FBR Group Announces First Quarter 2007 Financial Results
ARLINGTON, Va., April 26 /PRNewswire-FirstCall/ -- Friedman, Billings, Ramsey Group, Inc. (FBR Group) (NYSE: FBR) today announced results for the quarter ended March 31, 2007. FBR Group reported a net after-tax loss for the quarter of $185.9 million, or $1.08 per share (diluted), compared to after-tax earnings of $26.6 million, or $0.16 per share (diluted), for the first quarter of 2006. Core book value net of Accumulated Other Comprehensive Income (AOCI) at the close of the quarter was $5.75 compared to $6.87 at the end of the fourth quarter of 2006(1).
Non-Prime Mortgage Businesses and Investments
FBR Group's loss for the first quarter was attributable to its non-prime mortgage-related businesses, of which First NLC (FNLC), FBR Group's non-prime mortgage origination subsidiary, is the principal component. During the first quarter, FNLC lost $124.2 million on an after-tax basis, a figure that includes a $36.1 million write-down of goodwill and intangible assets and $5.2 million of restructuring and other costs.
In addition, there were $21.8 million in realized losses and write-downs in the value of certain investments in non-prime mortgage companies in FBR Group's merchant banking and other long-term investment portfolio. Lastly, the company revalued its non-prime mortgage loan investment portfolio, recognizing a $34.4 million non-cash, lower-of-cost or market value write-down.
FBR Group announced in March that it is evaluating all strategic alternatives for FNLC that would reduce all of FBR Group's exposure to the non-prime sector. These include, among other alternatives, the possibility of a sale or third-party recapitalization of the business. While we cannot give any assurances with regard to the execution of a specific alternative, we intend to implement one of the alternatives during the second quarter. Further, FNLC has taken extensive steps described below to reduce the current risk in the business. Those steps, together with the implementation of any one of the alternatives under consideration, will substantially reduce FBR Group's financial risk with respect to its ownership of this business.
"This has been an extremely difficult operating environment for the entire non-prime mortgage banking industry, and it has resulted in a series of distressed sales and bankruptcies," said Eric F. Billings, Chairman and Chief Executive Officer of FBR Group. "We believe that FNLC's management has taken aggressive steps designed to limit foreseeable major risks with respect to the business."
Among the actions FNLC has taken are a substantial modification in lending guidelines and significant cost restructuring initiatives. These guideline changes are resulting in substantially lower origination volumes - from approximately $8 billion on an annualized basis in the fourth quarter of 2006 to less than $2 billion currently - and an increase in the value of loans originated. FNLC recently closed on the sale of approximately $712 million of warehouse loans, substantially reducing its unsold loan inventory since the end of the first quarter.
Mortgage Investment Portfolios
In the first quarter, FBR Group's investments in mortgages and mortgage- backed securities generated net interest income of $35.0 million, compared to $37.4 million in the fourth quarter of 2006. The average balance of these portfolios was $11.2 billion during the first quarter and yielded gross income of 6.21% with associated cost of funds of 5.18%, resulting in earned net interest income of 1.03%.
Merchant Banking
Excluding the previously mentioned realized losses and write-downs in certain of the company's investments in non-prime mortgage companies, the investment gains and dividends in FBR Group's merchant banking and other long- term investment portfolio totaled $3.4 million during the first quarter. The total value of FBR Group's merchant banking and other long-term investments at the close of the first quarter was $114.5 million.
FBR Capital Markets Initial Public Offering
In March, FBR Capital Markets Corporation (FBR Capital Markets), FBR Group's 71%-owned equity capital markets and asset management taxable REIT subsidiary, filed an S-1 registration statement with the Securities and Exchange Commission in connection with a planned initial public offering of up to 13,512,500 shares of its common stock that are beneficially owned by FBR Group and certain other selling stockholders. The net proceeds of the offering will all go to FBR Group and the other selling stockholders, if any. If all of the FBR Capital Markets shares that are being offered by FBR Group are sold in the proposed offering, FBR Group's beneficial ownership of FBR Capital Markets common stock will be reduced to 50.5%.
"It is important to note that the difficulties in the non-prime businesses have no direct impact on FBR Capital Markets, which is a separately capitalized company with $430 million in cash and no exposure to FBR Group's non-prime mortgage businesses," Mr. Billings said.
FBR Capital Markets Corporation First Quarter 2007 Results
FBR Capital Markets Corporation reported first quarter pre-tax earnings of $25.8 million on net revenues of $143.2 million. Excluding FASB 123R-related non-cash tax charges of $3.4 million, after-tax earnings were $14.4 million, or $0.22 per share (diluted). Net after-tax earnings for the first quarter were $11.0 million, or $0.17 cents per share (diluted), compared to net after- tax earnings of $4.8 million, or $0.10 per share (diluted), in the first quarter of 2006. The company expects to return to a normalized tax rate in the second quarter.
FBR Capital Market's book value at the close of the quarter was $7.81 per share compared to $7.57 at the end of the fourth quarter of 2006. At the close of the first quarter, FBR Capital Markets had $502 million in equity, $430 million of cash, and no funded liabilities or debt. Complete financial results for FBR Capital Markets are included in the tabular material in this release.
Equity Capital Markets
In the first quarter, FBR Capital Markets generated investment banking revenues of $103.7 million compared to $69.2 million in the first quarter of 2006 and $81.1 million in the fourth quarter of 2006. The firm raised a total of $3.0 billion in 13 capital markets transactions, including four initial public offerings. FBR Capital Markets acted as sole or joint book runner for eight of the 13 transactions and completed seven advisory assignments during the quarter.
In a very competitive market environment, FBR Capital Markets recorded agency commissions and principal transactions revenues of $25.8 million in the first quarter of 2007 compared to $29.1 million in the first quarter of 2006 and $24.7 million in the fourth quarter of 2006.
Asset Management
In FBR Capital Markets' asset management/private wealth business, asset management base fees and incentive fees were $5.6 million for the first quarter of 2007, compared to $5.5 million in the fourth quarter of 2006. During the quarter we opened two new mutual funds and reopened a fund that had been closed to new investors since October 2004. Assets under management as of March 31, 2007 were $2.8 billion compared to $2.4 billion at the end of the fourth quarter of 2006, an increase of 17%.
"Our investment banking activity was well diversified across our industry groups during the quarter," said Richard J. Hendrix, President and Chief Operating Officer of FBR Capital Markets," and our new M&A team has already had a positive impact on our business development activities. Most importantly, in support of the evolution and growth of our business, we made a series of important leadership appointments during the quarter that included the naming of co-heads of investment banking, a new head of research, a new director of human capital, and several key positions in our growing international operations."
Mr. Billings added, "We are very pleased with our capital markets businesses and the progress we have made in executing our strategic plan."
The firm will host an earnings conference call on Thursday, April 26, 2007 at 9:00 a.m. U.S. EST. Investors wishing to listen to the call may do so via the web at http://phx.corporate-ir.net/phoenix.zhtml?c=71352&p=irol-irhome. Replays of the webcast will be available after the call.
Friedman, Billings, Ramsey Group, Inc. (FBR Group) provides investment banking*, merger and acquisition advisory services*, institutional brokerage*, asset management and private wealth services through majority ownership of FBR Capital Markets Corporation (FBR Capital Markets). FBR Capital Markets focuses capital and financial expertise on eight industry sectors: consumer, diversified industrials, energy & natural resources, financial institutions, healthcare, insurance, real estate, and technology, media & telecommunications. For the benefit of its shareholders, FBR Group also invests in mortgage-related assets and merchant banking opportunities. FBR is headquartered in the Washington, D.C. metropolitan area with offices in Arlington, VA, Boston, Dallas, Houston, Irvine, London, New York, Phoenix and San Francisco. Friedman, Billings, Ramsey Group, Inc. is the parent company of First NLC Financial Services, Inc., a non-conforming residential mortgage originator headquartered in Deerfield Beach, Florida. For more information, please visit http://www.fbr.com.
*Friedman, Billings, Ramsey & Co., Inc.
(1) Accumulated Other Comprehensive Income (AOCI) includes changes in the value of available-for-sale securities and cash flow hedges. FBR believes that such changes represent temporary market fluctuations, are not reflective of our market strategy, and, therefore, the exclusion of AOCI provides a reasonable basis for calculating returns.
Statements concerning future performance, developments, events, market forecasts, revenues, expenses, earnings, run rates and any other guidance on present or future periods, constitute forward-looking statements that are subject to a number of factors, risks and uncertainties that might cause actual results to differ materially from stated expectations or current circumstances. These factors include, but are not limited to, the effect of demand for public offerings, activity in the secondary securities markets, the overall environment for interest rates, costs of borrowing, interest spreads, mortgage pre-payment speeds, the adverse impact of delinquencies, losses and declining real estate values on the non-conforming mortgage loan origination business, credit and regulatory risks associated with the business of originating, holding and securitizing non-conforming residential mortgage loans which can result in losses on these assets, sustainability of loan origination volumes and levels of origination costs, continued availability of credit facilities for the origination of mortgage loans, the ability to sell or securitize loans originated by FNLC on favorable terms or at all, deterioration in the performance of loans sold by FNLC and the related repurchase activities, risks associated with merchant banking investments, the realization of gains and losses on principal investments, available technologies, competition for business and personnel, and general economic, political and market conditions. These and other risks are described in the Company's Annual Report and Form 10-K and quarterly reports on Form 10-Q that are available from the company and from the SEC.
Financial data follows (Friedman, Billings, Ramsey Group, Inc., followed by FBR Capital Markets Corporation).
###
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(Unaudited)
Quarter ended March 31, | |||||||||||||
2007 | % | 2006 | % | ||||||||||
REVENUES: | |||||||||||||
Investment banking: | |||||||||||||
Capital raising | $ | 97,247 | 787.6 | % | $ | 66,335 | 37.5 | % | |||||
Advisory | 6,458 | 52.3 | % | 2,869 | 1.6 | % | |||||||
Institutional brokerage: | |||||||||||||
Principal transactions | 2,036 | 16.5 | % | 5,720 | 3.2 | % | |||||||
Agency commissions | 23,818 | 192.9 | % | 23,409 | 13.2 | % | |||||||
Mortgage trading interest | - | 0.0 | % | 17,650 | 10.0 | % | |||||||
Mortgage trading net investment loss | - | 0.0 | % | (1,237 | ) | -0.7 | % | ||||||
Asset management: | |||||||||||||
Base management fees | 5,528 | 44.8 | % | 5,097 | 2.9 | % | |||||||
Incentive allocations and fees | 104 | 0.8 | % | 1,008 | 0.6 | % | |||||||
Principal investment: | |||||||||||||
Interest | 181,696 | 1471.6 | % | 149,126 | 84.3 | % | |||||||
Net investment (loss) income | (59,713 | ) | -483.6 | % | 26,185 | 14.8 | % | ||||||
Dividends | 959 | 7.8 | % | 3,699 | 2.1 | % | |||||||
Mortgage banking: | |||||||||||||
Interest | 26,530 | 214.9 | % | 23,113 | 13.1 | % | |||||||
Net investment (loss) income | (106,859 | ) | -865.5 | % | 10,738 | 6.1 | % | ||||||
Other | 4,094 | 33.1 | % | 4,987 | 2.8 | % | |||||||
Total revenues | 181,898 | 1473.2 | % | 338,699 | 191.5 | % | |||||||
Interest expense | 169,551 | 1373.2 | % | 153,483 | 86.8 | % | |||||||
Provision for loan losses | - | 0.0 | % | 8,392 | 4.7 | % | |||||||
Revenues, net of interest expense and provision for loan losses | 12,347 | 100.0 | % | 176,824 | 100.0 | % | |||||||
NON-INTEREST EXPENSES: | |||||||||||||
Compensation and benefits | 103,982 | 842.2 | % | 83,497 | 47.2 | % | |||||||
Professional services | 13,854 | 112.2 | % | 14,265 | 8.1 | % | |||||||
Business development | 13,769 | 111.5 | % | 14,085 | 8.0 | % | |||||||
Clearing and brokerage fees | 2,701 | 21.9 | % | 2,316 | 1.3 | % | |||||||
Occupancy and equipment | 13,117 | 106.2 | % | 11,242 | 6.3 | % | |||||||
Communications | 7,051 | 57.1 | % | 5,607 | 3.2 | % | |||||||
Other operating expenses | 31,716 | 256.9 | % | 20,977 | 11.9 | % | |||||||
Impairment of goodwill | 25,852 | 209.4 | % | - | 0.0 | % | |||||||
Restructuring charges | 15,485 | 125.4 | % | - | 0.0 | % | |||||||
Total non-interest expenses | 227,527 | 1842.8 | % | 151,989 | 86.0 | % | |||||||
Operating (loss) income | (215,180 | ) | -1742.8 | % | 24,835 | 14.0 | % | ||||||
OTHER INCOME: | |||||||||||||
Gain on sale of subsidiary shares | 831 | 6.7 | % | - | 0.0 | % | |||||||
Net (loss) income before income taxes and minority interest | (214,349 | ) | -1736.0 | % | 24,835 | 14.0 | % |
Income tax benefit | (31,550 | ) | -255.5 | % | (1,719 | ) | -1.0 | % | |||||
Minority interest in earnings of consolidated subsidiary | 3,079 | 24.9 | % | - | 0.0 | % | |||||||
Net (loss) income | $ | (185,878 | ) | -1505.4 | % | $ | 26,554 | 15.0 | % | ||||
Basic (loss) earnings per share | $ | (1.08 | ) | $ | 0.16 | ||||||||
Diluted (loss) earnings per share | $ | (1.08 | ) | $ | 0.16 | ||||||||
Weighted average shares - basic | 172,850 | 170,728 | |||||||||||
Weighted average shares - diluted | 172,850 | 171,031 |
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
Financial & Statistical Supplement - Operating Results
(Dollars in thousands, except per share data)
(Unaudited)
Q-1 07 | ||||
Revenues | ||||
Investment banking: | ||||
Capital raising | $ | 97,247 | ||
Advisory | 6,458 | |||
Institutional brokerage: | ||||
Principal transactions | 2,036 | |||
Agency commissions | 23,818 | |||
Asset management: | ||||
Base management fees | 5,528 | |||
Incentive allocations and fees | 104 | |||
Principal investment: | ||||
Interest | 181,696 | |||
Net investment loss | (59,713 | ) | ||
Dividends | 959 | |||
Mortgage banking: | ||||
Interest | 26,530 | |||
Net investment loss | (106,859 | ) | ||
Other | 4,094 | |||
Total revenues | 181,898 | |||
Interest expense | 169,551 | |||
Revenues, net of interest expense | 12,347 | |||
Non-interest expenses | ||||
Compensation and benefits | 103,982 | |||
Professional services | 13,854 | |||
Business development | 13,769 | |||
Clearing and brokerage fees | 2,701 | |||
Occupancy and equipment | 13,117 | |||
Communications | 7,051 | |||
Other operating expenses | 31,716 | |||
Impairment of goodwill | 25,852 | |||
Restructuring charges | 15,485 | |||
Total non-interest expenses | 227,527 |
Operating loss | (215,180 | ) | ||
Other Income | ||||
Gain on sale of subsidiary shares | 831 | |||
Net loss before income taxes and minority interest | (214,349 | ) | ||
Income tax benefit | (31,550 | ) | ||
Minority interest in earnings of consolidated subsidiary | 3,079 | |||
Net loss | $ | (185,878 | ) | |
Net loss before income taxes and minority interest as a percentage of net revenue | -1736.0 | % | ||
ROE (annualized) | -68.8 | % | ||
ROE (annualized-excluding AOCI) (1) | -68.2 | % | ||
Total shareholders' equity | $ | 989,213 | ||
Total shareholders' equity, net of AOCI (1) | $ | 993,753 | ||
Basic loss per share | $ | (1.08 | ) | |
Diluted loss per share | $ | (1.08 | ) | |
Ending shares outstanding (in | ||||
thousands) | 172,846 | |||
Book value per share | $ | 5.72 | ||
Book value per share, net of AOCI (1) | $ | 5.75 | ||
Gross assets under management (in millions) | ||||
Managed accounts | $ | 258.8 | ||
Hedge & offshore funds | 67.1 | |||
Mutual funds | 2,412.9 | |||
Private equity and venture capital funds | 41.2 | |||
Total | $ | 2,780.0 | ||
Net assets under management (in millions) | ||||
Managed accounts | $ | 258.8 | ||
Hedge & offshore funds | 62.5 | |||
Mutual funds | 2,406.4 | |||
Private equity and venture capital funds | 38.0 | |||
Total | $ | 2,765.7 | ||
Employee count | 2,592 |
(1) | Accumulated Other Comprehensive Income (AOCI) includes changes in value of available-for-sale securities and cash flow hedges. We believe that such changes represent temporary market fluctuations, are not reflective of our market strategy, and therefore, exclusion of AOCI provides a reasonable basis for calculating returns. |
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
Financial & Statistical Supplement - Operating Results
(Dollars in thousands, except per share data)
(Unaudited)
For the year ended December 31, 2006 | Q-4 06 | Q-3 06 | Q-2 06 | Q-1 06 | ||||||||||||
Revenues | ||||||||||||||||
Investment banking: | ||||||||||||||||
Capital raising | $ | 190,187 | $ | 71,883 | $ | 6,852 | $ | 45,117 | $ | 66,335 | ||||||
Advisory | 24,148 | 9,172 | 5,826 | 6,281 | 2,869 | |||||||||||
Institutional brokerage: | ||||||||||||||||
Principal transactions | 5,814 | (8 | ) | (1,658 | ) | 1,760 | 5,720 | |||||||||
Agency commissions | 101,009 | 24,720 | 24,388 | 28,492 | 23,409 | |||||||||||
Mortgage trading interest | 51,147 | 2,509 | 13,845 | 17,143 | 17,650 | |||||||||||
Mortgage trading net investment loss | (3,301 | ) | (309 | ) | (1,546 | ) | (209 | ) | (1,237 | ) | ||||||
Asset management: | ||||||||||||||||
Base management fees | 20,093 | 5,051 | 4,880 | 5,065 | 5,097 | |||||||||||
Incentive allocations and fees | 1,327 | 403 | (31 | ) | (53 | ) | 1,008 | |||||||||
Principal investment: | ||||||||||||||||
Interest | 594,879 | 181,491 | 150,649 | 113,613 | 149,126 | |||||||||||
Net investment (loss) income | (184,552 | ) | (8,826 | ) | (170,621 | ) | (31,290 | ) | 26,185 | |||||||
Dividends | 14,551 | 2,043 | 4,750 | 4,059 | 3,699 | |||||||||||
Mortgage banking: | ||||||||||||||||
Interest | 88,662 | 21,806 | 22,476 | 21,267 | 23,113 | |||||||||||
Net investment income | 83,786 | 27,555 | 16,092 | 29,401 | 10,738 | |||||||||||
Other | 20,154 | 3,162 | 6,540 | 5,465 | 4,987 | |||||||||||
Total revenues | 1,007,904 | 340,652 | 82,442 | 246,111 | 338,699 | |||||||||||
Interest expense | 611,800 | 164,891 | 165,237 | 128,189 | 153,483 | |||||||||||
Provision for loan losses | 15,740 | - | - | 7,348 | 8,392 | |||||||||||
Revenues, net of interest expense and provision for loan losses | 380,364 | 175,761 | (82,795 | ) | 110,574 | 176,824 | ||||||||||
Non-interest expenses | ||||||||||||||||
Compensation and benefits | 309,065 | 84,431 | 69,405 | 71,732 | 83,497 | |||||||||||
Professional services | 59,722 | 18,224 | 14,308 | 12,925 | 14,265 | |||||||||||
Business development | 42,150 | 11,884 | 7,577 | 8,604 | 14,085 | |||||||||||
Clearing and brokerage fees | 11,820 | 3,505 | 2,917 | 3,082 | 2,316 | |||||||||||
Occupancy and equipment | 50,051 | 13,668 | 12,909 | 12,232 | 11,242 | |||||||||||
Communications | 24,398 | 6,307 | 6,471 | 6,013 | 5,607 | |||||||||||
Other operating expenses | 89,377 | 20,116 | 23,291 | 24,993 | 20,977 | |||||||||||
Total non-interest expenses | 586,583 | 158,135 | 136,878 | 139,581 | 151,989 | |||||||||||
Operating (loss) income | (206,219 | ) | 17,626 | (219,673 | ) | (29,007 | ) | 24,835 | ||||||||
Other Income | ||||||||||||||||
Gain on sale of subsidiary shares | 121,511 | - | 121,511 | - | - | |||||||||||
Net (loss) income before income taxes and minority interest | (84,708 | ) | 17,626 | (98,162 | ) | (29,007 | ) | 24,835 | ||||||||
Income tax (benefit) provision | (14,682 | ) | 11,859 | (26,062 | ) | 1,240 | (1,719 | ) | ||||||||
Minority interest in (loss) earnings of consolidated subsidiary | (2,751 | ) | 1,957 | (4,708 | ) | - | - | |||||||||
Net (loss) income | (67,275 | ) | 3,810 | (67,392 | ) | (30,247 | ) | 26,554 | ||||||||
Net (loss) income before income taxes and minority interest as a percentage of net revenue | -22.3 | 10.0 | 118.6 | -26.2 | 14.0 | |||||||||||
ROE (annualized) | -5.4 | % | 1.3 | % | -22.1 | % | -9.4 | % | 8.2 | % |
ROE (annualized- excluding AOCI)(1) | -5.4 | % | 1.3 | % | -22.2 | % | -9.5 | % | 8.1 | % | ||||||
Total shareholders' equity | $ | 1,171,045 | $ | 1,171,045 | $ | 1,163,681 | $ | 1,270,361 | $ | 1,301,949 | ||||||
Total shareholders' equity, net of AOCI (1) | $ | 1,186,181 | $ | 1,186,181 | $ | 1,181,372 | $ | 1,250,117 | $ | 1,306,450 | ||||||
Basic (loss) earnings per share | $ | (0.39 | ) | $ | 0.02 | $ | (0.39 | ) | $ | (0.18 | ) | $ | 0.16 | |||
Diluted (loss) earnings per share | $ | (0.39 | ) | $ | 0.02 | $ | (0.39 | ) | $ | (0.18 | ) | $ | 0.16 | |||
Ending shares outstanding (in thousands) | 172,759 | 172,759 | 172,506 | 171,812 | 171,236 | |||||||||||
Book value per share | $ | 6.78 | $ | 6.78 | $ | 6.75 | $ | 7.39 | $ | 7.60 | ||||||
Book value per share, net of AOCI (1) | $ | 6.87 | $ | 6.87 | $ | 6.85 | $ | 7.28 | $ | 7.63 | ||||||
Gross assets under management (in millions) | ||||||||||||||||
Managed accounts | $ | 259.9 | $ | 259.9 | $ | 376.6 | $ | 386.8 | $ | 383.9 | ||||||
Hedge & offshore funds | 97.5 | 97.5 | 102.1 | 125.8 | 136.6 | |||||||||||
Mutual funds | 1,961.9 | 1,961.9 | 1,825.1 | 1,750.6 | 1,849.5 | |||||||||||
Private equity and venture capital funds | 42.2 | 42.2 | 48.5 | 48.2 | 50.5 | |||||||||||
Total | $ | 2,361.5 | $ | 2,361.5 | $ | 2,352.3 | $ | 2,311.4 | $ | 2,420.5 | ||||||
Net assets under management (in millions) | ||||||||||||||||
Managed accounts | $ | 259.9 | $ | 259.9 | $ | 376.6 | $ | 386.8 | $ | 380.9 | ||||||
Hedge & offshore funds | 96.4 | 96.4 | 98.3 | 116.1 | 125.4 | |||||||||||
Mutual funds | 1,954.7 | 1,954.7 | 1,817.8 | 1,742.6 | 1,843.4 | |||||||||||
Private equity and venture capital funds | 40.5 | 40.5 | 46.9 | 46.7 | 49.1 | |||||||||||
Total | $ | 2,351.5 | $ | 2,351.5 | $ | 2,339.6 | $ | 2,292.2 | $ | 2,398.8 | ||||||
Employee count | 3,019 | 3,019 | 2,909 | 2,651 | 2,531 |
(1) | Accumulated Other Comprehensive Income (AOCI) includes changes in value of available-for-sale securities and cash flow hedges. We believe that such changes represent temporary market fluctuations, are not reflective of our market strategy, and therefore, exclusion of AOCI provides a reasonable basis for calculating returns. |
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amounts)
(Unaudited)
ASSETS | 31-Mar-07 | 31-Dec-06 | |||||
Cash and cash equivalents | $ | 450,979 | $ | 189,956 | |||
Restricted cash | 92 | 132 | |||||
Receivables | 227,765 | 217,249 | |||||
Investments: | |||||||
Mortgage-backed securities, at fair value | 5,783,273 | 6,870,661 | |||||
Loans held for sale, net | 5,169,489 | 5,367,934 |
Long-term investments | 149,793 | 185,492 | |||||
Trading securities, at fair value | 22,400 | 18,180 | |||||
Due from clearing broker | 30,452 | 28,999 | |||||
Derivative assets, at fair value | 22,011 | 36,875 | |||||
Goodwill | 136,913 | 162,765 | |||||
Intangible assets, net | 11,600 | 21,825 | |||||
Furniture, equipment, software and leasehold improvements, net | 43,428 | 44,111 | |||||
Prepaid expenses and other assets | 222,088 | 208,339 | |||||
Total assets | $ | 12,270,283 | $ | 13,352,518 | |||
LIABILITIES AND SHAREHOLDERS ' EQUITY | |||||||
Liabilities: | |||||||
Trading account securities sold short but not yet purchased, at fair value | $ | 759 | $ | 202 | |||
Commercial paper | 3,425,432 | 3,971,389 | |||||
Repurchase agreements | 3,013,827 | 3,059,330 | |||||
Derivative liabilities, at fair value | 41,247 | 44,582 | |||||
Dividends payable | 8,736 | 8,743 | |||||
Interest payable | 14,579 | 12,239 | |||||
Accrued compensation and benefits | 48,906 | 57,227 | |||||
Accounts payable, accrued expenses and other liabilities | 160,395 | 81,819 | |||||
Securitization financing, net | 4,100,975 | 4,486,046 | |||||
Long-term debt | 323,466 | 324,453 | |||||
Total liabilities | 11,138,322 | 12,046,030 | |||||
Minority Interest | 142,748 | 135,443 | |||||
Shareholders' equity: | |||||||
Common stock, 174,433 and 174,712 shares | 1,744 | 1,747 | |||||
Additional paid-in capital | 1,564,671 | 1,562,497 | |||||
Employee stock loan receivable (2 and 2 shares) | (12 | ) | (12 | ) | |||
Accumulated other comprehensive loss, net of taxes | (4,540 | ) | (15,136 | ) | |||
Accumulated deficit | (572,650 | ) | (378,051 | ) | |||
Total shareholders' equity | 989,213 | 1,171,045 | |||||
Total liabilities and shareholders' equity | $ | 12,270,283 | $ | 13,352,518 |
FBR CAPITAL MARKETS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(Unaudited)
Quarter Ended March 31, | |||||||||||||
2007 | % | 2006 | % | ||||||||||
REVENUES: | |||||||||||||
Investment banking: | |||||||||||||
Capital raising | $ | 97,236 | 67.9 | % | $ | 66,335 | 59.9 | % | |||||
Advisory | 6,458 | 4.5 | % | 2,869 | 2.6 | % | |||||||
Institutional brokerage: | |||||||||||||
Principal transactions | 2,036 | 1.4 | % | 5,720 | 5.2 | % | |||||||
Agency commissions | 23,776 | 16.6 | % | 23,366 | 21.1 | % | |||||||
Mortgage trading interest | - | 0.0 | 17,650 | 15.9 | % | ||||||||
Mortgage trading net investment loss | - | 0.0 | % | (1,234 | ) | -1.1 | % | ||||||
Asset management: | |||||||||||||
Base management fees | 5,528 | 3.9 | % | 4,876 | 4.4 | % | |||||||
Incentive allocations and fees | 104 | 0.1 | % | 1,008 | 0.9 | % | |||||||
Interest income | 11,114 | 7.8 | % | 2,613 | 2.4 | % | |||||||
Net investment income | 1,495 | 1.0 | % | 3,046 | 2.8 | % | |||||||
Other | 76 | 0.1 | % | 1,315 | 1.1 | % | |||||||
Total revenues | 147,823 | 103.3 | % | 127,564 | 115.2 | % | |||||||
Interest expense | 4,662 | 3.3 | % | 16,862 | 15.2 | % | |||||||
Revenues, net of interest expense | 143,161 | 100.0 | % | 110,702 | 100.0 | % | |||||||
NON-INTEREST EXPENSES: | |||||||||||||
Compensation and benefits | 77,791 | 54.3 | % | 63,552 | 57.4 | % | |||||||
Professional services | 10,824 | 7.6 | % | 10,004 | 9.0 | % | |||||||
Business development | 11,315 | 7.9 | % | 12,376 | 11.2 | % | |||||||
Clearing and brokerage fees | 2,666 | 1.9 | % | 2,266 | 2.0 | % | |||||||
Occupancy and equipment | 7,493 | 5.2 | % | 7,273 | 6.6 | % | |||||||
Communications | 5,409 | 3.8 | % | 4,583 | 4.1 | % | |||||||
Other operating expenses | 1,820 | 1.2 | % | 3,264 | 3.0 | % | |||||||
Total non-interest expenses | 117,318 | 81.9 | % | 103,318 | 93.3 | % | |||||||
Net income before income taxes | 25,843 | 18.1 | % | 7,384 | 6.7 | % | |||||||
Income tax provision | 14,837 | 10.4 | % | 2,566 | 2.3 | % | |||||||
Net income | $ | 11,006 | 7.7 | % | $ | 4,818 | 4.4 | % | |||||
Basic earnings per share | $ | 0.17 | $ | 0.10 | |||||||||
Diluted earnings per share | $ | 0.17 | $ | 0.10 | |||||||||
Weighted average shares - basic | 64,149 | 46,000 | |||||||||||
Weighted average shares - diluted | 64,155 | 46,000 |
FBR CAPITAL MARKETS CORPORATION
Financial & Statistical Supplement - Operating Results
(Dollars in thousands, except per share data)
(Unaudited)
Q-1 07 | ||||
Revenues | ||||
Investment banking: | ||||
Capital raising | $ | 97,236 | ||
Advisory | 6,458 | |||
Institutional brokerage: | ||||
Principal transactions | 2,036 | |||
Agency commissions | 23,776 | |||
Asset management: | ||||
Base management fees | 5,528 | |||
Incentive allocations and fees | 104 | |||
Interest | 11,114 | |||
Net investment income | 1,495 | |||
Other | 76 | |||
Total revenues | 147,823 | |||
Interest expense | 4,662 | |||
Revenues, net of interest expense | 143,161 | |||
Non-interest expenses | ||||
Compensation and benefits | 77,791 | |||
Professional services | 10,824 | |||
Business development | 11,315 | |||
Clearing and brokerage fees | 2,666 | |||
Occupancy and equipment | 7,493 | |||
Communications | 5,409 | |||
Other operating expenses | 1,820 | |||
Total non-interest expenses | 117,318 | |||
Net income before income taxes | 25,843 | |||
Income tax provision | 14,837 | |||
Net income | $ | 11,006 | ||
Net income before income taxes as a percentage of net revenue | 18.1 | % | ||
ROE (annualized) | 8.9 | % | ||
Total shareholders' equity | 501,858 | |||
Basic earnings per share | $ | 0.17 | ||
Diluted earnings per share | $ | 0.17 | ||
Ending shares outstanding (in thousands) | 64,282 | |||
Book value per share | $ | 7.81 | ||
Gross assets under management (in millions) | ||||
Managed accounts | $ | 258.8 | ||
Hedge & offshore funds | 67.1 | |||
Mutual funds | 2,412.9 | |||
Private equity and venture capital funds | 41.2 | |||
Total | $ | 2,780.0 | ||
Net assets under management (in millions) | ||||
Managed accounts | $ | 258.8 | ||
Hedge & offshore funds | 62.5 | |||
Mutual funds | 2,406.4 |
Private equity and venture capital funds | 38.0 | |||
Total | $ | $2,765.7 | ||
Employee count | 751 |
FBR CAPITAL MARKETS CORPORATION
Financial & Statistical Supplement - Operating Results
(Dollars in thousands, except per share data)
(Unaudited)
For the year ended December 31, 2006 | Q-4 06 | Q-3 06 | Q-2 06 | Q-1 06 | ||||||||||||
Revenues | ||||||||||||||||
Investment banking: | ||||||||||||||||
Capital raising | $ | 190,576 | $ | 71,879 | $ | 6,852 | $ | 45,510 | $ | 66,335 | ||||||
Advisory | 24,148 | 9,172 | 5,826 | 6,281 | 2,869 | |||||||||||
Institutional brokerage: | ||||||||||||||||
Principal transactions | 5,814 | (8 | ) | (1,658 | ) | 1,760 | 5,720 | |||||||||
Agency commissions | 100,855 | 24,683 | 24,359 | 28,447 | 23,366 | |||||||||||
Mortgage trading interest | 51,148 | 2,510 | 13,845 | 17,143 | 17,650 | |||||||||||
Mortgage trading net investment loss | (3,298 | ) | (309 | ) | (1,546 | ) | (209 | ) | (1,234 | ) | ||||||
Asset management: | ||||||||||||||||
Base management fees | 19,871 | 5,051 | 4,879 | 5,065 | 4,876 | |||||||||||
Incentive allocations and fees | 1,327 | 403 | (30 | ) | (54 | ) | 1,008 | |||||||||
Interest | 20,934 | 5,235 | 8,439 | 4,647 | 2,613 | |||||||||||
Net investment income (loss) | 3,372 | 3,288 | (3,070 | ) | 108 | 3,046 | ||||||||||
Other | 3,892 | 1,279 | 482 | 816 | 1,315 | |||||||||||
Total revenues | 418,639 | 123,183 | 58,378 | 109,514 | 127,564 | |||||||||||
Interest expense | 54,543 | 3,136 | 16,390 | 18,155 | 16,862 | |||||||||||
Revenues, net of interest expense | 364,096 | 120,047 | 41,988 | 91,359 | 110,702 | |||||||||||
Non-interest expenses | ||||||||||||||||
Compensation and benefits | 225,712 | 61,326 | 46,398 | 54,436 | 63,552 | |||||||||||
Professional services | 43,712 | 13,809 | 9,069 | 10,830 | 10,004 | |||||||||||
Business development | 33,772 | 9,458 | 5,229 | 6,709 | 12,376 | |||||||||||
Clearing and brokerage fees | 11,715 | 3,504 | 2,892 | 3,053 | 2,266 | |||||||||||
Occupancy and equipment | 30,039 | 7,918 | 7,349 | 7,499 | 7,273 | |||||||||||
Communications | 20,039 | 5,024 | 5,442 | 4,990 | 4,583 | |||||||||||
Other operating expenses | 12,219 | 1,434 | 4,561 | 2,960 | 3,264 | |||||||||||
Total non-interest expenses | 377,208 | 102,473 | 80,940 | 90,477 | 103,318 | |||||||||||
Net (loss) income before income taxes | (13,112 | ) | 17,574 | (38,952 | ) | 882 | 7,384 | |||||||||
Income tax (benefit) provision | (3,271 | ) | 10,614 | (16,346 | ) | (105 | ) | 2,566 | ||||||||
Net (loss) income | $ | (9,841 | ) | $ | 6,960 | $ | (22,606 | ) | $ | 987 | $ | 4,818 | ||||
Net (loss) income before income taxes as a percentage of net revenue | -3.6 | % | 14.6 | % | -92.8 | % | 1.0 | % | 6.7 | % |
ROE (annualized) | -2.7 | % | 7.6 | % | -24.9 | % | 1.6 | % | 7.7 | % | ||||||
Total shareholders' equity | 484,388 | 484,388 | 476,098 | 248,965 | 253,812 | |||||||||||
Basic (loss) earnings per share | $ | (0.18 | ) | $ | 0.11 | $ | (0.37 | ) | $ | 0.02 | $ | 0.10 | ||||
Diluted (loss) earnings per share | $ | (0.18 | ) | $ | 0.11 | $ | (0.37 | ) | $ | 0.02 | $ | 0.10 | ||||
Ending shares outstanding (in thousands) | 64,000 | 64,000 | 64,000 | 46,000 | 46,000 | |||||||||||
Book value per share | $ | 7.57 | $ | 7.57 | $ | 7.44 | $ | 5.41 | $ | 5.52 | ||||||
Gross assets under management (in millions) | ||||||||||||||||
Managed accounts | $ | 259.9 | $ | 259.9 | $ | 376.6 | $ | 386.8 | $ | 383.9 | ||||||
Hedge & offshore funds | 97.5 | 97.5 | 102.1 | 125.8 | 136.6 | |||||||||||
Mutual funds | 1,961.9 | 1,961.9 | 1,825.1 | 1,750.6 | 1,849.5 | |||||||||||
Private equity and venture capital funds | 42.2 | 42.2 | 48.5 | 48.2 | 50.5 | |||||||||||
Total | $ | 2,361.5 | $ | 2,361.5 | $ | 2,352.3 | $ | 2,311.4 | $ | 2,420.5 | ||||||
Net assets under management (in millions) | ||||||||||||||||
Managed accounts | $ | 259.9 | $ | 259.9 | $ | 376.6 | $ | 386.8 | $ | 380.9 | ||||||
Hedge & offshore funds | 96.4 | 96.4 | 98.3 | 116.1 | 125.4 | |||||||||||
Mutual funds | 1,954.7 | 1,954.7 | 1,817.8 | 1,742.6 | 1,843.4 | |||||||||||
Private equity and venture capital funds | 40.5 | 40.5 | 46.9 | 46.7 | 49.1 | |||||||||||
Total | $ | 2,351.5 | $ | 2,351.5 | $ | 2,339.6 | $ | 2,292.2 | $ | 2,398.8 | ||||||
Employee count | 702 | 702 | 702 | 726 | 752 |
FBR CAPITAL MARKETS CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amounts)
(Unaudited)
ASSETS | 31-Mar-07 | 31-Dec-06 | |||||
Cash and cash equivalents | $ | 430,426 | $ | 151,417 | |||
Receivables | 15,462 | 43,013 | |||||
Investments: | |||||||
Mortgage-backed securities, at fair value | 5,961 | 415,391 | |||||
Long-term investments | 35,249 | 32,343 | |||||
Trading securities, at fair value | 22,400 | 18,180 | |||||
Due from clearing broker | 30,117 | 28,691 | |||||
Intangible assets, net | 11,600 | 11,000 | |||||
Furniture, equipment and leasehold improvements, net | 30,271 | 31,222 | |||||
Prepaid expenses and other assets | 27,244 | 28,162 | |||||
Total assets | $ | 608,730 | $ | 759,419 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Liabilities: | |||||||
Trading account securities sold short but not yet purchased, at fair value | $ | 759 | $ | 202 | |||
Repurchase agreements | - | 189,155 | |||||
Accrued compensation and benefits | 39,247 | 43,836 | |||||
Accounts payable, accrued expenses and other liabilities | 66,752 | 36,602 | |||||
Due to affiliates | 114 | 5,236 | |||||
Total liabilities | 106,872 | 275,031 | |||||
Shareholders' equity: | |||||||
Common stock - 64,623 and 64,000 shares | 65 | 64 | |||||
Additional paid-in capital | 402,509 | 395,778 | |||||
Accumulated other comprehensive income, net of taxes | 275 | 543 | |||||
Retained earnings | 99,009 | 88,003 | |||||
Total shareholders' equity | 501,858 | 484,388 | |||||
Total liabilities and shareholders' equity | $ | 608,730 | $ | 759,419 |
SOURCE Friedman, Billings, Ramsey Group, Inc.
-0- 04/26/2007
/CONTACT: Media: Lauren Burk at +1-703-469-1004 or lburk@fbr.com;
Investors: Paul Beattie at +1-703-312-9673 or pbeattie@fbr.com /
/Web site: http://www.fbr.com/
(FBR)