Thursday, November 02, 2006

implosion! massive writedown friedman billings ramsey

no wonder when you look at the market opinion from michael youngblood, he is the managing director of asset-backed securities research. kein wunder wenn ihr auf den chef der zuständigen abteilung guckt....

in july 2006 his predictions on the houising market was

• Housing prices will rise in each of the next four quarters, but by progressively slower rates year over year: 7.1% in 2Q 2006; 5.7% in 3Q 2006; 4.4% in 4Q 2006 and 3.5% in 1Q 2007.

when you want a good laugh red the rest of his predictions......

now their mbs portfolio implodes!

Friedman, Billings, Ramsey Group, Inc. 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. (this makes the writedown even more impressive!)

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.


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