FICC Fieldstone Investment Corp (MM)

COLUMBIA, Md., Dec. 20 /PRNewswire-FirstCall/ -- Fieldstone Investment Corporation (NASDAQ:FICC) today announced that it has modified the financial covenants of four of its repurchase facilities and confirmed its plans to consolidate its operations centers, and that its Board of Directors has declared a dividend for the fourth quarter of 2006. Amendments to Repurchase Facilities. Fieldstone announced today that it has modified four repurchase agreements in anticipation of its fourth quarter operating results. The agreements are with affiliates of JPMorgan Chase, Credit Suisse and Lehman Brothers. The amendments lower the tangible net worth covenant through January 31, 2007 from $400 million to $365 million and provide that the operating loss that Fieldstone forecasts it will incur for the final six months of 2006 will not result in a breach of these agreements. As a result, Fieldstone expects to be in compliance with the financial covenants in all of its lines of credit at year-end. Fieldstone is continuing to discuss additional amendments with these lenders and expects to extend the current amendments beyond January 31, 2007. Consolidation of Operations Centers. In addition, Fieldstone confirmed today its plan to reduce the number of wholesale operation centers from sixteen to nine. Fieldstone believes that the consolidation of its operation centers will improve its operating efficiencies and reduce its cost to originate loans in 2007, one of Fieldstone's key strategic initiatives for 2007. Fieldstone expects to take a one time pre-tax charge of approximately $0.5 million in the fourth quarter of 2006 relative to this consolidation, consisting substantially of compensation and lease termination expenses. Fieldstone will continue to maintain a local sales force to serve brokers in the markets in which its operations centers are closing and will maintain its one retail operations center in a facility shared with one of the wholesale operations centers. Fourth Quarter Dividend. Fieldstone announced today that its Board of Directors has declared a quarterly cash dividend of $0.05 per share for the quarter ended December 31, 2006. The dividend will be paid on January 18, 2007 to stockholders of record at the close of business on December 29, 2006. The common stock will begin trading ex-dividend on December 27, 2006. This dividend will be deemed 2006 income for stockholders, even though it will be paid in 2007. "Although this is a challenging time for the non-conforming mortgage industry generally, we are implementing several key initiatives to improve our business in 2007. These initiatives are designed to lower our cost to originate, improve our level of originations and improve the performance of our loans held for investment," stated Michael J. Sonnenfeld, Fieldstone's President and Chief Executive Officer. "We have worked with our lenders to re-structure the terms of four of our lines of credit in anticipation of the effect the current market conditions will have on our operating results. This will allow us to remain in compliance with our covenants and maintain adequate liquidity in 2007. Additionally, we have finalized our plans for consolidating our wholesale operations centers: we expect to improve our operating efficiencies and lower our cost to originate while maintaining our level of customer service by having our local sales force serve our customers through regional operations centers. At the same time, we are building our production levels by continuing to introduce new loan products and adding significantly to our national sales force. While the overall non-conforming mortgage market's performance deteriorated in the fourth quarter of 2006, we are working closely with our sub-servicer to improve the relative performance of our loans held for investment. Fieldstone has adequate working capital, and I remain confident that the specific initiatives our entire organization is implementing will allow us to address the changing mortgage market." About Fieldstone Fieldstone Investment Corporation owns and manages a portfolio of non- conforming mortgage loans originated primarily by its mortgage origination subsidiary, Fieldstone Mortgage Company, and has elected to be a real estate investment trust for federal income tax purposes. Founded in 1995, Fieldstone Mortgage Company is a nationwide residential mortgage banking company that originates non-conforming and conforming residential mortgage loans through independent mortgage brokers serviced by regional wholesale operations centers and a network of retail branch offices located throughout the country. Fieldstone is headquartered in Columbia, Maryland. Information Regarding Forward-Looking Statements Certain matters discussed in this press release may constitute "forward- looking statements" within the meaning of the federal securities laws. These statements are being made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results and the timing of certain events may differ materially from those indicated by such forward-looking statements due to a variety of risks and uncertainties, many of which are beyond Fieldstone's ability to control or predict, including but not limited to (i) Fieldstone's ability to successfully consolidate its operations centers and realize cost savings; (ii) Fieldstone's ability to implement or change aspects of its portfolio strategy; (iii) interest rate volatility and the level of interest rates generally; (iv) the sustainability of loan origination volumes and levels of origination costs; (v) compliance with the covenants in Fieldstone's credit and repurchase facilities and continued availability of credit facilities for the liquidity it needs to support its origination of mortgage loans; (vi) the ability to sell or securitize mortgage loans on favorable economic terms; (vii) deterioration in the credit quality of Fieldstone's loan portfolio; (viii) the nature and amount of competition; (ix) the impact of changes to the fair value of Fieldstone's interest rate swaps on its net income, which will vary based upon changes in interest rates and could cause net income to vary significantly from quarter to quarter; and (x) other risks and uncertainties outlined in Fieldstone Investment Corporation's periodic reports filed with the Securities and Exchange Commission. These statements are made as of the date of this press release, and Fieldstone undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. DATASOURCE: Fieldstone Investment Corporation CONTACT: Mark C. Krebs, Director of Investor Relations of Fieldstone Investment Corporation, +1-410-772-5160, or Toll-Free, +1-866-438-1088, or Web site: http://www.fieldstoneinvestment.com/

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