MFA Financial (MFA) Tops Q3 EPS by 1c

November 6, 2019 8:32 AM EST

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MFA Financial (NYSE: MFA) reported Q3 EPS of $0.20, $0.01 better than the analyst estimate of $0.19.

  • MFA generated third quarter GAAP net income of $91.8 million, or $0.20 per common share. Core earnings, a non-GAAP financial measure of MFA\'s operating performance that is calculated by adjusting GAAP net income to exclude the impact of unrealized gains and losses on certain investments in residential mortgage securities and related hedges, was also $0.20 per common share.
  • GAAP book value per common share during the quarter continued to be stable and was $7.09 at September 30, 2019.
  • Economic book value per common share, a non-GAAP financial measure of MFA\'s financial position that adjusts GAAP book value by the amount of unrealized mark to market gains on residential whole loans held at carrying value for GAAP reporting, was $7.41 at September 30, 2019.
  • MFA acquired, or committed to acquire, approximately $1.1 billion of residential mortgage assets in the third quarter, including $918 million of residential whole loans. In addition, consistent with the ongoing execution of our residential whole loan investment strategy, we provided $100 million of capital to select loan origination partners.
  • Interest income on MFA\'s purchased performing loan portfolio increased 14.3% from the prior quarter to $53.6 million, building on the growth observed in this portfolio over the past several quarters.
  • On October 31, 2019, MFA paid its third quarter 2019 dividend of $0.20 per share of common stock to shareholders of record as of September 30, 2019.

Craig Knutson, MFA's CEO and President, said, "MFA's investment portfolio activity in the third quarter of 2019 was driven by acquisitions of $1.1 billion of new assets. Our residential whole loan and REO portfolio increased by $548 million, largely due to investments in purchased performing loans. Our growth in purchased performing loans was driven by the acquisition of Non-QM, fix and flip and single-family rental loans. We continue to gain traction on these new acquisition efforts, which involve relationships cultivated over the past two years. Through our willingness and ability to explore and enter into various arrangements, including flow agreements, strategic alliances and also minority equity investments, we have been able to partner with originators to source attractive new investments, while enabling them to grow with support from MFA as a reliable provider of capital. During the quarter we made approximately $100 million of capital contributions to select loan origination partners."

Mr. Knutson added, "Through our asset selection and hedging strategy, our estimated net effective duration, a gauge of our portfolio's sensitivity to interest rates, remained relatively low and measured 1.14 at quarter-end. Our portfolio continues to deliver GAAP book value stability. In addition, MFA's Economic book value was $7.41 at September 30, 2019 and has increased by approximately 1% during 2019. Leverage, which reflects the ratio of our financing obligations to equity, was 2.8:1 at quarter-end, unchanged from the end of the second quarter."

For earnings history and earnings-related data on MFA Financial (MFA) click here.

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