MFA Financial's Q2 2025: Unpacking Key Contradictions in Economic Returns, Growth Strategies, and Dividend Policies

Economic return and dividend yield, origination growth and strategy, dividend accrual and book value, capital allocation and investment strategy, non-QM loans and economic book value are the key contradictions discussed in MFA Financial's latest 2025Q2 earnings call.



Economic and Market Environment:
- The market experienced turmoil during Q2, with 2-year treasuries fluctuating between 3.88% and 4.05% and 10-year treasuries ranging from 3.99% to 4.60%.
- The economic and macro environments were characterized by resilience amidst growth and inflation fears, with expectations for two rate cuts later in the year.

Portfolio Performance:
- MFA's portfolio delivered a total economic return of 1.5% for Q2 and 3.4% year-to-date, with the economic book value slightly down by 1% in Q2.
- The decline in distributable earnings to $0.24 per share was attributed to credit losses and an increase in Series C preferred dividend.

Loan Origination and Securitization:
- MFA sourced $876 million of loans and securities in Q2, with a focus on non-QM loans, Agency MBS, and business purpose loans through Lima One.
- The company completed its 18th non-QM securitization, selling $291 million of bonds at an average coupon of 5.76%.

Credit Management and Resolution:
- MFA reduced overall portfolio 60-plus day delinquency to 7.3% and lowered nonaccrual status loan balances by $33.6 million.
- The company resolved approximately $24 million of challenged transitional loans via loan sales and expects further resolutions in the second half.