Arlington Asset Investment Corp. Reports 2008 Financial Results
PRNewswire - First Call
Arlington, Virginia
NYSE: FBR

ARLINGTON, Va., March 16 /PRNewswire-FirstCall/ -- Arlington Asset Investment Corp. (the Company), formerly Friedman, Billings, Ramsey Group, Inc., (NYSE: FBR) today reported a net after-tax loss of $268.5 million for the quarter ended December 31, 2008, or $1.77 per share (diluted), compared to net after-tax loss of$270.4 million, or $1.77 per share (diluted), for the fourth quarter of 2007. The Company's net after-tax loss for the year was $417.5 million, or $2.76 per share (diluted), compared to a net after-tax loss of $658.6 million, or$3.94 per share (diluted) for the year ended December 31, 2007.

Subsequent to December 31, 2008 and through March 13, 2009, the Company continued its previously announced plan to downsize its mortgage-backed securities (MBS) portfolio and fund the extinguishment of its trust preferred debt at a significant discount. To date in the first quarter of 2009, the Company extinguished$201.7 million of trust preferred debt, recognizing a gain of $131.5 million. The Company intends to revoke its REIT status effective as of January 1, 2009 in order to maximize the use of its net operating loss, or NOL, carry-forwards.

After taking into consideration the extinguishment of the trust preferred debt and related MBS sales subsequent to year-end, the Company's consolidated tangible equity at year end would have been $124.6 million, or $0.82per share. This includes the Company's proportionate share of the equity book value of FBR Capital Markets Corporation.

As of March 16, 2009, excluding its interest in FBR Capital Markets Corporation, the Company expects to have$17.8 million in cash as well as $37.1 million of MBS, including $27.3 million of agency fixed-rate MBS, $30.1 million of total MBS repo financing and $50.0 million of trust preferred debt. The Company also had $6.3 million of merchant banking and other long-term investments and no remaining subprime exposure. The Company's remaining NOL and NCL, net capital loss, carry-forwards equaled $259.6 million and $597.4 million, respectively.

    Net loss for the fourth quarter of 2008 of $268.5 million includes:

    --  $3.8 million of operating cash loss at the Company, excluding
        investment losses and $3.6 million of non-cash compensation charges;
    --  $35.0 million gain on the extinguishment of $59.1 million of trust
        preferred debt;
    --  $217.1 million of investment loss;
    --  $66.9 million of losses, net of minority interest and buy-back gain,
        relating to FBR Capital Markets Corporation; and
    --  $12.1 million of costs related to non-recurring activities and taxes.

On February 23, 2009, the Company announced that it has begun doing business under the name "Arlington Asset Investment Corp." and that it will seek shareholder approval at the next annual meeting of shareholders of a proposal to amend its charter to change its corporate name from "Friedman, Billings, Ramsey Group, Inc." to "Arlington Asset Investment Corp." The Company has notified the New York Stock Exchange (NYSE) of the name change and received the approval from the NYSE to change the ticker symbol to "AI" from "FBR" and will issue a press release when the symbol change becomes effective.

Complete fourth quarter 2008 financial results and tables for FBR Capital Markets Corporation can be found atwww.fbrcapitalmarkets.com.

Arlington Asset Investment Corp. (NYSE: FBR) is a real estate investment trust headquartered in theWashington, D.C. metropolitan area. For more information, please visit www.arlingtonasset.com.

Statements concerning future performance, developments, events, market forecasts, revenues, expenses, earnings, run rates 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 and market conditions. These and other risks are described in the Company's Annual Report and Form 10-K and quarterly reports on Form 10-Q that are available from the Company and from the SEC.

    Financial data follow.



    ARLINGTON ASSET INVESTMENT CORP.
    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
    (Dollars in thousands, except per share amounts)
    (Unaudited)
                                           Quarter Ended
                                            December 31,

                                          2008       2007
                                          ----       ----
    REVENUES:
    Investment banking:
      Capital raising                     $745    $25,648
      Advisory                           5,306      4,973
    Institutional brokerage:
      Principal transactions             6,807      2,996
      Agency commissions                28,816     26,153
    Asset management:
      Base management fees               2,827      5,542
      Incentive allocations and
       fees                                  -         99
    Principal investment:
      Interest                          16,486     50,998
      Net investment loss             (283,077)   (22,327)
      Dividends                            452        805
    Mortgage banking:
      Interest                               -      4,059
      Net investment loss                    -    (83,174)
    Other                                  904      3,242
                                           ---      -----
      Total revenues                  (220,734)    19,014
    Interest expense                    14,313     52,583
                                        ------     ------
      Revenues, net of interest
       expense                        (235,047)   (33,569)
                                      --------    -------

    NON-INTEREST EXPENSES:
    Compensation and benefits           56,860     69,533
    Professional services                7,550     15,598
    Business development                 6,295     10,878
    Clearing and brokerage fees          3,235      2,797
    Occupancy and equipment              8,441     13,791
    Communications                       6,374      6,899
    Other operating expenses            16,205     15,706
    Goodwill impairment                      -    108,013
    Restructuring charges                    -     21,466
                                           ---     ------
      Total non-interest
       expenses                        104,960    264,681
                                       -------    -------

    Operating loss                    (340,007)  (298,250)
                                      --------   --------

    OTHER INCOME:
      Gain on subsidiary share
       transactions                      8,005          4
      Gain on reduction in long-
       term debt                        35,005          -
      Other income                           2          -
                                             -        ---

      Loss before income taxes and
       minority interest              (296,995)  (298,246)

    Income tax provision (benefit)      27,311    (15,817)
    Minority interest in losses of
     consolidated subsidiary           (55,814)   (12,008)
                                       -------    -------

      Net loss                       $(268,492) $(270,421)
                                     =========  =========

    Basic loss per share                $(1.77)    $(1.77)
                                        ======     ======
    Diluted loss per share              $(1.77)    $(1.77)
                                        ======     ======

    Weighted average shares -
     basic                             151,270    152,375
                                       =======    =======
    Weighted average shares -
     diluted                           151,270    152,375
                                       =======    =======


    ARLINGTON ASSET INVESTMENT CORP.
    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
    (Dollars in thousands, except per share amounts)
    (Unaudited)
                                       Twelve Months Ended
                                           December 31,

                                         2008        2007
                                         ----        ----
    REVENUES:
    Investment banking:
      Capital raising                 $76,380    $282,619
      Advisory                         20,573      34,063
    Institutional brokerage:
      Principal transactions           20,262      10,152
      Agency commissions              118,397     104,792
    Asset management:
      Base management fees             15,334      23,549
      Incentive allocations and
       fees                                 -         401
    Principal investment:
      Interest                        100,284     497,256
      Net investment loss            (471,714)   (216,429)
      Dividends                         1,446       3,173
    Mortgage banking:
      Interest                             36      51,245
      Net investment income (loss)        463    (222,032)
    Other                               6,719      15,808
                                        -----      ------
      Total revenues                 (111,820)    584,597
    Interest expense                   85,208     477,437

      Revenues, net of interest
       expense                       (197,028)    107,160
                                     --------     -------

    NON-INTEREST EXPENSES:
    Compensation and benefits         248,895     361,355
    Professional services              40,951      55,741
    Business development               30,663      43,518
    Clearing and brokerage fees        14,092      12,514
    Occupancy and equipment            34,492      52,302
    Communications                     24,420      28,690
    Other operating expenses           35,312      82,246
    Goodwill impairment                     -     162,765
    Restructuring charges                   -      46,985
                                            -      ------
      Total non-interest
       expenses                       428,825     846,116
                                       -------     -------

    Operating loss                   (625,853)   (738,956)
                                     --------    --------

    OTHER INCOME:
      Gain on subsidiary share
       transactions                     7,809     104,062
      Gain on reduction in long-
       term debt                       39,083           -
      Gain on disposition of
       subsidiary and other income     73,039           -
                                       ------         ---


      Loss before income taxes and
       minority interest             (505,922)   (634,894)

    Income tax (benefit) provision     (1,592)     22,932
    Minority interest in (losses)
     earnings of consolidated
     subsidiary                       (86,867)        774
                                      -------         ---

      Net loss                      $(417,463)  $(658,600)
                                    =========   =========

    Basic loss per share               $(2.76)     $(3.94)
                                       ======      ======
    Diluted loss per share             $(2.76)     $(3.94)
                                       ======      ======

    Weighted average shares - basic   151,168     166,975
                                      =======     =======
    Weighted average shares -
     diluted                          151,168     166,975
                                      =======     =======


    ARLINGTON ASSET INVESTMENT CORP.
    Financial & Statistical Supplement - Operating Results
    (Dollars in thousands, except per share data)
    (Unaudited)

                        Year- Ended
                        December
                        31, 2008     Q-4 08     Q-3 08    Q-2 08    Q-1 08
                       ---------     ------     ------    ------    ------
    Revenues
    --------
    Investment banking:
      Capital raising    $76,380       $745     $6,763    $3,962   $64,910
      Advisory            20,573      5,306      5,999     4,192     5,076
    Institutional
     brokerage:
      Principal
       transactions
                          20,262      6,807      2,610     4,888     5,957
      Agency
       commissions       118,397     28,816     33,813    29,918    25,850
    Asset management:
      Base management
       fees               15,334      2,827      3,710     4,153     4,644
    Principal investment:
      Interest           100,284     16,486     31,057    26,827    25,914
      Net investment
       loss             (471,714)  (283,077)  (164,153)   (4,797)  (19,687)
      Dividends            1,446        452        307       258       429
    Mortgage banking:
      Interest                36          -          -         -        36
      Net investment
       income (loss)         463          -          -        (5)      468
    Other                  6,719        904      1,548     1,932     2,335
                           -----        ---      -----     -----     -----
      Total revenues    (111,820)  (220,734)   (78,346)   71,328   115,932
    Interest expense      85,208     14,313     25,387    21,858    23,650
                          ------     ------     ------    ------    ------
      Revenues, net
       of interest
       expense          (197,028)  (235,047)  (103,733)   49,470    92,282
                        --------   --------   --------    ------    ------

    Non-interest
     expenses
    ---------
    Compensation
     and benefits        248,895     56,860     61,111    53,970    76,954
    Professional
     services             40,951      7,550     10,442    10,492    12,467
    Business
     development          30,663      6,295      5,262     6,812    12,294
    Clearing and
     brokerage fees       14,092      3,235      3,834     3,393     3,630
    Occupancy and
     equipment            34,492      8,441      8,282     8,580     9,189
    Communications        24,420      6,374      5,773     6,255     6,018
    Other operating
     expenses             35,312     16,205      6,668     7,055     5,384
                          ------     ------      -----     -----     -----
         Total non-
          interest
          expenses       428,825    104,960    101,372    96,557   125,936
                         -------    -------    -------    ------   -------

    Operating loss      (625,853)  (340,007)  (205,105)  (47,087)  (33,654)

    Other income (loss)
      Gain (loss)
       on subsidiary
       share
       transactions        7,809      8,005         (4)     (192)        -
      Gain on
       reduction in
       long-term
       debt               39,083     35,005      4,078
      Gain on
       disposition
       of subsidiary
       and other
       income             73,039          2          -         -    73,037
                          ------        ---        ---       ---    ------

    (Loss) income
     before income
     taxes and
     minority
     interest           (505,922)  (296,995)  (201,031)  (47,279)   39,383

    Income tax
     (benefit)
     provision            (1,592)    27,311    (18,123)   (9,974)     (806)
    Minority
     interest in
     losses of
     consolidated
     subsidiary          (86,867)   (55,814)   (13,886)  (12,254)   (4,913)

                       ---------  ---------  ---------  --------   -------
    Net (loss)
     income            $(417,463) $(268,492) $(169,022) $(25,051)  $45,102
                       =========  =========  =========  ========   =======

    Total
     shareholders'
     equity              $13,583    $13,583   $268,097  $343,686  $344,408
    Total
     shareholders'
     equity, net of
     AOCI (1)            $13,701    $13,701   $274,547  $436,093  $455,761


    Basic (loss)
     earnings per
     share                $(2.76)    $(1.77)    $(1.12)   $(0.17)    $0.30
    Diluted (loss)
     earnings per
     share                $(2.76)    $(1.77)    $(1.12)   $(0.17)    $0.30

    Ending shares
     outstanding (in
     thousands)          151,221    151,221    151,352   150,989   150,915

    Book value per
     share                 $0.09      $0.09      $1.77     $2.28     $2.28
    Book value per
     share, net of
     AOCI (1)              $0.09      $0.09      $1.81     $2.89     $3.02


    Employee count           579        579        666       719       726
                             ===        ===        ===       ===       ===

    (1) Accumulated Other Comprehensive Income (AOCI) includes changes in
        value of available-for-sale securities and cash flow hedges.  We
        believe that such changes represent temporary market fluctuations,
        are not reflective of our market strategy, and therefore, exclusion
        of AOCI provides a reasonable basis for calculating returns.



    ARLINGTON ASSET INVESTMENT CORP.
    CONSOLIDATED BALANCE SHEETS
    Dollars and shares in thousands, except per share amounts)
    (Unaudited)



    ASSETS                                    31-Dec-08   31-Dec-07
                                              ---------   ---------

    Cash and cash equivalents                  $254,653    $692,360
    Restricted cash                                   -      14,166
    Receivables                                  33,949      75,357
    Investments:
      Mortgage-backed securities, at fair
       value                                    594,294   1,791,480
      U.S. Treasury bonds, at fair value        550,000           -
      Loans held for sale, net                        -      65,074
      Long-term investments                      54,976     169,274
      Trading securities, at fair value          17,954      19,057
    Due from clearing broker                          -           -
    Derivative assets, at fair value                264       3,514
    Intangible assets, net                        8,943       9,837
    Furniture, equipment, software and
     leasehold improvements, net                 24,442      30,451
    Prepaid expenses and other assets            20,816      74,385
                                                 ------      ------
      Total assets                           $1,560,291  $2,944,955
                                             ==========  ==========


    LIABILITIES AND SHAREHOLDERS' EQUITY

    Liabilities:
    Trading account securities sold but
     not yet purchased, at fair value            $8,325        $206
    Repurchase agreements                     1,063,040   1,744,377
    Securities purchased                              -           -
    Derivative liabilities, at fair value            56       3,558
    Interest payable                              2,064       5,746
    Accrued compensation and benefits            47,259      57,000
    Due to clearing broker                        3,009       7,059
    Accounts payable, accrued expenses and
     other liabilities                           38,925     105,456
    Short-term loan financing                         -      63,981
    Long-term debt                              254,357     320,820
                                                -------     -------
      Total liabilities                       1,417,035   2,308,203
                                              ---------   ---------

    Minority interest                           129,673     243,061

    Shareholders' equity:
    Common stock, 159,217 and 151,883 shares      1,592       1,519
    Additional paid-in capital                1,493,130   1,468,801
    Accumulated other comprehensive loss,
     net of taxes                                  (118)    (13,071)
    Accumulated deficit                      (1,481,021) (1,063,558)
                                             ----------  ----------
      Total shareholders' equity                 13,583     393,691
                                                 ------     -------

      Total liabilities and shareholders'
       equity                                $1,560,291  $2,944,955
                                             ==========  ==========




 

SOURCE Friedman, Billings, Ramsey Group, Inc.
03/16/2009

 

For further information: Media: +1-703-469-1004 or media@arlingtonasset.com, or Investors: Kurt Harrington, +1-703-469-1080, or ir@arlingtonasset.com, both of Arlington Asset Investment Corp./ /Web Site: http://www.fbrcapitalmarkets.com http;//www.arlingtonasset.com /