Core Insights - David A. Johnson is the founder and principal of Endurance Capital Management, specializing in various investment vehicles including stocks, bonds, options, ETFs, REITs, real estate, closed-end funds, hedge funds, and private credit [1] Group 1 - David A. Johnson has over 30 years of experience in investing and holds a Master of Science (MS) Degree in Finance with a concentration in Investment Analysis from Boston University [1] - He also possesses a Certificate in Financial Planning and an MBA from Fordham University [1]

PART I. FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Total assets reached $11.52 billion by March 31, 2025, with Q1 2025 net income increasing to $41.2 million and basic EPS to $0.32 Consolidated Balance Sheet Highlights (Unaudited) | (in billions) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$11.52** | **$11.41** | | Residential whole loans, net | $8.78 | $8.81 | | Securities, at fair value | $1.79 | $1.54 | | **Total Liabilities** | **$9.68** | **$9.57** | | Financing agreements | $9.37 | $9.16 | | **Total Stockholders' Equity** | **$1.84** | **$1.84** | Consolidated Statements of Operations Highlights (Unaudited) | (in millions, except per share) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net Interest Income | $57.54 | $47.81 | | Other Income/(Loss), net | $24.51 | $22.40 | | **Net Income** | **$41.18** | **$23.21** | | Net Income Available to Common Stock | $32.96 | $15.00 | | **Basic Earnings per Common Share** | **$0.32** | **$0.14** | | **Diluted Earnings per Common Share** | **$0.31** | **$0.14** | Consolidated Statements of Cash Flows Highlights (Unaudited) | (in millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by/(used in) operating activities | $(14.56) | $53.47 | | Net cash provided by/(used in) investing activities | $(251.55) | $(91.40) | | Net cash provided by/(used in) financing activities | $138.09 | $78.90 | | **Net increase/(decrease) in cash, cash equivalents and restricted cash** | **$(128.02)** | **$40.96** | [Notes to the Unaudited Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Unaudited%20Consolidated%20Financial%20Statements) Notes detail accounting policies, fair value elections, and VIE consolidation, highlighting the $8.8 billion residential loan portfolio and $5.9 billion securitized debt - The company has elected to be treated as a REIT and must distribute at least **90%** of its annual REIT taxable income to stockholders. Certain subsidiaries are treated as taxable REIT subsidiaries (TRS)[22](index=22&type=chunk) - Since the second quarter of 2021, the company has elected the fair value option for all originated or acquired residential whole loans. Loans acquired before this period and not elected for fair value are held at carrying value[26](index=26&type=chunk) Residential Whole Loan Portfolio by Type (March 31, 2025) | Loan Type | Carrying/Fair Value (in billions) | | :--- | :--- | | Non-QM loans | $4.54 | | Single-family rental loans | $1.31 | | Legacy RPL/NPL loans | $1.06 | | Single-family transitional loans | $0.99 | | Multifamily transitional loans | $0.84 | | **Total** | **$8.78** | Financing Agreements Breakdown (March 31, 2025) | Financing Type | Carrying/Fair Value (in billions) | | :--- | :--- | | Securitized debt | $5.87 | | Agreements with mark-to-market collateral provisions | $2.89 | | Agreements with non-mark-to-market collateral provisions | $0.42 | | Senior Notes | $0.18 | | **Total** | **$9.37** | Segment Net Income (Three Months Ended March 31, 2025) | Segment | Net Income/(Loss) (in millions) | | :--- | :--- | | Mortgage-Related Assets | $56.18 | | Lima One | $5.38 | | Corporate | $(20.39) | | **Total Net Income** | **$41.18** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=63&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Q1 2025 performance includes GAAP EPS of $0.32, Distributable Earnings of $0.29, $875 million in new assets, and a dividend increase to $0.36 - The company's principal business objective is to deliver shareholder value through distributable income and asset performance linked to residential mortgage credit fundamentals[251](index=251&type=chunk) - In Q1 2025, the company added approximately **$875 million** of target assets, including **$383 million** of Non-QM loans, **$223 million** of Business purpose loans, and **$268 million** of Agency MBS[262](index=262&type=chunk) - The dividend on common stock was increased from **$0.35** to **$0.36** per share during the quarter, reflecting the Board's confidence in the portfolio's earnings power[263](index=263&type=chunk) Q1 2025 Performance Summary | Metric | Value | | :--- | :--- | | GAAP EPS (basic) | $0.32 | | Distributable Earnings per share (non-GAAP) | $0.29 | | GAAP Book Value per share | $13.28 | | Economic Book Value per share (non-GAAP) | $13.84 | Net Interest Spread and Margin (Including Swaps) | Quarter Ended | Net Interest Spread | Net Interest Margin | | :--- | :--- | :--- | | March 31, 2025 | 1.84% | 2.63% | | December 31, 2024 | 1.99% | 2.76% | | March 31, 2024 | 2.06% | 2.88% | [Reconciliation of GAAP and Non-GAAP Financial Measures](index=86&type=section&id=Reconciliation%20of%20GAAP%20and%20Non-GAAP%20Financial%20Measures) Reconciliation details non-GAAP Distributable Earnings ($0.29 per share) and Economic Book Value ($13.84 per share), offering supplemental financial insights - Distributable earnings is a non-GAAP measure that adjusts GAAP net income by removing unrealized gains/losses on investments, debt, and hedges, as well as certain non-cash expenses and one-time securitization costs[351](index=351&type=chunk) - Economic book value is a non-GAAP measure that adjusts GAAP book value by marking the portfolios of residential whole loans and securitized debt held at carrying value to their respective fair values[356](index=356&type=chunk) Reconciliation to Distributable Earnings (Q1 2025) | (in millions, except per share) | Amount | | :--- | :--- | | GAAP Net income used in basic EPS | $32.75 | | Total adjustments | $(2.18) | | **Distributable earnings** | **$30.58** | | GAAP earnings per basic common share | $0.32 | | **Distributable earnings per basic common share** | **$0.29** | Reconciliation to Economic Book Value (March 31, 2025) | (in millions, except per share) | Amount | | :--- | :--- | | GAAP Stockholders' Equity for book value per common share | $1,363.4 | | Fair value adjustments (Loans & Debt) | $56.8 | | **Economic book value** | **$1,420.2** | | GAAP book value per common share | $13.28 | | **Economic book value per common share** | **$13.84** | [Quantitative and Qualitative Disclosures about Market Risk](index=92&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company is exposed to interest rate, credit, liquidity, and prepayment risks, managed through derivatives and underwriting, with interest rate sensitivity detailed - The company is exposed to interest rate risk as borrowing costs on financing agreements typically change more quickly than yields on its assets. Swaps are used to mitigate this risk[381](index=381&type=chunk) Interest Rate Sensitivity Analysis (Shock Table) as of March 31, 2025 | Change in Interest Rates | Change in Estimated Net Portfolio Value ($ in millions) | Percentage Change in Total Stockholders' Equity | | :--- | :--- | :--- | | +100 Basis Point Increase | $(147.49) | (8.02)% | | +50 Basis Point Increase | $(64.93) | (3.53)% | | -50 Basis Point Decrease | $47.29 | 2.57% | | -100 Basis Point Decrease | $76.94 | 4.19% | - Credit risk is present in the residential whole loan portfolio. It is managed through underwriting, low LTV ratios, and acquiring distressed loans at significant discounts[394](index=394&type=chunk)[395](index=395&type=chunk) - Liquidity risk stems from financing long-maturity assets with shorter-term borrowings and potential margin calls. As of March 31, 2025, the company had **$253.7 million** in cash and cash equivalents, plus **$156.0 million** in unencumbered residential whole loans and Agency MBS[405](index=405&type=chunk)[406](index=406&type=chunk) [Controls and Procedures](index=97&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during Q1 2025 - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[410](index=410&type=chunk) - No material changes in the company's internal control over financial reporting occurred during the quarter ended March 31, 2025[411](index=411&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=97&type=section&id=Item%201.%20Legal%20Proceedings) There are no material pending legal proceedings involving the company or its assets - There are no material pending legal proceedings[413](index=413&type=chunk) [Risk Factors](index=97&type=section&id=Item%201A.%20Risk%20Factors) No material changes from the risk factors previously disclosed in the 2024 Annual Report on Form 10-K - There are no material changes from the risk factors set forth in the 2024 Form 10-K[414](index=414&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=97&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) A $200 million stock repurchase program was authorized, with no shares repurchased in Q1 2025, but shares were withheld for employee equity tax obligations - A **$200 million** stock repurchase program was authorized on February 29, 2024, and remains fully available as of March 31, 2025[415](index=415&type=chunk)[417](index=417&type=chunk) - No shares were repurchased under the publicly announced program in Q1 2025. However, **482,079 shares** were withheld to satisfy tax obligations from employee equity plan settlements[418](index=418&type=chunk)[419](index=419&type=chunk) [Defaults Upon Senior Securities](index=98&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon its senior securities - None[421](index=421&type=chunk) [Mine Safety Disclosures](index=98&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) The company reported no mine safety disclosures - None[422](index=422&type=chunk) [Other Information](index=98&type=section&id=Item%205.%20Other%20Information) The company reported no other information for this item - None[423](index=423&type=chunk) [Exhibits](index=98&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed, including CEO/CFO certifications and Interactive Data Files (iXBRL) - The exhibits filed include CEO/CFO certifications under Sections 302 and 906 of the Sarbanes-Oxley Act and iXBRL data files[428](index=428&type=chunk)

Financial Data and Key Metrics Changes - For the first quarter, the company generated GAAP earnings of $41.2 million or $0.32 per basic common share, driven by growth in net interest income to $57.5 million and modest net mark to market gains [12][13] - GAAP book value was $13.28 per share and economic book value was $13.84 per share, each down less than 1% since December [12][16] - Distributable earnings for the quarter were $30.5 million or $0.29 per basic common share, down from $0.39 in the fourth quarter [15] Business Line Data and Key Metrics Changes - Lima One contributed $5.4 million of mortgage banking income for the quarter, a decline from $8.5 million in the fourth quarter, driven by lower origination volumes and a decline in gains on sales of single-family rental loans [13][21] - The company sourced $875 million of loans and securities, growing the portfolio to $10.7 billion from $10.5 billion at year-end [17] - The company issued its seventeenth non-QM securitization in March, selling $283 million of bonds at an average coupon of 5.58% [18] Market Data and Key Metrics Changes - Fixed income markets were generally constructive throughout the first quarter, with the ten-year yield closing the quarter at 4.2% [6] - Credit spreads tightened somewhat over January and February but widened modestly in March as the market anticipated trade policy announcements [7] - The company experienced total margin calls of just under $20 million, satisfied with $18.5 million of cash and $1.3 million of unpledged agency bonds [10] Company Strategy and Development Direction - The company emphasized its investment strategy, risk management, and financing rigor to weather market volatility [9][11] - The focus remains on three strategies: Non-QM, BPL, and Agency MBS, with plans to continue growing the Agency MBS segment as long as spreads remain attractive [17][20] - The company expects to see ample opportunities to add target assets at mid to high teen ROEs, which are seen as a proxy for current earnings power [14] Management's Comments on Operating Environment and Future Outlook - Management noted that increased uncertainty and volatility are not favorable for fixed income, particularly for mortgages, but highlighted the benefits of the company's strategic emphasis on securitization and diversification [9][10] - The company anticipates that distributable earnings will be increasingly volatile and less indicative of current earnings power over the next several quarters due to short-term headwinds [15][16] - Management estimates that economic book value is down approximately 2% to 4% since the end of the first quarter, primarily due to wider spreads [16] Other Important Information - The company hired nine loan officers in Q1 and seven so far in Q2 to improve volume growth at Lima One [22] - Delinquency rates for the entire loan portfolio remained stable at 7.5%, with some increases in specific segments due to repayments outpacing origination volume [22][23] Q&A Session Summary Question: Impact from the swap and runoff - The impact for the second quarter is expected to be about $0.02 in terms of Q1 versus Q2 impact [25] Question: Quantifying loan resolutions - Timing for resolutions is difficult to predict, but the majority of the multifamily transitional book is in foreclosure [26][27] Question: Returns breakdown between agencies and other asset classes - Mid to high teens returns are achievable in both agencies and non-QM, with BPL potentially above 20% [28][29] Question: Loan resolutions relative to marks - Resolutions have generally occurred at or near the mark, with comfort in current valuations [33][34] Question: Focus on new BPL originations - The focus remains on ground-up bridge and fix-and-flip transactions, with opportunities in ground-up projects [36] Question: Changes in book value in the second quarter - Economic book value is expected to be down 2% to 4% net of dividend accrual [40][42] Question: Number of approved loan sellers for NQM - The number of approved loan sellers varies from four to eight, with deeper relationships with fewer counterparties [43] Question: Demand for loan products and competitive environment - Strong demand from insurance companies remains, with no significant shakeout in the competitive environment [51][52] Question: Convexity risk in the portfolio - Convexity risk is driven by both the agency MBS and non-QM portfolios, with a conservative approach to calculations [59][60] Question: Nature of defaults in the Lima One portfolio - Defaults are driven by various factors, including high interest expenses and project delays, but tariffs are not expected to have a material impact [61][63]

Financial Data and Key Metrics Changes - For the first quarter of 2025, the company reported GAAP earnings of $41.2 million or $0.32 per basic common share, driven by growth in net interest income to $57.5 million and modest net mark-to-market gains [10][11] - Economic book value was down 0.6% to $13.84 per share, while GAAP book value was also down less than 1% [10][11] - Distributable earnings for the quarter were $30.5 million or $0.29 per basic common share, down from $0.39 in the fourth quarter [12][13] Business Line Data and Key Metrics Changes - Lima One contributed $5.4 million of mortgage banking income for the quarter, a decline from $8.5 million in the fourth quarter, attributed to lower origination volumes and a decrease in sales of single-family rental loans [11][19] - The company sourced $875 million of loans and securities, growing the investment portfolio to $10.7 billion from $10.5 billion at year-end [15] - Non-QM loans sourced during the quarter totaled $383 million with an average coupon of 7.8% and a weighted average LTV of 65% [16] Market Data and Key Metrics Changes - Fixed income markets were generally constructive throughout the first quarter, with the ten-year yield closing at 4.2% [5] - Credit spreads tightened in January and February but widened modestly in March due to anticipated trade policy announcements [6] - The company experienced total margin calls of just under $20 million, satisfied with $18.5 million in cash and $1.3 million in unpledged agency bonds [8] Company Strategy and Development Direction - The company emphasized its investment strategy, risk management, and financing rigor to navigate market volatility [8] - The focus remains on three strategies: Non-QM, Business Purpose Loans (BPL), and Agency MBS, with plans to continue growing the Agency MBS segment as long as spreads remain attractive [15][18] - The company expects to see ample opportunities to add target assets at mid to high teen ROEs, indicating confidence in long-term earnings power [11][12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged increased uncertainty and volatility in the market, particularly affecting fixed income and mortgage sectors [8] - The company anticipates short-term increases in realized credit losses as it works through challenged assets, but believes these headwinds are temporary [12][13] - Economic book value is estimated to be down approximately 2% to 4% since the end of the first quarter, primarily due to wider spreads [14] Other Important Information - The company declared an increased dividend of $0.36 per common share for the first quarter, reflecting confidence in the portfolio's earnings power [11] - The company issued its seventeenth non-QM securitization in early March, selling $283 million of bonds at an average coupon of 5.58% [16] Q&A Session Summary Question: Impact from the swap and runoff - The impact for the second quarter is expected to be about $0.02 in terms of Q1 versus Q2 impact due to remaining runoff [24] Question: Quantifying loan resolutions - Timing for loan resolutions is difficult to predict, but the majority of credit discounts are expected to flush out over the next year [25][26] Question: Returns breakdown between asset classes - Mid to high teens returns are achievable in both agencies and non-QM, with BPL potentially above 20% [27] Question: Loan resolutions relative to marks - Resolutions have generally occurred at or near the mark, with comfort in the current valuations [30][31] Question: Focus on new BPL originations - The focus remains on ground-up bridge and fix-and-flip projects, with opportunities in the current market [34] Question: Changes in book value - Economic book value is expected to be down 2% to 4% net of dividend accrual [38][40] Question: Number of approved loan sellers - The number of approved loan sellers varies from four to eight, with deeper relationships with fewer counterparties [42] Question: Securitization pricing in the current market - Recent deals have priced between 160 and 170, indicating strong demand despite wider spreads [46] Question: Demand for loan products and competitive environment - Demand from insurance companies remains strong, and there has not been a significant shakeout in the competitive environment [51][52]

Company Update FIRST QUARTER 2025 Forward-looking statements 2 When used in this presentation 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, ...

Core Viewpoint - MFA Financial (MFA) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system reflects changes in earnings estimates, which are strongly correlated with near-term stock price movements [4][6]. - An increase in earnings estimates typically leads to higher fair value calculations by institutional investors, resulting in buying or selling actions that affect stock prices [4]. Recent Performance and Projections - MFA Financial is projected to earn $1.64 per share for the fiscal year ending December 2025, representing a year-over-year increase of 4.5% [8]. - Over the past three months, the Zacks Consensus Estimate for MFA Financial has increased by 4%, indicating a positive trend in earnings expectations [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with only the top 20% of stocks receiving a 'Strong Buy' or 'Buy' rating [9][10]. - The upgrade of MFA Financial to a Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [10].

Core Viewpoint - MFA Financial, Inc. (NYSE: MFA) is rated as a Hold for income-focused investors interested in mortgage real estate investment trusts (mREITs) [1] Group 1 - The analysis is influenced by various factors, including the company's performance and market conditions [1] - David A. Johnson, the founder of Endurance Capital Management, has over 30 years of investment experience and holds advanced degrees in finance and business administration [1]

Financial Performance - The company generated GAAP earnings per share (EPS) of $0.83 and Distributable earnings of $1.57 per basic common share for the year[227]. - For the year ended December 31, 2024, net income available to common stock and participating securities was $86.4 million, or $0.83 per basic share, compared to $47.3 million, or $0.46 per basic share in 2023, reflecting a significant increase of 82.7%[265]. - Basic earnings per common share increased to $0.83 in 2024 from $0.46 in 2023, representing a growth of 80.4%[265]. - Net income for 2024 was $119.25 million, compared to $80.16 million in 2023, marking a year-over-year increase of approximately 48.8%[384]. - The Company reported a net gain on residential whole loans measured at fair value through earnings of $45.99 million in 2024, down from $89.85 million in 2023[384]. - The Company’s net interest income after reversal for credit losses was $204.68 million in 2024, compared to $185.33 million in 2023, an increase of approximately 10.4%[384]. - Other income increased by $22.3 million to $85.428 million in 2024, driven by mark-to-market gains compared to losses in 2023[265]. - The company reported a net gain on derivatives used for risk management purposes of $78.503 million in 2024, compared to a gain of $3.761 million in 2023, reflecting an increase of $74.742 million[264]. Asset and Loan Portfolio - As of December 31, 2024, the company had total assets of approximately $11.4 billion, with $8.8 billion (77%) in residential whole loans[216]. - The residential mortgage asset portfolio increased to approximately $10.5 billion at December 31, 2024, compared to $9.9 billion at December 31, 2023[231]. - The company held $1.5 billion in Securities at fair value as of December 31, 2024, including $1.4 billion in Agency MBS[235]. - The total recorded investment in residential whole loans and REO was $8.9 billion, representing 85.3% of the residential mortgage asset portfolio[234]. - Loan acquisition activity during 2024 totaled $2.6 billion, including $991.5 million in Single-family transitional loans and $1.2 billion in Non-QM loans[234]. - The company originated Business purpose loans with a maximum unpaid principal balance of $1.4 billion in 2024, down from $2.2 billion in 2023[228]. - The company had $2.6 billion of total unpaid principal balance related to asset-backed financing agreements with mark-to-market collateral provisions as of December 31, 2024[320]. Dividends and Shareholder Returns - The company declared dividends of $1.40 per common share during the year[227]. - The company paid $143.9 million in cash dividends on common stock and $32.9 million on preferred stock during 2024[331]. - The dividend payout ratio for Q4 2024 was 0.90, indicating a slight decrease from 0.70 in Q4 2023[299]. - The company repurchased $39.9 million principal amount of Convertible Senior Notes for $39.8 million during the three months ended March 31, 2024[319]. Interest Income and Expense - Total interest income for 2024 was $723.965 million, up from $605.597 million in 2023, marking an increase of $118.368 million[264]. - Interest income on residential whole loans for 2024 increased by $95.7 million, or 17.8%, to $633.6 million compared to $537.9 million for 2023, driven by a yield increase to 6.74% from 6.15%[282]. - Interest expense rose to $521.234 million in 2024 from $429.118 million in 2023, an increase of $92.116 million[264]. - The net interest spread and margin for 2024 were 2.10% and 2.91%, respectively, compared to 2.05% and 2.90% in 2023, showing slight improvements in profitability metrics[268]. Credit Losses and Risk Management - The total allowance for credit losses on residential whole loans held at carrying value was $10.7 million as of December 31, 2024[236]. - The reversal of provision for credit losses on residential whole loans was $3.084 million in 2024, down from $8.853 million in 2023, indicating a decrease of $5.769 million[264]. - The company expects heightened levels of delinquency and credit loss risks in its Business purpose loan portfolio during 2025 due to market conditions[228]. - The company is exposed to credit risk primarily through residential whole loans, with current LTVs estimated to have decreased significantly due to home price appreciation[353]. Financial Position and Liquidity - GAAP total stockholders' equity as of December 31, 2024, was $1,841.8 million, down from $1,899.9 million as of December 31, 2023[301]. - The company had unused financing capacity of approximately $3.8 billion across its financing arrangements as of December 31, 2024[321]. - The company was in compliance with all financial covenants as of December 31, 2024[330]. - Cash, cash equivalents, and restricted cash increased by $113.1 million during 2024, with $424.6 million used in investing activities and $337.6 million provided by financing activities[325]. Market and Economic Conditions - The company expects to continue pledging residential mortgage assets as part of its ongoing financing arrangements[323]. - The fair value of the company's net portfolio is sensitive to interest rate changes, with a projected decrease of $145.8 million (1.28%) for a 100 basis point increase in rates as of December 31, 2024[345]. - The company has a liquidity risk arising from financing long-maturity assets with shorter-term borrowings, which could lead to increased margin calls if asset values decrease[364]. Operational Expenses - Compensation and benefits expenses increased by $1.9 million to $87.7 million for 2024, primarily due to separation and severance-related costs[289]. - Other general and administrative expenses rose by $0.4 million to $44.3 million for 2024, attributed to accelerated depreciation and higher IT infrastructure costs[290]. - Loan servicing and other related operating expenses increased by approximately $1.2 million, or 3.4%, primarily due to higher non-recoverable advances[291].

Financial Data and Key Metrics Changes - As of December 31, GAAP book value was $13.39 per share, and economic book value was $13.93 per share, a decrease of approximately 3.7% from $14.46 at the end of September [17] - The company delivered a total economic return of negative 1.2% for the quarter and positive 5.2% for the year [18] - Distributable earnings for the fourth quarter were $40.8 million or $0.39 per basic common share, up from $0.37 in the third quarter [21] Business Line Data and Key Metrics Changes - The investment portfolio grew by over $1.2 billion in the fourth quarter, with $470 million in non-QM loans carrying a coupon of 7.8% and an LTV of 67% [26] - Lima One originated $235 million of loans in the quarter with an average coupon of 9.5% and LTV of 67%, totaling $1.4 billion in business purpose loans for 2024 [28] Market Data and Key Metrics Changes - The yield curve steepened in the fourth quarter, with two-year yields rising sixty basis points while ten-year rates rose nearly eighty basis points [9] - The company added over $700 million in loans, non-QM and BPL, and over $450 million of agencies during the quarter [10] Company Strategy and Development Direction - The company aims to maintain a strong liquidity position while complementing the volume and timing of loan acquisitions [12] - Management expressed confidence in the leadership team for 2025 and beyond, indicating a focus on growth and operational improvements [15] Management's Comments on Operating Environment and Future Outlook - Management noted that the economy remains resilient, with a strong labor market and persistent inflation [9] - The company expects macroeconomic tailwinds, including a positively sloped yield curve and additional rate cuts, to support business moving forward [24] Other Important Information - The company mourned the passing of Board member Frank Ulrich, highlighting his contributions and impact [11] - Approximately 40% of the 2024 common dividends were treated as a non-taxable return of capital to shareholders, enhancing after-tax dividend yield [18] Q&A Session Summary Question: Current economic return of the portfolio - Management indicated that the economic return is in the low teens, aligning with the economic earnings power of the portfolio [39][40] Question: Increase in delinquency for single-family and multifamily transitional loans - Management explained that higher delinquencies are expected in riskier asset classes, particularly in transitional loans [54][56] Question: Outlook for Lima One - Management confirmed that single-family loans remain the focus, with expectations for growth in 2025, potentially reaching around $1.5 billion [64] Question: Level of unfunded commitments in the Lima One portfolio - Management estimated unfunded commitments to be in the $600 million range, with expectations for funding over the next year [81]

Company Update FOURTH QUARTER 2024 Forward-looking statements When used in this presentation 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, ...