FBR is continuing its return to a core strategy of managing a portfolio of agency-backed hybrid ARMs while utilizing its NOLs to shield itself from distribution requirements, though the Company said it will be reviewing reinstatement of the dividend over the next quarter. In any case, FBR is at least earning income at the REIT level once again -- although it had significant losses in the TRS.
The Company also said it was seeing haircuts on repo financing remaining stable at about 5% for its agency-backed portfolio. FBR expects to return to a cash operating profit by the end of the third quarter.
Investors liked what liked Chairman Eric Billings had to say, sending the stock higher by about 12% at last check. Nonetheless, FBR is still trading at just 85% of its 3/31 book value, and with net interest margin continuing to widen, FBR might just be a steal at these levels.