ARLINGTON, Va., Aug. 10 /PRNewswire-FirstCall/ -- Arlington Asset
Investment Corp. (NYSE:AI) (the Company) today reported a net
after-tax loss of $32.2 million for the quarter ended June 30,
2009, or $0.21 per share (diluted), compared to a net after-tax
loss of $25.1 million, or $0.17 per share (diluted) for the second
quarter of 2008. For the six months ending June 30, 2009, the
Company reported net income of $69.4 million, or $0.45 per share
(diluted), compared to net income of $20.1 million, or $0.13 per
share (diluted) for the six months ending June 30, 2008. As of June
30, 2009, book value per share was $0.59. During the quarter ended
June 30, 2009, the Company sold 18.2 million shares of its holding
in FBR Capital Markets Corporation (FBR Capital Markets) generating
a loss of $13.8 million, including a mark-to-market adjustment of
$4.0 million on the remaining holdings. The Company is accounting
for its remaining investment in FBR Capital Markets under the fair
value method of accounting using quoted market prices. As of June
30, 2009, the Company's remaining 15.1 million shares of FBR
Capital Markets stock were valued at $4.70 per share and represent
approximately a 24% interest. As a result of the sales of FBR
Capital Markets stock, the Company no longer had majority control
of FBR Capital Markets and therefore, the Company's consolidated
financial statements for the periods subsequent to May 20, 2009
will not include the results of FBR Capital Markets' operations.
The Company's consolidated financial statements will reflect the
fair value of the FBR Capital Markets stock on the balance sheet
and the changes in the market value of FBR Capital Markets stock in
earnings as a component of investment income or loss for the
respective period. Subsequent to June 30, 2009, the Company
extinguished an additional $25.0 million of trust preferred
securities for $5.0 million, resulting in a $20.0 million gain. In
addition, the Company also sold an additional 411,032 shares of FBR
Capital Markets stock at a price of $4.42 per share in connection
with the over-allotment option that was granted to the underwriters
under the underwriting agreement entered into on June 15, 2009. As
of August 10, 2009, excluding the Agency mortgage-backed securities
(MBS) portfolio, the Company's unlevered non-agency residential MBS
portfolio equaled $115.8 million face value with an average cost of
42.6%, was valued at $49.3 million and had a weighted average
coupon of 5.6% of face value. At that date, the Company also had
$9.4 million of unrestricted cash, 14.7 million shares of FBR
Capital Markets stock and $25.0 million of remaining trust
preferred securities outstanding. Second Quarter Highlights Net
loss of $32.2 million for the second quarter of 2009, reflecting
both cash and non-cash items, includes the following: -- $2.3
million of operating cash loss, excluding $1.2 million of non-cash
compensation charges; -- $13.8 million in net losses from the sale
and mark-to-market of shares of FBR Capital Markets; -- $5.6
million of losses, net of minority interest, relating to FBR
Capital Markets operations for April and May, 2009; and -- $9.3
million of net expenses related to non-recurring activities
including the 2010 FBR Open and fees and expenses related to the
sale of FBR Capital Markets stock in the second quarter. New
Corporate Direction The sale of FBR Capital Markets stock is in
furtherance of the strategic shift the Company has initiated to
focus on a principal investing strategy by monetizing the Company's
investment in FBR Capital Markets. Given current dislocations in
the capital markets, the Company seeks to benefit from potential
high current cash returns available on mortgage investments. The
Company plans to deploy the net cash proceeds for investments that
offer current income as well as capital appreciation potential, and
which may utilize the Company's net operating loss carry-forwards
("NOLs") and net capital loss carry-forwards ("NCLs"). The Company
expects future investments to include non-agency residential
mortgage-backed securities and residential mortgage-backed
securities guaranteed by a U.S. Government agency or U.S.
Government-sponsored entity, among others. The Company may also
consider opportunities for financial service operating businesses
potentially in the form of a bank charter, and will seek to
continue strengthening its balance sheet by converting long-term
debt to equity through the extinguishment of the remaining $25
million of trust preferred securities at a discount to face value.
Consistent with its new direction, the Company expects to deploy
proceeds from potential future dispositions of FBR Capital Markets
stock to fund the extinguishment of the remaining trust preferred
securities and expand the investment portfolio, net interest
income, and earnings. About the Company Arlington Asset Investment
Corp. (NYSE:AI) invests in mortgage-related assets and merchant
banking opportunities. The Company is headquartered in the
Washington, D.C. metropolitan area. For more information, please
visit http://www.arlingtonasset.com/. Complete second quarter 2009
financial results and tables for FBR Capital Markets can be found
at http://www.fbrcapitalmarkets.com/. Statements concerning future
performance, plans and steps to position the Company to realize
value, and any other guidance on present or future periods,
constitute forward-looking statements that are subject to a number
of factors, risks and uncertainties that might cause actual results
to differ materially from stated expectations or current
circumstances. These factors include, but are not limited to,
changes in interest rates, increased costs of borrowing, decreased
interest spreads, changes in mortgage pre-payment speeds, risks
associated with merchant banking investments, the realization of
gains and losses on principal investments, available technologies,
competition for business and personnel, and general economic,
political, regulatory and market conditions. These and other risks
are described in the Company's Annual Report on Form 10-K and
Quarterly Reports on Form 10-Q that are available from the Company
and from the SEC. Financial data follows. ARLINGTON ASSET
INVESTMENT CORP. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts) Quarter Ended
(Unaudited) June 30, ----------------------- 2009 2008 ----------
---------- REVENUES: Capital markets $31,171 $52,993 Principal
investment: Interest 1,282 22,842 Net investment loss (3,989)
(5,542) Dividends 108 133 Other - 902 ---------- ---------- Total
revenues 28,572 71,328 Interest expense 582 21,858 ----------
---------- Revenues, net of interest expense 27,990 49,470
---------- ---------- NON-INTEREST EXPENSES: Compensation and
benefits 25,594 53,970 Professional services 7,224 10,492 Business
development 7,142 6,812 Clearing and brokerage fees 2,653 3,393
Occupancy and equipment 5,374 8,580 Communications 3,637 6,255
Other operating expenses 3,611 7,055 ---------- ---------- Total
non-interest expenses 55,235 96,557 ---------- ---------- Operating
loss (27,245) (47,087) ---------- ---------- OTHER INCOME (LOSS):
Loss on subsidiary share transactions (9,776) (189) Other loss (4)
(3) ---------- ---------- Loss before income taxes (37,025)
(47,279) Income tax benefit (310) (9,974) ---------- ---------- Net
loss (36,715) (37,305) Less: Net loss attributable to the
noncontrolling interest of consolidated subsidiary (4,558) (12,254)
---------- ---------- Net loss attributable to Arlington Asset
shareholders $(32,157) $(25,051) ========== ========== Basic loss
per share attributable to Arlington Asset $(0.21) $(0.17)
========== ========== Diluted loss per share attributable to
Arlington Asset $(0.21) $(0.17) ========== ========== Weighted
average shares outstanding - basic (in thousands) 153,912 150,948
========== ========== Weighted average shares outstanding - diluted
(in thousands) 153,912 150,948 ========== ========== ARLINGTON
ASSET INVESTMENT CORP. CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (Dollars in thousands, except per share amounts) Six
Months Ended (Unaudited) June 30, ----------------------- 2009 2008
---------- ---------- REVENUES: Capital markets $81,075 $157,072
Principal investment: Interest 3,881 47,694 Net investment loss
(3,983) (20,201) Dividends 108 339 Other - 2,356 ----------
---------- Total revenues 81,081 187,260 Interest expense 3,346
45,508 ---------- ---------- Revenues, net of interest expense
77,735 141,752 ---------- ---------- NON-INTEREST EXPENSES:
Compensation and benefits 70,731 130,924 Professional services
11,993 22,959 Business development 13,123 19,106 Clearing and
brokerage fees 5,950 7,023 Occupancy and equipment 13,479 17,769
Communications 8,864 12,273 Other operating expenses 8,936 12,439
---------- ---------- Total non-interest expenses 133,076 222,493
---------- ---------- Operating loss (55,341) (80,741) ----------
---------- OTHER INCOME (LOSS): Loss on subsidiary share
transactions (9,912) (189) Gain on extinguishment of long-term debt
132,453 - Other (loss) income (7) 73,034 ---------- ----------
Income (loss) before income taxes 67,193 (7,896) Income tax
provision (benefit) 9,245 (10,780) ---------- ---------- Net income
57,948 2,884 Less: Net loss attributable to the noncontrolling
interest of consolidated subsidiary (11,459) (17,167) ----------
---------- Net income attributable to Arlington Asset shareholders
$69,407 $20,051 ========== ========== Basic earnings per share
attributable to Arlington Asset $0.45 $0.13 ========== ==========
Diluted earnings per share attributable to Arlington Asset $0.45
$0.13 ========== ========== Weighted average shares outstanding -
basic (in thousands) 153,135 150,869 ========== ========== Weighted
average shares outstanding - diluted (in thousands) 153,551 151,345
========== ========== ARLINGTON ASSET INVESTMENT CORP. CONSOLIDATED
BALANCE SHEETS (Dollars and shares in thousands, except per share
amounts) (Unaudited) ASSETS 30-Jun-09 31-Dec-08 ----------
---------- Cash and cash equivalents $36,831 $254,653 Receivables:
Interest 802 1,378 Other 199 32,571 Investments: Mortgage-backed
securities, at fair value 149,298 594,294 U.S. Treasury bonds, at
fair value - 550,000 Equity investments, at fair value 71,280 -
Trading securities, at fair value - 17,954 Long-term and other
investments 4,148 54,976 Derivative assets, at fair value - 264
Intangible assets, net - 8,943 Furniture, equipment, software and
leasehold improvements, net 34 24,442 Prepaid expenses and other
assets 6,995 20,816 ---------- ---------- Total assets $269,587
$1,560,291 ========== ========== LIABILITIES AND EQUITY
Liabilities: Repurchase agreements $94,738 $1,063,040 Trading
account securities sold, but not yet purchased, at fair value -
8,325 Derivative liabilities, at fair value - 56 Interest payable
483 2,064 Accrued compensation and benefits 7,175 47,259 Due to
clearing broker - 3,009 Accounts payable, accrued expenses and
other liabilities 23,740 38,925 Long-term debt 51,775 254,357
---------- ---------- Total liabilities 177,911 1,417,035
---------- ---------- Equity: Common stock, 158,984 and 159,217
shares 1,590 1,592 Additional paid-in capital 1,502,911 1,493,130
Accumulated other comprehensive loss, net of taxes (1,211) (118)
Accumulated deficit (1,411,614) (1,481,021) ---------- ----------
Total Arlington Asset shareholders' equity 91,676 13,583
Noncontrolling interest - 129,673 ---------- ---------- Total
equity 91,676 143,256 ---------- ---------- Total liabilities and
equity $269,587 $1,560,291 ========== ========== Book value per
share - Arlington Asset shareholders' equity $0.59 $0.09 ==========
========== Book value per share - total equity $0.59 $0.95
========== ========== Shares outstanding (in thousands) 154,116
151,221 ========== ========== DATASOURCE: Arlington Asset
Investment Corp. CONTACT: Media or Investors, Kurt Harrington,
+1-877-370-4413, Web Site: http://www.arlingtonasset.com/
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