FBR Mulls Its Alternatives

Turmoil in the credit markets is roiling Arlington's Friedman, Billings Ramsey Group.

The investment bank said it will recognize $18 million in losses following the sale of $153 million in mortgage loans and pursue other unspecified "strategic alternatives" in the future.

The company said in a statement that its board also authorized it to double its stock repurchase program from 50 million to 100 million shares and suspend payment of its cash dividend this quarter.

FBR said it is currently negotiating the sale of $48 million in mortgage loansthat remain on its books, and it estimates that in the fourth quarter of 2007 it will recognize additional losses of approximately $20 million from the sale or write-down of these remaining non-securitized non-prime mortgage loans.

The company said it also expects to write-off goodwill of approximately $108 million in the fourth quarter of 2007.

Here's what the company said about the moves::

"The Board has worked with management over the last month to explore a variety of potential strategic alternatives with a view to increasing shareholder returns, because the Board continues to believe that FBR's stock price does not accurately reflect the underlying value of the Company, including its majority ownership interest in FBR Capital Markets Corporation (FBCM) (FBR Capital Markets), one of the Company's taxable-REIT subsidiaries that owns the Company's investment banking, institutional sales and brokerage and asset management businesses. The Board concluded that, at this time, the most prudent use of FBR's financial resources is to repurchase additional shares of Class A common stock in open market repurchase transactions, privately negotiated purchases, a possible tender offer or through other available methods, based on the belief that the Class A common stock is undervalued and that purchasing shares is an attractive and prudent investment for the Company. The Company may in the future consider and pursue other strategic alternatives."

By Dan Beyers  |  December 21, 2007; 8:28 AM ET  | Category:  FBR
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