Specialized lender reports solid financial performance despite market challenges
Specialized lender MFA Financial (MFA) has published its financial report for the second quarter of 2024, navigating another volatile period for the fixed-income and mortgage markets.
The company generated distributable earnings of $45.6 million, or $0.44 per basic common share, and saw its economic book value climb to $14.34 per share.
During the quarter, MFA purchased or originated $688 million in residential mortgage loans with an average coupon of 9.6% and added $176 million of agency mortgage-backed securities (MBS).
“We continued to execute our strategy of acquiring residential mortgage assets at attractive levels,” MFA president and CEO Craig Knutson said in a media release.
MFA’s residential whole loan balance reached $9.2 billion after acquiring $688.2 million in loans, including $422.1 million in business purpose loans and $266.1 million in non-QM loans.
Its wholly owned subsidiary, Lima One Capital, funded $270 million in new business purpose loans and $152.2 million in draws on previously originated transitional loans.
On the liability side, the company repaid $170 million in maturing convertible notes and issued $75 million in senior unsecured notes. MFA also completed two securitizations totaling $557 million in non-QM and transitional loans.
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“We also securitized $303 million of primarily re-performing loans subsequent to quarter-end,” Knutson added. “Finally, we once again benefited from our $3.3 billion interest rate swap position, which generated a net positive carry of $29 million.”
The company’s securities portfolio grew to $863.3 million with the addition of $175.5 million in Agency MBS. MFA also reduced its real estate owned (REO) portfolio by selling 63 properties for a total of $25.6 million.
MFA’s 60+ day delinquencies improved to 6.5% from 6.9% in the previous quarter. The company completed two loan securitizations during the quarter, bringing its total securitized debt to approximately $5 billion.
MFA increased its interest rate swap position to a notional amount of approximately $3.3 billion. The company estimates the net effective duration of its investment portfolio rose to 1.12 from 0.98 over the second quarter.
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