Arlington Asset Investment (AAIC) 8-K FBR Announces Third Quarter 2006 Financial Results

Exhibit 99.1

Contacts:

Media: Lauren Burk at 703-469-1004 orlburk@fbr.com

Investors: Paul Beattie at 703-312-9673 orpbeattie@fbr.com

FBR Announces Third Quarter 2006 Financial Results

ARLINGTON, VA, November 2, 2006 – Friedman, Billings, Ramsey Group, Inc. (NYSE: FBR) today announced its results for the quarter ended September 30, 2006. The company reported a net after-tax loss for the quarter of $67.4 million, or $0.39 per share (diluted), compared to after-tax earnings of $23.0 million, or $0.14 per share (diluted), for the third quarter of 2005. FBR’s net after-tax loss for the first nine months of 2006 was $71.1 million, or $0.41 per share (diluted), compared to earnings of $100.7 million, or $0.59 per share (diluted), for the first nine months of 2005. The company’s consolidated equity was $1.2 billion at the end of the third quarter, resulting in core book value net of Accumulated Other Comprehensive Income (AOCI) of $6.85¹.

Principal Investments

As of September 30, 2006, FBR made a determination in evaluating its mortgage investments and strategy to reclassify the mortgage loan portfolio held at the real estate investment trust (REIT). As a result of this change, FBR has recorded its investment in this portfolio at the lower of cost or market, and consequently the company recognized a $146.8 million non-cash mark-to-market write-down in the value of this mortgage loan portfolio. The write-down of the mortgage portfolio signals the company’s decision not to hold that portfolio to maturity and an intention to redeploy the capital invested in that portfolio more rapidly than if the portfolio were held to maturity.

In addition, FBR made a determination in evaluating its merchant banking portfolio to recognize as “other than temporary impairments” the amounts by which the fair value of certain of its merchant banking investments were below their respective cost bases. At the close of the quarter, FBR recognized a $20 million non-cash write-down of equity positions in its merchant banking portfolio, the majority of which involve companies doing business in the non-prime mortgage sector.

1

FBR Capital Markets

FBR Capital Markets Corporation, a consolidated taxable subsidiary formed in the second quarter of 2006, acts as a holding company for FBR’s capital markets operations – investment banking, institutional brokerage, research, and its asset management businesses, including FBR-sponsored mutual funds and private wealth management.

In July, FBR Capital Markets Corporation sold shares of its common stock to institutional investors in a private transaction valued at $270 million, giving the newly formed subsidiary an initial market value of approximately $960 million. FBR Group, which retains a beneficial ownership interest of 71.9% in FBR Capital Markets, recorded a net gain of $121.5 million as a result of the cash received in the transaction.

Equity capital markets revenues for the third quarter totaled $36.7 million, down from $113.0 million in the third quarter of 2005, and FBR Capital Markets had an overall net after-tax loss of $19.2 million during the quarter. The net loss for FBR Capital Markets, exclusive of expenses associated with the July capital raise and other nonrecurring items, was $12 million. FBR’s banking revenues for the quarter were unusually low, consistent with the industry’s relatively slow third quarter for new equity issues. The firm believes this to be an anomaly and, in support of that view, the company has already generated more banking revenue during October than in the entire third quarter. Further, the company’s current investment banking pipeline, including transactions expected to close in the fourth quarter, is strong. The pipeline includes transactions across all of our eight vertical industry groups.

FBR Capital Markets finished the quarter with approximately $475 million in equity and over $300 million of cash on its balance sheet. This capital will help to facilitate the continued execution of the company’s strategic plan, involving the build-out of its mergers and acquisitions capability, the continued strengthening of its industry groups, and growth in its asset management business.

First NLC

FNLC generated a net after-tax loss of $7.4 million during the quarter, the result of a $23 million loss provision. The total provision includes $17.5 million of additional reserves related to the impact of an industry-wide increase in requests for buy-backs of loans related to early pay defaults. Without this additional reserve, FNLC would have realized net after-tax earnings of about $3.0 million. FNLC originated over $2 billion in loans in the third quarter, as compared to $1.6 billion in loan originations for the third quarter of 2005, and maintained its cost to originate below 2%.

“Clearly the last year has been both challenging and disappointing for the company and its shareholders,” said Eric F. Billings, FBR Chairman and Chief Executive Officer. “However, the non-cash write-down of our mortgage loan and merchant banking portfolios should position our balance sheet to now generate higher and more consistent returns. We further believe that First NLC is poised to generate meaningful returns for the company. Additionally, despite an unusually slow third quarter in our capital markets business, we are optimistic about the near term and longer term prospects for this franchise. We are continuing to execute against our strategic plan and look forward to working with Crestview Partners in their role as board members and investors in FBR Capital Markets. These actions, we believe, position all three of our core businesses to provide sustainable profitability for the company.”

2

The firm will host an earnings conference call this morning, Thursday, November 2, 2006 at 9:00 A.M. U.S. EST. Investors wishing to listen to the earnings conference call at 9:00 A.M. U.S. EST may do so via the web at:
http://phx.corporate-ir.net/phoenix.zhtml?c=71352&p=irol-irhome.

Replays of the webcast will be available following the call.

Friedman, Billings, Ramsey Group, Inc. provides investment banking*, institutional brokerage*, asset management, and private wealth services through its operating subsidiaries and invests in mortgage-related assets and merchant banking opportunities. FBR focuses capital and financial expertise on eight industry sectors: consumer, diversified industrials, energy and natural resources, financial institutions, healthcare, insurance, real estate, and technology, media and telecommunications. FBR is headquartered in the Washington, D.C. metropolitan area with offices in Arlington, Va., Boston, Dallas, Houston, Irvine, London, New York, Phoenix and San Francisco. Friedman, Billings, Ramsey Group, Inc. is the parent company of First NLC Financial Services, Inc., a non-conforming residential mortgage originator headquartered in Deerfield Beach, Florida. For more information, see http://www.fbr.com.

*Friedman, Billings, Ramsey & Co., Inc.

¹Accumulated Other Comprehensive Income (AOCI) includes changes in the value of available-for-sale securities and cash flow hedges. FBR believes that such changes represent temporary market fluctuations, are not reflective of our market strategy, and, therefore, the exclusion of AOCI provides a reasonable basis for calculating returns.

Statements concerning future performance, developments, events, market forecasts, revenues, expenses, earnings, run rates 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, the effect of demand for public offerings, activity in the secondary securities markets, interest rates, costs of borrowing, interest spreads, mortgage pre-payment speeds, risks associated with merchant banking investments, the realization of gains and losses on principal investments, available technologies, competition for business and personnel, and general economic, political and market conditions. These and other risks are described in the Company’s Annual Report and Form 10-K and quarterly reports on Form 10-Q that are available from the company and from the SEC.

Financial data follows.

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FRIEDMAN, BILLINGS, RAMSEY GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share amounts) (Unaudited)

	Quarter ended September 30,
	2006			%		2005			%
REVENUES:
Investment banking:
Capital raising	$	6,852		-8.3	%	$	86,035		48.2	%
Advisory		5,826		-7.0	%		3,026		1.7	%
Institutional brokerage:
Agency commissions and principal transactions		22,730		-27.5	%		24,793		13.9	%
Mortgage trading interest		13,845		-16.7	%		11,304		6.3	%
Mortgage trading net investment loss		(1,546	)	1.9	%		(2,401	)	-1.3	%
Asset management:
Base management fees		4,880		-5.9	%		7,914		4.4	%
Incentive allocations and fees		(31	)	0.0	%		832		0.5	%
Principal investment:
Interest		150,649		-182.0	%		144,401		80.8	%
Net investment (loss) income		(170,621	)	206.1	%		4,866		2.7	%
Dividends		4,750		-5.7	%		8,772		4.9	%
Mortgage Banking:
Interest		22,476		-27.1	%		27,280		15.3	%
Net investment income		16,092		-19.5	%		17,600		9.9	%
Other		6,540		-8.0	%		5,479		3.0	%
Total revenues		82,442		-99.7	%		339,901		190.3	%
Interest expense		165,237		-199.7	%		156,373		87.6	%
Provision for loan losses		—		0.0	%		4,890		2.7	%
Revenues, net of interest expense and provision for loan losses		(82,795	)	100.0	%		178,638		100.0	%
NON-INTEREST EXPENSES:
Compensation and benefits		69,405		-83.8	%		88,348		49.5	%
Professional services		14,308		-17.3	%		16,158		9.0	%
Business development		7,577		-9.2	%		8,815		4.9	%
Clearing and brokerage fees		2,917		-3.5	%		2,363		1.3	%
Occupancy and equipment		12,909		-15.5	%		9,397		5.4	%
Communications		6,471		-7.8	%		5,561		3.1	%
Other operating expenses		23,291		-28.1	%		16,861		9.4	%
Total non-interest expenses		136,878		-165.2	%		147,503		82.6	%
Operating (loss) income		(219,673	)	265.2	%		31,135		17.4	%
OTHER INCOME:
Gain on sale of subsidiary shares		121,511		-146.8	%		—		0.0	%
Net (loss) income before income taxes and minority interest		(98,162	)	118.6	%		31,135		17.4	%
Income tax (benefit) provision		(26,062	)	31.5	%		8,090		4.5	%
Minority interest in loss of consolidated subsidiary		(4,708	)	5.7	%		—		0.0	%
Net (loss) income	$	(67,392	)	81.4	%	$	23,045		12.9	%
Basic (loss) earnings per share	$	(0.39	)			$	0.14
Diluted (loss) earnings per share	$	(0.39	)			$	0.14
Weighted average shares - basic		172,091					169,745
Weighted average shares - diluted		172,091					170,490

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Material and Non-Public Information

Confidential and Proprietary - Finance

FRIEDMAN, BILLINGS, RAMSEY GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share amounts) (Unaudited)

	Nine Months Ended September 30,
	2006			%		2005			%
REVENUES:
Investment banking:
Capital raising	$	118,304		57.8	%	$	267,887		48.8	%
Advisory		14,976		7.3	%		10,344		1.9	%
Institutional brokerage:
Agency commissions and principal transactions		82,111		40.1	%		75,934		13.7	%
Mortgage trading interest		48,638		23.8	%		11,304		2.1	%
Mortgage trading net investment loss		(2,992	)	-1.5	%		(2,401	)	-0.4	%
Asset management:
Base management fees		15,042		7.4	%		24,195		4.4	%
Incentive allocations and fees		924		0.5	%		1,187		0.2	%
Principal investment:
Interest		413,388		202.1	%		360,021		65.6	%
Net investment (loss) income		(175,726	)	-85.9	%		18,746		3.4	%
Dividends		12,508		6.1	%		20,583		3.7	%
Mortgage Banking:
Interest		66,856		32.7	%		49,182		9.0	%
Net investment income		56,231		27.5	%		35,640		6.5	%
Other		16,992		8.2	%		17,138		3.1	%
Total revenues		667,252		326.1	%		889,760		162.0	%
Interest expense		446,909		218.4	%		334,920		60.9	%
Provision for loan losses		15,740		7.7	%		6,028		1.1	%
Revenues, net of interest expense and provision for loan losses		204,603		100.0	%		548,812		100.0	%
NON-INTEREST EXPENSES:
Compensation and benefits		224,634		109.8	%		244,162		44.5	%
Professional services		41,498		20.3	%		49,994		9.1	%
Business development		30,266		14.8	%		36,215		6.6	%
Clearing and brokerage fees		8,315		4.1	%		6,435		1.2	%
Occupancy and equipment		36,383		17.8	%		23,893		4.4	%
Communications		18,091		8.8	%		14,893		2.7	%
Other operating expenses		69,261		33.9	%		45,695		8.3	%
Total non-interest expenses		428,448		209.5	%		421,287		76.8	%
Operating (loss) income		(223,845	)	-109.5	%		127,525		23.2	%
OTHER INCOME:
Gain on sale of subsidiary shares		121,511		59.4	%		—		0.0	%
Net (loss) income before income taxes and minority interest		(102,334	)	-50.0	%		127,525		23.2	%
Income tax (benefit) provision		(26,541	)	-13.0	%		26,825		4.9	%
Minority interest in loss of consolidated subsidiary		(4,708	)	-2.3	%		—		0.0	%
Net (loss) income	$	(71,085	)	-34.7	%	$	100,700		18.3	%
Basic (loss) earnings per share	$	(0.41	)			$	0.60
Diluted (loss) earnings per share	$	(0.41	)			$	0.59
Weighted average shares - basic		171,376					169,166
Weighted average shares - diluted		171,376					170,122

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FRIEDMAN, BILLINGS, RAMSEY GROUP, INC. Financial & Statistical Supplement - Operating Results (Dollars in thousands, except per share data) (Unaudited)

	For the nine months ending September 30, 2006			Q-3 06			Q-2 06			Q-1 06
Revenues
Investment banking:
Capital raising	$	118,304		$	6,852		$	45,117		$	66,335
Advisory		14,976			5,826			6,281			2,869
Institutional brokerage:
Agency commissions and principal transactions		82,111			22,730			30,252			29,129
Mortgage trading interest		48,638			13,845			17,143			17,650
Mortgage trading net investment loss		(2,992	)		(1,546	)		(209	)		(1,237	)
Asset management:
Base management fees		15,042			4,880			5,065			5,097
Incentive allocations and fees		924			(31	)		(53	)		1,008
Principal investment:
Interest		413,388			150,649			113,613			149,126
Net investment (loss) income		(175,726	)		(170,621	)		(31,290	)		26,185
Dividends		12,508			4,750			4,059			3,699
Mortgage Banking:
Interest		66,856			22,476			21,267			23,113
Net investment income		56,231			16,092			29,401			10,738
Other		16,992			6,540			5,465			4,987
Total revenues		667,252			82,442			246,111			338,699
Interest expense		446,909			165,237			128,189			153,483
Provision for loan losses		15,740			—			7,348			8,392
Revenues, net of interest expense and provision for loan losses		204,603			(82,795	)		110,574			176,824
Non-interest expenses
Compensation and benefits		224,634			69,405			71,732			83,497
Professional services		41,498			14,308			12,925			14,265
Business development		30,266			7,577			8,604			14,085
Clearing and brokerage fees		8,315			2,917			3,082			2,316
Occupancy and equipment		36,383			12,909			12,232			11,242
Communications		18,091			6,471			6,013			5,607
Other operating expenses		69,261			23,291			24,993			20,977
Total expenses		428,448			136,878			139,581			151,989
Operating (loss) income		(223,845	)		(219,673	)		(29,007	)		24,835
Other income
Gain on sale of subsidiary shares		121,511			121,511			—			—
Net (loss) income before income taxes and minority interest		(102,334	)		(98,162	)		(29,007	)		24,835
Income tax (benefit) provision		(26,541	)		(26,062	)		1,240			(1,719	)
Minority interest in loss of consolidated subsidiary		(4,708	)		(4,708	)		—			—
Net (loss) income	$	(71,085	)	$	(67,392	)	$	(30,247	)	$	26,554
ROE (annualized)		-7.7	%		-22.1	%		-9.4	%		8.2	%
ROE (annualized-excluding AOCI) (1)		-7.6	%		-22.2	%		-9.5	%		8.1	%
Total shareholders’ equity	$	1,163,681		$	1,163,681		$	1,270,361		$	1,301,949
Total shareholders’ equity, net of AOCI (1)	$	1,181,373		$	1,181,373		$	1,250,117		$	1,306,450
Basic (loss) earnings per share	$	(0.41	)	$	(0.39	)	$	(0.18	)	$	0.16
Diluted (loss) earnings per share	$	(0.41	)	$	(0.39	)	$	(0.18	)	$	0.16
Ending shares outstanding (in thousands)		172,506			172,506			171,812			171,236
Book value per share	$	6.75		$	6.75		$	7.39		$	7.60
Book value per share, net of AOCI (1)	$	6.85		$	6.85		$	7.28		$	7.63
Gross assets under management (in millions)
Managed accounts	$	376.6		$	376.6		$	386.8		$	383.9
Hedge & offshore funds		102.1			102.1			125.8			136.6
Mutual funds		1,825.1			1,825.1			1,750.6			1,849.5
Private equity and venture capital funds		48.5			48.5			48.2			50.5
Total	$	2,352.3		$	2,352.3		$	2,311.4		$	2,420.5
Net assets under management (in millions)
Managed accounts	$	376.6		$	376.6			386.8		$	380.9
Hedge & offshore funds		98.3			98.3			116.1			125.4
Mutual funds		1,817.8			1,817.8			1,742.6			1,843.4
Private equity and venture capital funds		46.9			46.9			46.7			49.1
Total	$	2,339.6		$	2,339.6		$	2,292.2		$	2,398.8
Employee count		2,909			2,909			2,651			2,531

(1) Accumulated Other Comprehensive Income (AOCI) includes changes in value of available-for-sale securities and cash flow hedges. We believe that such changes represent temporary market fluctuations, are not reflective of our market strategy, and therefore, exclusion of AOCI provides a reasonable basis for calculating returns.

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FRIEDMAN, BILLINGS, RAMSEY GROUP, INC. Financial & Statistical Supplement - Operating Results (Dollars in thousands, except per share data) (Unaudited)

	For the year ending December 31, 2005			Q-4 05			Q-3 05			Q-2 05			Q-1 05
Revenues
Investment banking:
Capital raising	$	356,753		$	88,866		$	86,035		$	95,039		$	86,813
Advisory		17,759			7,415			3,026			6,180			1,138
Institutional brokerage:
Agency commissions and principal transactions		100,728			24,794			24,793			23,357			27,784
Mortgage trading interest		30,859			19,555			11,304			—			—
Mortgage trading net investment loss		(3,820	)		(1,419	)		(2,401	)		—			—
Asset management:
Base management fees		30,348			6,153			7,914			7,813			8,468
Incentive allocations and fees		1,929			742			832			730			(375	)
Principal investment:
Interest		549,832			189,811			144,401			116,724			98,896
Net investment (loss) income		(239,754	)		(258,500	)		4,866			17,738			(3,858	)
Dividends		36,622			16,039			8,772			8,371			3,440
Mortgage Banking:
Interest		78,007			28,825			27,280			15,543			6,359
Net investment (loss) income		13,741			(21,899	)		17,600			14,559			3,481
Other		22,302			5,164			5,479			6,030			5,629
Total revenues		995,306			105,546			339,901			312,084			237,775
Interest expense		546,313			211,393			156,373			103,725			74,822
Provision for loan losses		14,291			8,263			4,890			1,138			—
Revenues, net of interest expense and provision for loan losses		434,702			(114,110	)		178,638			207,221			162,953
Non-interest expenses
Compensation and benefits		331,492			87,330			88,348			80,015			75,799
Professional services		66,550			16,556			16,158			20,186			13,650
Business development		46,648			10,433			8,815			11,962			15,438
Clearing and brokerage fees		8,882			2,447			2,363			2,040			2,032
Occupancy and equipment		34,044			10,151			9,397			8,772			5,724
Communications		20,634			5,741			5,561			5,300			4,032
Other operating expenses		70,679			24,984			16,861			12,540			16,294
Total non-interest expenses		578,929			157,642			147,503			140,815			132,969
Net (loss) income before income taxes		(144,227	)		(271,752	)		31,135			66,406			29,984
Income tax provision (benefit)		26,683			(142	)		8,090			13,163			5,572
Net (loss) income	$	(170,910	)	$	(271,610	)	$	23,045		$	53,243		$	24,412
ROE (annualized)		-11.9	%		-80.5	%		6.3	%		14.3	%		6.4	%
ROE (annualized-excluding AOCI) (1)		-11.7	%		-74.7	%		5.9	%		13.8	%		6.0	%
Total shareholders’ equity	$	1,304,170		$	1,304,170		$	1,394,137		$	1,519,021		$	1,458,861
Total shareholders’ equity, net of AOCI (1)	$	1,305,147		$	1,305,147		$	1,603,305		$	1,631,955		$	1,629,293
Basic (loss) earnings per share	$	(1.01	)	$	(1.60	)	$	0.14		$	0.31		$	0.15
Diluted (loss) earnings per share	$	(1.01	)	$	(1.60	)	$	0.14		$	0.31		$	0.14
Ending shares outstanding (in thousands)		170,264			170,264			169,891			169,617			169,214
Book value per share	$	7.66		$	7.66		$	8.21		$	8.96		$	8.62
Book value per share, net of AOCI (1)	$	7.67		$	7.67		$	9.44		$	9.62		$	9.63
Gross assets under management (in millions)
Managed accounts	$	463.4		$	463.4		$	437.2		$	510.4		$	242.4
Hedge & offshore funds		154.3			154.3			239.0			463.1			601.1
Mutual funds		1,883.3			1,883.3			2,078.1			2,185.0			2,213.9
Private equity and venture capital funds		56.2			56.2			42.7			41.3			69.5
Total	$	2,557.2		$	2,557.2		$	2,797.0		$	3,199.8		$	3,126.9
Net assets under management (in millions)
Managed accounts	$	329.5		$	329.5		$	255.5		$	257.3		$	223.0
Hedge & offshore funds		150.5			150.5			227.8			401.1			490.3
Mutual funds		1,872.8			1,872.8			2,069.9			2,176.6			2,204.2
Private equity and venture capital funds		46.8			46.8			39.9			37.8			66.3
Total	$	2,399.6		$	2,399.6		$	2,593.1		$	2,872.8		$	2,983.8
Employee count		2,449			2,449			2,455			2,226			2,123

(1) Accumulated Other Comprehensive Income (AOCI) includes changes in value of available-for-sale securities and cash flow hedges. We believe that such changes represent temporary market fluctuations, are not reflective of our market strategy, and therefore, exclusion of AOCI provides a reasonable basis for calculating returns.

7

FRIEDMAN, BILLINGS, RAMSEY GROUP, INC. CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except per share amounts) (Unaudited)

	30-Sep-06			31-Dec-05
ASSETS
Cash and cash equivalents	$	365,121		$	238,615
Restricted cash		4,081			6,101
Receivables
Securities sold		946,063			—
Other		231,516			259,519
Investments:
Mortgage-backed securities, at fair value		5,971,276			8,002,561
Loans held for investment, net		—			6,841,266
Loans held for sale, net		5,668,669			963,807
Long-term investments		242,111			347,644
Reverse repurchase agreements		120,103			283,824
Trading securities, at fair value		488,084			1,032,638
Due from clearing broker		154,570			71,065
Derivative assets, at fair value		55,229			70,636
Goodwill		162,765			162,765
Intangible assets, net		22,807			26,485
Furniture, equipment and leasehold improvements, net		44,614			46,382
Prepaid expenses and other assets		181,046			82,482
Total assets	$	14,658,055		$	18,435,790
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Trading account securities sold short but not yet purchased, at fair value	$	81,484		$	150,547
Commercial paper		3,720,804			6,996,950
Repurchase agreements		2,687,363			2,698,619
Securities purchased		1,358,462			—
Derivative liabilities, at fair value		60,354			31,952
Dividends payable		8,751			34,588
Interest payable		12,939			12,039
Accrued compensation and benefits		34,537			82,465
Accounts payable, accrued expenses and other liabilities		129,451			82,576
Temporary subordinated loan payable		—			75,000
Securitization financing		4,942,263			6,642,198
Long-term debt		324,447			324,686
Total liabilities		13,360,855			17,131,620
Minority Interest		133,519			—
Shareholders’ equity:
Common stock, 174,392 and 172,854 shares		1,744			1,729
Additional paid-in capital		1,551,248			1,547,128
Employee stock loan receivable including accrued interest (9 and 551 shares)		(72	)		(4,018	)
Deferred Compensation, net		—			(15,602	)
Accumulated other comprehensive loss, net of taxes		(17,691	)		(977	)
Accumulated deficit		(371,548	)		(224,090	)
Total shareholders’ equity		1,163,681			1,304,170
Total liabilities and shareholders’ equity	$	14,658,055		$	18,435,790

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