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Arlington Asset Investment Management Discusses Q2 2012 Results - Earnings Call Transcript

Arlington Asset Investment (AI)

Q2 2012 Earnings Call

July 31, 2012 9:00 am ET

Executives

Kurt Ross Harrington - Chief Financial Officer, Chief Accounting Officer, Executive Vice President and Treasurer

Eric F. Billings - Co-Founder, Chairman, Chief Executive Officer, Chairman of FBR Capital Markets, Chairman of FBR Asset Investment Corporation and Chief Executive Officer FBR Capital Markets

J. Rock Tonkel - President, Chief Operating Officer and Director

Analysts

Jason Stewart - Compass Point Research & Trading, LLC, Research Division

James J. Fowler - Harvest Capital Strategies LLC

David M. Walrod - Ladenburg Thalmann & Co. Inc., Research Division

Presentation

Operator

Good morning. I'd like to welcome, everyone, to the Arlington Asset Second Quarter 2012 Earnings Call.

[Operator Instructions] I would now like to turn the conference over to Mr. Kurt Harrington. Mr. Harrington, you may begin, sir.

Kurt Ross Harrington

Thank you very much. Good morning. This is Kurt Harrington, Chief Financial Officer of Arlington Asset.

Before we begin this morning's call, I would like to remind everyone that statements concerning future performance, market conditions, risk spreads, private-label MBS trading activity, liquidity levels and credit trends, agency-backed MBS prices, cash earnings, book value, portfolio allocation, 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 cost of borrowing; decreased interest spreads; changes in default rates; preservation of utilization or net operating loss and net capital loss carry-forwards; impacts of regulatory changes, including actions taken by the Securities and Exchange Commission; impacts of changes to Fannie Mae or Freddie Mac; actions taken by the U.S. Federal Reserve and the U.S. Treasury; availability of opportunities that meet or exceed our risk-adjusted return expectations; ability to effectively migrate private-label MBS into agency-backed MBS; ability to realize a higher return on capital migrated to agency MBS; ability and willingness to make future dividends; the failure of sovereign or municipal entities to meet their debt obligations or a downgrade in the credit rating of such obligations; ability to generate sufficient cash through retained earnings to satisfy capital needs; changes in and the effects on the company of mortgage prepayments fees; use of proceeds from our recently completed equity offering; ability to realize book value growth through reflation of private-label MBS; the realization of gains and losses on principal investments; the outcome of certain litigation and investigatory matters; available technologies; competition for business and personnel; and general economic, political, regulatory and market conditions.

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