MFA Financial, Inc. (MFA), a mortgage real estate investment trust, reported Wednesday an increase in third-quarter profit, helped by a much lower interest expense. Earnings on a per share basis came in above Street view.
For the third quarter, net income to common stockholders rose to $64.79 million or $0.25 per share from $48.01 million or $0.24 per share in the previous year. The results of the latest quarter included gain on MBS Forwards of $754 thousands. The prior-year results included loss on early termination of Swaps of $986 thousand.
On average, 10 analysts polled by Thomson Reuters expected the company to report earnings of $0.26 per share in the third quarter. Analysts' estimate typically excludes special items.
Net Interest Income for the quarter surged to $71.57 million from $55.92 million. Eight analysts were expecting revenue of $79.41 million in the third quarter.
Interest income from Mortgage Backed Securities dipped to $124.40 million from $139.42 million. Interest Expense declined sharply to $52.97 million from $85.03 million a year earlier.
William Gorin, MFA's finance chief, said "In the third quarter, MFA continued to acquire Non-Agency RMBS funded in part with proceeds from our July 29, 2009 common stock offering. We continue to perform detailed analysis in our asset selection process while allocating additional capital to Non-Agency RMBS."
Gorin added, "During 2009, we have not acquired any additional Agency MBS due to high premium prices and historically low yields. As a result, we have substantially reduced our reliance on leverage through repurchase financings." He said that by utilizing less leverage, the company believes that future earnings will be less sensitive to variations in interest rates and the yield curve.
Mortgage-backed securities stood at $9.35 billion, compared to $10.12 billion a year ago.
For the nine-month period, net income to common stockholders was $183.49 million or $0.78 per share, compared to loss of $6.97 million or $0.04 per share in fiscal 2008. Net interest income advanced to $200.93 million from $134.57 million.
Considering the current LIBOR and repo rates, MFA now sees overall funding costs to continue to decline in the fourth quarter of 2009.
MFA is currently trading at $7.50, up $0.02 or 0.27%, on the NYSE.
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