MFA Financial, Inc. Announces Third Quarter 2012 Financial Results

06 Nov, 2012, 08:30 ET from MFA Financial, Inc.

NEW YORK, Nov. 6, 2012 /PRNewswire/ -- MFA Financial, Inc. (NYSE: MFA) today announced financial results for the third quarter ended September 30, 2012. 

Third Quarter 2012 and other recent highlights:

  • Third quarter net income per common share of $0.21 and Core Earnings (as defined below) per common share of $0.19
  • Book value per common share grew to $8.80 as of September 30, 2012, compared to $7.45 as of June 30, 2012, and $6.74 at December 31, 2011. This 18% increase in book value per share in the third quarter and the 30% increase in book value per share in the first nine months of 2012 are the result of MFA's total return strategy of investing in both Agency and discounted Non-Agency MBS.
  • On October 31, 2012, MFA paid its third quarter 2012 dividend of $0.21 per share of common stock to stockholders of record as of October 12, 2012. 

For the third quarter ended September 30, 2012, MFA generated net income allocable to common stockholders of $75.7 million, or $0.21 per share of common stock.  Core Earnings for the third quarter were $68.9 million, or $0.19 per share of common stock.  "Core Earnings" is a Non-GAAP financial measure, which reflects net income excluding $4.3 million of gains on sale of MBS and a $2.5 million increase in the fair value of the securities underlying our Linked Transactions.

Stewart Zimmerman, MFA's Chairman of the Board and CEO, said, "MFA continues to provide stockholders with attractive returns through what we believe to be appropriately leveraged investments in both Agency and Non-Agency residential MBS.  At quarter-end our debt to equity ratio (including the liabilities underlying our Linked Transactions) was 3.2:1.  In this low interest rate environment, core earnings per share was $0.19 versus $0.20 in the second quarter.  Our Agency portfolio had an average amortized cost basis of 103.2% of par as of September 30, 2012, and generated a 2.66% yield in the third quarter.  Our Non-Agency portfolio had an average amortized cost of 72.6% of par as of September 30, 2012, and generated a loss-adjusted yield of 6.65% in the third quarter (Non-Agency average cost and loss-adjusted yield are adjusted for the impact of MBS Linked Transactions)."

"We believe MFA, an internally managed REIT, continues to be a very efficient vehicle for delivering the benefits of residential MBS investment to stockholders.  For the three months ended September 30, 2012, MFA's cost for compensation and benefits and other general and administrative expenses were $8.7 million or an annualized 1.06% of stockholders' equity as of September 30, 2012."

William Gorin, MFA's President, added, "The Fed continues to combat deflationary pressures through its monetary policy. Given rising multifamily rents, limited housing construction, capital flows into rent-to-own (REO) foreclosure purchases and demographic-driven U.S. household formation, there have been increasing signs of home price stabilization. However, we continue to appropriately factor in the uncertainty regarding housing fundamentals into our cash flow projection and credit reserve analysis.  Our Non-Agency MBS loss adjusted yield of 6.65% is based on projected defaults that are approximately twice the amount of underlying mortgage loans that are presently 60+ days delinquent. MFA's Non-Agency MBS prices increased, on average, approximately 6.5 points in the third quarter. We believe this reflects the impact of a shrinking universe of seasoned Non-Agency MBS and improvement in fundamental assumptions as investors assign lower probabilities to the more pessimistic housing scenarios."

MFA's $5.246 billion fair market value of Non-Agency MBS had a face amount of $6.512 billion, an amortized cost of $4.736 billion and a net purchase discount of $1.776 billion (all amounts adjusted for the impact of MBS Linked Transactions) at September 30, 2012.  This discount consists of a $1.466 billion credit reserve and other-than-temporary impairments and a $309.6 million net accretable discount. In the third quarter, the net transfer to accretable discount from credit reserve was $54.1 million. This amount will be realized in income over the life of the underlying assets. At September 30, 2012, MFA's Non-Agency MBS had 3.5% average structured credit enhancement in the form of subordination (subordinated bonds which absorb losses before MFA's Non-Agency MBS are impacted). 

In the third quarter, the Fed announced that it intends to keep the target range for the Federal Funds rate at 0 to ¼ percent and anticipates that exceptionally low levels are likely to be warranted at least through mid-2015. The Fed also announced that it will increase its holdings of Agency MBS by $40 billion per month until the labor market improves. It is also continuing its policy of reinvesting principal payments from existing Agency MBS holdings, bringing total monthly purchases near $85 billion. These actions have put downward pressure on Agency MBS yields.

Prepayments for MFA's MBS portfolio did trend up in the third quarter. Unlike MFA's Agency MBS, due to their discounted purchase prices, the return on Non-Agency MBS is generally positively impacted if prepayment rates increase.  The following table presents the weighted average prepayment speed on MFA's MBS portfolio (including MBS underlying Linked Transactions).

 

Table 1

Third Quarter   2012 Average CPR

Second Quarter   2012 Average CPR

MBS Portfolio

19.06%

18.17%

Agency MBS

21.62%

20.39%

Non-Agency MBS

15.41%

14.86%

 

As of September 30, 2012, under its swap agreements, MFA has a weighted average fixed pay rate of interest of 2.64% and a floating receive rate of 0.25% on notional balances totaling $2.761 billion, with an average maturity of 16 months.  In the fourth quarter, $341.2 million notional amount of existing swaps with a weighted average fixed pay rate of 4.43% is scheduled to expire.

The following table presents MFA's asset allocation as of September 30, 2012 and the third quarter 2012 yield on average interest earning assets, average MBS cost of funds, cost of Senior Notes and net interest rate spread for the various asset types.

 

Table 2

ASSET ALLOCATION (1)

At September 30, 2012

Agency MBS

Non-Agency MBS (2)

MBS Portfolio

Cash (3)

Other, net (4)

Total

($ in Thousands)

Amortized Cost

$

7,218,952

$

4,735,911

$

11,954,863

$

457,455

$

(18,758)

$

12,393,560

Market Value

$

7,476,848

$

5,246,033

$

12,722,881

$

457,455

$

(18,758)

$

13,161,578

Less Payable for Unsettled Purchases

(126,035)

-

(126,035)

-

-

(126,035)

Less Repurchase Agreements

(6,460,037)

(1,905,598)

(8,365,635)

-

-

(8,365,635)

Less Multi-year Collateralized Financing

-

(503,114)

(503,114)

-

-

(503,114)

  Arrangements (5)

Less Securitized Debt

-

(749,471)

(749,471)

-

-

(749,471)

Less Senior Notes

-

-

-

-

(100,000)

(100,000)

Equity Allocated

$

890,776

$

2,087,850

$

2,978,626

$

457,455

$

(118,758)

$

3,317,323

Less Swaps at Market Value

-

-

-

-

(78,169)

(78,169)

Net Equity Allocated

$

890,776

$

2,087,850

$

2,978,626

$

457,455

$

(196,927)

$

3,239,154

Debt/Net Equity Ratio (6)

7.39 x

1.51 x

3.27 x

3.20 x

For the Quarter Ended September

30, 2012

Yield on Average Interest Earning

2.66%

6.65%

4.26%

0.04%

-

4.12%

  Assets

Less Average MBS Cost of Funds (7)

(1.53)

(2.40)

(1.82)

-

-

(1.82)

Less Cost of Senior Notes (8)

-

-

-

-

(8.03)%

(8.03)

Net Interest Rate Spread

1.13%

4.25%

2.44%

0.04%

(8.03)%

2.23%

(1)

Information presented with respect to Non-Agency MBS, related repurchase agreement borrowings and resulting totals are presented on a non-GAAP basis.  See the accompanying Reconciliation of non-GAAP Financial Measures.

(2)

Includes Non-Agency MBS and repurchase agreements underlying Linked Transactions.  The purchase of a Non-Agency MBS and repurchase borrowing of this MBS with the same counterparty are accounted for under GAAP as a "linked transaction."  The two components of a linked transaction (MBS purchase and associated borrowings under a repurchase agreement) are evaluated on a combined basis and are presented net as "Linked Transactions" on MFA's consolidated balance sheet.

(3)

Includes cash, cash equivalents and restricted cash.

(4)

Includes securities obtained and pledged as collateral, interest receivable, goodwill, prepaid and other assets, obligation to return securities obtained as collateral of $509.7 million, Senior Notes, interest payable, derivative hedging instruments at fair value, dividends payable and accrued expenses and other liabilities.

(5)

Multi-year collateralized financing arrangements are viewed by management as having an effective term of 3.3 years, but for GAAP reporting purposes are disclosed within repurchase agreements and as having a contractual term of over 30 days to 90 days.

(6)

Represents the sum of borrowings under repurchase agreements, multi-year collateralized financing arrangements, payable for unsettled purchases, obligation to return securities obtained as collateral of $509.7 million, securitized debt and Senior Notes as a multiple of net equity allocated.

(7)

Includes effect of swaps.

(8)

Includes amortization of Senior Notes issuance costs.

 

At September 30, 2012, MFA's $12.723 billion of Agency and Non-Agency MBS, which includes MBS underlying Linked Transactions, were backed by Hybrid, adjustable and fixed-rate mortgages.  Additional information about these MBS, including months to reset and three-month average CPR, is presented below:

 

Table 3

Agency MBS

Non-Agency MBS

Total

($ in thousands)

Market

Avg

Avg

Market

Avg

Avg

  Market

Avg

Avg

Time to Reset

Value

MTR (1)

CPR (2)

Value

MTR (1)

CPR (2)

Value

MTR (1)

CPR (2)

< 2 years (3)

$

1,621,052

7

20.56%

$

2,955,601

5

14.30%

$

4,576,653

6

16.58%

2-5 years

2,414,580

38

30.43

664,114

47

18.67

3,078,694

40

27.96

> 5 years

1,279,614

75

16.17

-

-

-

1,279,614

75

16.17

ARM-MBS Total

$

5,315,246

37

24.03%

$

3,619,715

13

15.12%

$

8,934,961

28

20.52%

15-year fixed

$

2,161,602

14.41%

$

12,165

27.99%

$

2,173,767

14.51%

30-year fixed

-

-

1,607,696

15.98

1,607,696

15.98

40-year fixed

-

-

6,457

13.33

6,457

13.33

Fixed-Rate Total

$

2,161,602

14.41%

$

1,626,318

16.07%

$

3,787,920

15.18%

MBS Total

$

7,476,848

21.62%

$

5,246,033

15.41%

$

12,722,881

19.06%

(1) MTR or Months To Reset is the number of months remaining before the coupon interest rate resets. At reset, the MBS coupon will adjust based upon the underlying benchmark interest rate index, margin and periodic or lifetime caps. The MTR does not reflect scheduled amortization or prepayments.

(2) Average CPR weighted by positions as of the beginning of each month in the quarter.

(3) Includes floating rate MBS that may be collateralized by fixed-rate mortgages.

 

MFA plans to hold a conference call on Tuesday, November 6, 2012, at 10:00 a.m. (Eastern Time) to discuss its third quarter 2012 financial results.  The number to dial in order to listen to the conference call is (866) 269-9608 in the U.S. and Canada.  International callers must dial is (612) 332-0718. A replay of the call will be available through Wednesday, February 6, 2013, and can be accessed by dialing (800) 475-6701 in the U.S. and Canada or (320) 365-3844 internationally and entering access code 270066.  Live audio of the conference call will also be accessible over the internet at http://www.mfafinancial.com through the appropriate link on MFA's Investor Information page. To listen to the call over the internet, go to the website at least 15 minutes before the call to register and to download and install any needed audio software.  An audio replay of the call will also be available on MFA's website following the call.

When used in this press release or other written or oral communications, statements which are not historical in nature, including those containing words such as "will," "believe," "expect," "anticipate," "estimate," "plan," "continue," "intend," "should," "may" 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. Statements regarding the following subjects, among others, may be forward-looking: changes in interest rates and the market value of MFA's MBS; changes in the prepayment rates on the mortgage loans securing MFA's MBS; changes in the default rates and management's assumptions regarding default rates on the mortgage loans securing MFA's Non-Agency MBS; MFA's ability to borrow to finance its assets and the terms, including the cost, maturity and other terms, of any such borrowing; implementation of or changes in government regulations or programs affecting MFA's business; 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 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 in engaged in the business of acquiring mortgages and mortgage-related interests; and risks associated with investing in real estate assets, including changes in business conditions and the general economy. These and other risks, uncertainties and factors, including those described in the annual, quarterly and current reports that MFA files with the Securities and Exchange Commission, could cause MFA's actual results to differ materially from those projected in any forward-looking statements it makes. All forward-looking statements 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.

 

MFA FINANCIAL, INC.

CONSOLIDATED BALANCE SHEETS

September 30,

December 31,

2012

2011

(In Thousands, Except Per Share Amounts)

(Unaudited)

Assets:

Mortgage-backed securities ("MBS"):

  Agency MBS, at fair value ($6,902,954 and $6,666,963 pledged

$

7,476,848

$

7,137,531

    as collateral, respectively)

  Non-Agency MBS, at fair value ($1,489,463 and $692,534 pledged

2,541,846

1,492,376

    as collateral, respectively)

  Non-Agency MBS transferred to consolidated variable interest entities ("VIEs")

2,655,129

2,283,070

Securities obtained and pledged as collateral, at fair value

509,704

306,401

Cash and cash equivalents

450,442

394,022

Restricted cash

7,013

15,502

MBS linked transactions, net ("Linked Transactions"), at fair value

12,767

55,801

Interest receivable

44,980

42,837

Derivative hedging instruments, at fair value

-

26

Goodwill

7,189

7,189

Prepaid and other assets

29,251

15,879

     Total Assets

$

13,735,169

$

11,750,634

Liabilities:

Repurchase agreements

$

8,832,326

$

7,813,159

Securitized debt

749,471

875,520

Obligation to return securities obtained as collateral, at fair value

509,704

306,401

8% Senior Notes due 2042 ("Senior Notes")

100,000

-

Accrued interest payable

14,117

9,112

Derivative hedging instruments, at fair value

78,169

114,220

Dividends and dividend equivalents rights ("DERs") payable

76,051

97,525

Payable for unsettled purchases

126,035

27,056

Accrued expenses and other liabilities

10,142

9,881

     Total Liabilities

$

10,496,015

$

9,252,874

Stockholders' Equity:

Preferred stock, $.01 par value; series A 8.50% cumulative redeemable;

$

38

$

38

  5,000 shares authorized; 3,840 shares issued and outstanding  ($96,000

  aggregate liquidation preference)

Common stock, $.01 par value; 895,000 shares authorized;

3,570

3,561

   357,013 and 356,112 issued and outstanding, respectively

Additional paid-in capital, in excess of par

2,804,688

2,795,925

Accumulated deficit

(255,591)

(243,061)

Accumulated other comprehensive income/(loss)

686,449

(58,703)

     Total Stockholders' Equity

$

3,239,154

$

2,497,760

     Total Liabilities and Stockholders' Equity

$

13,735,169

$

11,750,634

 

MFA FINANCIAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended

Nine Months Ended

September 30,

September 30,

(In Thousands, Except Per Share Amounts)

2012

2011

2012

2011

(Unaudited)

Interest Income:

Agency MBS

$

47,198

$

59,957

$

150,048

$

186,114

Non-Agency MBS

37,087

24,379

95,555

76,098

Non-Agency MBS transferred to consolidated VIEs

40,812

46,405

128,502

110,435

Cash and cash equivalent investments

38

25

84

106

    Interest Income

125,135

130,766

374,189

372,753

Interest Expense:

Repurchase agreements

39,317

34,924

111,639

102,513

Securitized debt

4,477

3,828

13,186

8,087

Senior Notes

2,007

-

3,791

-

    Interest Expense

45,801

38,752

128,616

110,600

    Net Interest Income

79,334

92,014

245,573

262,153

Other-Than-Temporary Impairments:

Total other-than-temporary impairment losses

-

(14,913)

(879)

(15,550)

Portion of loss recognized in/(reclassified from)

-

10,922

(321)

9,167

    other comprehensive income

    Net Impairment Losses Recognized in Earnings

-

(3,991)

(1,200)

(6,383)

Other Income, net:

Unrealized net gains and net interest income

3,177

733

11,444

9,970

    from Linked Transactions

Gains on sales of MBS

4,279

4,196

7,232

4,196

Revenue from operations of real estate held-for-sale

-

390

-

1,146

Other, net

1

(898)

2

(886)

    Other Income, net

7,457

4,421

18,678

14,426

Operating and Other Expense:

Compensation and benefits

5,984

5,477

16,752

15,591

Other general and administrative expense

2,666

3,031

8,679

7,981

Real estate held-for-sale operating expense

-

237

-

774

    Operating and Other Expense

8,650

8,745

25,431

24,346

Net Income

78,141

83,699

237,620

245,850

Less: Preferred Stock Dividends

2,040

2,040

6,120

6,120

    Net Income Available to Common Stock and

$

76,101

$

81,659

$

231,500

$

239,730

       Participating Securities

Earnings per Common Share - Basic and Diluted

$

0.21

$

0.23

$

0.65

$

0.71

Dividends Declared per Share of Common Stock

$

0.21

$

0.25

$

0.68

$

0.74

 

Reconciliations of Non-GAAP Financial Measures

This press release contains disclosures related to MFA's Core Earnings, Core Earnings per common share, investments in Non-Agency MBS, and returns on such assets for the three months ended September 30, 2012, which constitute non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission.  MFA's management believes that these non-GAAP financial measures presented in this press release, when considered together with GAAP financial measures, provide information that is useful to investors in understanding period-over-period operating results and balance sheet composition.  An analysis of any non-GAAP financial measures should be made in conjunction with results presented in accordance with GAAP.

Core Earnings and Core Earnings per common share for the three months ended September 30, 2012, are not measures of performance in accordance with GAAP, as they exclude gains on the sale of MBS and changes in fair value of MBS underlying our Linked Transactions.

MFA believes that Core Earnings and Core Earnings per share provides investors with a useful measure to assess the performance of the Company's ongoing business and useful supplemental information to both management and investors in evaluating our financial results.  A reconciliation of the GAAP items discussed above to their non-GAAP measures for the three months ended September 30, 2012, are as follows:

 

Table 4

Three Months Ended

September 30, 2012

(In Thousands, Except Per Share Amounts)

Reconciliation

Basic and Diluted EPS

GAAP Net Income Available to Common Stock and

$

76,101

-

Participating Securities

Less: Dividends and Dividend Equivalent Rights on

(360)

-

Participating Securities

GAAP Net Income Allocable to Common Stockholders

$

75,741

$

0.21

Non-GAAP Adjustments:

Net Unrealized Gains on Linked Transactions

$

(2,533)

-

Gains on Sales of MBS

(4,279)

Total Adjustments to Arrive at Core Earnings

$

(6,812)

$

(0.02)

Core Earnings

$

68,929

$

0.19

Weighted Average Common Shares Outstanding - Basic and Diluted

356,921

 

As noted above, certain Non-Agency MBS purchases are presented as a component of Linked Transactions in MFA's GAAP financial statements for the three months ended September 30, 2012.  In assessing the performance of the Non-Agency MBS portfolio, MFA's management does not view these transactions as linked, but rather views the performance of the linked Non-Agency MBS and the related repurchase agreement borrowings as it would any other Non-Agency MBS that is not part of a linked transaction.  Consequently, MFA considers that these non-GAAP financial measures assist investors in analyzing the performance of MFA's Non-Agency MBS in the same way that MFA's management assesses such assets.  However, as noted above, these non-GAAP financial measures do not take into account the effect of the changes in fair value of MBS underlying Linked Transactions, and gains on sales of MBS, which are reflected in GAAP earnings.

Information pertaining to MFA's Non-Agency MBS that are a component of Linked Transactions are reconciled below as of and for the three months ended September 30, 2012, with the most directly comparable financial measure calculated in accordance with GAAP, as follows:

 

Table 5

Adjustments to Include

Assets/Liabilities of

GAAP Based

Underlying Linked

Non-GAAP

(Dollars in Thousands)

Information

Transactions

Presentation

At September 30, 2012:

Repurchase Agreement Borrowings

$

8,832,326

$

36,423

(1)

$

8,868,749

Securitized Debt

749,471

-

749,471

Obligation to Return Securities Obtained as Collateral

509,704

-

509,704

Senior Notes

100,000

-

100,000

Payable for Unsettled MBS Purchases

126,035

-

126,035

Total Borrowings (Debt)

$

10,317,536

$

36,423

(1)

$

10,353,959

Stockholders' Equity

$

3,239,154

$

-

$

3,239,154

Debt-to-Equity (Debt/Stockholders' Equity)

3.2 x

-

3.2 x

For the Three Months Ended September 30, 2012:

Average Interest Earning Assets

$

12,185,427

$

51,173

(2)

$

12,236,600

Interest Income

$

125,135

$

812

$

125,947

Yield on Average Interest Earning Assets

4.11%

6.34%

4.12%

Average Total Borrowings

$

9,660,381

$

40,373

(1)

$

9,700,754

Interest Expense

$

45,801

$

168

$

45,969

Average Cost of Funds

1.89%

1.66%

1.89%

Net Interest Rate Spread

2.22%

4.68%

2.23%

(1)  Represents borrowings under repurchase agreements underlying Linked Transactions.

(2)  Represents Non-Agency MBS underlying Linked Transactions.

 

 

The table below reconciles MFA's Non-Agency MBS and related repurchase agreement borrowings and securitized debt on a GAAP basis to reflect on a combined basis its Non-Agency MBS and related repurchase agreements underlying its Linked Transactions, which is a non-GAAP financial measure. Based on this non-GAAP presentation, MFA has also presented certain resulting performance measures (reflected in the table below) on a Non-GAAP basis.   

 

Table 6

Adjustments to Include

Assets/Liabilities

GAAP Based

Underlying Linked

Non-GAAP

(Dollars in Thousands)

Information

(1)

   Transactions

(2)

Presentation

At September 30, 2012:

Amortized Cost of Non-Agency MBS

$

4,690,253

$

45,658

$

4,735,911

Fair Value of Non-Agency MBS

$

5,196,975

$

49,058

$

5,246,033

Face/Par Value of Non-Agency MBS

$

6,457,071

$

54,690

$

6,511,761

Purchase (Discount) Designated as Credit Reserve and OTTI

$

(1,459,651)

(3)

$

(6,646)

$

(1,466,297)

(4)

Net Purchase (Discount) Designated as Accretable

(307,167)

(2,386)

(309,553)

  Total Purchase (Discount) on Non-Agency MBS

$

(1,766,818)

(3)

$

(9,032)

$

(1,775,850)

(4)

Non-Agency Repurchase Agreements and

$

3,121,760

$

36,423

$

3,158,183

  Securitized Debt

For the Three Months Ended September 30, 2012:

Non-Agency MBS Average Amortized Cost

$

4,685,068

$

51,173

$

4,736,241

Non-Agency Average Total Borrowings

$

3,161,971

$

40,373

$

3,202,344

Coupon Interest on Non-Agency MBS

$

69,139

$

640

$

69,779

Effective Yield Adjustment

(5)

8,760

172

8,932

Interest Income on Non-Agency MBS

$

77,899

$

812

$

78,711

Interest Expense on Non-Agency Total Borrowings

$

19,143

$

168

$

19,311

Yield on Average Interest Earning Non-Agency MBS

6.65%

6.34%

6.65%

Non-Agency Average Cost of Funds

2.41

1.66

2.40

Non-Agency Interest Rate Spread

4.24%

4.68%

4.25%

(1)

Includes Non-Agency MBS transferred to consolidated VIEs.

(2)

Adjustment to reflect Non-Agency MBS underlying Linked Transactions and borrowings under repurchase agreements underlying Linked Transactions.

(3)

Amounts disclosed reflect purchase discount designated as credit reserve of $1.409 billion and OTTI of $50.3 million.

(4)

Amounts disclosed reflect purchase discount designated as credit reserve of $1.416 billion and OTTI of $50.3 million.

(5)

The effective yield adjustment on Non-Agency MBS is the difference between net income calculated using the net yield on average interest earning Non-Agency MBS, which is based on management's estimates of future cash flows for Non-Agency MBS, less the current coupon yield.

CONTACT:

MFA Investor Relations

800-892-7547

www.mfafinancial.com

SOURCE MFA Financial, Inc.



RELATED LINKS

http://www.mfafinancial.com