a 2.6% total economic return for the quarter and maintained its common dividend at $0.36 per share. Economic book value was essentially unchanged during the period, even as market conditions included higher interest rates and a flatter Treasury yield curve. → Sandisk Just Delivered a Blowout Quarter—Here's Why the Stock Is Falling “We are converting unproductive assets back into earning capital,” Knutson said of the company’s efforts to resolve delinquent loans. “We’re doing it faster.” Chief Financial Officer Michael Roper said GAAP book value at June 30 was $12.71 per share, while economic book value was $13.20 per share, both effectively unchanged from the end of the first quarter. → 4 Oil and Gas ETF Plays as Prices Stay Sky-High GAAP net income totaled approximately $46.8 million, or $0.35 per basic common share. Net interest income, including TBA dollar roll income, rose modestly to $59.6 million from $59.2 million in the first quarter. Mortgage banking income at Lima One increased to $8.4 million as origination activity expanded. Distributable earnings were $12.2 million, or $0.12 per share, reflecting $24.5 million of realized credit losses on fair-value loans as MFA resolved about $200 million of previously delinquent assets. Roper said distributable earnings recognize losses at the time assets are resolved, whereas the related economics had already been reflected in earlier GAAP results and book value marks. → No Hangover: Revisiting Microsoft One Week After Earnings Excluding realized credit losses, distributable earnings were $36.7 million, or $0.35 per share, compared with $0.34 per share in the prior quarter. Roper noted that first-quarter results included about $0.03 per share of a nonrecurring gain related to the early termination of the lease at MFA’s former corporate headquarters. Excluding that item, distributable earnings before realized credit losses increased by $0.04 per share sequentially. General and administrative expenses totaled $31.2 million, including roughly $5 million of accelerated non-cash depreciation associated with the former headquarters. Those assets are now fully depreciated. MFA expects quarterly run-rate G&A expenses of approximately $26 million to $27 million for the rest of 2026, down more than $6 million from the company’s 2024 quarterly average of $33 million. Subsequent to quarter-end, Roper said MFA estimated its economic book value had declined about 2%, driven by higher market interest rates and modestly wider spreads. MFA’s investment portfolio ended the quarter at approximately $13 billion, up from $12.5 billion at March 31 and roughly 20% above its level a year earlier. Growth was concentrated in agency mortgage-backed securities, which Chief Investment Officer Bryan Wulfsohn said remain an attractive complement to the company’s credit assets. The Non-QM portfolio remained MFA’s largest asset class at $5.7 billion. The company acquired $462 million of Non-QM loans with an average coupon of 6.9% and loan-to-value ratio of 67%. MFA issued its 24th Non-QM securitization, selling nearly $300 million of bonds at an average cost of just over 5.5%. The company purchased more than $700 million of agency bonds, growing the agency portfolio to $4.1 billion. MFA also increased its TBA position by nearly $500 million and said it may continue rolling the position if market conditions remain favorable. Wulfsohn said MFA added $1.6 billion of target assets during the quarter at expected returns on equity in the mid-teens. The company also re-securitized more than $500 million of single-family rental loans after calling three previous issuances, unlocking $48 million of cash and financing capacity while reducing mark-to-market recourse leverage. The company’s 60-plus-day loan delinquency rate declined to 7.0% from 7.8% in the first quarter. MFA resolved approximately $65 million of delinquent legacy multifamily loans, reducing that portfolio to $360 million, less than half its size a year earlier. Multifamily transitional loans represented 2% of the investment portfolio at quarter-end. During the question-and-answer session, Wulfsohn said MFA expects to resolve the remaining legacy multifamily portfolio over “a few quarters.” He said the material credit losses associated with those assets are expected primarily in the next quarter. Roper said realized credit losses are expected to remain elevated in the third quarter, though below the second-quarter level, before moderating significantly toward year-end and during the first half of 2027. He said MFA expects distributable earnings to begin reconverging with its common dividend as credit losses return to more normalized levels. Lima One origination volume increased 44% from the first quarter to $316 million. That total included $220 million of new short-term transitional loans and $96 million of 30-year rental loans. Wulfsohn said the company has focused more on ground-up construction financing because of opportunities for investors in higher-priced housing markets, in addition to bridge lending. He said recent Lima One loan vintages have shown meaningfully better delinquency performance than earlier production. MFA attributed the increase in activity to investments in technology, changes to underwriting processes and a rebuilt sales force. Wulfsohn said Lima One’s pipeline had reached levels not seen since 2024 and that submissions were strong in July. While he expects further growth in the third quarter, he cautioned that the increase may not match the sequential jump reported in the second quarter because of seasonal factors. MFA also repurchased more than 500,000 common shares during the quarter at what Knutson described as a significant discount to economic book value. The repurchases were funded largely through preferred-stock issuance under the company’s at-the-market program. MFA Financial, Inc, headquartered in New York City, is a real estate investment trust that specializes in investing in residential mortgage loans and mortgage-related securities. The company's primary objective is to generate attractive risk-adjusted returns through net interest income and capital appreciation. As a mortgage REIT, MFA Financial focuses on constructing a diversified portfolio of agency and non-agency residential mortgage assets, leveraging its expertise in acquiring, financing and servicing mortgage products. MFA Financial's investment portfolio encompasses a wide range of mortgage instruments, including adjustable-rate and fixed-rate mortgage loans, interest-only securities, and agency mortgage-backed securities guaranteed by government-sponsored entities. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "MFA Financial Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

NEW YORK, August 05, 2026--(BUSINESS WIRE)--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 Table 2 - Net Interest Spread 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 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 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. 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: 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: 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 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 View source version on businesswire.com: https://www.businesswire.com/news/home/20260805306109/en/ Contacts INVESTOR CONTACT:[email protected] 212-207-6488www.mfafinancial.com MEDIA CONTACT:H/Advisors AbernathySydney Isaacs713-343-0427

This article first appeared on GuruFocus. GAAP Book Value: $12.71 per share at June 30, effectively unchanged from the end of the first quarter. Economic Book Value: $13.20 per share, effectively unchanged from the end of the first quarter. Total Economic Return: Positive 2.6% for the second quarter. GAAP Net Income: Approximately $46.8 million, or $0.35 per basic common share. Net Interest Income: $59.6 million, including TBA dollar roll income, a modest increase from $59.2 million in the first quarter. Lima One Mortgage Banking Income: Rose to $8.4 million in connection with significant growth in originations. G&A Expenses: Totaled $31.2 million, including approximately $5 million of accelerated non-cash depreciation expense; expected run-rate G&A is approximately $26 million to $27 million per quarter. Distributable Earnings (DE): $12.2 million, or $0.12 per share, impacted by $24.5 million of realized credit losses. DE Prior to Realized Credit Losses: $36.7 million, or $0.35 per share, up from $0.34 per share last quarter. Common Dividend: Declared at $0.36 per share. Investment Portfolio: Ended the quarter at approximately $13 billion, up from $12.5 billion at March 31. Non-QM Loans: Acquired $462 million with an average coupon of 6.9% and an LTV of 67%; portfolio remains the biggest asset class at $5.7 billion. Agency Portfolio: Purchased over $700 million of Agency bonds, growing the book to $4.1 billion. Lima One Origination Volume: Rose by 44% during the quarter to $316 million, including $220 million of new short-term transitional loans and $96 million of 30-year rental loans. Delinquency Rate: 60-plus day delinquency rate declined from 7.8% to 7.0%. Legacy Multifamily Portfolio: Resolved $65 million of delinquent loans, reducing the portfolio to $360 million. Share Repurchases: Bought back over 500,000 shares during the quarter. Warning! GuruFocus has detected 4 Warning Sign with MFA. Is MFA fairly valued? Test your thesis with our free DCF calculator. Release Date: August 05, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. MFA Financial Inc (NYSE:MFA) delivered a positive total economic return of 2.6% for Q2 2026, with economic book value remaining stable at $13.20 per share. The company significantly accelerated the resolution of delinquent assets, reducing the 60+ day delinquency rate from 7.8% to 7.0% and converting unproductive assets back into earning capital. Lima One origination volume surged by 44% quarter-over-quarter to $316 million, driven by improved technology, a rebuilt salesforce, and a strong pipeline, indicating a re-acceleration of the origination franchise. MFA Financial Inc (NYSE:MFA) continued to grow its investment portfolio to approximately $13 billion, with strategic purchases of Agency MBS and Non-QM loans at attractive spreads, enhancing the earnings power of the portfolio. The company reduced its expense base, with run-rate G&A expected to decline to $26-27 million per quarter, a significant drop from the 2024 quarterly average of $33 million, and continued to repurchase common stock at a discount to economic book value. Distributable earnings (DE) declined to $0.12 per share in Q2 2026, impacted by $24.5 million of realized credit losses from the resolution of delinquent loans. Realized credit losses are expected to remain elevated in Q3 2026, though lower than Q2, which will continue to pressure near-term earnings and delay the reconvergence of DE to the dividend level. The company's economic book value decreased by approximately 2% subsequent to quarter-end, driven by higher market interest rates and modestly wider spreads, indicating potential near-term volatility. The legacy multifamily portfolio, though reduced, still poses a risk with material credit losses expected in the next quarter, and the full resolution of the portfolio is likely a few quarters away. Lima One's origination growth is expected to moderate in Q3 due to seasonality and the lumpy nature of the business, suggesting that the strong Q2 momentum may not be sustained at the same pace. Q: What is the timeframe for resolving the remaining legacy multifamily loans, and what would be the earnings impact of redeploying the remaining $84 million of equity?A: Bryan Wulfsohn (Co-Chief Investment Officer) stated that the portfolio is likely a few quarters away from full resolution, with material credit losses expected in the next quarter. CFO Michael Roper added that deploying the $84 million at a mid-teens ROE could generate approximately $14 million to $15 million of additional annual earnings, with normalized losses replacing the current heightened credit losses. Q: How do you view the risk/reward in the Agency MBS market given recent spread movements, and where is the best risk/reward for deploying incremental capital?A: Bryan Wulfsohn noted that Agency MBS remains attractive despite spreads widening by 8-10 basis points, with mid-teens ROEs still achievable. However, he identified Lima One originations as the highest ROE business, followed by Non-QM, both offering mid-teens ROEs. The company is pressing on all fronts and will reallocate based on market conditions. Q: What are your thoughts on further improvements in operating leverage and expense reduction going forward?A: CFO Michael Roper indicated that most one-time expense items have been accounted for, with run-rate G&A expected to average $26-27 million per quarter. He noted the company remains committed to expense discipline, with smaller savings expected from AI initiatives over the remainder of the year. Q: How is Lima One's product mix evolving, and what is the outlook for third-quarter origination volume?A: Bryan Wulfsohn explained that Lima One is focusing more on ground-up construction lending due to high housing prices, in addition to bridge loans. While the pipeline remains strong with good July submissions, he cautioned that Q3 growth may not match the 44% sequential jump seen in Q2 due to seasonality and the lumpy nature of originations. Q: Can you provide more detail on the realized credit losses in Q2 and the expected trajectory for future quarters?A: CFO Michael Roper explained that Q2 DE was impacted by $24.5 million of realized credit losses from resolving approximately $200 million of delinquent loans. He expects realized credit losses to remain elevated in Q3 but below Q2 levels, before moderating significantly into year-end and the first half of 2027, allowing DE to reconverge toward the common dividend level. Q: What drove the growth in the investment portfolio during the quarter, and how is the financing structured?A: Bryan Wulfsohn highlighted the purchase of $462 million of Non-QM loans and over $700 million of Agency bonds, growing the portfolio to approximately $13 billion. The company issued its 24th Non-QM securitization and re-securitized over $500 million of Single-Family rental loans, unlocking $48 million of cash while reducing mark-to-market recourse leverage. Q: How is the credit performance of Lima One's recent production vintages compared to earlier years?A: Bryan Wulfsohn reported that credit performance on more recent Lima One production is encouraging, with delinquency on recent vintages tracking meaningfully better than earlier years. This improvement follows the overhaul of underwriting processes and significant personnel changes over the past two years. Q: What is the current status of the Agency portfolio and the TBA position?A: Bryan Wulfsohn noted that the Agency book grew to $4.1 billion, comprising nearly a third of the investment portfolio, with a TBA position of nearly $500 million. The company intends to continue rolling the TBA position to generate drop income economically equivalent to net carry from owning pools, while maintaining flexibility to dial the book up or down based on market opportunities. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

On May 19, 2026, EMG Holdings disclosed a new position in KB Home (NYSE:KBH), acquiring 77,657 shares in a trade estimated at $4.57 million based on quarterly average pricing. According to its SEC filing dated May 19, 2026, EMG Holdings reported purchasing 77,657 shares of KB Home (NYSE:KBH) during the first quarter. The estimated value of this transaction was $4.57 million, based on the quarterly average share price. As of March 31, 2026, the holding was valued at $4.02 million, reflecting the new position and subsequent price movements during the quarter. Top five holdings after the filing: As of May 18, 2026, KB Home shares were priced at $45.64, down 15% over the past year and lagging the S&P 500, which is instead up about 25%. KB Home develops and sells single-family homes, townhomes, and condominiums, with additional offerings in insurance and title services. The firm generates revenue primarily through home sales across multiple U.S. regions, complemented by ancillary financial services. It targets first-time, move-up, and active adult homebuyers in states including California, Texas, Florida, and Arizona. KB Home focuses on residential construction for a diverse range of buyers, including first-time and move-up customers. The company leverages a regional operating model and offers integrated financial and insurance services. Homebuilder stocks have struggled under the weight of high mortgage rates and cautious consumers, but EMG’s new position suggests it still sees value here. Still, KB Home’s latest quarter was a bit uneven on the surface. Revenue fell 23% year over year to $1.08 billion, while diluted earnings per share dropped to $0.52 from $1.49 a year earlier. Gross margins also compressed, with housing gross profit margin sliding to 15.3% from 20.2% as the company leaned on price reductions and incentives to drive demand.However, there were also some encouraging signs beneath the headline numbers. Net orders actually rose 3% to 2,846 homes, cancellation rates improved to 12% from 16%, and KB Home continued aggressively buying back stock, repurchasing $50 million worth of shares during the quarter.For long-term investors, it’s important to remember that housing stocks can be very cyclical. If mortgage rates eventually ease, beaten-down homebuilders could recover faster than many investors currently expect. Before you buy stock in KB Home, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and KB Home wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $483,476!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,362,941!* Now, it’s worth noting Stock Advisor’s total average return is 998% — a market-crushing outperformance compared to 207% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of May 19, 2026. Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool recommends KB Home and recommends the following options: short July 2026 $60 calls on KB Home. The Motley Fool has a disclosure policy. KB Home Stock Is Down 15%. So Why Did One Investor Buy Up $4 Million in Shares Last Quarter? was originally published by The Motley Fool

Interested in MFA Financial, Inc.? Here are five stocks we like better. MFA Financial posted a negative first-quarter 2026 economic return of -1.2% as higher rates, wider mortgage spreads and market volatility pressured book value and produced mark-to-market losses. GAAP book value fell to $12.70 per share and economic book value to $13.22 per share, both down about 3.8% from year-end 2025. The company’s portfolio grew to $12.5 billion, helped by more than $1 billion of new mortgage asset purchases and two non-QM securitizations that unlocked about $40 million of cash and financing capacity. Management also said credit performance in the non-QM book remained strong and that the agency portfolio expanded above $3.5 billion. Lima One showed improving momentum, with mortgage banking income rising 34% quarter over quarter and the origination pipeline reaching its highest level since 2024. MFA also highlighted cost cuts, saying headquarters relocation efforts should eventually deliver about $4 million in annual run-rate expense savings. MFA Financial (NYSE:MFA) reported a negative total economic return for the first quarter of 2026 as higher rates, wider mortgage spreads and market volatility weighed on book value, while management pointed to portfolio growth, securitization activity and cost reductions as key priorities for the year. Chief Executive Officer Craig Knutson said the quarter unfolded in two distinct market environments. Fixed income markets began the year with strong investor demand and low volatility, continuing the trend from the second half of 2025. He said mortgages performed well early in the quarter, helped by a directive for the government-sponsored enterprises to purchase $200 billion of agency mortgage-backed securities. → Beyond NVIDIA: Picks-and-Shovels AI Plays with Strong Momentum However, Knutson said conditions changed abruptly after the onset of a war in Iran, which increased volatility, pushed rates sharply higher and drove oil prices up. He said higher energy prices renewed inflation concerns and led markets to price in fewer, or potentially no, rate cuts later in the year. “Mortgage spreads widened significantly against this backdrop and contributed to an economic return for MFA in the Q1 of negative 1.2%,” Knutson said. He added that despite volatility and geopolitical tension, markets remained “open and orderly.” → 3 Ways to Target the Resources Powering AI and Data Centers Chief Financial Officer Michael Roper said MFA’s GAAP book value was $12.70 per share at March 31, while economic book value was $13.22 per share. Both were down approximately 3.8% from the end of 2025. The company paid a common dividend of $0.36 per share during the quarter and delivered a quarterly total economic return of negative 1.2%. MFA generated a GAAP loss of approximately $1 million, or $0.11 per basic common share. Roper said the results were hurt by approximately $28.8 million of net mark-to-market losses on the portfolio, driven by higher rates and wider spreads. → Quantum Earnings Season Is Ramping Up—What to Watch From 2 Major Players Net interest income rose to $59.2 million from $55.5 million in the fourth quarter. Roper attributed the increase to rate cuts late last year and growth in the investment portfolio, partially offset by $3.5 million of interest income reversals tied to loans moving to non-accrual status in the transitional loan portfolio. Distributable earnings were approximately $31.1 million, or $0.30 per share, up from $0.27 per share in the prior quarter. Roper said the increase reflected a $0.03 benefit related to a lease modification and roughly $0.02 of higher mortgage banking income at Lima One, partially offset by higher REO carrying costs and realized credit losses on fair value loans. MFA introduced a new non-GAAP measure of distributable earnings that excludes realized credit losses on residential whole loans held at fair value. Roper said the company added the disclosure to provide more context as credit losses from its legacy multifamily portfolio continue to affect distributable earnings. Roper said resolving nonperforming loans does not affect distributable earnings until well after the loans have already been marked down in GAAP results and book value, which can obscure the current earnings power of the portfolio. He said MFA expects credit losses on the legacy transitional loan portfolio to accelerate meaningfully in the second quarter before beginning to normalize in the back half of 2026 and into the first half of 2027. In response to an analyst question, Roper said the company’s expectation that distributable earnings will reconverge with the $0.36 quarterly dividend later this year refers to the reported distributable earnings figure, rather than the supplemental measure excluding realized credit losses. MFA grew its investment portfolio to $12.5 billion in the first quarter. President and Chief Investment Officer Bryan Wulfsohn said the company acquired more than $1 billion of residential mortgage assets, including $471 million of non-QM loans, nearly $400 million of agency securities, $300 million of TBAs and $219 million of business purpose loans originated by Lima One. Non-QM remained MFA’s largest asset class, with the book growing to $5.5 billion. Wulfsohn said new non-QM loans added during the quarter had an average coupon of 7% and a loan-to-value ratio of 68%. He said credit performance in the non-QM book remained strong, with a default rate just above 4%. The company completed two non-QM securitizations in March. The first was its 22nd non-QM deal, involving the sale of $326 million of bonds at an average coupon of 5.12%. The second was a re-securitization of more than $400 million of seasoned non-QM loans from two earlier deals. Wulfsohn said the transaction unlocked approximately $40 million of cash and additional financing capacity and is expected to be accretive to earnings. MFA also expanded its agency portfolio, which now exceeds $3.5 billion. Wulfsohn said the company took advantage of wider spreads late in the quarter by establishing a $300 million TBA position. Since quarter end, he said spreads had tightened by about 10 basis points. Lima One originated $219 million of business purpose loans in the first quarter, including $145 million of new transitional loans and $74 million of rental term loans. Wulfsohn said MFA continued to sell longer-duration rental loans to third-party investors, selling $81 million during the quarter and generating $2.7 million of gain-on-sale income. Mortgage banking income at Lima One increased 34% from the fourth quarter to $7.7 million. Wulfsohn said monthly submissions and the origination pipeline reached their highest level since 2024. He said the recent opening of a wholesale channel and the relaunch of multifamily lending are expected to support future earnings contributions. On expenses, Roper said MFA entered into agreements in February to relocate its corporate headquarters in New York without paying early lease termination fees. The move resulted in $2.4 million of accelerated non-cash depreciation expense in the first quarter, with an additional $5 million expected in the second quarter. After those charges, the company expects run-rate expense reductions of approximately $4 million per year from the relocation, or nearly $40 million over the remaining term of the prior lease. Roper said MFA now estimates its expense reduction initiatives have achieved nearly $20 million per year of run-rate overhead savings compared with 2024 levels. Wulfsohn said delinquencies in MFA’s residential loan portfolio rose to 7.8% during the quarter, driven primarily by elevated default activity in the legacy multifamily book, which has been in runoff for the past two years. He said the delinquency rate had already declined to 7.3% since quarter end as the company made further progress resolving nonperforming loans. In the question-and-answer session, Roper said just over $100 million of capital was tied up in the remaining multifamily transitional portfolio at quarter end. He said MFA’s guidance for distributable earnings to reconverge with the dividend includes anticipated paydowns of troubled assets and redeployment into target assets. Roper also said MFA expects multifamily credit losses in the second quarter to be in the “mid-to-high teens” before beginning to normalize later in the year and into 2027, though he cautioned that the timing of resolutions can vary significantly from quarter to quarter. Management said MFA’s economic book value was approximately flat to the end of the first quarter as of the close of business on the Friday following quarter end. MFA Financial, Inc, headquartered in New York City, is a real estate investment trust that specializes in investing in residential mortgage loans and mortgage-related securities. The company's primary objective is to generate attractive risk-adjusted returns through net interest income and capital appreciation. As a mortgage REIT, MFA Financial focuses on constructing a diversified portfolio of agency and non-agency residential mortgage assets, leveraging its expertise in acquiring, financing and servicing mortgage products. MFA Financial's investment portfolio encompasses a wide range of mortgage instruments, including adjustable-rate and fixed-rate mortgage loans, interest-only securities, and agency mortgage-backed securities guaranteed by government-sponsored entities. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "MFA Financial Q1 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for May 2026.

Get insights on thousands of stocks from the global community of over 7 million individual investors at Simply Wall St. MFA Financial (MFA) reported a first quarter 2026 net loss of US$0.984 million, compared with net income of US$41.18 million a year earlier, with basic and diluted loss per share of US$0.11. See our latest analysis for MFA Financial. Despite the weak first quarter result, MFA Financial’s recent share price performance has been relatively steady, with a 2.31% year to date share price return and a 19.94% 1 year total shareholder return that points to gradually improving sentiment. If this earnings setback has you reassessing income and credit focused ideas, it could be a useful moment to screen for other opportunities through 18 top founder-led companies With MFA Financial trading at US$9.75 against an analyst price target of US$15.00 and an intrinsic value estimate close to the current price, investors may ask whether there is potential upside or if future growth expectations are already reflected in the share price. The most followed narrative on MFA Financial suggests a fair value of $15.10 compared with the last close of $9.75, framing the stock as materially undervalued by that lens. Read the complete narrative. Want to see how this playbook translates into the $15.10 fair value? The narrative leans heavily on a reshaped earnings mix, higher margins and a richer future earnings multiple. The key is how those moving parts interact over several years, not just the next quarter. Result: Fair Value of $15.10 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, this depends on credit losses remaining contained and access to securitization funding staying reliable, since either pressure point could quickly weaken the undervalued narrative. Find out about the key risks to this MFA Financial narrative. The analyst-led narrative points to a fair value of $15.10 and labels MFA Financial as undervalued. However, the SWS DCF model presents a much narrower gap, with an estimated future cash flow value of $9.73 compared with a share price of $9.75, which effectively suggests the stock is fairly valued on that basis. When one approach indicates a 35.4% discount and another aligns almost exactly with the current price, it raises a straightforward question for you as an investor: which set of assumptions feels more realistic for how cash flows and returns will actually play out? Look into how the SWS DCF model arrives at its fair value. Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out MFA Financial for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 51 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity. Mixed signals around valuation and earnings can make sentiment feel uncertain, so it helps to move fast, review the data for yourself, and weigh both the potential upsides and pressure points by checking the 2 key rewards and 2 important warning signs Before closing the tab, give yourself options. A few minutes with the right stock lists can surface ideas that fit your goals better than sticking to one story. Target potential value opportunities by scanning companies screened as 51 high quality undervalued stocks that may trade below what their fundamentals suggest. Prioritize resilience with stocks highlighted in the 72 resilient stocks with low risk scores to focus on steadier risk profiles when markets feel uncertain. Hunt for lesser known opportunities using the screener containing 23 high quality undiscovered gems that spotlight companies with solid fundamentals but limited attention. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include MFA. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]