8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (date of earliest event reported): February 18, 2010

ARLINGTON ASSET INVESTMENT CORP.

(Exact name of Registrant as specified in its charter)

Virginia	54-1873198	000-50230
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)	(Commission File Number)

1001 Nineteenth Street North

Arlington, VA 22209

(Address of principal executive offices) (Zip code)

(877) 370-4413

(Registrant’s telephone number including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)  

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)  

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))  

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 7.01 Regulation FD Disclosure.

Arlington Asset Investment Corp., a Virginia corporation (the “Company”) has posted an updated investor presentation to its website, www.arlingtonasset.com.  A copy of the slide presentation is attached as Exhibit 99.1 hereto.

The information in Item 7.01 of this Current Report on Form 8-K, including Exhibit 99.1 furnished pursuant to Item 9.01, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities under that Section. Furthermore, the information in Item 7.01 of this Current Report on Form 8-K, including Exhibit 99.1 furnished pursuant to Item 9.01, shall not be deemed to be incorporated by reference into the filings of the Company under the Securities Act of 1933, as amended.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit Number	Description
99.1	Investor presentation posted to the Company’s website.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

	ARLINGTON ASSET INVESTMENT CORP.
Date: February 18, 2010	By:         /s/   Kurt R. Harrington
	Name:    Kurt R. Harrington
	Title:      Executive Vice President, Chief Financial                Officer and Chief Accounting Officer

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EXHIBIT INDEX

Exhibit Number	Description
99.1	Investor presentation posted to the Company’s website.

EX-99.1

Investor Presentation February 18, 2010

Information Related to Forward-Looking Statements This presentation contains “forward-looking statements” within the meaning of the Private Securities Litigation
Reform Act of 1995.  These include statements regarding future results or expectations.  Forward-looking
statements can be identified by forward-looking language, including words such as “believes,” “anticipates,”
“expects,” “estimates,” “intends,” “may,” “plans,” “projects,” “potential,” “prospective,” “will” and similar
expressions, or the negative of these words. Such forward-looking statements are based on facts and
conditions as they exist at the time such statements are made.  Forward-looking statements are also based on
predictions as to future facts and conditions, the accurate prediction of which may be difficult and involve the
assessment of events beyond our control.  Forward-looking statements are further based on various operating
and return assumptions. Caution must be exercised in relying on forward-looking statements.  Due to known
and unknown risks, actual results may differ materially from expectations or projections. You should carefully consider these risks when you make a decision concerning an investment in our common
stock, along with the following factors, among others, that may cause our actual results to differ materially from
those described in any forward-looking statements: risks and uncertainties relating to the recent global
economic downturn; changes in economic and market conditions; impacts of regulatory changes and changes
to Fannie Mae and Freddie Mac; availability of opportunities that meet or exceed our risk adjusted return
expectations, changes in interest rates; changes in anticipated earnings and returns; our ability to maintain
adequate liquidity; 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; our ability to maintain our exemption from registration as an investment company pursuant to the
Investment Company Act of 1940; our ability to generate earnings or gains and otherwise realize and protect
taxable benefits associated with net operating loss carry-forwards and net capital loss carry-forwards; our ability
to realize continued cost savings; our ability and willingness to pay future dividends; available technologies;
competition for business and personnel; changes in, and our ability to remain in compliance with, law,
regulations or government policies affecting our business; and the factors described in the sections entitled
“Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2008 and our other public
filings with the SEC.  You should not place undue reliance on these forward-looking statements, which apply
only as of the date of this presentation.  We undertake no obligation to update or revise any forward-looking
statement, whether written or oral, relating to matters discussed in this presentation, except as may be required
by applicable securities laws.

Arlington Asset OverviewInternally managed principal investment firm with a primary focus in
non-agency mortgage-backed securities (“MBS”) Successfully invested equity in attractive non-agency MBS portfolio during 2009 $324 million non-agency MBS portfolio at 02/11/10 with cost of 49% of par ($160 million unlevered capital
invested) 20% unlevered yield for 4Q 2009 $0.51 per share operating cash income in 4Q 2009 Declared $0.35 per share dividend for 1Q 2010 Declared expected 50% to 60% dividend payout ratio in current period (excluding non-recurring items) Attractive non-agency MBS investment opportunities available (Size and nimble approach fit market opportunity,
recent investments meet risk adjusted return expectations) Low leverage, transparent balance sheet (5% debt to total assets) Earnings power driven by non-agency MBS strategy Attractive expected risk/return vs. other alternatives (~20% expected unlevered returns) Current cash income with potential appreciation (~50% discount to face value) Utilizes tax benefits Attractive total return opportunity with significant upside potential 8% dividend yield (based on 02/11/10 price of $17.15) Retention of cash earnings with reinvestment in discounted assets Potential to capture, monetize, and reinvest $164 million non-agency MBS purchase discount over time Straightforward C-Corp structure with in excess of $800 million of tax benefits (off balance sheet)

Arlington Asset Highlights (NYSE:  AI) Eric F. Billings Chairman & CEO J. Rock Tonkel, Jr. Chief Operating Officer Brian J. Bowers Chief Investment Officer Kurt R. Harrington Chief Financial Officer Arlington Asset Management Team Share Price (2) 17.15 $         Cash (1) 10 $             Shares O/S (2) 7.7 Non-Agency MBS (2) 160 $            Market Cap (2) 132 $            Total Assets (1) 314 $            BV per share (1) 19.54 $         Long Term Debt (2) 16 $             Price to Book (2) 88% Shareholders' Equity (1) 150 $            Share Data ($ in millions, except per share data) Key Financial Data ($ in millions)

Non-Agency MBS Investment Opportunity Market dislocation has provided an exceptional investment opportunity in $2 trillion non-agency
market Greater than $1 trillion in Prime and Alt-A MBS Opportunity to benefit from unprecedented Government policy to improve liquidity in the non-agency
mortgage market Ability to invest in collateral-backed assets at significant discount to par value Creates potential unlevered current cash returns in the mid-teens to low 20’s (coupon yield +
prepayment accretion) Under severe modeling assumptions we expect to receive more than our investment through
prepayments or reflation Reflation potential equals gap between cost and face value and should grow as portfolio grows $164 million at 02/11/10 compared to market cap of $132 million $800 million in NOLs and NCLs to shelter future earnings and capital gains Results in potential book value growth and favorable tax treatment for dividends

Housing Market Historical Trends *Source: Bloomberg S&P/Case Schiller Home Price Index 125 135 145 155 165 175 185 195 205 215 225 S&P 500 600 700 800 900 1000 1100 1200 1300 1400 1500 1600 US Unemployment Rate 4.0 5.0 6.0 7.0 8.0 9.0 10.0 11.0 Mortgage Deliquency Rate (60+ Days) 0 5 10 15 20 25 30

Arlington Asset Non-Agency Portfolio Summary ⁽¹⁾ Prime and Alt A MBS not Guaranteed by
FN/FH/GN Average Loan Size:$584K # of Loans:22,000 Coupon:5.7% Original FICO:728 Original LTV:72% Wgt Avg Loan Origination Date:Aug 2006 Wgt Avg Loan Age:42 months Purchase Price to Par:49% Credit Enhancement:11% 60+ Delinquency:21% 3mo Severity:44% Cumulative Loss to Date:2.8% 3mo CPR:17% Re-remic Capital Allocation:$56M First Tranche Capital Allocation:$104M (1) As of 02/11/10

Non-Agency MBS Investment Opportunity (1) Assumes total investment mix of 65% Senior and 35% Mezzanine MBS.  As a percentage of face value, this assumption implies a mix of 52% Senior and 48% Mezzanine MBS.  These
assumptions are not projections and do not necessarily represent the Company’s expectations and future
performance.  This is illustrative only and actual results could materially differ. Current Face 100 $    Dollar Cost 49 $       Coupon 5.7% Coupon Yield 11.6% CPR on Senior Bonds 15.0 Prepayment 9.6 $      Return of Principal 5.8 $      Accretion 3.8 $      Accretion in BPS 7.8% Unlevered Return 19.4% Illustrative Return Model (1) Based on current market conditions

Downside Protection with Upside Potential Frequency         22% Severity       44% Return vs Par  100% Frequency         50% Severity       60% Return vs Par    80% Frequency         80% Severity       75% Return vs Par    49% Coupon Yield on Invested Capital: 11.6% Coupon Yield on Invested Capital: 11.6% Coupon Yield on Invested Capital: 11.6% Cash Accretion: 105% Cash Accretion: 65% (1) These assumptions are not projections and do not necessarily represent the Company’s expectations and
future performance.  This is illustrative only and actual results could materially differ. POTENTIAL RETURN ON INVESTMENT EXAMPLES (1) Based on current market conditions 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Invested Capital Cash Accretion

Potential Cash Earnings Power $160 million in unlevered non-agency MBS portfolio cost at 02/11/10 with a current yield of
approximately 19% Approximately $5+ million available for non-agency MBS investment at 02/11/10 Plus reinvestment of non-agency MBS prepayments and retained cash earnings primarily in
discounted non-agency MBS $2.2 million expected ongoing fixed operating overhead expense in 4Q 2009 less potential future
reductions $15 million of long term debt at 3% current cost of funds 2% expected alternative minimum tax rate 7.9 million shares outstanding on a fully diluted basis $0.35 per share dividend declared for 1Q 2010 or $2.8 million ($11.2 million annualized)

Book Value Per Share with Potential Upside Opportunities Reflation of non-agency MBS investment portfolio $164 million purchase discount at 02/11/10 $324 million face value vs. $160 million invested Reinvestment of retained earnings in discounted non-
agency MBS assets Net operating loss carry-forwards and capital loss carry-
forwards In excess of $800 million Potential Upside Opportunities 12/31/2009   Book Value Cash and cash equivalents 10 $          Mortgage Backed Securities Agency, net of $127 repo 10 Non-Agency Private Label 159 Total 179 $         Other Investments 3 Total cash, securities and investments 182 $         Long-term debt (17) Other assets/liabilities, net (15) Shareholders' equity 150 $         Book value per share 19.54 $      Allocation of Book Value ($ in millions, except per share data)

Conclusion Successfully invested equity in attractive non-agency MBS portfolio during 2009 $324 million non-agency MBS portfolio at 02/11/10 with cost of 49% of par ($160 million unlevered capital
invested) 20% unlevered yield for 4Q 2009 $0.51 per share operating cash income in 4Q 2009 Declared $0.35 per share dividend for 1Q 2010 Declared expected 50% to 60% dividend payout ratio in current period (excluding non-recurring items) Attractive non-agency MBS investment opportunities available (Size and nimble approach fit market opportunity,
recent investments meet risk adjusted return expectations) Low leverage, transparent balance sheet (5% debt to total assets) Earnings power driven by non-agency MBS strategy Attractive expected risk/return vs. other alternatives (~20% expected unlevered returns) Current cash income with potential appreciation (~50% discount to face value) Utilizes tax benefits Attractive total return opportunity with significant upside potential 8% dividend yield (based on 02/11/10 price of $17.15) Retention of cash earnings with reinvestment in discounted assets Potential to capture, monetize, and reinvest $164 million non-agency MBS purchase discount over time Straightforward C-Corp structure with in excess of $800 million of tax benefits (off balance sheet)