UPDATE 1-FBR Capital sees return to profitability in Q4

* Says considering more than 20 investment banking deals

* Says will more actively look at possible acquisitions

* Shares down 14 pct

Oct 21 (Reuters) - FBR Capital Markets Corp (FBCM.O) said it expected to post a profit for the fourth quarter, ending a streak of several loss-making quarters, helped by a better investment banking business pipeline and cost savings.

The company expects to produce improved operating results and deliver profitability on a core and a GAAP basis for the fourth quarter and the full second half of the year, Chief Executive Richard Hendrix said on a conference call.

The company, which posted a surprise loss in the third-quarter, said it has made several investment banking transactions already in the fourth quarter and is considering more than 20 investment banking deal opportunities across sectors.

"The revenue in the fourth quarter that we've already booked and earned essentially is equal to or just slightly in excess of the total banking revenue year-to-date to the third quarter," Hendrix said.

On Tuesday FBR said the capital-raising segment of its investment banking business had seen a four-fold rise in revenue to $29 million in the third-quarter.

The company is going to more actively look at possible acquisitions, the CEO said.

Hendrix said the company has an agreement with a smaller fund group, which is going to move their assets into the company's funds early in 2010, a transaction that is expected to give FBR Capital a 20 percent growth in its mutual fund business.

On Tuesday, the company had said its former majority holder Arlington Asset Investment Corp will sell 12.8 million common shares of FBR Capital in a secondary offering.

After the completion of this transaction, Arlington Asset will no longer have an ownership stake in FBR Capital, Hendrix said on the call, and added this marks the final step in the separation of the two firms and the independence of the FBR Capital brand.

For the third quarter, the company posted a loss of 9 cents a share, compared with analyst estimates of a profit of 5 cents a share, according to Thomson Reuters I/B/E/S.

FBR Capital said earnings were hurt by a 21 percent fall in advisory revenue to $4.7 million, and a 38 percent drop in agency commissions to $21 million.

FBR Capital's thrust on reducing cost structure, however, helped the quarterly earnings as expenses fell by 15 percent to $78.4 million in the quarter, the company said on Tuesday. Shares of the company were down 11 percent at $6 Wednesday afternoon on Nasdaq. They touched a low of $5.80 earlier in the day. (Reporting by Archana Shankar in Bangalore; Editing by Unnikrishnan Nair)