FBR Agrees to Sell Its Subprime Mortgage Unit
Arlington investment bank Friedman, Billings, Ramsey Group has agreed to sell its struggling subprime mortgage subsidiary to an affiliate of private equity firm Sun Capital Partners, the companies said in a statement today. Under the agreement, Sun Capital will invest $60 million and FBR will put in $15 million to help recapitalize the mortgage unit, First NLC Financial Services.
FBR acquired First NLC in 2005, at the height of the housing boom, for $101 million. But a surge in defaults on subprime mortgages have battered the lending industry this year, and FBR announced in March it was exploring a sale of First NLC. In the first quarter, First NLC recorded $124.2 million in losses, dragging down FBR's results.
Separately, FBR reported results for the second quarter. In a statement, the company said it earned $10.7 million for the period ended June 30, compared with a loss of $30.2 million a year ago. Total revenue jumped from $246.1 million to $319.7 million, as revenue from investment banking activities more than doubled.
The results included a $28.9 million write down associated with First NLC, and a $61 million after-tax gain on the June initial public offering of stock in its FBR Capital Markets subsidiary.
-- Mike Shepard
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