Third Quarter 2026
Filed Nov 4, 2026MFA Financial, Inc. Announces Third Quarter 2026 Financial Results
MFA reported a GAAP net loss available to common stock and participating securities of $(122.4) million and a total economic return of (10.6)% amid wider mortgage spreads and higher Treasury yields, while distributable earnings were $26.4 million and the company continued portfolio purchases, securitization activity and dividend payments.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Interest Income, three months ended September 30GAAP | $203.9M | – | – |
| Interest Expense, three months ended September 30GAAP | $142.5M | – | – |
| Net Interest Income, three months ended September 30GAAP | $61.40M | – | – |
| Net Interest Income after Reversal/(Provision) for Credit Losses, three months ended September 30GAAP | $61.36M | – | – |
| Other Income/(Loss), net, three months ended September 30GAAP | −$145.9M | – | – |
| Operating and Other Expense, three months ended September 30GAAP | $27.18M | – | – |
| Income/(loss) before income taxes, three months ended September 30GAAP | −$111.7M | – | – |
| Net Income/(Loss), three months ended September 30GAAP | −$111.7M | – | – |
| Net Income/(Loss) Available to Common Stock and Participating Securities, three months ended September 30GAAP | −$122.4M | – | – |
| Basic Earnings/(Loss) per Common Share, three months ended September 30GAAP | $ (1.19) | – | – |
| Diluted Earnings/(Loss) per Common Share, three months ended September 30GAAP | $ (1.19) | – | – |
| Distributable earningsnon-GAAP | $ 26.4 million, or $0.26 per basic common share | – | – |
| Distributable earnings prior to realized credit lossesnon-GAAP | $ 45.3 million, or $0.44 per share | – | – |
| GAAP Total Stockholders’ EquityGAAP | $1.62B | – | – |
| GAAP book value per common shareGAAP | $ 11.12 | – | – |
| Economic book value per common sharenon-GAAP | $ 11.44 | – | – |
| Total economic returnnon-GAAP | (10.6)% | – | – |
| Total Balance Sheet Net Yield, three-month period ended September 30, 2026other | 6.01 % | – | – |
| Total Balance Sheet Cost of Funding, three-month period ended September 30, 2026other | (4.76) % | – | – |
| Total Balance Sheet Net Interest Spread, three-month period ended September 30, 2026other | 1.63 % | – | – |
| Residential investment portfolioother | $12.8B | – | – |
| 60+ day delinquencies for MFA’s residential loan portfolioother | 6.7% | – | – |
| Debt/Net Equity Ratioother | 7.1x | – | – |
| Recourse leverageother | 3.4x | – | – |
| Interest Income, nine months ended September 30GAAP | $593.6M | – | – |
| Net Interest Income, nine months ended September 30GAAP | $180.2M | – | – |
| Net Income/(Loss), nine months ended September 30GAAP | −$65.88M | – | – |
| Basic Earnings/(Loss) per Common Share, nine months ended September 30GAAP | $ (0.95) | – | – |
| Diluted Earnings/(Loss) per Common Share, nine months ended September 30GAAP | $ (0.95) | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Mortgage-Related AssetsThe segment recorded $ (157,729) of net loss on residential whole loans measured at fair value through earnings, $ (223,345) of impairment and other net loss on securities and other portfolio investments, $ 144,175 of net gain on derivatives, and $ 92,940 of net gain on securitized debt measured at fair value through earnings. | $ 163,073 interest income | – | – |
| Lima OneLima One funded $166.1 million of new business purpose loans with a maximum loan amount of $287.8 million, funded $88.4 million of draws on previously originated Transitional loans, and generated $7.4 million of mortgage banking income. | $ 39,457 interest income | – | – |
| CorporateThe Corporate column primarily consists of corporate cash and related interest income, investments in loan originators and related economics, general and administrative expenses not directly attributable to Lima One, interest expense on unsecured senior notes, securitization issuance costs, and preferred stock dividends. | $ 1,377 interest income | – | – |
Capital returns
- MFA paid a regular cash dividend of $0.36 per common share on October 30, 2026.
What drove it
- MFA purchased $884.2 million and sold $750.3 million of Agency MBS during the quarter.
- Non-QM loan acquisitions totaled $480.5 million, bringing MFA’s Non-QM portfolio to $5.8 billion at September 30, 2026.
- After portfolio runoff and market value changes, MFA’s Agency MBS position declined to $3.9 billion.
- MFA maintained TBA forward contracts with a notional amount of $478.0 million at September 30, 2026.
- Asset dispositions included $94.8 million of proceeds from recently-originated single-family rental loans, generating a $2.4 million gain on sale.
- MFA sold 62 REO properties in the third quarter for aggregate net proceeds of $20.5 million.
- MFA added a net $357.2 million of new interest rate hedges and estimated net effective duration of its investment portfolio at 1.09 years.
- Net interest income increased to $ 61,404 from $ 57,001 in the prior-year quarter, while total balance-sheet net interest spread was 1.63 % versus 1.58 % in the prior quarter.
Concerns
- Net gain/(loss) on residential whole loans measured at fair value through earnings was $ (203,991), compared with $ 31,241 in the prior-year quarter.
- Impairment and other net gain/(loss) on securities and other portfolio investments was $ (223,303), compared with $ 18,004 in the prior-year quarter.
- GAAP book value per common share declined to $ 11.12 from $ 12.71 in the prior quarter and $ 13.13 in the prior-year quarter.
- Economic book value per common share declined to $ 11.44 from $ 13.20 in the prior quarter and $ 13.69 in the prior-year quarter.
- Total economic return was (10.6)% for the third quarter.
- Realized credit losses on residential whole loans at fair value, net of recoveries, were $ 18,939.
- The shock table projected a (10.87) % change in total stockholders' equity under a +100 Basis Point Increase scenario.
- Multifamily transitional loans had a 60+ DQ % of 23.7 % and a 60+ LTV of 156 % at September 30, 2026.
What to watch
- The deployment of capital into the higher yielding environment cited by management.
- The performance of the $5.8 billion Non-QM portfolio and the $3.9 billion Agency MBS position.
- Realized credit losses, which reduced distributable earnings relative to distributable earnings prior to realized credit losses.
- Mortgage spread movements, Treasury-yield volatility and their effect on fair values of residential whole loans, securities, derivatives and securitized debt.
- The planned leadership transition: Craig Knutson will retire as Chief Executive Officer effective June 30, 2027, Bryan Wulfsohn will become Chief Executive Officer on July 1, 2027, and Andrew Kail will join as Senior Vice President and Chief Investment Officer effective January 1, 2027.
Balance sheet and cash flow
- MFA closed the quarter with $119.5 million of unrestricted cash and $241.2 million of unpledged Agency MBS.
- Cash and cash equivalents were $ 119,548 at September 30, 2026, compared with $ 213,211 at December 31, 2025.
- Restricted cash was $ 207,318 at September 30, 2026, compared with $ 173,457 at December 31, 2025.
- Total Assets were $ 13,541,288 at September 30, 2026, compared with $ 13,046,449 at December 31, 2025.
- Total Liabilities were $ 11,925,579 at September 30, 2026, compared with $ 11,218,754 at December 31, 2025.
- MFA acquired $1.6 billion of assets during the quarter, including a $750 million rotation within its Agency MBS portfolio into higher coupon bonds.
- Portfolio runoff was $614.0 million.
- MFA completed one securitization during the quarter collateralized by $446.5 million UPB of loans, bringing total securitized debt to approximately $5.9 billion.
- MFA re-securitized $447 million of seasoned NPL collateral after calling a prior issuance, unlocking $40 million of capital and additional financing capacity.
Analysis
MFA’s third quarter was marked by a sharp GAAP loss and book-value pressure from mortgage-market volatility. Net income/(loss) available to common stock and participating securities was $ (122,372), compared with $ 37,270 in the prior-year quarter, and basic and diluted earnings/(loss) per common share were each $ (1.19). GAAP book value per common share was $ 11.12, versus $ 12.71 in the prior quarter, while economic book value per common share was $ 11.44, versus $ 13.20. Total economic return was (10.6)%.
The loss was driven by fair-value and impairment effects rather than a deterioration in net interest income. Net interest income was $ 61,404, compared with $ 57,001 in the prior-year quarter. However, other income/(loss), net was $ (145,870), reflecting $ (203,991) of net loss on residential whole loans measured at fair value through earnings and $ (223,303) of impairment and other net loss on securities and other portfolio investments. These were only partly offset by $ 158,845 of net gain on derivatives and $ 115,540 of net gain on securitized debt measured at fair value through earnings.
Non-GAAP distributable earnings were $26.4 million, or $0.26 per basic common share, compared with $ 12,238, or $ 0.12 per basic common share, in the prior quarter. Distributable earnings prior to realized credit losses were $45.3 million, or $0.44 per share, after an $ 18,939 adjustment for realized credit losses on residential whole loans at fair value, net of recoveries. Total balance-sheet net interest spread was 1.63 %, compared with 1.58 % in the prior quarter and 1.86 % in the prior-year quarter.
Portfolio activity emphasized rotation and new loan deployment. MFA acquired $1.6 billion of assets, including purchases of $884.2 million of Agency MBS and $480.5 million of Non-QM loans. The residential investment portfolio was $12.8 billion at September 30, 2026, compared with $13.0 billion at June 30, 2026. The company also completed a securitization collateralized by $446.5 million UPB of loans and re-securitized $447 million of seasoned NPL collateral, which management said unlocked $40 million of capital and additional financing capacity.
Credit and leverage remain important areas of attention. Residential-loan 60+ day delinquencies decreased to 6.7% from 7.0% at June 30, 2026, but multifamily transitional loans reported a 60+ DQ % of 23.7 %. MFA ended the quarter with $119.5 million of unrestricted cash, a Debt/Net Equity Ratio of 7.1x and recourse leverage of 3.4x. The company paid a regular cash dividend of $0.36 per common share on October 30, 2026. No forward financial guidance was provided.
Management, verbatim
The third quarter was challenging for mortgage investors with Treasury yields spiking across the curve and heightened volatility sending spreads wider. While we were not immune to these market movements, we purchased Non-QM loans and Agency MBS at attractive levels while further reducing our legacy multifamily exposure. We look forward to deploying capital into a higher yielding environment moving forward.
Craig Knutson, Chief Executive Officer
We acquired $1.6 billion of assets during the quarter, including a $750 million rotation within our Agency MBS portfolio into higher coupon bonds. We also re-securitized $447 million of seasoned NPL collateral after calling a prior issuance, unlocking $40 million of capital and additional financing capacity.
Bryan Wulfsohn, President and Chief Investment Officer
Not in the filing
stated, not guessed- Forward revenue guidance
- Forward gross margin guidance
- Forward operating-expense guidance
- Forward tax-rate guidance
- Prior outlook for comparison
- Cash flow from operating activities
- Free cash flow
- Share repurchases
- Gross margin
- Consolidated revenue as a reported line item
- A reported percentage change for most reported metrics
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was checked against the filing text, and a metric whose value, prior period and change do not add up is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.