Arlington Asset Investment Corp. Reports Operating Results (10-K)
Arlington Asset Investment Corp. has a market cap of $322.605 million; its shares were traded at around $24.46 with a P/E ratio of 9.4518 and P/S ratio of 5.2466. The dividend yield of Arlington Asset Investment Corp. stocks is 14.27%.
Highlight of Business Operations:We have generated taxable income of $16.5 million, $27.5 million, and $45.4 million during the years ended December 31, 2010, 2011, and 2012, respectively, demonstrating a positive and consistent earnings trend over the three year period ended December 31, 2012. We expect to continue to benefit from the significant increase in our MBS portfolio. Our MBS portfolio increased to $1.8 billion as of December 31, 2012 from $0.8 billion and $0.4 billion as of December 31, 2011 and 2010, respectively. This increase is primarily from the deployment of the proceeds from our capital raising activities during the year ended December 31, 2012 as discussed above.
In addition to the financial results reported in accordance with generally accepted accounting principles as consistently applied in the United States (GAAP), we calculated non-GAAP core operating income for the years ended December 31, 2012 and 2011. Our core operating income for the years ended December 31, 2012 and 2011 was $50.3 million and $46.4 million, respectively. In determining core operating income, we excluded certain costs and the following non-cash expenses: (1) compensation costs associated with stock-based awards, (2) accretion of MBS purchase discounts adjusted for principal repayments in excess of proportionate invested capital, (3) unrealized mark-to-market adjustments on the trading MBS and hedge instruments, (4) other-than-temporary impairment charges recognized, and (5) release of valuation allowance on deferred tax assets. This non-GAAP measurement is used by management to analyze and assess the operating results and dividends. We believe that this non-GAAP measurement assists investors in understanding the impact of these non-core items and non-cash expenses on our performance and provides additional clarity around our forward earnings capacity and trend. A limitation of utilizing this non-GAAP measure is that the GAAP accounting effects of these events do in fact reflect the underlying financial results of our business and these effects should not be ignored in evaluating and analyzing our financial results. Therefore, we believe net income on a GAAP basis and core operating income on a non-GAAP basis should be considered together.
The realized gains on sale of available-for-sale investments, net, recognized for the year ended December 31, 2012 and 2011 were primarily the result of $34.1 million and $79.2 million of proceeds received, respectively, from the sales of $53.5 million and $119.0 million in face value of MBS, respectively. We recorded a net gain of $9.8 million and $13.0 million from these sales for the year ended December 31, 2012 and 2011, respectively. We also realized net gains from the sale of other investments of $1.9 million for the year ended December 31, 2011.
The realized gains on sale of available-for-sale investments, net, recognized for the year ended December 31, 2011 were primarily the result of proceeds received of $79.2 million from the sales of $119.0 million in face value of MBS at a net gain of $13.0 million and realized net gains from the sale of other investments of $1.9 million as compared to the result of proceeds received of $253.1 million from the sales of $335.0 million in face value of MBS at a net gain of $10.0 million for the year ended December 31, 2010.
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