8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 23, 2021

MFA FINANCIAL, INC.

(Exact name of registrant as specified in its charter)

Maryland	1-13991	13-3974868
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(IRS Employer Identification No.)

350 Park Avenue, 20th Floor
New York, New York	10022
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code: (212) 207-6400

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:	Trading Symbols:	Name of each exchange on which registered:
Common Stock, par value $0.01 per share	MFA	New York Stock Exchange
7.50% Series B Cumulative Redeemable Preferred Stock, par value $0.01 per share	MFA/PB	New York Stock Exchange
6.50% Series C Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock, par value $0.01 per share	MFA/PC	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Item 2.02 Results of Operations and Financial Condition and

Item 7.01 Regulation FD Disclosure

MFA Financial, Inc. (“MFA”) issued a press release, dated February 23, 2021, announcing its financial results for the quarter ended December 31, 2020, which is attached hereto as Exhibit 99.1 and is incorporated herein by reference. In addition, in conjunction with the announcement of its financial results, MFA issued additional information relating to its 2020 fourth quarter financial results. Such additional information is attached to this report as Exhibit 99.2 and is incorporated herein by reference.

The information referenced in this Current Report on Form 8-K (including Exhibits 99.1 and 99.2) is being “furnished” and, as such, shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information set forth in this Current Report on Form 8-K (including Exhibits 99.1 and 99.2) is and will not be incorporated by reference into any registration statement or other document filed by MFA pursuant to the Securities Act of 1933, as amended (the “Securities Act”), except as may be expressly set forth by specific reference in such filing.

As discussed therein, the press release contains forward-looking statements within the meaning of the Securities Act and the Exchange Act and, as such, may involve known and unknown risks, uncertainties and assumptions. These forward-looking statements relate to MFA’s current expectations and are subject to the limitations and qualifications set forth in the press release as well as in MFA’s other documents filed with the SEC, including, without limitation, that actual events and/or results may differ materially from those projected in such forward-looking statements.

Exhibit

99.1	Press Release, dated February 23, 2021, announcing MFA’s financial results for the quarter ended December 31, 2020.
99.2	Additional information relating to the financial results of MFA for the quarter ended December 31, 2020.
104	Cover Page Interactive Data File (formatted as Inline XBRL).

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	MFA FINANCIAL, INC.
	(REGISTRANT)
	By:	/s/ Harold E. Schwartz
		Name: Harold E. Schwartz
		Title: Senior Vice President and General Counsel
Date:   February 23, 2021

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release, dated February 23, 2021 announcing MFA Financial Inc.’s financial results for the quarter ended December 31, 2020.
99.2	Additional information relating to the financial results of MFA Financial, Inc. for the quarter ended December 31, 2020.
104	Cover Page Interactive Data File (formatted as Inline XBRL).

EX-99.1

Exhibit 99.1

  

MFA

FINANCIAL, INC.

350 Park Avenue

New York, New York 10022

PRESS RELEASE FOR IMMEDIATE RELEASE

February 23, 2021		NEW YORK METRO
INVESTOR CONTACT:	InvestorRelations@mfafinancial.com	NYSE: MFA
	212-207-6488
	www.mfafinancial.com
MEDIA CONTACT:	Abernathy MacGregor
	Tom Johnson
	212-371-5999

MFA Financial, Inc. Announces Fourth Quarter 2020 Financial Results

Earnings continue to stabilize as financing initiatives are implemented

$50.7 million of accretive common stock repurchases

Limited dilution from execution of warrant transactions with Apollo and Athene

NEW YORK - MFA Financial, Inc. (NYSE:MFA) today provided its financial results for the fourth quarter ended December 31, 2020.

Fourth Quarter 2020 financial results update:

• MFA generated fourth quarter net income of $37.6 million, or $0.08 per common share.

• MFA paid a regular cash dividend for the fourth quarter of $0.075 per share of common stock on January 29, 2021.

• GAAP book value at December 31, 2020 was $4.54 per common share, while Economic book value, a non-GAAP financial measure of MFA’s financial position that adjusts GAAP book value by the amount of unrealized market value changes in residential whole loans held at carrying value for GAAP reporting, was $4.92 per common share at quarter-end.

1

• Markets for residential mortgage assets further stabilized following the disruptions experienced earlier in 2020. Earnings and changes in book value continued to be positively impacted by improvements in the values of residential mortgage assets. Income from residential whole loans at fair value included $30.9 million of market value gains, while changes in the fair value of loans held on our balance sheet at carrying value also resulted in an increase in Economic book value during the quarter of approximately $0.07 per common share. While MFA’s fourth quarter financial results had fewer unusual items than prior periods, they were impacted by certain items that will not reoccur in future periods. In particular, fourth quarter net income included expenses totaling $25.3 million (or $0.06 per common share) recognized on the repayment of the senior secured term loan from Apollo and Athene and a $3.1 million non-cash charge (or $0.01 per common share) related to the redemption of our 8% Senior Notes (both items discussed further below).

• Additionally, during the quarter, we completed two transactions with Apollo and Athene that eliminated potential future dilution from the warrants that were issued in connection with the loan. In the first transaction, the Company repurchased, for $33.7 million, approximately 48% of the warrants and in the second transaction, the remaining warrants were exercised by Apollo and Athene, resulting in MFA issuing approximately 12.3 million shares of common stock and receiving $6.5 million in cash. The combined impact of the warrant exercise and repurchase transactions decreased MFA’s GAAP book value per common share by $0.18 and Economic book value per common share by $0.19, reflecting less than 4% dilution of previously reported book value.

• We continued to make significant progress on initiatives to lower the cost of financing our investments with more durable forms of borrowing. During the quarter, we completed two Non-QM securitization transactions, totaling $951.6 million, that generated $214.6 million of additional liquidity and lowered the funding rate for the associated assets by approximately 193 basis points. After the end of the fourth quarter, we completed a securitization solely consisting of $217.5 million of Business Purpose Rental Loans, generating $48.4 million of additional liquidity. As the weighted average coupon of the bonds sold was 1.06%, this transaction is expected to lower the funding rate of the underlying assets by more than 150 basis points.

• During the fourth quarter, under our previously announced stock repurchase program we repurchased 14,085,678 shares of common stock at an average price of approximately $3.61 per share. These repurchases were accretive to MFA’s GAAP book value by $0.03 per common share and Economic book value by $0.04 per common share.

• On January 6, 2021, we completed the redemption of the $100 million 8% Senior Notes due 2042 (the “Senior Notes”). In connection with this redemption, we recorded in our fourth quarter interest expense a non-cash charge of approximately $3.1 million representing remaining unamortized deferred expenses incurred when the Senior Notes were originally issued in 2012.

Commenting on the fourth quarter 2020 results, Craig Knutson, MFA’s CEO and President said, “MFA’s fourth quarter financial results were a continuation of a return to normal, as we put the capital transactions necessary to emerge from our COVID-19 pandemic-induced distress behind us. The Apollo/Athene debt was fully paid off during the fourth quarter, and the associated warrants have been extinguished through a combination of repurchases and exercise. While the warrant settlement was mildly dilutive, a strong quarter and the impact of accretive common stock repurchases mitigated this dilution, with GAAP book value down just 1.5% and Economic book value flat compared to September 30. The net impact of the warrant transactions decreased reported book value amounts by roughly 3.9%.”

2

Mr. Knutson added, “We continued to make substantial progress on multiple initiatives by seizing market opportunities in the fourth quarter that we believe should have a significant positive impact on our results as we enter 2021. With interest rates at historic lows and robust demand for mortgage credit, particularly rated mortgage credit, we executed two new securitizations in the fourth quarter and another subsequent to year-end. This brings our aggregate securitizations to just over $1.5 billion since September. These transactions substantially reduce our interest costs and also generate significant additional liquidity. In addition to paying off expensive debt (including our 8% Senior Notes that we redeemed in early January), we also deployed capital to repurchase MFA common stock at levels well below book value.”

Mr. Knutson continued, “We also took advantage of a strong housing market to materially reduce our REO portfolio in 2020, selling over 1,000 properties for aggregate proceeds of $271 million, which was nearly 2.5 times the proceeds realized in 2019. These properties sold for an average of 105.9% of carrying value, generating gains on disposal of $15.1 million.”

Q4 2020 Portfolio Activity

MFA’s residential mortgage investment portfolio decreased by $346.0 million during the fourth quarter, primarily due to portfolio run-off. Acquisition of new investments continued to be modest, with $83.2 million of Non-QM loans and $27.3 million of Business Purpose loans purchased during the quarter.

At December 31, 2020, the net carrying value of our investments in residential whole loans totaled $5.3 billion. Of this amount, $4.1 billion is recorded at carrying value and $1.2 billion is recorded at fair value on our consolidated balance sheet. Loans held at carrying value generated an overall yield of 4.66% during the quarter, a slight increase from the prior quarter. Yields on purchased performing loans were essentially unchanged from the prior quarter at 4.57%, while yields on purchased credit deteriorated loans increased to 5.16% from 4.89% in the prior quarter. Overall delinquency rates on loans held at carrying value were largely unchanged from the prior quarter. The amount of Non-QM loans that were 60 or more days delinquent, measured as a percentage of the unpaid principal balance, declined during the quarter and was 7.9% at December 31, 2020, compared to 8.8% at September 30, 2020. In addition, the amount of purchased credit deteriorated loans that were 90 or more days delinquent, measured as a percentage of the unpaid principal balance, marginally increased during the quarter and was 18.5% at December 31, 2020, compared to 18.2% at September 30, 2020. Delinquency levels for our Rehabilitation loans also increased from the prior quarter, with loans that were 60 or more days delinquent totaling $161.8 million, compared to $143.3 million at September 30, 2020.

For the fourth quarter, a reversal of the provision for credit losses of $19.0 million was recorded on residential whole loans held at carrying value, primarily reflecting lower estimates of future rates of unemployment and lower loan balances. The total allowance for credit losses recorded on residential whole loans held at carrying value at December 31, 2020 was $86.8 million. In addition, as of December 31, 2020, reserves for credit losses totaling approximately $1.2 million were recorded related to undrawn commitments on loans held at carrying value. Further, we recorded a provision for credit losses on other financial instruments of $3.3 million during the fourth quarter. The total allowance for credit losses on other financial instruments was $9.0 million as of December 31, 2020.

3

Net gains for the quarter on residential whole loans measured at fair value through earnings were $49.8 million, including unrealized gains in the fair value of the underlying loans of $30.9 million, and $18.9 million of coupon interest payments and other gains realized during the quarter. The percentage amount of fair value loans that were 90 or more days delinquent decreased to 47.0% at December 31, 2020 from 49.0% at September 30, 2020.

In addition, as of the end of the quarter, we held approximately $250 million of REO properties, which has decreased from $299 million as of the end of the third quarter as foreclosure activity in recent months has slowed, while asset sales continued. MFA’s proactive asset management team has been able to shorten liquidation timelines and increase property sale proceeds, leading to improved outcomes and better returns.

At the end of the fourth quarter, MFA held approximately $53.9 million of RPL/NPL MBS. In addition, our investments in MSR-related assets totaled $239.0 million at December 31, 2020. Our investments in CRT securities totaled $104.2 million at December 31, 2020.

Expenses recognized on repayment of senior secured term loan

Included in Other income are expenses of approximately $25.3 million recorded on the repayment of the remaining balance of the $500 million senior secured term loan from Apollo and Athene that was obtained on June 26, 2020. These expenses are recognized as the loan was repaid at its par value and include accelerated accretion of original issue discount and the reversal of unrealized market value gains recorded in the prior quarter.

Impact of warrant transactions

During the quarter, the Company repurchased approximately 48% of the warrants that were issued to Apollo and Athene in connection with the senior secured term loan. These warrants were repurchased for $33.7 million, reflecting the market value of the warrants at the time of repurchase. The impact of this transaction is reflected directly in the Company’s stockholders’ equity and had no impact on current period net income. In addition, the remaining warrants were exercised by Apollo and Athene late in the quarter, resulting in the Company issuing approximately 12.3 million shares of common stock and receiving $6.5 million in cash.

General and Administrative and other expenses

For the three months ended December 31, 2020, MFA’s costs for compensation and benefits and other general and administrative expenses were $8.6 million, or an annualized 1.37% of average stockholders’ equity for the quarter ended December 31, 2020. Compensation related expenses for the quarter were lower than our normal expected run rate, primarily due to the finalization of incentive compensation accruals for 2020, which resulted in a reduction in accrued incentive compensation of approximately $3.1 million.

4

Stock Repurchase Program

On November 2, 2020, MFA’s Board of Directors authorized a share repurchase program under which MFA may repurchase up to $250 million of its common stock through the end of 2022. Under this program during the fourth quarter, the Company repurchased 14,085,678 shares of common stock at an average price of approximately $3.61 per share. In addition, as previously discussed, during the year ended December 31, 2020 the Company repurchased 17,593,576 warrants for $33.7 million that were included in the stock repurchase program. As of December 31, 2020, the Company was permitted to purchase an additional $165.7 million of its common stock.

MFA expects to fund the share repurchases from current cash balances and future investment portfolio run-off. The Company currently has approximately 451.7 million shares of common stock outstanding.

5

The following table presents MFA’s asset allocation as of December 31, 2020, and the fourth quarter 2020 yield on average interest-earning assets, average cost of funds and net interest rate spread for the various asset types.

Table 1 - Asset Allocation

At December 31, 2020	Residential Whole Loans, at Carrying Value (1)			Residential Whole Loans, at Fair Value			Residential Mortgage Securities			MSR- Related Assets			Other, net (2)			Total
($ in Millions)
Fair Value/Carrying Value	$	4,108		$	1,217		$	161		$	239		$	1,137		$	6,862
Financing Agreements with non-mark-to-market collateral provisions		(906	)		(253	)		—			—			—			(1,159	)
Financing Agreements with mark-to-market collateral provisions		(839	)		(285	)		(89	)		(125	)		—			(1,338	)
Less Securitized Debt		(1,261	)		(254	)		—			—			—			(1,515	)
Less Convertible Senior Notes		—			—			—			—			(225	)		(225	)
Less Senior Notes		—			—			—			—			(100	)		(100	)
Net Equity Allocated	$	1,102		$	425		$	72		$	114		$	812		$	2,525
Debt/Net Equity Ratio (3)		2.7	x		1.9	x		1.2	x		1.1	x					1.7	x
For the Quarter Ended December 31, 2020
Yield on Average Interest Earning Assets (4)(5)		4.66	%		N/A			7.22	%		12.27	%					4.44	%
Less Average Cost of Funds (6)		(2.81	)		(3.57	)		(2.71	)		(2.67	)					(3.37	)
Net Interest Rate Spread		1.85	%		N/A			4.51	%		9.60	%					1.07	%

(1) Includes $2.3 billion of Non-QM loans, $563.4 million of Rehabilitation loans, $442.5 million of Single-family rental loans, $136.2 million of Seasoned performing loans and $630.3 million of Purchased Credit Deteriorated Loans. At December 31, 2020, the total fair value of these loans is estimated to be approximately $4.3 billion.

(2) Includes $814.4 million of cash and cash equivalents, $7.2 million of restricted cash, $249.7 million of real estate owned, and $47.1 million of capital contributions made to loan origination partners, as well as other assets and other liabilities.

(3) Total Debt/Net Equity ratio represents the sum of borrowings under our financing agreements noted above as a multiple of net equity allocated.

(4) Yields reported on our interest earning assets are calculated based on the interest income recorded and the average amortized cost for the quarter of the respective asset. At December 31, 2020, the amortized cost of our interest earning assets were as follows: Legacy Non-Agency MBS - $2.2 million; RPL/NPL MBS - $46.9 million; Credit Risk Transfer securities - $86.2 million; Residential Whole Loans at carrying value - $4.2 billion; and MSR-related assets - $184.9 million. In addition, the yield for residential whole loans at carrying value was 4.61%, net of 5 basis points of servicing fee expense incurred during the quarter. For GAAP reporting purposes, such expenses are included in Loan servicing and other related operating expenses in our statement of operations.

(5) Interest payments received on residential whole loans at fair value is reported in Other Income as Net (loss)/gain on residential whole loans measured at fair value through earnings in our statement of operations. Accordingly, no yield is presented as such loans are not included in interest earning assets for reporting purposes.

(6) Average cost of funds includes interest on financing agreements, Convertible Senior Notes, Senior Notes, securitized debt and Secured Term notes. Total average cost of funds excludes the non-cash charge of $3.1 million recorded in connection with the redemption of the Senior Notes that was completed early in 2021.

6

The following table presents the activity for our residential mortgage asset portfolio for the three months ended December 31, 2020:

Table 2 - Investment Portfolio Activity Q4 2020

(In Millions)	September 30, 2020		Runoff (1)			Acquisitions		Other (2)		December 31, 2020		Change
Residential whole loans and REO	$	5,916	$	(511	)	$	111	$	59	$	5,575	$	(341	)
MSR-related assets		252		(21	)		—		8		239		(13	)
Residential mortgage securities		153		(2	)		—		10		161		8
Totals	$	6,321	$	(534	)	$	111	$	77	$	5,975	$	(346	)

(1) Primarily includes principal repayments, cash collections on Purchased Credit Deteriorated Loans and sales of REO.

(2) Primarily includes changes in fair value and adjustments to record lower of cost or estimated fair value adjustments on REO.

The following tables present information on our investments in residential whole loans.

Residential Whole Loans, at Carrying Value at December 31, 2020 and December 31, 2019:

Table 3 - Portfolio composition

(Dollars In Thousands)	December 31, 2020			December 31, 2019
Purchased Performing Loans:
Non-QM loans	$	2,357,185		$	3,707,245
Rehabilitation loans		581,801			1,026,097
Single-family rental loans		446,374			460,742
Seasoned performing loans		136,264			176,569
Total Purchased Performing Loans		3,521,624			5,370,653
Purchased Credit Deteriorated Loans (1)		673,708			698,717
Total Residential whole loans, at carrying value	$	4,195,332		$	6,069,370
Allowance for credit losses on residential whole loans held at carrying value		(86,833	)		(3,025	)
Total Residential whole loans at carrying value, net	$	4,108,499		$	6,066,345
Number of loans		13,112			17,082

(1) The amortized cost basis of Purchased Credit Deteriorated Loans was increased by $62.6 million on January 1, 2020 in connection with the adoption of ASU 2016-13.

7

Table 4 - Yields and average balances

	For the Three-Month Period Ended
(Dollars in Thousands)	December 31, 2020							September 30, 2020							December 31, 2019
	Interest		Average Balance		Average Yield (1)			Interest		Average Balance		Average Yield			Interest		Average Balance		Average Yield
Purchased Performing Loans:
Non-QM loans	$	24,316	$	2,435,751		3.99	%	$	25,884	$	2,534,967		4.08	%	$	37,032	$	3,130,041		4.73	%
Rehabilitation loans		9,983		669,320		5.97	%		10,863		802,661		5.41	%		16,087		1,010,975		6.36	%
Single-family rental loans		6,193		470,197		5.27	%		6,917		489,536		5.65	%		6,091		404,600		6.02	%
Seasoned performing loans		1,993		143,926		5.54	%		1,945		153,003		5.08	%		2,730		184,532		5.92	%
Total Purchased Performing Loans		42,485		3,719,194		4.57	%		45,609		3,980,167		4.58	%		61,940		4,730,148		5.24	%
Purchased Credit Deteriorated Loans		8,973		694,988		5.16	%		8,784		718,957		4.89	%		10,314		712,914		5.79	%
Total Residential whole loans, at carrying value	$	51,458	$	4,414,182		4.66	%	$	54,393	$	4,699,124		4.63	%	$	72,254	$	5,443,062		5.31	%

(1) Average yield reported for Single-family rental loans for the three-month period ended December 31, 2020 excludes $846,000 of prepayment penalties that are collected on loans that payoff before a specified date. For GAAP reporting purposes prepayment penalties are reported in Other income. If such fees were included in interest income, the reported yield for the period ended December 31, 2020 would have been 5.99%.

8

Table 5 - Credit related metrics

December 31, 2020

										Weighted
					Unpaid		Weighted			Average		Weighted			Weighted
					Principal		Average			Term to		Average			Average		Aging by Amortized Cost Basis
	Carrying		Amortized		Balance		Coupon			Maturity		LTV			Original				Past Due Days
(Dollars In Thousands)	Value		Cost Basis		(“UPB”)		(1)			(Months)		Ratio (2)			FICO (3)		Current		30-59		60-89		90+
Purchased Performing Loans:
Non-QM loans (4)	$	2,336,117	$	2,357,185	$	2,294,086		5.84	%		351		64	%		712	$	2,099,134	$	73,163	$	36,501	$	148,387
Rehabilitation loans (4)		563,430		581,801		581,801		7.29			3		63			719		390,706		29,315		25,433		136,347
Single-family rental loans (4)		442,456		446,374		442,208		6.32			324		70			730		415,386		6,652		3,948		20,388
Seasoned performing loans (4)		136,157		136,264		149,004		3.30			171		40			723		124,877		2,186		1,170		8,031
Purchased Credit Deteriorated Loans (4)(5)		630,339		673,708		782,319		4.46			287		76			N/A		N/M		N/M		N/M		119,621
Residential whole loans, at carrying value, total or weighted average	$	4,108,499	$	4,195,332	$	4,249,418		5.77	%		282

December 31, 2019

										Weighted
					Unpaid		Weighted			Average		Weighted			Weighted
					Principal		Average			Term to		Average			Average		Aging by Amortized Cost Basis
	Carrying		Amortized		Balance		Coupon			Maturity		LTV			Original				Past Due Days
(Dollars In Thousands)	Value		Cost Basis		(“UPB”)		(1)			(Months)		Ratio (2)			FICO (3)		Current		30-59		60-89		90+
Purchased Performing Loans:
Non-QM loans (4)	$	3,706,857	$	3,707,245	$	3,592,701		5.96	%		368		67	%		716	$	3,492,533	$	59,963	$	19,605	$	20,600
Rehabilitation loans (4)		1,023,766		1,026,097		1,026,097		7.30			8		64			717		868,281		67,747		27,437		62,632
Single-family rental loans (4)		460,679		460,741		457,146		6.29			324		70			734		432,936		15,948		2,047		6,215
Seasoned performing loans		176,569		176,569		192,151		4.24			181		46			723		187,683		2,164		430		1,874
Purchased Credit Impaired Loans (5)		698,474		698,718		873,326		4.46			294		81			N/A		N/M		N/M		N/M		108,998
Residential whole loans, at carrying value, total or weighted average	$	6,066,345	$	6,069,370	$	6,141,421		5.96	%		288

(1) Weighted average is calculated based on the interest bearing principal balance of each loan within the related category. For loans acquired with servicing rights released by the seller, interest rates included in the calculation do not reflect loan servicing fees. For loans acquired with servicing rights retained by the seller, interest rates included in the calculation are net of servicing fees.

(2) LTV represents the ratio of the total unpaid principal balance of the loan to the estimated value of the collateral securing the related loan as of the most recent date available, which may be the origination date. For Rehabilitation loans, the LTV presented is the ratio of the maximum unpaid principal balance of the loan, including unfunded commitments, to the estimated “after repaired” value of the collateral securing the related loan, where available. For certain Rehabilitation loans, totaling $189.9 million and $269.2 million at December 31, 2020 and December 31, 2019, respectively, an after repaired valuation was not obtained and the loan was underwritten based on an “as is” valuation. The weighted average LTV of these loans based on the current unpaid principal balance and the valuation obtained during underwriting, is 68% and 69% at December 31, 2020 and December 31, 2019, respectively. Excluded from the calculation of weighted average LTV are certain low value loans secured by vacant lots, for which the LTV ratio is not meaningful.

(3) Excludes loans for which no Fair Isaac Corporation (“FICO”) score is available.

(4) At December 31, 2020 and December 31, 2019 the difference between the Carrying Value and Amortized Cost Basis represents the related allowance for credit losses.

(5) Purchased Credit Deteriorated Loans tend to be characterized by varying performance of the underlying borrowers over time, including loans where multiple months of payments are received in a period to bring the loan to current status, followed by months where no payments are received. Accordingly, delinquency information is presented for loans that are more than 90 days past due that are considered to be seriously delinquent.

9

Table 6 - LTV 90+ Days Delinquencies

The following table presents certain information regarding the Company’s Residential whole loans that are 90 days or more delinquent:

	December 31, 2020
(Dollars In Thousands)	Carrying Value / Fair Value		UPB		LTV (1)
Purchased Credit Deteriorated Loans	$	119,621	$	145,028		86.7	%
Non-QM loans	$	148,387	$	144,681		65.9	%
Rehabilitation loans	$	136,347	$	136,347		65.8	%
Single-family rental loans	$	20,388	$	20,233		72.7	%
Seasoned performing loans	$	8,031	$	8,823		55.1	%
Residential whole loans, at fair value	$	571,729	$	625,621		86.8	%

(1) LTV represents the ratio of the total unpaid principal balance of the loan to the estimated value of the collateral securing the related loan as of the most recent date available, which may be the origination date. For Rehabilitation loans, the LTV presented is the ratio of the maximum unpaid principal balance of the loan, including unfunded commitments, to the estimated “after repaired” value of the collateral securing the related loan, where available. For certain Rehabilitation loans, an after repaired valuation was not obtained and the loan was underwritten based on an “as is” valuation. Excluded from the calculation of weighted average LTV are certain low value loans secured by vacant lots, for which the LTV ratio is not meaningful.

Table 7 - Allowance for Credit Losses

The following table presents a roll-forward of the allowance for credit losses on the Company’s Residential Whole Loans, at Carrying Value:

	For the Year Ended December 31, 2020
(Dollars In Thousands)	Non-QM Loans			Rehabilitation Loans (1)(2)			Single-family Rental Loans			Seasoned Performing Loans			Purchased Credit Deteriorated Loans (3)			Totals
Allowance for credit losses at December 31, 2019	$	388		$	2,331		$	62		$	—		$	244		$	3,025
Transition adjustment on adoption of ASU 2016-13 (4)		6,904			517			754			19			62,361			70,555
Current provision		26,358			33,213			6,615			230			8,481			74,897
Write-offs		—			(428	)		—			—			(219	)		(647	)
Valuation adjustment on loans held for sale		70,181			—			—			—			—			70,181
Allowance for credit and valuation losses at  March 31, 2020	$	103,831		$	35,633		$	7,431		$	249		$	70,867		$	218,011
Current provision/(reversal)		(2,297	)		(5,213	)		(500	)		(25	)		(2,579	)		(10,614	)
Write-offs		—			(420	)		—			—			(207	)		(627	)
Valuation adjustment on loans held for sale		(70,181	)		—			—			—			—			(70,181	)
Allowance for credit losses at June 30, 2020	$	31,353		$	30,000		$	6,931		$	224		$	68,081		$	136,589
Current provision/(reversal)		(4,568	)		(7,140	)		(1,906	)		(74	)		(16,374	)		(30,062	)
Write-offs		(32	)		(227	)		—			—			(22	)		(281	)
Allowance for credit losses at September 30, 2020	$	26,753		$	22,633		$	5,025		$	150		$	51,685		$	106,246
Current provision/(reversal)		(5,599	)		(3,837	)		(1,107	)		(43	)		(7,997	)		(18,583	)
Write-offs		(86	)		(425	)		—			—			(319	)		(830	)
Allowance for credit losses at December 31, 2020	$	21,068		$	18,371		$	3,918		$	107		$	43,369		$	86,833

10

	For the Year Ended December 31, 2019
(Dollars In Thousands)	Non-QM Loans		Rehabilitation Loans			Single-family Rental Loans		Seasoned Performing Loans		Purchased Credit Deteriorated Loans			Totals
Allowance for credit losses at December 31, 2018	$	—	$	—		$	—	$	—	$	968		$	968
Current provision		—		500			—		—		183			683
Write-offs		—		—			—		—		—			—
Allowance for credit losses at  March 31, 2019	$	—	$	500		$	—	$	—	$	1,151		$	1,651
Current provision		—		—			—		—		385			385
Write-offs		—		(50	)		—		—		—			(50	)
Allowance for credit losses at June 30, 2019	$	—	$	450		$	—	$	—	$	1,536		$	1,986
Current provision		—		—			—		—		347			347
Write-offs		—		(62	)		—		—		—			(62	)
Allowance for credit losses at September 30, 2019	$	—	$	388		$	—	$	—	$	1,883		$	2,271
Current provision/(reversal)		388		2,220			62		—		(1,639	)		1,031
Write-offs		—		(277	)		—		—		—			(277	)
Allowance for credit losses at December 31, 2019	$	388	$	2,331		$	62	$	—	$	244		$	3,025

(1) In connection with purchased Rehabilitation loans, the Company had unfunded commitments of $60.6 million, with an allowance for credit losses of $1.2 million at December 31, 2020. Such allowance is included in “Other liabilities” in the Company’s consolidated balance sheets.

(2) Includes $161.8 million of loans that were assessed for credit losses based on a collateral dependent methodology.

(3) Includes $70.3 million of loans that were assessed for credit losses based on a collateral dependent methodology.

(4) Of the $70.6 million of reserves recorded on adoption of ASU 2016-13, $8.3 million was recorded as an adjustment to stockholders’ equity and $62.4 million was recorded as a “gross up” of the amortized cost basis of Purchased Credit Deteriorated Loans.

11

Residential Whole Loans, at fair value at December 31, 2020 and December 31, 2019:

Table 8 - Credit related metrics

(Dollars in Thousands)	December 31, 2020				December 31, 2019
Less than 60 Days Past Due:
Outstanding principal balance		$	602,292		$	666,026
Aggregate fair value		$	595,521		$	641,616
Weighted Average LTV Ratio (1)			72.57	%		76.69	%
Number of loans			3,033			3,159
60 Days to 89 Days Past Due:
Outstanding principal balance		$	54,180		$	58,160
Aggregate fair value		$	49,652		$	53,485
Weighted Average LTV Ratio (1)			82.11	%		79.48	%
Number of loans			263			313
90 Days or More Past Due:
Outstanding principal balance		$	625,621		$	767,320
Aggregate fair value		$	571,729		$	686,482
Weighted Average LTV Ratio (1)			86.78	%		89.69	%
Number of loans			2,326			2,983
Total Residential whole loans, at fair value		$	1,216,902		$	1,381,583

(1) LTV represents the ratio of the total unpaid principal balance of the loan, to the estimated value of the collateral securing the related loan. Excluded from the calculation of weighted average LTV are certain low value loans secured by vacant lots, for which the LTV ratio is not meaningful.

Table 9 - Net gain on residential whole loans measured at fair value through earnings

	For the Year Ended December 31,
(In Thousands)	2020			2019
Coupon payments, realized gains, and other income received (1)		$	72,700	$	91,438
Net unrealized gains			17,204		47,849
Net gain on transfers to REO			4,309		19,043
Total		$	94,213	$	158,330

(1) Primarily includes gains on liquidation of non-performing loans, including the recovery of delinquent interest payments, recurring coupon interest payments received on mortgage loans that are contractually current, and cash payments received from private mortgage insurance on liquidated loans.

12

Webcast 

MFA Financial, Inc. plans to host a live audio webcast of its investor conference call on Tuesday, February 23, 2021, at 10:00 a.m. (Eastern Time) to discuss its fourth quarter 2020 financial results. The live audio webcast will be accessible to the general public over the internet at http://www.mfafinancial.com through the “Webcasts & Presentations” link on MFA’s home page. To listen to the conference call over the internet, please go to the MFA website at least 15 minutes before the call to register and to download and install any needed audio software. Earnings presentation materials will be posted on the MFA website prior to the conference call and an audio replay will be available on the website following the call.

Cautionary Language Regarding Forward-Looking Statements

When used in this press release or other written or oral communications, statements which 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, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and, as such, may involve known and unknown risks, uncertainties and assumptions. These forward-looking statements include information about possible or assumed future results with respect to our business, financial condition, liquidity, results of operations, plans and objectives.  Statements regarding the following subjects, among others, may be forward-looking: risks related to the ongoing spread of the novel coronavirus and the COVID-19 pandemic, including the pandemic’s effect on the general economy and our business, financial position and results of operations (including, among other potential effects, increased delinquencies and greater than expected losses in our whole loan portfolio); changes in interest rates and the market (i.e., fair) value of MFA’s residential whole loans, MBS and other assets; changes in the prepayment rates on residential mortgage assets, an increase of which could result in a reduction of the yield on certain investments in its portfolio and could require MFA to reinvest the proceeds received by it as a result of such prepayments in investments with lower coupons, while a decrease in which could result in an increase in the interest rate duration of certain investments in MFA’s portfolio making their valuation more sensitive to changes in interest rates and could result in lower forecasted cash flows; credit risks underlying MFA’s assets, including changes in the default rates and management’s assumptions regarding default rates on the mortgage loans in MFA’s residential whole loan portfolio; MFA’s ability to borrow to finance its assets and the terms, including the cost, maturity and other terms, of any such borrowings; implementation of or changes in government regulations or programs affecting MFA’s business; MFA’s estimates regarding taxable income, the actual amount of which is dependent on a number of factors, including, but not limited to, changes in the amount of interest income and financing costs, the method elected by MFA to accrete the market discount on residential whole loans and the extent of prepayments, realized losses and changes in the composition of MFA’s residential whole loan portfolios that may occur during the applicable tax period, including gain or loss on any MBS disposals and whole loan modifications, foreclosures and liquidations; the timing and amount of distributions to stockholders, which are declared and paid at the discretion of MFA’s Board and will depend on, among other things, MFA’s taxable income, its financial results and overall financial condition and liquidity, maintenance of its REIT qualification and such other factors as MFA’s Board deems relevant; MFA’s ability to maintain its qualification as a REIT for federal income tax purposes; MFA’s ability to maintain its exemption from registration under the Investment Company Act of 1940, as amended (or the “Investment Company Act”), including statements regarding the concept release issued by the Securities and Exchange Commission (“SEC”) relating to interpretive issues under the Investment Company Act with respect to the status under the Investment Company Act of certain companies that are engaged in the business of acquiring mortgages and mortgage-related interests; MFA’s ability to continue growing its residential whole loan portfolio, which is dependent on, among other things, the supply of loans offered for sale in the market; expected returns on MFA’s investments in nonperforming residential whole loans (“NPLs”), which are affected by, among other things, the length of time required to foreclose upon, sell, liquidate or otherwise reach a resolution of the property underlying the NPL, home price values, amounts advanced to carry the asset (e.g., taxes, insurance, maintenance expenses, etc. on the underlying property) and the amount ultimately realized upon resolution of the asset; targeted or expected returns on MFA’s investments in recently-originated loans, the performance of which is, similar to MFA’s other mortgage loan investments, subject to, among other things, differences in prepayment risk, credit risk and financing cost associated with such investments; risks associated with MFA’s investments in MSR-related assets, including servicing, regulatory and economic risks, risks associated with our investments in loan originators, and risks associated with investing in real estate assets, including changes in business conditions and the general economy. These and other risks, uncertainties and factors, including those described in the annual, quarterly and current reports that MFA files with the SEC, could cause MFA’s actual results to differ materially from those projected in any forward-looking statements it makes. All forward-looking statements are based on beliefs, assumptions and expectations of MFA’s future performance, taking into account all information currently available. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. New risks and uncertainties arise over time and it is not possible to predict those events or how they may affect MFA. Except as required by law, MFA is not obligated to, and does not intend to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

13

MFA FINANCIAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In Thousands, Except Per Share Amounts)	December 31, 2020			December 31, 2019
Assets:
Residential whole loans:
Residential whole loans, at carrying value ($2,704,646 and $4,847,782 pledged as collateral, respectively) (1)	$	4,195,332		$	6,069,370
Residential whole loans, at fair value ($827,001 and $794,684 pledged as collateral, respectively) (1)		1,216,902			1,381,583
Allowance for credit losses on residential whole loans held at carrying value		(86,833	)		(3,025	)
Total residential whole loans, net		5,325,401			7,447,928
Residential mortgage securities, at fair value ($161,000 and $3,966,591 pledged as collateral, respectively)		161,000			3,983,519
Mortgage servicing rights (“MSR”) related assets ($238,999 and $1,217,002 pledged as collateral, respectively)		238,999			1,217,002
Cash and cash equivalents		814,354			70,629
Restricted cash		7,165			64,035
Other assets		385,381			785,057
Total Assets	$	6,932,300		$	13,568,170
Liabilities:
Financing agreements ($3,366,772 and $0 held at fair value, respectively)	$	4,336,976		$	10,031,606
Other liabilities		70,522			152,612
Total Liabilities	$	4,407,498		$	10,184,218
Stockholders’ Equity:
Preferred stock, $0.01 par value; 7.50% Series B cumulative redeemable; 8,050 shares authorized; 8,000 shares issued and outstanding ($200,000 aggregate liquidation preference)	$	80		$	80
Preferred stock, $0.01 par value; 6.50% Series C fixed-to-floating rate cumulative redeemable; 12,650 shares authorized; 11,000 shares issued and outstanding ($275,000 aggregate liquidation preference)		110			—
Common stock, $0.01 par value; 874,300 and 886,950 shares authorized; 451,714 and 452,369 shares issued and outstanding, respectively		4,517			4,524
Additional paid-in capital, in excess of par		3,848,129			3,640,341
Accumulated deficit		(1,405,327	)		(631,040	)
Accumulated other comprehensive income		77,293			370,047
Total Stockholders’ Equity	$	2,524,802		$	3,383,952
Total Liabilities and Stockholders’ Equity	$	6,932,300		$	13,568,170

(1) Includes approximately $1.4 billion and $186.4 million of Residential whole loans, at carrying value and $382.3 million and $567.4 million of Residential whole loans, at fair value transferred to consolidated variable interest entities (“VIEs”) at December 31, 2020 and 2019, respectively. Such assets can be used only to settle the obligations of each respective VIE.

14

MFA FINANCIAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended December 31,						Year Ended December 31,
(In Thousands, Except Per Share Amounts)	2020			2019			2020			2019
	(Unaudited)			(Unaudited)			(Unaudited)
Interest Income:
Residential whole loans held at carrying value	$	51,458		$	72,254		$	258,764		$	243,980
Residential mortgage securities		2,459			62,880			54,137			274,554
MSR-related assets		5,768			14,415			35,957			52,647
Other interest-earning assets		761			2,879			9,850			7,152
Cash and cash equivalent investments		30			690			676			3,393
Interest Income	$	60,476		$	153,118		$	359,384		$	581,726
Interest Expense:
Asset-backed and other collateralized financing arrangements	$	32,041		$	76,570		$	242,039		$	315,344
Other interest expense		9,003			5,893			26,719			17,012
Interest Expense	$	41,044		$	82,463		$	268,758		$	332,356
Net Interest Income	$	19,432		$	70,655		$	90,626		$	249,370
Reversal/(Provision) for credit and valuation losses on residential whole loans and other financial instruments	$	15,709		$	(1,032	)	$	(22,381	)	$	(2,569	)
Net Interest Income after Provision for Credit and Valuation Losses	$	35,141		$	69,623		$	68,245		$	246,801
Other Income, net:
Impairment and other losses on securities available-for-sale and other assets	$	—		$	(180	)	$	(425,082	)	$	(180	)
Net realized gain/(loss) on sales of residential mortgage securities and residential whole loans		—			11,975			(188,847	)		62,002
Net unrealized gain/(loss) on residential mortgage securities measured at fair value through earnings		2,946			(897	)		(10,486	)		7,080
Net gain on residential whole loans measured at fair value through earnings		49,782			41,415			94,213			158,330
Loss on terminated swaps previously designated as hedges for accounting purposes		—			—			(57,034	)		—
Other, net		(21,654	)		3,084			(18,885	)		(1,375	)
Other Income/(Loss), net	$	31,074		$	55,397		$	(606,121	)	$	225,857
Operating and Other Expense:
Compensation and benefits	$	1,908		$	7,920		$	31,042		$	32,235
Other general and administrative expense		6,727			4,812			25,666			20,413
Loan servicing, financing and other related costs		11,763			11,667			40,372			41,893
Costs associated with restructuring/forbearance agreement		—			—			44,434		$	—
Operating and Other Expense	$	20,398		$	24,399		$	141,514		$	94,541
Net Income/(Loss)	$	45,817		$	100,621		$	(679,390	)	$	378,117
Less Preferred Stock Dividend Requirement	$	8,218		$	3,750		$	29,796			15,000
Net Income/(Loss) Available to Common Stock and Participating Securities	$	37,599		$	96,871		$	(709,186	)	$	363,117
Basic Earnings/(Loss) per Common Share	$	0.08		$	0.21		$	(1.57	)	$	0.80
Diluted Earnings/(Loss) per Common Share	$	0.08		$	0.21		$	(1.57	)	$	0.79

15

MFA FINANCIAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

Reconciliation of GAAP Book Value per Common Share to non-GAAP Economic Book Value per Common Share

“Economic book value” is a non-GAAP financial measure of our financial position. To calculate our Economic book value, our portfolios of Residential whole loans at carrying value are adjusted to their fair value, rather than the carrying value that is required to be reported under the GAAP accounting model applied to these loans. This adjustment is also reflected in our end of period stockholders’ equity in the table below. Management considers that Economic book value provides investors with a useful supplemental measure to evaluate our financial position as it reflects the impact of fair value changes for all of our residential mortgage assets, irrespective of the accounting model applied for GAAP reporting purposes. Economic book value does not represent and should not be considered as a substitute for Stockholders’ Equity, as determined in accordance with GAAP, and our calculation of this measure may not be comparable to similarly titled measures reported by other companies.

The following table provides a reconciliation of our GAAP book value per common share to our non-GAAP Economic book value per common share for the quarterly periods below:

(In Millions, Except Per Share Amounts)	December 31, 2020			September 30, 2020			June 30, 2020			March 31, 2020			December 31, 2019
GAAP Total Stockholders’ Equity	$	2,524.8		$	2,565.7		$	2,521.1		$	2,440.7		$	3,384.0
Preferred Stock, liquidation preference		(475.0	)		(475.0	)		(475.0	)		(475.0	)		(200.0	)
GAAP Stockholders’ Equity for book value per common share		2,049.8			2,090.7			2,046.1			1,965.7			3,184.0
Adjustments:
Fair value adjustment to Residential whole loans, at carrying value		173.9			141.1			(25.3	)		(113.5	)		182.4
Stockholders’ Equity including fair value adjustment to Residential whole loans, at carrying value (Economic book value)	$	2,223.7		$	2,231.8		$	2,020.8		$	1,852.2		$	3,366.4
GAAP book value per common share	$	4.54		$	4.61		$	4.51		$	4.34		$	7.04
Economic book value per common share	$	4.92		$	4.92		$	4.46		$	4.09		$	7.44
Number of shares of common stock outstanding		451.7			453.3			453.2			453.1			452.4

16

EX-99.2

Exhibit 99.2

 Fourth Quarter 2020 Earnings Presentation

Forward looking statements When used in this presentation or other written or oral communications, statements which 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, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and, as such, may involve known and unknown risks, uncertainties and assumptions. These forward-looking statements include information about possible or assumed future results with respect to our business, financial condition, liquidity, results of operations, plans and objectives. Statements regarding the following subjects, among others, may be forward-looking: risks related to the ongoing spread of the novel coronavirus and the COVID-19 pandemic, including the pandemic’s effect on the general economy and our business, financial position and results of operations (including, among other potential effects, increased delinquencies and greater than expected losses in our whole loan portfolio); changes in interest rates and the market (i.e., fair) value of MFA’s residential whole loans, MBS and other assets; changes in the prepayment rates on residential mortgage assets, an increase of which could result in a reduction of the yield on certain investments in its portfolio and could require MFA to reinvest the proceeds received by it as a result of such prepayments in investments with lower coupons, while a decrease in which could result in an increase in the interest rate duration of certain investments in MFA’s portfolio making their valuation more sensitive to changes in interest rates and could result in lower forecasted cash flows; credit risks underlying MFA’s assets, including changes in the default rates and management’s assumptions regarding default rates on the mortgage loans in MFA’s residential whole loan portfolio; MFA’s ability to borrow to finance its assets and the terms, including the cost, maturity and other terms, of any such borrowings; implementation of or changes in government regulations or programs affecting MFA’s business; MFA’s estimates regarding taxable income, the actual amount of which is dependent on a number of factors, including, but not limited to, changes in the amount of interest income and financing costs, the method elected by MFA to accrete the market discount on residential whole loans and the extent of prepayments, realized losses and changes in the composition of MFA’s residential whole loan portfolios that may occur during the applicable tax period, including gain or loss on any MBS disposals and whole loan modifications, foreclosures and liquidations; the timing and amount of distributions to stockholders, which are declared and paid at the discretion of MFA’s Board and will depend on, among other things, MFA’s taxable income, its financial results and overall financial condition and liquidity, maintenance of its REIT qualification and such other factors as MFA’s Board deems relevant; MFA’s ability to maintain its qualification as a REIT for federal income tax purposes; MFA’s ability to maintain its exemption from registration under the Investment Company Act of 1940, as amended (or the “Investment Company Act”), including statements regarding the concept release issued by the Securities and Exchange Commission (“SEC”) relating to interpretive issues under the Investment Company Act with respect to the status under the Investment Company Act of certain companies that are engaged in the business of acquiring mortgages and mortgage-related interests; MFA’s ability to continue growing its residential whole loan portfolio, which is dependent on, among other things, the supply of loans offered for sale in the market; expected returns on MFA’s investments in nonperforming residential whole loans (“NPLs”), which are affected by, among other things, the length of time required to foreclose upon, sell, liquidate or otherwise reach a resolution of the property underlying the NPL, home price values, amounts advanced to carry the asset (e.g., taxes, insurance, maintenance expenses, etc. on the underlying property) and the amount ultimately realized upon resolution of the asset; targeted or expected returns on MFA’s investments in recently-originated loans, the performance of which is, similar to MFA’s other mortgage loan investments, subject to, among other things, differences in prepayment risk, credit risk and financing cost associated with such investments; risks associated with MFA’s investments in MSR-related assets, including servicing, regulatory and economic risks, risks associated with our investments in loan originators, and risks associated with investing in real estate assets, including changes in business conditions and the general economy. These and other risks, uncertainties and factors, including those described in the annual, quarterly and current reports that MFA files with the SEC, could cause MFA’s actual results to differ materially from those projected in any forward-looking statements it makes. All forward-looking statements are based on beliefs, assumptions and expectations of MFA’s future performance, taking into account all information currently available. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. New risks and uncertainties arise over time and it is not possible to predict those events or how they may affect MFA. Except as required by law, MFA is not obligated to, and does not intend to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Executive summary 2020 fourth quarter financial results and other highlights Investment portfolio and asset based financing composition Non-QM and BPL securitizations Apollo/Athene warrant position repurchased/exercised MFA share repurchase program 8% senior note redemption MFA recognition

2020 fourth quarter financial results GAAP earnings of $0.08 per common share Continued strong contribution from whole loans accounted for at fair value $15.7 million net reversal of provision for credit losses Expenses of $25.3 million recognized on Apollo debt repayment GAAP book value was $4.54, down 1.5%, and Economic book value (EBV) was unchanged compared to September 30 at $4.92 Warrant transactions lowered GAAP book value by $0.18 and EBV by $0.19, or 3.9% Purchased 14.1 million shares under the share repurchase program. $0.03 accretive to GAAP book value and $0.04 accretive to EBV Leverage (debt to equity) was 1.7:1 as of December 31 $0.075 dividend paid to common stockholders on January 29

Other highlights Net interest income again increased and nearly doubled compared to Q3 Securitizations materially reduce interest expense Apollo/Athene debt paid off in October 8% senior notes redeemed on January 6, 2021 Took advantage of strong housing market to liquidate REO properties Sold 1,000 properties in 2020 for $271 million (2.5 times 2019 proceeds realized) Properties sold for an average of 105.9% of carrying value generating gains on disposal of $15.1 million MFA efforts since June 30 following exit from forbearance have generated meaningful results for shareholders as total shareholder return from June 30 through December 31, 2020 was 62% 5

Investment portfolio and asset based financing composition Investment Portfolio Asset Based Financing REO, $0.3 Residential Mortgage Securities, $0.2 Fair Value loans(2), $1.2 PCD(3) and Other Loans, $0.8 Business Purpose Loans(1), $1.0 MSR-Related Assets, $0.2 Non-QM Loans, Securitized Debt, $1.5 Mark-to-Market, $1.3 Non Mark-to-Market, $1.2 $2.4 No significant changes in portfolio composition during the quarter: 93% residential whole loans at 12/31/20 $111 million of loan purchases in Q4 No sales of CRT securities or MSR-related assets At 12/31/20, 67% of our asset backed financing arrangements are on non mark-to-market terms. Total weighted average financing cost at 12/31/20 of 3.1% versus 4.3% at 09/30/20. On redemption of the senior notes in early January, total weighted average financing costs drops further to 2.9%. Business Purpose Loans comprise $0.6 billion of Rehabilitation Loans and $0.4 billion of Single Family Rental Loans at 12/31/20. The Fair Value option was elected on these loans at acquisition as they were more than 60 days delinquent. At 12/31/20, approximately 50% of this portfolio was less than 60 days delinquent.6 PCD or Purchased Credit Deteriorated loans were purchased at a discount (typically as re-performing loans) that reflected, at least in part, the prior credit performance of underlying borrower.

Non-QM and BPL securitizations MFRA 2020-NQM2 ($570 mil) closed October 28, 2020 $405.4 million AAA’s sold at 1.34% yield Bonds sold represent 93.8% of UPB Blended cost of debt sold of 1.64% MFRA 2020-NQM3 ($381 mil) closed December 11, 2020 $264.5 mil AAA’s sold at 0.98% yield Bonds sold represent 94.2% of UPB Blended cost of debt sold of 1.30% MFRA 2021-INV1 ($217 mil) closed February 4, 2021 $149.0 mil AAA’s sold at 0.83% yield Bonds sold represent 91.0% of UPB Blended cost of debt sold of 1.06% 7

Apollo/Athene warrant position repurchased/exercised No warrants outstanding as of December 31, 2020 Apollo/Athene own 12.3 million shares (approximately 2.7%) Total dilution attributable to warrant package of less than 4% MFA repurchased 47.5% of warrants on December 10, 2020 17.6 million warrants purchased for $33.7 million Book value dilution of $0.07 per share or 1.6% Apollo/Athene exercised balance of warrant position on December 28, 2020 Combination of cash exercise and cashless (net share) exercise Payment to MFA of $6.5 million and issuance of 12.3 million shares Book value dilution of $0.11 per share or 2.3% 8

MFA share repurchase program MFA Board of Directors authorized $250 million share repurchase program 10b-18 program permits share repurchase during “open window” periods $50.7 million of common stock repurchases during the fourth quarter 14.1 million shares at an average price of $3.61 (including commissions) $0.03 per common share accretive to GAAP book value $0.04 per common share accretive to Economic book value $33.7millionApollo/Athenewarrantpurchasesincludedundershare repurchase program Permitted to purchase an additional $165.7 million of common stock at December 31, 2020

 Senior note redemption $100 million 8% senior notes due 2042 Originally issued in 2012 Redemption announced on December 22, 2020 Redemption completed on January 6, 2021 Interest savings of $8 million per year One-time non-cash charge in December 2020 of $3.1 million for unamortized issuance expenses

MFA recognition MFA Financial included in 2021 Bloomberg Gender Equality Index Second consecutive year of inclusion for MFA One of 380 global public companies in 11 sectors across 44 countries and regions Attestation of MFA’s commitment to and support of gender equality MFA Financial certified as a “Great Place to Work” (January 2021) Certified by Great Place to Work Institute, Inc. Based on employee validation through engagement survey ImportantaffirmationofMFA’scultureparticularlyintoday’sworldofvirtual recruitment MFA joins other financial services companies with this certification in NYC including Blackrock, American Express, Goldman Sachs, KKR, Blackstone and Neuberger Berman

Q4 earnings continued to normalize, but were impacted by non-recurring items Summary Income Statement Q4 2020 Q3 2020 Net Interest Income: Residential mortgage securities (1) $ 6.7 $ 6.5 Residential whole loans (RWL) (2) 22.6 20.2 Apollo senior secured financing (1.7) (13.8) Other interest earning assets and interest bearing liabilities (8.2) (2.8) Net Interest Income $ 19.4 $ 10.1 Net reversal of provision for credit losses - RWL 19.0 30.5 Provision for credit losses - other financial instruments (3.3) (3.3) Net reversal of provision for credit losses $ 15.7 $ 27.2 Other Income, net: Net gains on RWL measured at fair value 49.8 76.9 Unrealized gain/(loss) on remaining CRT securities held at fair value 2.9 0.1 Expenses recognized on repayment of Senior Secured Credit Agreement (25.3) — Other miscellaneous net investment income 3.7 0.2 Other Income, net: $ 31.1 $ 77.2 Operating and Other Expenses (20.4) (27.3) Preferred dividends (8.2) (8.2) Net Income Available to Common Shareholders $ 37.6 $ 79.0 Earnings Per Common Share $ 0.08 $ 0.17 Includes MBS, CRT securities and MSR-related assets. $ in mm $ in mm Net interest income reflects: Improved net interest spreads for RWL as securitization initiatives take hold. Payoff of Apollo senior secured debt. $3.1 million non-cash charge related to Senior Note redemption. Net reversal of credit loss reserves of $15.7 million, primarily reflecting improvement in macro-economic assumptions and lower loan balances. Net gains on fair value loans of $49.8 million, reflecting $30.9 million of market value increases and $18.9 million cash income. $25.3 million of expenses recorded on repayment of senior secured term loan. Includes interest expense on financing associated with all residential whole loans. Interest income received on residential whole loans held at fair value is reported in Other Income in Net gains on residential whole loans measured at fair value. Lower than usual operating and other expenses primarily due to adjustments to 2020 incentive compensation accrual.

 Non-QM Portfolio Statistics (12/31/20) WA LTV 63.8% Total UPB (in millions) $2,294 WA FICO 712 WA Coupon 6.15% Avg Balance $424,438 Hybrid ARM’s 69% Fixed Rate 31% Current 92.1% 60+Days DQ 7.9% 3-Month CPR 30% Top 2 States CA 54% FL 19% Origination of Non-QM loans slowed materially in the second quarter, but has begun to pickup once again with the stabilization of the securitization market We purchased $40 million in the 3rd quarter of 2020 and $80 million in the 4th quarter We closed on a second securitization of our Non-QM loans in October and our third in December Over 75% of our borrowing is funded with Non-MTM leverage We expect to continue to execute programmatic securitizations should market conditions warrant materially lowering our cost of funds

Non-QM COVID-19 pandemic impact Mar-20June - 20 Sep-20 Dec-20 Loan Count 7,670 5,947 5,656 5,405 Total UPB ($ millions) 3,424.6 2,501.5 2,397.2 2,294.1 % Current 97.5 % 97.2 % 88.2 % 89.0 % % 30 Days 1.4 % 1.0 % 3.0 % 3.1 % % 60+ Days 1.1 % 1.8 % 8.8 % 7.9 % LTV 65.8 63.6 63.6 63.8 % COVID-19 Impact — % 31.5 % 32.0 % 31.5 % % Active Deferral — % 30.6 % 0.1 % — % % Active Forbearance — % 0.6 % 2.2 % 2.8 % Many of our borrowers are self-employed and run small businesses Through the end of the year, we executed forbearance/deferral plans for 31.5% of the Non-QM portfolio The majority of loans exiting forbearance plans have continued to perform by making the next contractual payment

RPL portfolio delinquency characteristics as of 12/31/2020 81% of our RPL portfolio is less than 60 days delinquent as of December31, 2020. On average, 24% of the 60+ days delinquent loans are making payments. Prepay speeds have generally maintained between 6% and 16%. 30% of the RPL portfolio has been granted forbearance plans related to the COVID-19 pandemic. Although borrowers have received forbearance plans, many continue to make payments and are contractually current. 15

Performance of Non-Performing(1) loans purchased before 12/31/19 Through diligent asset management, we continue to improve outcomes for our NPL portfolio by returning loans to performing or paid-in-full status and through other forms of resolution. 45% of our NPL portfolio has liquidated or reverted to REO. In addition, we have accelerated our sales of REO this year selling 87% more properties compared to 2019. Measured by UPB at purchase, 36% (or approximately 4,000) of loans that were non-performing at purchase are either performing or have paid in full as of December 31, 2020. 73% of MFA modified loans are either performing today or have paid in full. 16 1Non-Performing at purchase defined as greater than or equal to 60 days delinquent 2Performing as of 12/31/2020 defined as less than 60 days delinquent or made a full P&I payment in December 2020

Business purpose loans – Rehabilitation loans Portfolio Statistics (12/31/20) UPB (in millions) $581 Undrawn commitments $61 WA ARV-LTV* 63 % WA As-Is/Purch. LTV** 69 % WA FICO 719 WA Orig Term (months) 17 WA Loan Age (months) 17 WA Passthrough Rate 7.29 % 3 mth Repayment Rate 59 % Current and 30 Days DQ 72 % 60+ Days DQ 28 % $141 million of principal payments $11 million in rehab draws $3 million was converted to REO $15 million of new investments Average yield of 5.97% in the fourth quarter. All of our Fix and Flip financing is non-mark-to-market. 60+ day delinquency increased from $143 million in the third quarter to $162 million in the fourth quarter. Due to a strong housing market, elevated prepayments and generally improving credit conditions, loan loss reserves on the Fix and Flip portfolio declined $4 million to $18.3 million at the end of the fourth quarter. Purchased $15 million ($23 million max loan amount) in the fourth quarter. * WA ARV-LTV: Weighted average after repair loan to value at origination17 **WA As-Is/Purch. LTV: Weighted average As-Is value or purchase value (when available) at origination

Business purpose loans – Rehabilitation loans (cont) 60+ Day DQ Loan Statistics (12/31/20) UPB (in million) $162 Undrawn commitments $7 WA ARV-LTV* 66 % WA As-Is/Purch. LTV** 71 % WA FICO 709 WA Orig Term (months) 14 WA Loan Age (months) 21 WA Passthrough Rate 7.61 % 60 day DQ 4 % 90 day DQ 6 % 120+ day DQ 18 % 60+ day DQ UPB increased $19 million to $162 million at the end of the quarter. $25 million paid off in full. $3 million cured to Current/30 day DQ. $3 million went to REO. $50 million became new 60+ day delinquent. 60+ day DQ as a % of UPB increased 7% to 28% at the end of the quarter. Approximately 15% of 60+ day delinquent loans are listed for sale and two-thirds of 60+ day delinquent loans are completed projects or loans where no/limited work was expected to be done. When loans pay off in full out of 60+ we often collect default interest, extension fees and other fees at pay-off. Loss mitigating factors Highly experienced asset management team. Term non-mark-to-market financing of portfolio gives us time to carefully manage delinquent assets. Default interest, extension fees and other fees. Approximately $2.6 million collected since inception. We have outstanding repurchase claims on $3 million of seriously delinquent loans. Fiscal and monetary stimulus continue to support housing, reducing expected losses. Low mortgage rates and resilient home sales support property values. Short term push to suburban housing due to COVID-19. 18 * WA ARV-LTV: Weighted average after repair loan to value at origination **WA As-Is/Purch. LTV: Weighted average As-Is value or purchase value (when available) at origination

Business purpose loans – Single Family Rental Loans SFR Portfolio Statistics (12/31/20) UPB (in millions) $442 WA LTV 70 % WA FICO 730 WA DSCR* 1.48x WA Coupon 6.68 % WA Loan Age (months) 18 5/1 Hybrid Loans 56 % 4th Quarter Yield 5.27 % 3 mth Prepayment Rate (CPR) 33 % DQ 60+ 5.6 % 4th quarter yield: 5.27% (including prepay penalties collected 4th quarter yield is 5.99%). 60+ day delinquency rate increased 70bp to 5.6%. Prepayment rates increased in the quarter as some 3-year balloon loans that were approaching maturity paid off. Fourth quarter 3mth CPR was 33%. Purchased $12 million in the fourth quarter. We closed on our first securitization solely consisting of Business Purpose Rental Loans in the first week of February 2021. $217.5 million of loans were securitized. Bonds sold represent 91% of loan UPB. Weighted average coupon of bonds sold was 1.06%. 23% of SFR financing was non-mark-to-market at the end of Q4. After closing our securitization in February non-mark-to-market financings rose to 77% of total SFR financing. 19 *WA DSCR: Weighted average debt service coverage ratio

Summary Fourth quarter results and book value primarily reflect stabilizing mortgage markets, resulting in continued recovery of asset vales and lower CECL credit reserves. Successful execution of securitization transactions has generated substantial liquidity and positively impacted our cost of funds. Securitized debt has added benefit of being non-recourse term financing without mark-to-market collateral maintenance. Results were also impacted by certain one-time items, particularly related to repayment of the Apollo/Athene loan as well as the repurchase and exercise of the associated warrants. We enter 2021 with a significantly strengthened balance sheet, substantial liquidity and demonstrated securitization capability across multiple loan products. We anticipate that continued use of loan securitization will further lower financing costs, which should drive earnings and return on equity.

 Additional Information

Reconciliation of GAAP book value to Economic book value “Economic book value” is a non-GAAP financial measure of our financial position. To calculate our Economic book value, our portfolios of Residential whole loans at carrying value are adjusted to their fair value, rather than the carrying value that is required to be reported under the GAAP accounting model applied to these loans. This adjustment is also reflected in our end of period stockholders’ equity in the table below. Management considers that Economic book value provides investors with a useful supplemental measure to evaluate our financial position as it reflects the impact of fair value changes for all of our residential mortgage assets, irrespective of the accounting model applied for GAAP reporting purposes. Economic book value does not represent and should not be considered as a substitute for Stockholders’ Equity, as determined in accordance with GAAP, and our calculation of this measure may not be comparable to similarly titled measures reported by other companies. The following table provides a reconciliation of GAAP book value per common share to our non-GAAP Economic book value per common share as of the end of each quarter since Q1 2019.

Book value changes for the quarter were modest as fair value increases and share repurchases largely offset dilution from warrant transactions Common stock dividend declared during Q4 2020 was $0.075 per share, which rounds to $0.08 for purposes of this presentation. For financing agreements accounted for a fair value (due to the election of the fair value option), credit risk related changes in fair value are recorded directly in Other Comprehensive Income, a component of shareholders’ equity. Changes in fair value for these financing agreements related to non credit risk related factors are recorded in earnings each period.23

Allowance for credit losses - Loans held at carrying value In connection with purchased Rehabilitation loans, the Company had unfunded commitments of $60.6 million, with a separately recorded liability for expected losses of $1.2 million. Amounts presented exclude allowance for loan losses on other financial instruments of $9.0 million at December 31, 2020. Allowance for credit losses for residential whole loans held at carrying value decreased during the quarter by $19.4 million, primarily due to adjustments to macro-economic assumptions used in our cash flow forecasts and lower loan balances. Changes in credit loss allowances are recorded in periodic GAAP earnings. Ongoing CECL accounting does not impact calculation of Economic book value. 24

XML

Cover	Feb. 23, 2021
Document Information [Line Items]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Feb. 23, 2021
Entity File Number	1-13991
Entity Registrant Name	MFA FINANCIAL, INC.
Entity Central Index Key	0001055160
Entity Tax Identification Number	13-3974868
Entity Incorporation, State or Country Code	MD
Entity Address, Address Line One	350 Park Avenue
Entity Address, Address Line Two	20th Floor
Entity Address, City or Town	New York
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	10022
City Area Code	212
Local Phone Number	207-6400
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Common Stock [Member]
Document Information [Line Items]
Title of 12(b) Security	Common Stock, par value $0.01 per share
Trading Symbol	MFA
Security Exchange Name	NYSE
Series B Preferred Stock [Member]
Document Information [Line Items]
Title of 12(b) Security	7.50% Series B Cumulative Redeemable Preferred Stock, par value $0.01 per share
Trading Symbol	MFA/PB
Security Exchange Name	NYSE
Series C Preferred Stock [Member]
Document Information [Line Items]
Title of 12(b) Security	6.50% Series C Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock, par value $0.01 per share
Trading Symbol	MFA/PC
Security Exchange Name	NYSE