ANTHRACITE CAPITAL INC, 10-Q, 1998-05-14

ANTHRACITE CAPITAL INC
10-Q, 1998-05-14
MORTGAGE BANKERS & LOAN CORRESPONDENTS

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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 1998

Commission File Number: 001-13937

ANTHRACITE CAPITAL, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)

Maryland 13-3978906
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

345 Park Avenue, New York, New York 10154
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)

(Registrant's telephone number including area code): (212) 409-3333

NOT APPLICABLE
-------------------------------------------------------
(Former name, former address, and former fiscal year if
changed since last report)

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.

(1) Yes X No
(2) Yes __ No X

As of May 13, 1998, 21,378,531 shares of voting common stock ($.001
par value) were outstanding.

ANTHRACITE CAPITAL, INC.

FORM 10-Q

INDEX

PART I - FINANCIAL INFORMATION Page

Item 1. Interim Financial Statements (Unaudited)........................3

Statement of Financial Condition at March 31, 1998..............3

Statement of Operations for the period March 24, 1998
(Commencement of Operations) through March 31, 1998.............4

Statement of Changes in Stockholders' Equity for the
period March 24, 1998 (Commencement of Operations)
through March 31, 1998..........................................5

Statement of Cash Flows for the period March 24, 1998
(Commencement of Operations) through March 31, 1998.............6

Notes to Financial Statements...................................7

Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................11

Part II - OTHER INFORMATION

Item 1. Legal Proceedings..............................................14

Item 2. Changes in Securities and Use of Proceeds......................14

Item 3. Defaults Upon Senior Securities................................15

Item 4. Submission of Matters to a Vote of Security Holders............15

Item 5. Other Information..............................................15

Item 6. Exhibits and Reports on Form 8-K...............................15

SIGNATURES

Part I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)

ANTHRACITE CAPITAL, INC.
STATEMENT OF FINANCIAL CONDITION
MARCH 31, 1998 (UNAUDITED)
- ----------------------------------------------------------------------------

ASSETS
Securities available for sale, at market value $ 382,890,695
Accrued interest receivable 2,950,673
--------------
Total Assets $ 385,841,368
==============

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Payable for securities purchased $ 72,724,868
Reverse repurchase agreements 14,787,375
Accrued expenses, payables and other liabilities 981,707
--------------
Total Liabilities 88,493,950
--------------

Stockholders' Equity:
Preferred stock, par value $0.001 per share;
100,000,000 shares authorized; no shares issued -
Common stock, par value $0.001 per share;
400,000,000 shares authorized; 21,378,531 shares
issued and outstanding 21,379
Additional paid-in capital 297,150,513
Retained earnings 173,196
Unrealized gain on securities available for sale 2,330
--------------
Total Stockholders' Equity 297,347,418
--------------
Total Liabilities and Stockholders' Equity $ 385,841,368
==============

The accompanying notes are an integral part of these financial statements.

ANTHRACITE CAPITAL, INC.
STATEMENT OF OPERATIONS
FOR THE PERIOD MARCH 24, 1998 (COMMENCEMENT OF OPERATIONS)
THROUGH MARCH 31, 1998 (UNAUDITED)
- ----------------------------------------------------------------------------

Interest Income:
Securities available for sale $ 117,907
Cash and cash equivalents 97,432
------------
Total interest income 215,339
------------
Expenses:
Management fee 21,273
Other expenses 20,870
------------
Total expenses 42,143
------------

Net Income $ 173,196
============

Net income per share:
Basic $ 0.008
============
Diluted $ 0.008
============

Weighted average number of shares outstanding:
Basic 21,378,531
============
Diluted 21,388,456
============

The accompanying notes are an integral part of these financial statements.

ANTHRACITE CAPITAL, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD MARCH 24, 1998 (COMMENCEMENT OF OPERATIONS)
THROUGH MARCH 31, 1998 (UNAUDITED)
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Unrealized
Gain
Common Stock on
--------------------------- Additional Securities Total
Paid-In Retained Available Stockholders'
Shares Amount Capital Earnings for Sale Equity
------------- ----------- -------------- ----------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Balance at March 24, 1998 13,333 $ 13 $ - - $ 200,000
199,987
Issuance of common stock 21,365,198 21,366 296,950,526 - - 296,971,892
Net Income - - - $173,196 - 173,196
Change in unrealized gain on
securities available for sale - - - - $2,330 2,330
------------- ----------- -------------- ----------- ------------ ---------------
Balance at March 31, 1998 21,378,531 $21,379 $297,150,513 $173,196 $2,330 $297,347,418
============= =========== ============== =========== ============ ===============
</TABLE>

The accompanying notes are an integral part of these financial statements.

ANTHRACITE CAPITAL, INC.
STATEMENT OF CASH FLOWS
FOR THE PERIOD MARCH 24, 1998 (COMMENCEMENT OF OPERATIONS)
THROUGH MARCH 31, 1998 (UNAUDITED)
- ----------------------------------------------------------------------------

Cash flows from operating activities:
Net income $ 173,196
Adjustments to reconcile net income to
net cash used by operating activities:
Premium amortization (discount
accretion), net (27,864)
Increase in interest receivable (2,950,673)
Increase in accrued expenses,
payables and other liabilities 981,707
---------------

Net cash used in operating activities (1,823,634)
---------------

Cash flows from investing activities:
Purchase of securities available for sale (382,957,933)
Purchase of cash equivalents (217,627,568)
Maturities of cash equivalents 217,725,000
Payable for securities purchased 72,724,868
---------------

Net cash used in investing activities (310,135,633)
---------------

Cash flows from financing activities:
Proceeds from reverse repurchase agreements 16,219,094
Principal payments on reverse repurchase
agreements (1,431,719)
Proceeds from issuance of common stock,
net of offering costs 296,971,892
---------------

Net cash provided by financing activities 311,759,267
---------------

Net decrease in cash and cash equivalents (200,000)
Cash and cash equivalents, beginning of period 200,000
---------------
Cash and cash equivalents, end of period $ 0
===============

Supplemental disclosure of cash flow
information:
Interest paid $ 225
===============

The accompanying notes are an integral part of these financial statements.

ANTHRACITE CAPITAL, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
- ----------------------------------------------------------------------------

NOTE 1 BASIS OF PRESENTATION

The accompanying unaudited financial statements have been prepared in
conformity with the instructions to Form 10-Q and Article 10, Rule 10-01 of
Regulation S-X for interim financial statements. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles ("GAAP") for complete financial statements.

In the opinion of management, the accompanying financial statements contain
all adjustments, consisting of normal and recurring accruals, necessary for
a fair presentation of the financial condition of Anthracite Capital, Inc.
(the "Company") at March 31, 1998 and the results of its operations, the
changes in its stockholders' equity and its cash flows for the period March
24, 1998 (Commencement of Operations) through March 31, 1998. Operating
results for the period ended March 31, 1998 are not necessarily indicative
of the results that may be expected for any other interim periods or the
period ended December 31, 1998.

In preparing the financial statements, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the dates of the statements of financial condition and
revenues and expenses for the periods covered. Actual results could differ
from those estimates and assumptions.

NOTE 2 ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

The Company was incorporated in Maryland in November 1997. The Company
commenced its operations on March 24, 1998.

A summary of the Company's significant accounting policies follows:

SECURITIES AVAILABLE FOR SALE

Certain U.S. Treasury securities, mortgage-backed securities and
mortgage-related securities are designated as assets available for sale
because the Company does not intend to hold them to maturity. Securities
available for sale are carried at market value with the net unrealized
gains or losses reported as a separate component of stockholders' equity.
Unrealized losses on securities that reflect a decline in value which is
other than temporary, if any, are charged to earnings. At disposition the
realized net gain or loss is included in earnings on a specific
identification basis. The amortization of premiums and accretion of
discounts are computed using the effective yield method after considering
actual and estimated prepayment rates, if applicable. Actual prepayment
experience is periodically reviewed and effective yields are recalculated
when differences arise between prepayments originally anticipated and
amounts actually received plus anticipated future prepayments.

NET INCOME PER SHARE

Net income per share is computed in accordance with Statement of Financial
Accounting Standards ("SFAS") No. 128, Earnings Per Share, and is
calculated on the basis of the weighted average number of common shares
outstanding during each period plus the additional dilutive effect of
common stock equivalents. The dilutive effect of outstanding stock options
is calculated using the treasury stock method.

INCOME TAXES

The Company intends to elect to be taxed as a Real Estate Investment Trust
("REIT") and to comply with the provisions of the Internal Revenue Code of
1986, as amended, with respect thereto. Accordingly, the Company will not
be subjected to Federal income tax to the extent of its distributions to
shareholders and as long as certain asset, income and stock ownership tests
are met.

NOTE 3 SECURITIES AVAILABLE FOR SALE

The Company's securities available for sale are carried at fair value and
were comprised of the following at March 31, 1998:

Securities available for sale:
Single-family residential:
FNMA adjustable rate $215,635,636
FHLMC interest only 14,202,351
FNMA interest only 2,443,279

Multi-family residential and commercial:
AAA-rated interest only 78,836,070
FHA-insured project loans 24,779,549

U.S. Treasury 17,176,622

Non-U.S. sovereign 15,112,500

BBB-rated asset backed 14,704,688
------------
Total $382,890,695
============

The FHLMC interest only securities and the FNMA interest only securities
are held primarily to reduce the interest rate sensitivity of the Company's
portfolio of securities available for sale.

During the period March 24, 1998 to March 31, 1998, the Company was in the
process of acquiring its initial investment portfolio of securities
available for sale. That process was not yet completed as of March 31, 1998
and, therefore, the composition of the portfolio of securities available
for sale shown above should not be considered indicative of the composition
of the portfolio that may be expected in the future.

NOTE 4 COMMON STOCK

The Company's common stock was sold through several transactions as follows:

The Company was initially capitalized with the sale of 13,333 shares of
common stock on March 5, 1998, for a total of $200,000.

The Company received commitments on March 23, 1998 for the purchase, in
private placements, of 1,365,198 shares of common stock at $13.95 per share
for a total of $19,044,512. The sale of these shares was consummated at the
time of the closing of the Company's initial public offering.

On March 27, 1998, the Company completed its initial public offering of
common stock. The Company issued 20,000,000 shares of common stock at a
price of $15 per share and received proceeds of $279,000,000, net of
underwriting discounts and commissions. Offering costs in connection with
the public offering amounting to $1,072,620 have been charged against the
proceeds of the offering.

NOTE 5 TRANSACTIONS WITH AFFILIATES

The Company has entered into a Management Agreement (the "Management
Agreement") with BlackRock Financial Management, Inc. (the "Manager"), a
majority owned indirect subsidiary of PNC Bank Corp. ("PNC") and the
employer of certain directors and officers of the Company, under which the
Manager manages the Company's day-to-day operations, subject to the
direction and oversight of the Company's Board of Directors. The Company
will pay the Manager an annual base management fee equal to a percentage of
the Average Invested Assets of the Company as further defined in the
Management Agreement. The base management fee is equal to 1% per annum of
the Average Invested Assets rated less than BB- or not rated, 0.75% of
Average Invested Assets rated BB- to BB+, and 0.35% of Average Invested
Assets rated above BB+.

The Company accrued $21,273 in base management fees in accordance with the
terms of the Management Agreement for the period March 24, 1998 to March
31, 1998.

The Company will also pay the Manager, as incentive compensation, an amount
equal to 25% of the Funds from Operations of the Company plus gains (minus
losses), before incentive compensation, in excess of the amount that would
produce an annualized Return on Equity equal to 3.5% over the Ten-Year U.S.
Treasury Rate as further defined in the Management Agreement. For purposes
of the incentive compensation calculation, equity is generally defined as
proceeds from issuance of common stock before underwriting discounts and
commissions and other costs of issuance.

The Company did not accrue for or pay the Manager any incentive
compensation for the period March 24, 1998 to March 31, 1998.

The Company may also grant stock options to the Manager, directors,
officers and any key employees of the Company, directors, officers and key
employees of the Manager and to any other individual or entity performing
services for the Company. Options granted for the period March 24, 1998 to
March 31, 1998 are disclosed in Note 6.

The Company received a commitment from PNC Investment Corp., a wholly owned
indirect subsidiary of PNC, on March 23, 1998 for the purchase, in a
private placement, of 648,352 shares of common stock at $13.95 per share
for a total of $9,044,510. The sale of these shares was consummated at the
time of the closing of the Company's initial public offering.

NOTE 6 STOCK OPTIONS

The Company has adopted a stock option plan (the "1998 Stock Option Plan")
that provides for the grant of both qualified incentive stock options that
meet the requirements of Section 422 of the Code, and non-qualified stock
options, stock appreciation rights and dividend equivalent rights. Stock
options may be granted to the Manager, directors, officers and any key
employees of the Company, directors, officers and key employees of the
Manager and to any other individual or entity performing services for the
Company.

The exercise price for any stock option granted under the 1998 Stock Option
Plan may not be less than 100% of the fair market value of the shares of
common stock at the time the option is granted. Each option must terminate
no more than ten years from the date it is granted. Subject to
anti-dilution provisions for stock splits, stock dividends and similar
events, the 1998 Stock Option Plan authorizes the grant of options to
purchase an aggregate of up to 2,470,453 shares of common stock.

On March 27, 1998, pursuant to the 1998 Stock Option Plan, options to
purchase 1,313,967 shares of the Company's common stock were granted to
certain officers, directors and employees of the Company and the Manager
and options to purchase 324,176 shares of the Company's common stock were
granted to PNC Investment Corp. The exercise price of these options is $15
per share. The remaining contractual life of each option is approximately
ten years. The options vest in four equal installments on March 27, 1999,
March 27, 2000, March 27, 2001 and March 27, 2002.

In addition to the options granted pursuant to the 1998 Stock Option Plan,
on March 27, 1998 options to purchase 246,544 shares of the Company's
common stock were granted to certain officers, directors and employees of
the Company and the Manager. The exercise price of these options is $13.95
per share. The remaining contractual life of each option is approximately
one year. The options become exercisable on September 30, 1998.

NOTE 7 EARNINGS PER SHARE (EPS)

A reconciliation of the numerator and denominator of the basic EPS
computation and the diluted EPS computation is as follows:

For the Period
March 24, 1998 to March 31, 1998
--------------------------------
Income Shares Per Share
Numerator Denominator Amount
--------- ----------- ---------
Net Income $ 173,196
---------
Basic EPS 173,196 21,378,531 $0.008
=========
Effect of dilutive
securities:
Dilutive stock options 0 9,925
--------- -----------
Diluted EPS $ 173,196 21,388,456 $0.008
========= =========== =========

Options to purchase 1,884,687 shares were outstanding beginning March 27,
1998 (see Note 6) and were dilutive as the exercise prices ($13.95 and $15)
were less than the average stock price for the Company for
the period March 24, 1998 to March 31, 1998 ($15.02).

NOTE 8 REVERSE REPURCHASE AGREEMENTS

The Company has entered into and has committed to enter into reverse
repurchase agreements to finance a portion of its securities. At March 31,
1998, the Company had outstanding a reverse repurchase agreement in the
amount of $14,787,375, with a current borrowing rate of 6.00% and a
maturity of one day. The reverse repurchase agreement was collateralized by
U.S. Treasury securities with an estimated fair value of $17,176,622.

Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations

GENERAL: The Company was organized in November 1997 to invest in a
diversified portfolio of multifamily, commercial and residential mortgage
loans, mortgage-backed securities and other real estate related assets in
the U.S. and non-U.S. markets. All of the $297.0 million of net proceeds
received from the sale of 21,365,198 shares of its common stock in March
1998 has been used to acquire the Company's investment portfolio of
securities available for sale. The Company is currently performing due
diligence on a variety of assets including CMBS subordinate interests and
mezzanine loans and participating debt opportunities on both stabilized
properties and construction projects.

The following discussion of the Company's financial condition, results from
operations, and capital resources and liquidity should be read in
conjunction with the Interim Financial Statements and related Notes
included in Item 1 hereof.

FUNDS FROM OPERATIONS: Most industry analysts, including the Company,
consider FFO an appropriate supplementary measure of operating performance
of a REIT. In general, FFO adjusts net income for non-cash charges such as
depreciation, certain amortization expenses and most non-recurring gains
and losses. However, FFO does not represent cash provided by operating
activities in accordance with GAAP and should not be considered an
alternative to net income as an indication of the results of the Company's
performance or to cash flows as a measure of liquidity.

In 1995, the National Association of Real Estate Investment Trusts
("NAREIT") established new guidelines clarifying its definition of FFO and
requested that REITs adopt this new definition beginning in 1996. The
Company computes FFO in accordance with the definition recommended by
NAREIT.

For the period March 24, 1998 to March 31, 1998, the Company's FFO was the
same as its reported net income of $173,196, or $0.008 per share.

RESULTS OF OPERATIONS: The Company began operations on March 24, 1998. Net
income for the period March 24, 1998 to March 31, 1998 amounted to $173,196
or $0.008 per share.

Management fees of $21,273 were comprised solely of the base management fee
paid to the Manager for the period (as provided pursuant to the management
agreement between the Manager and the Company), as the Manager earned no
incentive fee for such period.

CHANGES IN FINANCIAL CONDITION

GENERAL: From March 24, 1998 to March 31, 1998 total assets increased by
$385.6 million. This increase was primarily due to a $382.9 million
increase in securities available for sale and a $2.9 million increase in
interest receivable. Total liabilities increased by $88.5 million during
the period, primarily due to a $72.7 million increase in payable for
securities purchased and a $14.8 million increase in reverse repurchase
agreements.

SECURITIES AVAILABLE FOR SALE: At March 31, 1998, an aggregate of $2,330 of
net unrealized gains/losses on securities available for sale as included in
stockholders' equity. The increase in securities available for sale of
$382.9 million during the period from March 24, 1998 to March 31, 1998 is
primarily due to net purchases in the amount of $383.0 million, which
resulted in $117,907 of interest income from securities available for sale
for the reported period.

ACCRUED EXPENSES, PAYABLES AND OTHER LIABILITIES: At March 31, 1998,
accrued expenses, payables and other liabilities of $981,707 were primarily
comprised of unpaid costs incurred in connection with the organization and
capitalization of the Company.

STOCKHOLDERS' EQUITY: Stockholders' equity increased by $297.1 million from
March 24, 1998 to March 31, 1998. The increase in stockholders' equity
during this period was attributable to net income of $173,196, an increase
of $2,330 in the unrealized gain on securities available for sale and an
increase in common stock and additional paid-in capital of $297.0 million
from the issuance of 21,365,198 shares of common stock in March 1998. See
the Statement of Changes in Stockholders' Equity in the Interim Financial
Statements included in Item 1 hereof.

CAPITAL RESOURCES AND LIQUIDITY: Liquidity is a measurement of the
Company's ability to meet potential cash requirements, including ongoing
commitments to repay borrowings, fund investments, loan acquisition and
lending activities and for other general business purposes. The primary
sources of funds for liquidity consist of reverse repurchase agreements and
maturities and principal payments on securities and loans, and proceeds
from sales thereof.

The Company's operating activities used cash flows of $1.8 million during
the period March 24, 1998 to March 31, 1998. During the foregoing period
cash flows from operating activities were used primarily to purchase
securities available for sale.

The Company's investing activities used cash flows totaling $310.1 million
during the period March 24, 1998 to March 31, 1998. During the foregoing
period, cash flows from investing activities were used primarily to
purchase securities available for sale.

The Company's financing activities provided $311.8 million during the
period March 24, 1998 to March 31, 1998 and consisted primarily of net
proceeds from the issuance of 21,365,198 shares of common stock.

As discussed above, the Company is engaged in due diligence with respect to
a variety of investments. In addition, the Company is engaged in
discussions with respect to obtaining various third-party borrowings. To
the extent that either of these two activities come to fruition, the
Company's liquidity and capital resources could be materially affected.

FORWARD-LOOKING STATEMENTS: Certain statements contained herein are not,
and certain statements contained in future filings by the Company with the
SEC, in the Company's press releases or in the Company's other public or
shareholder communications may not be, based on historical facts and are
"Forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements which are based
on various assumptions (some of which are beyond the Company's control),
may be identified by reference to a future period or periods, or by the use
of forward-looking terminology, such as "may," "will," "believe," "expect,"
"anticipate," "continue," or similar terms or variations on those terms, or
the negative of those terms. Actual results could differ materially from
those set forth in forward-looking statements due to a variety of factors,
including, but not limited to, those related to the economic environment,
particularly in the market areas in which the Company operates, competitive
products and pricing, fiscal and monetary policies of the U.S. Government,
changes in prevailing interest rates, acquisitions and the integration of
acquired businesses, credit risk management, asset/liability management,
the financial and securities markets and the availability of and costs
associated with sources of liquidity. The Company does not undertake, and
specifically disclaims any obligation, to publicly release the result of
any revisions which may be made to any forward-looking statements to
reflect the occurrence of anticipated or unanticipated events or
circumstances after the date of such statements.

Part II - OTHER INFORMATION

Item 1. Legal Proceedings

At March 31, 1998 there were no pending legal proceedings to which
the Company was a party or of which any of its property was subject.

Item 2. Changes in Securities and Use of Proceeds

Changes in Securities

On March 27, 1998, the Company sold (1) 648,352 shares of Common
Stock to PNC Investment Corp., a Delaware corporation, at a price of $13.95
per share of Common Stock or $9,044,510 in the aggregate and (2) 716,846
shares of Common Stock to FBR Asset Investment Corporation, a Virginia
corporation, at a price of $13.95 per share of Common Stock or $10,000,000
in the aggregate. The foregoing shares were sold without registration under
the Securities Act in reliance on one or more exemptions therefrom.

Use of Proceeds of Initial Public Offering

Effective Date of the Company's Registration Statement: March 23, 1998.

Commission File Number: 333-40813

Date the Offering Commenced: March 24, 1998

Names of Managing Underwriters: Friedman, Billings, Ramsey & Co., Inc.,
Lehman Brothers Inc. and Prudential
Securities Incorporated

Class of Securities Registered: Common Stock

Amount Registered and Sold: See below
Amount registered - 20,000,000 shares
Aggregate price of offering amount registered - $300,000,000
Amount sold - 20,000,000 shares
Aggregate offering price of amount sold - $300,000,000

Expenses: The expenses incurred in connection with the Offering were as
follows:

Underwriting Discounts and Commissions* $ 21,000,000
Finders Fees* $ 0
Expenses Paid to or for Underwriters** $ 0
Other Expenses** $ 1,000,000
Total Expenses** $ 22,000,000

* Actual amount of expense
** Reasonable estimate for amount of expense

None of the expenses of the Offering consisted of direct or indirect
payments to (i) directors, officers, general partners of the Company or
their associates, (ii) persons owning 10 percent or more of any class of
equity securities of the Company, or (iii) affiliates of the Company.

Net Proceeds: The net offering proceeds to the Company from the Offering
after deducting the total expenses described above was $278,000,000.
All of the net proceeds of the Offering has been used to acquire the
Company's investment portfolio of securities available for sale.

Item 3. Defaults Upon Senior Securities

Not applicable

Item 4. Submission of Matters to a Vote of Security Holders

Not applicable

Item 5. Other Information

None

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

Exhibit 10.1 - Stock Purchase Agreement dated March 23, 1998
between the Company and PNC Investment Corp.

Exhibit 10.2 - Stock Purchase Agreement dated March 23, 1998
between the Company and FBR Asset Investment Corporation

Exhibit 27.1 - Financial Data Schedule

(b) Reports on Form 8-K

None

EXHIBIT INDEX

EXHIBIT NO.
-----------
10.1 Stock Purchase Agreement dated March 23, 1998 between
the Company and PNC Investment Corp.

10.2 Stock Purchase Agreement dated March 23, 1998 between
the Company and FBR Asset Investment Corporation.

27.1 Financial Data Schedule

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.

ANTHRACITE CAPITAL, INC.

Dated: May 14, 1998 By: /s/ Hugh R. Frater
----------------------------------------
Name: Hugh R. Frater
Title: President and Chief Executive
Officer (authorized officer
of registrant)

Dated: May 14, 1998 By: /s/ Richard M. Shea
----------------------------------------
Name: Richard M. Shea
Title: Chief Operating Officer and Chief
Financial Officer (principal
accounting officer)

Exhibit 10.1

STOCK PURCHASE AGREEMENT

Stock Purchase Agreement ("Agreement"), dated as of March 23,
1998, by and between Anthracite Capital, Inc., a Maryland corporation (the
"Company"), and PNC Investment Corp., a Delaware corporation (the
"Purchaser").

1. Sale and Purchase of Stock. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties contained
herein, the Company agrees to issue and sell to the Purchaser and the
Purchaser agrees to purchase 648,352 shares (the "Shares") of the Company's
par value $.001 per share (the "Common Stock") Common Stock (or such other
amount as shall constitute approximately 3% of the Company's Common Stock,
to be issued and outstanding immediately after the closing of the IPO), and
in the event that the underwriter's overallotment option is exercised in
full or in part, Purchaser shall purchase, additional shares, such that
Purchaser shall own 3% of the shares of Common Stock to be issued and
outstanding on such date. The Shares shall be purchased, with the rights,
restrictions, privileges and preferences as set forth in the Company's
Articles of Amendment and Restatement (the "Articles") as in effect on the
date hereof, for an aggregate initial purchase price equal to $9,044,510,
which amount shall be increased by $13.95 per share for any shares
purchased in connection with the underwriter's exercise of the
overallotment option (as so adjusted, the "Purchase Price"), and which is
equal to the initial public offering price, net of any underwriting
discounts and commissions, as set forth in the Company's Registration
Statement on Form S-11, as amended (Registration No. 333-40813) (the
"Registration Statement").

2. Closing.

2.1. Closing Date. The sale and purchase of the Shares (the
"Closing") shall occur at the time and place of the closing of the initial
public offering ("the IPO") of the Company pursuant to the Registration
Statement.

2.2. Transactions at Closing. At the Closing, the Company will
deliver to the Purchaser, at such place as the Purchaser shall designate
prior to the Closing, a share certificate or certificates evidencing the
Shares, duly executed and registered in the name of the Purchaser, against
the receipt from the Purchaser of the Purchase Price in federal funds.

2.3. Registration Rights. As an inducement for the Purchaser to
enter into this Agreement, the Company shall, contemporaneously with the
execution of this Agreement, enter into a Registration Rights Agreement
granting the Purchaser certain registration rights with respect to the
Shares (the "Registration Rights Agreement").

3. Representations and Warranties of the Company. The Company represents
and warrants that:

3.1. Organization and Standing. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Maryland.

3.2. Capitalization. The Company's Articles provide that the
Company may issue up to 400,000,000 shares of Common Stock and up to
100,000,000 shares of preferred stock ("Preferred Stock"). After the
Closing, the Company will have authorized and issued 20,000,000 shares of
Common Stock pursuant to the IPO (or, if the underwriters' overallotment is
exercised, 23,000,000), will have authorized and issued, pursuant to the
1998 Stock Option Plan, outstanding options ("Stock Options"), to acquire
1,711,525 shares of Common Stock, will have authorized and issued 144,000
options (the "Additional Options," and, together with the Stock Options,
the "Options"), to certain directors, officers and employees of the Company
and the Manager, will have authorized and issued 716,846 shares of Common
Stock to FBR Asset Investment Corporation, pursuant to a stock purchase
agreement as of the Closing and will have authorized and issued 648,352
shares of Common Stock (or such other amount as shall constitute
approximately 3% of the shares of Common Stock to be issued and outstanding
immediately after the closing of the IPO) pursuant to this Agreement. In
the event that the underwriter's overallotment option is exercised in full
or in part, the Company shall authorize and issue to the Purchaser,
additional shares, such that Purchaser shall own 3% of the shares of Common
Stock to be issued and outstanding on such date. Other than the Options,
there are no outstanding options, warrants, subscription rights (including
any preemptive rights), calls or commitments of any character whatsoever to
which the Company or any of its subsidiaries is a party or may be bound,
requiring the issuance or sale of shares of any capital stock or other
equity securities of the Company or securities or rights convertible into
or exchangeable for such shares or other equity securities, and there are
no contracts, commitments, understandings or arrangements by which the
Company is or may become bound to issue additional shares of its capital
stock or other equity securities or options, warrants or rights to purchase
or acquire any additional shares of its capital stock or other equity
securities or securities convertible into or exchangeable for such shares
or other equity securities. The Company has no shares of Preferred Stock
outstanding.

3.3. Authorization. The Company has the corporate power and
authority to execute and deliver this Agreement and the Registration Rights
Agreement and to perform its obligations hereunder and thereunder. The
execution and delivery of this Agreement and the Registration Rights
Agreement and the issuance and sale of the Shares have been duly authorized
by the Board of Directors of the Company. No further approval or
authorization of the Board of Directors or the shareholders of the Company
will be required for the issuance and sale of the Shares as contemplated
herein. This Agreement and the Registration Rights Agreement have been duly
and validly executed and delivered by the Company, and each constitutes a
legal, valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except to the extent that
enforceability may be limited by bankruptcy, insolvency, moratorium or
other laws affecting the enforcement of creditors' rights generally or by
general equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law).

3.4. Legality of the Common Stock. Upon receipt by the Company
of the Purchase Price, the Shares will be duly authorized, validly issued,
fully paid and nonassessable. No party has any preemptive or similar rights
in connection with the issuance of the Common Stock hereunder. All of the
outstanding shares of Common Stock have been validly issued and are fully
paid and non-assessable and were duly registered under the Securities Act
of 1933, as amended (the "Securities Act") and applicable state securities
laws or were issued in reliance on exemptions therefrom and were not issued
in violation of any preemptive rights.

3.5. No Violation. Neither the Company's execution and delivery
of this Agreement or the Registration Rights Agreement nor the consummation
by the Company of the transactions contemplated hereby or thereby will
violate the Company's Articles of Incorporation or Bylaws or breach a
material agreement to which the Company or any subsidiary of the Company is
a party or by which its or any of its subsidiaries' assets are bound, or
cause any such violation or breach, or accelerate or allow any person to
accelerate, terminate, modify or cancel any material rights under any such
agreement, or will result in the creation of any material lien on the
assets or properties of the Company or any of its subsidiaries. Such
execution, delivery and consummation will not violate or breach or
constitute a default under any law, judgment, order, or decree to which the
Company or any of its subsidiaries is subject or by which the properties or
assets of the Company or any of its subsidiaries are bound.

3.6. Consents and Approvals. No consent, authorization, order,
license, permit, or approval of, or filing with, any governmental authority
or person is required in connection with the Company's execution, delivery
and performance of this Agreement or the Registration Rights Agreement,
except (i) such as must be made or obtained by the Purchaser, and (ii) such
as shall have been made or obtained by the Company prior to the Closing.

3.7. Registration Statement. As of the date hereof, the
Registration Statement does not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading.

3.8. Litigation, etc. There is no action, proceeding or
investigation pending or, to the best of the Company's knowledge,
threatened (or any basis therefor known to the Company), that questions the
validity of this Agreement, the Registration Rights Agreement, the Shares
to be issued pursuant to this Agreement or which could have a material
adverse effect on the financial condition, results of operations, business
or properties of the Company and its subsidiaries, taken as a whole.

3.9. Brokers, Intermediaries and Finder's Fees. The Company
represents that no finder, broker, agent, financial advisor or other
intermediary has acted on behalf of the Company in connection with the
offering and sale of the Common Stock to be issued and sold pursuant to
this Agreement or the negotiation or consummation of this Agreement or any
of the transactions contemplated hereby.

3.10. REIT Status. The Company is organized in a manner
intended to qualify as a real estate investment trust ("REIT") under the
Internal Revenue Code of 1986, as amended (the "Code"), and the Company
intends to elect to be taxed as a REIT for its taxable year ended December
31, 1998.

4. Representations and Warranties of the Purchaser. The Purchaser
represents and warrants that:

4.1. Organization and Standing. The Purchaser is a corporation
duly incorporated, validly existing and in good standing under the laws of
Delaware.

4.2. Authorization. The Purchaser has the corporate power and
authority to execute and deliver this Agreement and the Registration Rights
Agreement and to perform its obligations hereunder and thereunder. The
execution and delivery of this Agreement and the Registration Rights
Agreement and the purchase of the Shares hereunder have been duly
authorized by the Purchaser. No further approval or authorization of the
Board of Directors or the shareholders of the Purchaser will be required
for the Purchaser's purchase of the Shares pursuant to the terms of this
Agreement or the Registration Rights Agreement. This Agreement and the
Registration Rights Agreement have been duly executed and delivered by the
Purchaser, and each constitutes a, valid and binding obligation of the
Purchaser enforceable against each of them in accordance with its terms,
except to the extent that such enforceability may be limited by bankruptcy,
insolvency, moratorium or other laws affecting the enforcement of
creditor's rights generally or by general equitable principles (regardless
of whether such enforceability is considered in a proceeding in equity or
at law).

4.3. No Violation. Neither the Purchaser's execution and
delivery of this Agreement or the Registration Rights Agreement nor the
consummation by it of the transactions contemplated hereby or thereby will
violate the Articles of Incorporation or Bylaws of the Purchaser or breach
or a material agreement to which it is a party or by which its assets are
bound, or cause any such violation or breach, or accelerate or allow any
person to accelerate, terminate, modify or cancel any material rights under
any such agreement, or will result in the creation of any material lien on
the assets or properties of the Purchaser. Such execution, delivery and
consummation will not violate or breach or constitute a default under any
material law, judgment, order, or decree to which the Purchaser is subject
or by which the Purchaser or its material subsidiaries' properties or
assets are bound.

4.4. Consents and Approvals. No consent, authorization, order,
license, permit, or approval of, or filing with, any governmental authority
or any person is required in connection with the Purchaser's execution,
delivery and performance of this Agreement or the Registration Rights
Agreement except (i) such as must be made or obtained by the Company, and
(ii) such as shall have been made or obtained by the Purchaser prior to the
Closing.

4.5. Litigation, etc. There is no action, proceeding or
investigation pending or, to the best of the Purchaser's knowledge,
threatened (or any basis therefor known to the Purchaser), that questions
the validity of this Agreement or the Registration Rights Agreement, or any
action contemplated, taken or to be taken pursuant hereto or thereto.

4.6. Brokers, Intermediaries and Finder's Fees. The Purchaser
represents that no finder, broker, agent, financial advisor or other
intermediary has acted on behalf of the Purchaser in connection with the
purchase of the Common Stock pursuant to this Agreement or the negotiation
or consummation of this Agreement or any of the transactions contemplated
hereby.

4.7. Investment Representations of the Purchaser. The Purchaser
represents and warrants to and agrees with the Company as follows:

(a) The Purchaser is acquiring the Shares for its own account
for investment and not with a view to, or for sale in
connection with, any distribution thereof, nor with any present
intention of distributing or selling the same, and it has no
obligation, indebtedness or commitment providing for the
disposition thereof.

(b) The Purchaser acknowledges that it has been advised and is
aware that (i) the Company is relying upon one or more
exemptions under the Securities Act, and applicable state
securities laws in connection with the offer, sale and issuance
of the Shares and (ii) the Shares in the hands of the Purchaser
will be restricted securities within the meaning of Rule 144
promulgated by the Securities Exchange Commission ("SEC")
pursuant to the Securities Act, and unless and until registered
under the Securities Act, may be subject to limitations on
resale (including, among others, limitations on the amount of
securities that can be resold and the timing and manner of
resale) set forth in Rule 144 or in administrative
interpretations of the Securities Act by the SEC or in other
rules and regulations promulgated thereunder by the SEC, in
effect at the time of the proposed sale or other disposition of
the Shares.

(c) The Purchaser has received a copy of the Registration
Statement and has independently examined and investigated the
Company in connection with the decision to purchase the Shares.
The Purchaser or its representatives have made inquiries deemed
by them to be satisfactory concerning the Company, its
business, its officers and its personnel and have had access to
its books and records. In making this investment, the Purchaser
has relied solely upon information made available to it by the
Company, and not upon information supplied by any other person.
The Purchaser and its officers, directors and other
representatives have substantial knowledge and experience in
financial and business matters such that the Purchaser and its
representatives are capable of evaluating the merits and risks
of investment in the Company, and the Purchaser is able to bear
the economic risks of its investment in the Company.

(d) The Purchaser certifies that it is an accredited investor
as defined in Rule 501(a)(3) promulgated under the Securities
Act because it is a corporation not formed for the specific
purpose of acquiring the Shares, with total assets in excess of
$5,000,000.

5. Transfer Restrictions; Legends. (a) In addition to the legends required
by the Company's Articles of Incorporation, each certificate or instrument
representing the Shares shall bear a legend in substantially the following
form:

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS, AND UNLESS SO REGISTERED, MAY NOT BE
OFFERED OR SOLD, EXCEPT PURSUANT TO AN EXEMPTION FROM, OR
IN A TRANSACTION NOT SUBJECT TO, THOSE LAWS.

Such legend shall be removed by the Company upon delivery to it
of an opinion of counsel satisfactory to the Company and its counsel that a
registration statement under the Securities Act is at the time effective
with respect to the transfer of the legended security or that such security
can be transferred without such registration statement being in effect and
without the requirements of a legend on the certificate in the hands of the
transferee.

For a period of one hundred eighty (180) days following the
commencement of the Company's IPO, the Purchaser agrees not to offer, sell,
dispose of or otherwise transfer, directly or indirectly, the Shares or any
interest in the Shares to any person in any manner. The Company agrees that
the Purchaser may, at any time on or after the date hereof, pledge the
shares of Common Stock to or for the benefit of any institutional lender or
debt financing source to the Purchaser.

6. Covenants of the Company.

The Company agrees:

(a) for so long as it is required to file periodic reports
under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), to file all required reports thereunder on or prior to the due
date therefor; and

(b) to indemnify and hold harmless the Purchaser from and
against any liability for commission or compensation in the nature of
a finder's fee to any broker or other person or firm and the costs
and expenses of defending against such liability or asserted
liability, for which the Company, or any of its employees or
representatives, is responsible.

7. Covenants of the Purchaser.

The Purchaser agrees:

(a) to indemnify and hold harmless the Company from and against
any liability for commission or compensation in the nature of a
finder's fee to any broker or other person or firm and the costs and
expenses of defending against such liability or asserted liability,
for which the Purchaser, or any of its employees or representatives,
is responsible; and

(b) to notify the Company in writing not less than 30 days in
advance of any transfer, conveyance, assignment or pledge of the
Common Stock permitted under the terms of this Agreement or the
Articles.

8. Conditions to Closing.

8.1. Conditions of Purchaser's Obligations. The Purchaser's
obligation to purchase the Shares is subject to the fulfillment, before or
at the Closing, of all of the following conditions:

(a) Representations and Warranties Correct. The representations
and warranties of the Company made or contained herein in
connection with the transactions contemplated hereby shall be
correct in all material respects at and as of the Closing Date
as if made on and as of the Closing Date, except as affected by
the transactions contemplated hereby.

(b) Performance. The Company shall have performed and complied
with all agreements and conditions contained herein required to
be performed or complied with by it before or at the Closing.

(d) Opinion of Counsel. The Purchaser shall have received one
or more opinions dated the Closing Date, reasonably
satisfactory to the Purchaser's counsel in form and substance,
from Skadden, Arps, Slate, Meagher & Flom LLP ("Skadden Arps"),
counsel for the Company, and/or Miles & Stockbridge, special
counsel to the Company, to the effect that:

(i) the Company has been duly organized and is
validly existing as a corporation under the laws of the
State of Maryland;

(ii) all of the issued shares of capital stock
of the Company have been validly issued and are fully
paid and nonassessable as of the Closing Date, and were
not issued in violation of or subject to any statutory
preemptive rights or, to counsel's knowledge, other
preemptive rights or other rights to subscribe for or
purchase securities;

(iii) the Shares have been duly authorized by
all necessary corporate action and when issued, paid for
and delivered pursuant to this Agreement, will be validly
issued, fully paid and nonassessable;

(iv) the execution and delivery of this
Agreement and the Registration Rights Agreement have been
duly and validly authorized by all necessary corporate
action of the Company, this Agreement and the
Registration Rights Agreement have been duly executed and
delivered by the Company, and each Agreement is the valid
and binding agreement of the Company, enforceable against
the Company in accordance with its respective terms; and

(v) registration of the Shares under the
Securities Act is not required;

(e) Officer's Certificate. The Purchaser shall have received an
officer's certificate, dated the Closing Date and signed by the
Company's President, certifying that the representations and
warranties of the Company contained in this Agreement are true
and correct in all material respects.

(f) Opinions Delivered to Underwriter. The Purchaser shall have
received opinions, addressed to the Purchaser dated the Closing
Date, from Skadden Arps, counsel to the Company, in the same
form as any opinions delivered to the underwriters as a
condition to the closing of the IPO.

(g) Certificates Delivered to Underwriter. The Purchaser shall
have received certificates, dated the Closing Date, from the
Company, in the same form as any certificates delivered to the
underwriter as a condition to the closing of the IPO.

(h) Registration Rights Agreement. The Company shall have
executed the Registration Rights Agreement, dated the date
hereof, relating to the Purchaser's registration rights with
respect to the Shares.

8.2. Conditions of Company's Obligations. The Company's
obligation to issue the Shares to the Purchaser at Closing is subject to
the fulfillment, before or at the Closing, of all of the following
conditions:

(a) Representations and Warranties Correct. The representations
and warranties of the Purchaser made or contained herein in
connection with the transactions contemplated hereby shall be
correct in all material respects at and as of the Closing Date
as if made on and as of the Closing Date, except as affected by
the transactions contemplated hereby.

(b) Performance. The Purchaser shall have performed and
complied with all agreements and conditions contained herein
required to be performed or complied with by it before or at
the Closing.

(d) Officer's Certificate. The Company shall have received an
officer's certificate, dated the Closing Date and signed by a
duly authorized vice president, certifying that the
representations and warranties of the Company contained in this
Agreement are true and correct in all material respects.

9. Notices. All notices, requests, consents and other communications to any
party hereunder shall be in writing and shall be delivered by facsimile,
reliable courier or first-class registered or certified mail, postage
prepaid, at such party's address as set forth below, marked for attention
as there indicated, or at such other address as may have been furnished to
the other parties by such party in writing:

TO THE COMPANY:

Anthracite Capital, Inc.
345 Park Avenue
New York, NY 10154
Telephone: (212) 754-5560
Facsimile: (212) [754-5397]
Attention: Secretary

TO THE PURCHASER:

PNC Investment Corp.
300 Delaware Avenue
Suite 304, Wilmington, DE 19801
Telephone: ( )
Facsimile: ( )
Attention: Secretary

10. Miscellaneous.

10.1. Governing Law. This Agreement shall be construed and
enforced in accordance with the laws of the State of Delaware without
regard to its conflict of laws principles or rules.

10.2. Successors and Assignees. All of the terms of this
Agreement shall be binding upon and inure to the benefit of and be
enforceable by the respective successors and permitted assignees of the
parties hereto.

10.3. Entire Agreement. This Agreement and the Registration
Rights Agreement embody the entire agreement and understanding among the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings relating to the
subject matter hereof.

10.4. Headings of the Agreement. The headings in this Agreement
are for convenience of reference only and shall not limit or otherwise
affect the meaning hereof.

10.5. Counterparts of the Agreement. This Agreement may be
executed in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.

10.6. Severability of the Agreement. In case any provision of
this Agreement shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any
way be affected or impaired thereby.

10.7. Termination. This Agreement shall terminate and be of no
further force and effect if the Closing shall not have occurred on or prior
to June 30, 1998.

10.8. Expenses. Each party shall bear its own expenses in
connection with this Agreement, whether or not the transactions
contemplated hereunder are consummated.

IN WITNESS WHEREOF, the parties have caused this Stock Purchase
Agreement to be duly executed and delivered as of the day and year first
written above.

THE COMPANY: ANTHRACITE CAPITAL, INC.

By:_______________________________________

Name:_____________________________________

Title:____________________________________

THE PURCHASER: PNC INVESTMENT CORP.

By:________________________________________

Name: Brian F. Lilly

Title: Vice President

Exhibit 10.2

STOCK PURCHASE AGREEMENT

Stock Purchase Agreement ("Agreement"), dated as of March 23,
1998, by and between Anthracite Capital, Inc., a Maryland corporation (the
"Company"), and FBR Asset Investment Corporation, a Virginia corporation
(the "Purchaser").

2. Closing.

3. Representations and Warranties of the Company. The Company represents
and warrants that:

3.1. Organization and Standing. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Maryland.

3.2. Capitalization. The Company's Articles provide that the
Company may issue up to 400,000,000 shares of Common Stock and up to
100,000,000 shares of preferred stock ("Preferred Stock"). After the
Closing, the Company will have authorized and issued 20,000,000 shares of
Common Stock pursuant to the IPO (or, if the underwriters' overallotment is
exercised, 23,000,000), will have authorized and issued, pursuant to the
1998 Stock Option Plan, outstanding options ("Stock Options"), to acquire
1,711,525 shares of Common Stock, will have authorized and issued 144,000
options (the "Additional Options," and, together with the Stock Options,
the "Options"), to certain directors, officers and employees of the Company
and the Manager, will have authorized and issued 640,727 shares of Common
Stock (assuming that the underwriters' overallotment is not exercised) to
PNC Bank Corp. pursuant to a stock purchase agreement as of the Closing and
will have authorized and issued 716,846 shares of Common Stock pursuant to
this Agreement. Other than the Options, there are no outstanding options,
warrants, subscription rights (including any preemptive rights), calls or
commitments of any character whatsoever to which the Company or any of its
subsidiaries is a party or may be bound, requiring the issuance or sale of
shares of any capital stock or other equity securities of the Company or
securities or rights convertible into or exchangeable for such shares or
other equity securities, and there are no contracts, commitments,
understandings or arrangements by which the Company is or may become bound
to issue additional shares of its capital stock or other equity securities
or options, warrants or rights to purchase or acquire any additional shares
of its capital stock or other equity securities or securities convertible
into or exchangeable for such shares or other equity securities. The
Company has no shares of Preferred Stock outstanding.

4. Representations and Warranties of the Purchaser. The Purchaser
represents and warrants that:

4.1. Organization and Standing. The Purchaser is a corporation
duly incorporated, validly existing and in good standing under the laws of
the Commonwealth of Virginia.

4.2. Authorization. The Purchaser has the corporate power and
authority to execute and deliver this Agreement and the Registration Rights
Agreement and to perform its obligations hereunder and thereunder. The
execution and delivery of this Agreement and the Registration Rights
Agreement and the purchase of the Shares hereunder have been duly
authorized by the Purchaser. No further approval or authorization of the
Board of Directors or the shareholders of the Purchaser will be required
for the Purchaser's purchase of the Shares pursuant to the terms of this
Agreement or the Registration Rights Agreement. This Agreement and the
Registration Rights Agreement have been duly and validly executed and
delivered by the Purchaser, and each constitutes a legal, valid and binding
obligation of the Purchaser enforceable against each of them in accordance
with its terms, except to the extent that such enforceability may be
limited by bankruptcy, insolvency, moratorium or other laws affecting the
enforcement of creditor's rights generally or by general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law).

4.3. No Violation. Neither the Purchaser's execution and
delivery of this Agreement or the Registration Rights Agreement nor the
consummation by it of the transactions contemplated hereby or thereby will
violate the Articles of Incorporation or Bylaws of the Purchaser or breach
a material agreement to which it is a party or by which its assets are
bound, or cause any such violation or breach, or accelerate or allow any
person to accelerate, terminate, modify or cancel any material rights under
any such agreement, or will result in the creation of any material lien on
the assets or properties of the Purchaser. Such execution, delivery and
consummation will not violate or breach or constitute a default under any
material law, judgment, order, or decree to which the Purchaser is subject
or by which the Purchaser or its subsidiaries' properties or assets are
bound.

4.7. Investment Representations of the Purchaser. The Purchaser
represents and warrants to and agrees with the Company as follows:

(a) The Purchaser is acquiring the Shares for its own account
for investment and not with a view to, or for sale in
connection with, any distribution thereof, nor with
any present intention of distributing or selling the same, and
it has no obligation, indebtedness or commitment providing for
the disposition thereof.

6. Covenants of the Company.

The Company agrees:

7. Covenants of the Purchaser.

The Purchaser agrees:

8. Conditions to Closing.

8.1. Conditions of Purchaser's Obligations. The Purchaser's
obligation to purchase the Shares is subject to the fulfillment, before or
at the Closing, of all of the following conditions:

(b) Performance. The Company shall have performed and complied
with all agreements and conditions contained herein required to
be performed or complied with by it before or at the Closing.

(i) the Company has been duly organized and is
validly existing as a corporation under the laws of the
State of Maryland;

(iii) the Shares have been duly authorized by
all necessary corporate action and when issued, paid for
and delivered pursuant to this Agreement, will be validly
issued, fully paid and nonassessable;

(v) registration of the Shares under the
Securities Act is not required.

(b) Performance. The Purchaser shall have performed and
complied with all agreements and conditions contained herein
required to be performed or complied with by it before or at
the Closing.

(d) Officer's Certificate. The Company shall have received an
officer's certificate, dated the Closing Date and signed by the
Purchaser's President, certifying that the representations and
warranties of the Company contained in this Agreement are true
and correct in all material respects.

TO THE COMPANY:

Anthracite Capital, Inc.
345 Park Avenue
New York, NY 10154
Telephone: (212) 754-5560
Facsimile: (212) [754-5397]
Attention: Secretary

TO THE PURCHASER:

FBR Asset Investment Corp.
1001 19th Street North
Arlington, VA 22209
Telephone: (703) 312-9500
Facsimile: (703) 312-9602
Attention: Secretary

10. Miscellaneous.

10.1. Governing Law. This Agreement shall be construed and
enforced in accordance with the laws of the State of New York without
regard to its conflict of laws principles or rules.

10.4. Headings of the Agreement. The headings in this Agreement
are for convenience of reference only and shall not limit or otherwise
affect the meaning hereof.

10.7. Termination. This Agreement shall terminate and be of no
further force and effect if the Closing shall not have occurred on or prior
to June 30, 1998.

10.8. Expenses. Each party shall bear its own expenses in
connection with this Agreement, whether or not the transactions
contemplated hereunder are consummated.

IN WITNESS WHEREOF, the parties have caused this Stock Purchase
Agreement to be duly executed and delivered as of the day and year
first written above.

THE COMPANY: ANTHRACITE CAPITAL, INC.

By:_____________________________

Name:___________________________

Title:__________________________

THE PURCHASER: FBR ASSET INVESTMENT CORPORATION

By:_____________________________

Name:___________________________

Title:__________________________

<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM MARCH 31, 1998 QUARTERLY REPORT ON
FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH.

<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> MAR-24-1998
<PERIOD-END> MAR-31-1998
<CASH> 0
<SECURITIES> 382,890,695
<RECEIVABLES> 2,950,673
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 385,841,368
<CURRENT-LIABILITIES> 88,493,950
<BONDS> 0
0
0
<COMMON> 297,171,892
<OTHER-SE> 175,526
<TOTAL-LIABILITY-AND-EQUITY> 385,841,368
<SALES> 0
<TOTAL-REVENUES> 215,339
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 42,143
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 173,196
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</TABLE>