MFA Financial, Inc.

Greetings and welcome to the MSA Financial First Quarter 2025 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow a formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. I will now turn the conference over to our host, Hal Schwartz, General Counsel. Thank you. You may begin.

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 the MFA's annual report on Form 10-K for the year ended December 31, 2024, 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 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 first quarter 2025 financial results. Thank you for your time. I would now like to turn this call over to MFA's CEO, Craig Knudson.

Thank you, Hal. good morning everyone and thank you for joining us for mfa financials first quarter 2025 earnings call with me today are brian wilson our president and chief investment officer mike roper our cfo and other members of our senior management team i'll begin with a high level review of the first quarter market environment and then touch on some of our results activities and opportunities Then I'll turn the call over to Mike to review our financial results in more detail, followed by Brian, who will review our portfolio, financing, Lima One, and risk management before we open up the call for questions. I must admit, it feels a little strange to talk about the first quarter of 2025, given the market turmoil that ensued on and after April 2nd. But despite the fact that it is not possible to unsee market development since April 2nd, it is instructive in the context of first quarter financial results to recall the market environment in which these results were achieved. And I promise that we'll also address market developments since quarter end later in this call. Fixed income markets were generally constructive throughout the first quarter of 2025. The 10-year yield peaked at 479 on January 14th and rallied to close the quarter at 420. Credit spreads tightened somewhat over January and February, but widened modestly in March as the market began to anticipate and focus on the upcoming trade policy announcements. MFA's portfolio delivered a total economic return of 1.9% for the first quarter, which includes our first quarter dividend that we increased to 36 cents. This dividend increase reflects what we believe is the earnings power of our portfolio, which Mike will explain more fully in his prepared remarks. Our economic book value was down very modestly in the first quarter by 0.6%. We were active in the quarter, sourcing $875 million of loans and securities across our target asset classes. These included $383 million of non-QM loans, $268 million of agency MBS, and $223 million of business purpose loan funded originations and draws on existing loans at Lima One. We issued our 17th non-QM securitization in early March, and we also sold $70 million of newly originated SFR loans at attractive levels. Our overall leverage at the end of the quarter was 5.1 times and our recourse leverage was 1.8 times, both only slightly higher than at year-end by one-tenth of a turn each. The real fund started in April, with the tariff circus kicking off on April 2nd. While the ultimate U.S. trade policy will undoubtedly take months to be determined, the day-to-day impacts have been a roller coaster for financial markets. Expectations for inflation, the economy, employment, corporate earnings, consumer confidence, Fed action, and even housing are all considerably more uncertain. As is always the case, increased uncertainty and volatility are never friendly for fixed income, and particularly for mortgages. As we reflect on this volatility and uncertainty, however, I'd like to highlight the benefits, the MFA's investment strategy, risk management, and financing rigor. Since the onset of market disruptions and the heightened market volatility following Liberation Day, MFA has experienced total margin calls of just under $20 million, which were satisfied with $18.5 million of cash and $1.3 million of unpledged agency bonds. At the height of the impact of the volatility, when the 10-year Treasury sold off by nearly 20 basis points on April 7th, we were net receivers of margin as the cash received on our swaps exceeded the collateral posted for repo margin calls. On the other hand, during the largest rally in rates that we saw since April 2nd, with the 10-year down nearly 12 basis points on April 14th, we posted a total of just 1.5 million of net margin. There's no better testament to the effectiveness of our strategic emphasis on securitization non-mark-to-market financing, and the diversification into agency MBS that we initiated in December of 2022. At March 31st, 83% of our loan financing and 70% of all of our liabilities were non-mark-to-market in nature, with more than half of the mark-to-market financing coming from extremely liquid agency MBS. Although recent volatility has led to modest cred spread widening, and higher rates, securitization markets are seeing strong demand and deals continue to be oversubscribed. Even on some of the most volatile trading sessions, non-QM securitizations continue to price and clear in an orderly fashion. MFA's investment portfolio, balance sheet composition, and risk management approach are positioned to deliver results across multiple scenarios and weather unexpected market volatility and uncertainty. I'll now turn the call over to Mike Roper to discuss financial results.