Arlington Asset Investment Corp. [AAIC-PC] Filings

Arlington Asset Investment Corp. [AAIC-PC] Filings

Arlington Asset Investment Corp. [AAIC] Filings

Arlington Asset Investment Corp. [AIC] Filings

Arlington Asset Investment Corp. [AAIC-PB] Filings

Arlington Asset Investment Corp. [AAIN] Filings

10-Q 1 aaic-20230630.htm 10-Q 10-Q

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-34374

ARLINGTON ASSET INVESTMENT CORP.

(Exact name of Registrant as specified in its charter)

Virginia

54-1873198

(State or Other Jurisdiction of
Incorporation or Organization)

(I.R.S. Employer
Identification No.)

6862 Elm Street, Suite 320
McLean, VA

22101

(Address of Principal Executive Offices)

(Zip Code)

(703) 373-0200

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock	AAIC	NYSE
7.00% Series B Cumulative Perpetual Redeemable Preferred Stock	AAIC PrB	NYSE
8.250% Series C Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock	AAIC PrC	NYSE
6.000% Senior Notes due 2026	AAIN	NYSE
6.75% Senior Notes due 2025	AIC	NYSE

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Sec. 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒

Number of shares outstanding of each of the registrant’s classes of common stock, as of August 10, 2023:


Title		Outstanding
Class A Common Stock		29,279,565 shares

ARLINGTON ASSET INVESTMENT CORP.

FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, 2023

INDEX


			Page
PART I — FINANCIAL INFORMATION
	Item 1.	Consolidated Financial Statements and Notes — (unaudited)	1
		Consolidated Balance Sheets	1
		Consolidated Statements of Comprehensive Income	2
		Consolidated Statements of Changes in Equity	3
		Consolidated Statements of Cash Flows	4
		Notes to Consolidated Financial Statements	5
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	50
	Item 4.	Controls and Procedures	54
PART II — OTHER INFORMATION
	Item 1.	Legal Proceedings	56
	Item 1A.	Risk Factors	56
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	58
	Item 3.	Defaults Upon Senior Securities	58
	Item 4.	Mine Safety Disclosures	58
	Item 5.	Other Information	58
	Item 6.	Exhibits	58
		Signatures	61

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements

ARLINGTON ASSET INVESTMENT CORP.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

(Unaudited)


	June 30, 2023			December 31, 2022
ASSETS
Cash and cash equivalents (includes $229 and $296, respectively, from consolidated VIEs)	$	13,249		$	28,021
Restricted cash of consolidated VIEs		12			2,191
Agency mortgage-backed securities, at fair value		467,503			443,540
MSR financing receivables, at fair value		195,893			180,365
Credit securities, at fair value		102,203			104,437
Mortgage loans, at fair value		25,992			29,264
Mortgage loans of consolidated VIEs, at fair value		910			193,957
Deposits		2,421			1,823
Other assets (includes $1,114 and $2,067, respectively, from consolidated VIEs)		9,287			18,720
Total assets	$	817,470		$	1,002,318
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Repurchase agreements	$	499,900		$	515,510
Secured debt of consolidated VIEs, at fair value		113			169,345
Long-term unsecured debt		86,611			86,405
Other liabilities (includes $-0- and $262, respectively, from consolidated VIEs)		10,834			13,718
Total liabilities		597,458			784,978
Commitments and contingencies
Stockholders’ Equity:
Series B Preferred stock, $0.01 par value, 379,668 shares issued and outstanding (liquidation preference of $9,492)		9,001			9,001
Series C Preferred stock, $0.01 par value, 957,133 shares issued and outstanding (liquidation preference of $23,928)		23,820			23,820
Class A common stock, $0.01 par value, 450,000,000 shares authorized, 28,360,447 and 28,186,827 shares issued and outstanding, respectively		284			282
Additional paid-in capital		2,025,638			2,024,298
Accumulated deficit		(1,838,731	)		(1,840,061	)
Total stockholders’ equity		220,012			217,340
Total liabilities and stockholders’ equity	$	817,470		$	1,002,318

	June 30, 2023			December 31, 2022
Assets and liabilities of consolidated VIEs
Cash and restricted cash	$	241		$	2,487
Mortgage loans, at fair value		910			193,957
Other assets		1,114			2,067
Secured debt, at fair value		(113	)		(169,345	)
Other liabilities		—			(262	)
Net investment in consolidated VIEs	$	2,152		$	28,904

See notes to consolidated financial statements.

ARLINGTON ASSET INVESTMENT CORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in thousands, except per share data)

(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Interest income
MSR financing receivables	$	4,709		$	3,983		$	9,394		$	7,365
Agency mortgage-backed securities		5,040			2,065			10,016			3,557
Credit securities and loans		2,802			991			5,564			1,844
Mortgage loans of consolidated VIEs		56			1,611			1,454			2,965
Other		109			113			288			438
Total interest and other income		12,716			8,763			26,716			16,169
Rent revenues from single-family properties		—			2,137			—			3,201
Interest expense
Repurchase agreements		6,604			763			12,729			1,039
Long-term debt secured by single-family properties		—			718			—			1,126
Long-term unsecured debt		1,561			1,400			3,102			2,770
Secured debt of consolidated VIEs		—			1,578			681			2,766
Total interest expense		8,165			4,459			16,512			7,701
Single-family property operating expenses		—			1,915			—			3,446
Net operating income		4,551			4,526			10,204			8,223
Investment and derivative gain (loss), net		6,417			370			2,566			(457	)
General and administrative expenses
Compensation and benefits		2,037			2,324			4,292			4,389
Other general and administrative expenses		2,676			1,463			4,332			2,682
Total general and administrative expenses		4,713			3,787			8,624			7,071
Income before income taxes		6,255			1,109			4,146			695
Income tax provision		1,387			802			1,496			3,089
Net income (loss)		4,868			307			2,650			(2,394	)
Dividend on preferred stock		(660	)		(707	)		(1,320	)		(1,449	)
Net income (loss) available (attributable) to common stock	$	4,208		$	(400	)	$	1,330		$	(3,843	)
Basic earnings (loss) per common share	$	0.15		$	(0.01	)	$	0.05		$	(0.13	)
Diluted earnings (loss) per common share	$	0.15		$	(0.01	)	$	0.05		$	(0.13	)
Weighted-average common shares outstanding (in thousands)
Basic		28,081			28,766			28,043			29,296
Diluted		28,709			28,766			28,594			29,296

See notes to consolidated financial statements.

ARLINGTON ASSET INVESTMENT CORP.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Dollars in thousands)

(Unaudited)


	Series B Preferred Stock (#)		Series B Preferred Amount ($)		Series C Preferred Stock (#)			Series C Preferred Amount ($)			Class A Common Stock (#)			Class A Amount ($)			Additional Paid-In Capital			Accumulated Deficit			Total
Balances, December 31, 2021		373,610	$	8,852		1,117,034		$	27,356			30,676,931		$	307		$	2,030,315		$	(1,842,703	)	$	224,127
Net loss		—		—		—			—			—			—			—			(2,701	)		(2,701	)
Issuance of Class A common stock under stock-based compensation plans		—		—		—			—			404,746			4			(4	)		—			—
Forfeiture of Class A common stock under stock-based compensation plans		—		—		—			—			(12,167	)		—			—			—			—
Repurchase of Class A common stock		—		—		—			—			(1,009,566	)		(10	)		(3,487	)		—			(3,497	)
Issuance of preferred stock		6,058		149		—			—			—			—			—			—			149
Stock-based compensation		—		—		—			—			—			—			761			—			761
Dividends declared		—		—		—			—			—			—			—			(742	)		(742	)
Balances, March 31, 2022		379,668	$	9,001		1,117,034		$	27,356			30,059,944		$	301		$	2,027,585		$	(1,846,146	)	$	218,097
Net income		—		—		—			—			—			—			—			307			307
Repurchase of Class A common stock		—		—		—			—			(947,570	)		(10	)		(3,232	)		—			(3,242	)
Repurchase of preferred stock		—		—		(72,363	)		(1,749	)		—			—

Arlington Asset Investment Corp. [AAIC-PC] Filings
Arlington Asset Investment Corp. [AAIC] Filings
Arlington Asset Investment Corp. [AIC] Filings
Arlington Asset Investment Corp. [AAIC-PB] Filings
Arlington Asset Investment Corp. [AAIN] Filings
10-Q	[2023-08-14]
10-Q	[2023-05-15]
10-K	[2023-03-31]
10-Q	[2022-11-14]
10-Q	[2022-08-15]
10-Q	[2022-05-16]
10-K	[2022-03-10]
10-Q	[2021-11-09]
10-Q	[2021-08-09]
10-Q	[2021-05-10]
10-K	[2021-02-26]
10-Q	[2020-11-06]
10-Q	[2020-07-31]
10-Q	[2020-05-11]
10-K	[2020-02-24]
10-Q	[2019-11-08]
10-Q	[2019-08-09]
10-Q	[2019-05-03]
10-K	[2019-02-19]
10-Q	[2018-11-02]
10-Q	[2018-08-03]
10-Q	[2018-05-04]
10-K	[2018-02-16]
10-Q	[2017-11-03]
10-Q	[2017-08-04]
10-Q	[2017-05-01]
10-K	[2017-02-21]
10-Q	[2016-11-04]
10-Q	[2016-08-05]
10-Q	[2016-05-10]
10-K	[2016-02-16]
10-Q	[2015-11-02]
10-Q	[2015-07-31]
10-Q	[2015-05-06]
10-K	[2015-02-09]
10-Q	[2014-10-31]
10-Q	[2014-08-01]
10-Q	[2014-05-02]
10-K	[2014-02-10]
10-Q	[2013-11-01]
10-Q	[2013-08-02]
10-Q	[2013-05-03]
10-K	[2013-02-08]
10-Q	[2012-11-02]
10-Q	[2012-08-03]
10-Q	[2012-04-20]
10-K	[2012-02-23]

Large accelerated filer

Accelerated filer

Non-accelerated filer

Small reporting company

Emerging growth company