Arlington Asset Investment

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This article is about the REIT formerly known as Friedman, Billings, Ramsey Group. For the investment banking firm formerly known as Friedman, Billings, Ramsey & Co., see FBR Capital Markets.
Arlington Asset Investment
Public
Traded as NYSEAI
Industry Investment management
Founded 1989
Headquarters Arlington, Virginia, United States
Key people
Eric Billings, Executive Chairman
Products Real Estate Investment Trust
Revenue IncreaseUS $154.6 Million (2015)
DecreaseUS $-69.4 Million (2015)
Number of employees
11 (2015)
Website www.arlingtonasset.com

Arlington Asset Investment Corp is a principal investment firm that acquires and holds a levered portfolio residential mortgage-backed securities ("MBS"), consisting of agency MBS and private-label MBS. Agency MBS include residential mortgage pass-through certificates for which the principal and interest payments are guaranteed by a U.S. government agency or government sponsored enterprise ("GSE") such as Fannie Mae and Freddie Mac. Private-label MBS, or non-agency MBS, include residential MBS that are not guaranteed by a GSE or the U.S. government. The company was formerly known as Friedman, Billings, Ramsey Group Inc. (FBR Group). The company is headquartered in Arlington, Virginia. It was founded in 1989 and had assets of over $4 billion as of December 31, 2015. Arlington Asset Investment is an internally managed company and taxed as a C Corporation for U.S. Federal tax purposes, whereas many of its peers are taxed as a real estate investment trust (REIT).

History[edit]

Friedman, Billings, Ramsey Group Inc. was founded in 1989 by Emmanuel Friedman, Eric Billings, and Russ Ramsey. The firm held its initial public offering in 1997, raising $206 million.[1]

From its founding through 2008, FBR Group was taxed as a real estate investment trust that operated in four business segments consisting of principal investing, capital markets, asset management and mortgage banking. The principal investing segment consisted primarily of investing in residential MBS on a leveraged basis. The capital markets segment consisted of investment banking services and institutional brokerage services. The asset management segment conducted through registered investment advisors provided clients with mutual fund services, alternative asset management and private wealth advisory. The capital markets and asset management segments were conducted through FBR Capital Markets. The mortgage banking segment consisted of the origination and sale of non-conforming, including non-prime residential mortgage loans conducted through its subsidiary First NLC Financial Services, Inc.

Mr. Ramsey left the company in 2001. Following the early 2000s recession, FBR Group invested heavily in subprime mortgages and housing until the subprime mortgage crisis.[2] The company announced severe losses related to its underperforming mortgage origination platform and widespread problems in subprime mortgage lending, which led to a sale of ownership in FBR's subprime subsidiary First NLC Financial Services, Inc in the summer of 2007.

In 2005, the SEC began investigating FBR for insider trading done in 2001. The firm was charged with short selling CompuDyne, a maker of security systems. In 2006 FBR paid $7.8 million to the SEC and $4.5 million to CompuDyne to settle the charges, but did not admit any wrongdoing. Mr. Friedman was personally fined $1.2 million, and barred for two years from supervising a brokerage firm. Mr. Friedman left FBR Group in 2005, during the investigation.[3][4][5]

FBR Capital Markets was formed through an equity spin-off from FBR Group in the spring of 2007.[6] The IPO was priced at $72 per share but the stock had traded down considerably at a low of $8.40 as a result of the 2008 and 2009 financial crisis.

In 2009, FBR Group changed its name to Arlington Asset Investment Corp. and divested its ownership of FBR Capital Markets.[7]

Starting in 2009, Arlington Asset Investment revoked its status as a real estate investment trust and began being taxed as a C corporation for U.S. Federal income tax purposes. The decision to elect to be taxed as a C corporation was driven primarily from the availability of net operating loss carryforwards and net capital loss carryforwards that allow the company to shield substantially all of its income from income taxes.

In June 2014, Eric Billings stepped down as CEO and J. Rock Tonkel, Jr. was appointed CEO. Mr. Billings remains as Executive Chairman. Mr. Tonkel previously served as the company's President and Chief Operating Officer. [2]

Sponsorship[edit]

Arlington Asset Investment sponsored the Phoenix Open PGA golf tournament held in Scottsdale, Arizona from 2004 until 2009.[8]

References[edit]

  1. ^ Heath, Thomas (December 23, 2008). "Last of FBR's Founders to Retire as CEO". The Washington Post. Retrieved August 5, 2015. 
  2. ^ a b Bhattarai, Abha (June 12, 2014). "FBR co-founder steps down as CEO". Washington Post. Retrieved August 5, 2015. 
  3. ^ Westbrook, Jesse; Schmidt, Robert (January 16, 2013). "FBR Founder's Fund Profits From Big Government Bemoaned by Bacon". Bloomberg. Retrieved August 5, 2015. 
  4. ^ Hilzenrath, David S.; Hart, Kim (December 21, 2006). "FBR Settles With SEC Over Insider Trading Case". The Washington Post. Retrieved August 5, 2015. 
  5. ^ O'Hara, Terence (April 5, 2005). "FBR's Friedman Quitting". The Washington Post. Retrieved 5 August 2015. 
  6. ^ Alejandro, Lazo. "Spinoff From FBR Gains 6% In Debut". The Washington Post. Retrieved 2014-11-16. 
  7. ^ Ruiz Switzky, Bryant (June 10, 2011). "FBR Capital Markets changes name — again". Washington Business Journal. Retrieved August 5, 2015. 
  8. ^ "Waste Management taking over FBR Open sponsorship". Phoenix Business Journal. December 9, 2009. Retrieved August 5, 2015. 

External links[edit]