Company: MFAN
Filing Date: 2025-11-06
Form Type: 10-Q
Source: 0001055160-25-000018
Chunk: 49

Company: MFA FINANCIAL, INC.
Filing Date: 2025-11-06
Form: 10-Q
Item: Part I, Item 2
Chunk 49
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 $110.9 million for cash dividends on our common stock and dividend equivalents and paid cash dividends of $29.6 million on our preferred stock. On September 11, 2025, we declared our third quarter 2025 dividend on our common stock of $0.36 per share; on October 31, 2025, we paid this dividend, which totaled approximately $37.3 million, including dividend equivalents of approximately $0.5 million.  

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.

We seek to manage our risks related to interest rates, liquidity, prepayment speeds, market value and the credit quality of our assets while, at the same time, seeking to provide an opportunity to stockholders to realize attractive total returns through ownership of our capital stock.  While we do not seek to avoid risk, we seek, consistent with our investment policies, to:  assume risk that can be quantified based on management’s judgment and experience and actively manage such risk; earn sufficient returns to justify the taking of such risks; and maintain capital levels consistent with the risks that we undertake.

Interest Rate Risk 

We are exposed to interest rate risk on our residential mortgage assets, as well as on our liabilities.  Changes in interest rates can affect our net interest income and the fair value of our assets and liabilities. 

In general, when interest rates change, borrowing costs on our financing agreements will change more quickly than the yield on our assets.  In a rising interest rate environment, the borrowing costs may increase faster than the interest income on our assets, thereby reducing our net income.  In order to mitigate compression in net income based on such interest rate movements, we may use Swaps or other derivatives to lock in a portion of the net interest spread between assets and liabilities or otherwise hedge interest rate risk.

When interest rates change, the fair value of our residential mortgage assets could change at a different rate than the fair value of our liabilities.  We measure the sensitivity of our portfolio to changes in interest rates by estimating the duration of our assets and liabilities.  Duration is the approximate percentage change in fair value for a 100 basis point parallel shift in the yield curve.  In general, our assets have higher duration than our liabilities, and in order to reduce this exposure, we have historically used Swaps and other derivatives to reduce the gap in duration between our assets and liabilities.

The fair value of our re-performing and non-performing residential whole loans is in part dependent on the value of the