MFA Financial(MFA) - 2024 Q4 - Annual Report

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$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$633.6 million compared to $537.9 million for 2023, driven by a yield increase to 6.74$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$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].