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MFA Financial's CEO Discusses Q4 2011 Results - Earnings Call Transcript

On February 9 th, 2012, we sold $433 million in principal amount of Non-Agency mortgage-backed securities as part of a re-securitization. In connection with this transaction, $186.7 million of senior bonds rated AAA by DBRS were issued to third-party investors via a trust. These bonds, with an average life of 1.9 years, were priced at a 2.75% yield. As required by GAAP, MFA will consolidate the re-securitization and will account for this transaction as a financing.

At year-end, our debt-to-equity ratio, including the liabilities underlying our Linked Transactions was 3.7:1. Our Agency portfolio had an amortized cost of 102.6% of par as of December 31 st, 2011 and generated a 3.14% yield in the fourth quarter. Our Non-Agency portfolio had an average amortized cost of 72.8% of par as of December 31 st, 2011 and generated a loss-adjusted yield of 7.06% in the fourth quarter.

We continued to selectively find value in the Agency MBS market. In addition, we continued to implement our strategy of identifying and acquiring Non-Agency mortgage-backed securities with what we consider to be superior loss-adjusted yields at prices well below par. We believe that we continue to be run on a very cost-effective basis for the benefit of our stockholders. For the three months ended December 31 st, 2011, our cost for compensation and benefits and other G&A expenses were $6.6 million or 1.06% on an annualized basis of stockholders' equity as of December 31 st, 2011. Our goal remains to continue positioning MFA to generate double-digit returns on equity over time.

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