MFA Financial, Inc.

Ladies and gentlemen, thank you for standing by. Welcome to the MSA Financial Fourth Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. If you'd like to ask a question, please press 1, then 0 on your touch-tone phone, and you will hear an acknowledgment that you've been placed into queue. You can remove yourself from queue at any time by repeating that 1-0 command. Should you require assistance during the conference, please press star, then 0, and an operator will assist you offline. As a reminder, today's conference is being recorded, and I will now turn the conference over to our host, Mr. Hal Schwartz. Please go ahead.

Thank you, Operator, and good morning, everyone. The information discussed on this conference call today may contain or refer to forward-looking statements regarding MFA Financial, Inc., which reflect management's beliefs, expectations, and assumptions as to MFA's future performance and operations. When used, statements that are not historical in nature, including those containing words such as will, believe, expect, anticipate, estimate, should, could, would, or similar expressions are intended to identify forward-looking statements. All forward-looking statements speak only as of the date on which they are made. These types of statements are subject to various known and unknown risks, uncertainties, assumptions, and other factors, including those described in MFA's annual report on Form 10-K for the year ended December 31, 2022, and other reports that it may file from time to time with the Securities and Exchange Commission. These risks, uncertainties, and other factors could cause MFA's actual results to differ materially from those projected, expressed, or implied in any forward-looking statements it makes. For additional information regarding MFA's use of forward-looking statements, please see the relevant disclosure in the press release announcing MFA's fourth quarter 2023 financial results. Thank you for your time. I would now like to turn this call over to MFA's CEO and President, Craig Knutson.

Thank you, Hal. Good morning, everyone, and thank you for joining us here today for MFA Financial's fourth quarter and full year 2023 earnings call. With me today are Mike Roper, our CFO, Gudmundur Kristiansen, and Brian Wolfson, our co-chief investment officers, and other members of our senior management team. I'll begin with a high-level review of the fourth quarter and full year 2023 market environment and MFA's results, and then discuss the current macro picture and 2024 outlook. Then I'll turn the call over to Mike to review our financial results, followed by Gudmundur and Brian, who will review our portfolio, financing, and risk management before we open up the call for questions. The fourth quarter of 2023 was yet another volatile period for fixed income markets, as 10-year Treasury yields rose about 40 basis points in the first two and a half weeks of the quarter before a furious rally that brought them down by about 110 basis points by the end of the year. This bond market rally was obviously friendly for mortgage assets and resulted in strong earnings and book value performance for MFA during the quarter. We generated a 7.8 economic return for the quarter and reported distributable earnings well in excess of our dividend. While 2023 was another extremely challenging year for fixed income investors and for levered mortgage investors in particular, MFA's prudent risk management and continued execution of our strategy produced a 2.7% economic return for the year and a total shareholder return of 30.7%. As we look forward to 2024, the Fed appears to be in a holding pattern as they await further inflation and other economic data. Although the predominant view is for rate cuts in 2024, it seems pretty clear, both from recent economic data and Chairman Powell's statements, that these much-awaited rate cuts are at least a few months away. Inflation numbers continue to surprise on the high side, labor markets are still strong, and the U.S. economy remains buoyant, despite recent recession signals from both Japan and England. While a lower Fed funds rate will obviously benefit levered fixed income investors and mortgage REITs in particular, MFA's positioning and strategy is decidedly not dependent on rate cuts. In the elevated rate environment of the last year, we've continued to add incremental assets at higher yields to execute securitizations as a durable source of financing and earn significant positive carry on our interest rate swap position that we put in place almost two years ago. We added 860 million of loans in the fourth quarter with an average coupon of 10% and we acquired $3 billion of loans in 2023 with an average coupon of 9.8%. We completed eight securizations during the year collateralized by 2.2 billion of loans. including an issuance of over $450 million of securitized debt in the fourth quarter, which included a non-QM deal in mid-December that priced over 50 basis points tighter and 100 basis points lower in yield than similar deals in October. Our strategic objectives and risk management initiatives have afforded us the opportunities and liquidity to grow our portfolio and materially increase its yield, which we believe sets us up well for 2024 and beyond. And finally, we're already off to a strong start to 2024. We issued an unsecured senior bond early in January that was a very successful transaction as we were able to upsize the deal to $115 million and tighten the yield into very strong demand. And this was no accident. We began working with underwriters in November and into December, and we specifically targeted an early January deal launch date to take advantage of investor appetites at the beginning of the year. And finally, we've repurchased in the secondary market a little over $60 million of our convertible bond that's due in June. These repurchases, together with the proceeds from our bond deal, largely cover this convertible bond maturity. And I'll now turn the call over to Mike Roper to discuss our financial results.