MFA Financial, Inc. (MFA) Morgan Stanley Financials Conference June 12, 2012 12:05 PM EST Executives Craig L. Knutson – Executive Vice President Goodmunder Christiansen – Executive Vice President PresentationModerator
Hi, good afternoon. I’m Cheryl Pate, the Specialty Finance Analyst here at Morgan Stanley and here to introduce MFA Financial. MFA Financial is a hybrid Mortgage REIT with a long track record. It was formed back in 1998 and is one of the few mortgage REITs operating today that has been in business through an entire interest rate cycle. The company has a strong track record in evaluating non-agency MBS and we look for the company to experience some expansion as some of the high cost flats roll off the portfolio over the next couple of years. As an internally managed REIT, MFA has among the lowest operating costs in our coverage group. And with us here today to present is Craig Knutson, Executive Vice President responsible for MFA’s non-agency portfolio and Goodmunder Christiansen, EVP that worked on the Agency side of the portfolio. So we have both sides of the portfolio coverage here which should make for interesting discussion. So I’ll turn it over to the company and I’ll kick off the Q&A session once the formal presentation has concluded. Craig L. Knutson Thanks Cheryl. So as Cheryl pointed out, MFA is an internally managed mortgage REIT and we do invest in both agency and non-agency RMBS. Investment opportunities continue to exist in both the Agency and non-agency sector. The Agency MBS investments that we make continue to benefit from the steep yield curve, and despite repeated government actions and policies, we are not seeing prepayment rates spike as one might expect. And we reiterate this; our goal is really to generate low double-digit returns on equity with the appropriate amount of leverage. So have we done that over time?