MFA Financial, Inc.

Greetings and welcome to the MFA Financial Inc. Second Quarter 2025 Financial Results Conference Call and Webcast. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. You may be placed into question queue at any time by pressing star 1 on your telephone keypad. If anyone should require operator assistance, please press star 0 on your telephone keypad. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Al Schwartz, General Counsel. Please go ahead, sir.

Thank you, Kevin, 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, 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 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 second quarter 2025 financial results. Thank you for your time. I would now like to turn this call over to MFA's CEO, Craig Knutson.

Thank you, Hal. Good morning, everyone, and thank you for joining us for MFA Financial's second 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 second 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'm sure you will all remember the market turmoil that rang in the second quarter with Liberation Day on April 2nd. Two-year treasuries ended the first quarter at $3.88, rallied to $3.65 by April 4th, sold off to 396 on April 11th, and rallied again to 360 on April 30th, and then subsequently sold off to 405 on May 14th. Ten-year Treasuries followed a similar trajectory, rallying 20 basis points to 399 on April 4th, selling off 50 basis points to 449 on April 11th, closing the month of April at 416, and then selling off to 460 by May 21st. Fortunately, cooler heads appear to have prevailed since then, both in Washington, D.C., and in bond and equity markets. At least until last Friday's employment report revisions, twos and tens had generally each settled into their own 25 basis point ranges since mid-May, and equity markets have continued to grind higher, again, last Friday notwithstanding. Mortgage credit spreads are tracked other risk assets, widening somewhat in April and then retracing back to or near level seen at the end of Q1 by the end of the second quarter. Importantly, the market for securitized mortgage credit assets and non-QM securizations in particular continues to deepen as liquidity increases and investor appetites remain strong. Spreads widen and tighten along with other risk assets, but deals get done and priced in a very orderly fashion. This was decidedly not the case as recently as 2023, when at times demand was weak, spreads were much more volatile, and some deals were pulled from the market. The depth and reliability of this market is a powerful testament to this durable source of financing that we utilize to finance over 80% of our loan portfolio. The economic and macro environments, while never certain, seem a bit more clear as the year progresses. Growth, though slower than originally expected, is remarkably resilient. The passage of the tax and spending bill has removed the market uncertainty that had been associated with that. Inflation fears have moderated, particularly as tariff negotiations begin to get resolved at less draconian levels than originally feared. Employment continues to grow, albeit at a reduced pace, although with the substantial revisions in last Friday's jobs report, a strong case can be made that the jobs market is not as healthy as previously believed. Amidst the drama between the President and the Fed Chair, consensus now seems to be for two rate cuts later this year, and lower short rates is always a helpful tonic for mortgage rates. Finally, housing is languishing somewhat as demand continues to fall off due to interest rate and affordability challenges. Actual home price declines have for the most part been concentrated in specific geographies where new supply has saturated these local markets. There's still a fundamental nationwide supply shortage, so it's hard to envision more than a very modest weakness in home prices nationwide. Homeowners with existing mortgages today are generally not over-levered, and years of substantial HPA coupled with prudent and sensible underwriting practices means that LTVs are low enough that even in the event of a job loss, death, or divorce, borrowers have substantial equity and will sell their property to extract their equity and pay off the lender. In the midst of this environment, our portfolio delivered a total economic return of 1.5% for the second quarter and 3.4% year-to-date, which includes our first two quarterly dividends, which we increased to 36 cents in the first quarter. Our economic book value in the second quarter was down very modestly by 1%. Our distributable earnings for the quarter was 24 cents per share and were negatively affected by credit losses incurred on certain business purpose loans that were realized during the quarter. Absent these credit losses, DE would have been 35 cents. As a reminder, these credit losses do not impact DE until actually realized. And as Mike Roper has emphasized for the last few quarters, these loans were marked down in 2024 and earlier when they went delinquent. Our fair value assets are marked to market every quarter. So the economic credit loss was realized through gap earnings and a reduction in book value a long time ago. Said another way, these realized credit losses that reduced distributable earnings in the second quarter are old news. Mike will provide additional color on the actual resolution amount versus the marks on these loans in his prepared remarks. We were active in the second quarter, sourcing $876 million of loans and securities across our target asset classes. These included $503 million of non-QM loans, $131 million of agency MBS, and $217 million of business purpose loans at Lima One. We issued our 18th non-QM securitization in early May. We sold $38 million of newly originated SFR loans and $24 million of delinquent transitional loans. Our overall leverage at the end of the quarter was 5.2 times and our recourse leverage was 1.8 times. Once again, the second quarter demonstrated that MFA's investment portfolio, our balance sheet composition, and risk management approach are positioned to deliver results across multiple scenarios and weather unexpected market volatility and uncertainty. And I will now turn the call over to Mike Roper to discuss financial results.