MFA Financial(US:MFA)2023-05-04 17:26Financial Data and Key Metrics Changes - The economic book value increased by 3% in the first quarter of 2023, generating an economic return of 5.3% despite challenging conditions for mortgage REITs [47][48] - The cost of funds increased by less than 60 basis points over the last three quarters, while the yield on the purchased performing loan portfolio increased by almost 120 basis points during the same period [4][5] Business Line Data and Key Metrics Changes - The company acquired approximately $630 million of loans and securities in the first quarter, growing the portfolio by 6% to about $8.4 billion [15] - Lima One originated approximately $380 million in the first quarter, accounting for about 80% of the loan additions, with origination volumes showing encouraging trends [24][37] Market Data and Key Metrics Changes - The securitization market exhibited volatility, but the company was able to execute over $500 million in bonds through three securitizations at attractive borrowing costs [17][51] - The average loan-to-value (LTV) ratio for the loan portfolio was 59%, indicating strong credit fundamentals [14][37] Company Strategy and Development Direction - The company continues to prioritize liquidity, maintaining a cash position of over $360 million at quarter-end, and plans to adjust market pricing and yields on asset purchases [5] - The focus on credit quality remains fundamental, with a strategy targeting high-FICO borrowers and lower LTVs to create a resilient portfolio [26][37] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about the banking sector's liquidity and potential asset sales, indicating that banks may be less willing to extend credit in the short term [13] - The outlook for origination volume from Lima One is expected to increase, with projections of around $500 million for Q2 and $600 million for each quarter in the second half of the year, totaling approximately $2 billion for 2023 [9][19] Other Important Information - The company successfully sold 93 properties from its REO portfolio for $34 million, resulting in $5 million in gains, indicating effective management of its credit portfolio [39] - The company expanded its RTL financing capacity by over $400 million in the quarter, enhancing its ability to support BPL origination [50] Q&A Session Summary Question: What is the estimated range for origination volume from Lima for 2023? - Management expects origination volume to be around $500 million for Q2 and $600 million for each quarter in the second half of the year, totaling approximately $2 billion for 2023 [9][19] Question: Can you comment on the book value and any positive price adjustments? - The loan book was up approximately 1.5 points, primarily due to rates, and the overall book value increased by 3% [21][29]