Contacts:
Media: Lauren Burk at 703.469.1004 or lburk@fbr.com
Investors: Paul Beattie at 703.312.9673 or pbeattie@fbr.com
FBR Group Announces
Third Quarter 2007 Financial Results
ARLINGTON, VA, October 25, 2007 - Friedman, Billings, Ramsey Group, Inc. (NYSE: FBR) today announced its results for the quarter ended September 30, 2007. The company reported a net after-tax loss for the quarter of $214.7 million, or $1.28 per share, compared to a net after-tax loss of $67.4 million, or $0.39 per share, for the third quarter of 2006. FBR Group’s net after-tax loss for the first nine months of 2007 was $389.9 million, or $2.28 per share, compared to a net after-tax loss of $71.1 million, or $0.41 per share, for the first nine months of 2006. Core book value net of Accumulated Other Comprehensive Income (AOCI) at the close of the third quarter was $4.49 compared to $5.76 at the end of the second quarter of 2007(1).
FBR Group ended the quarter with $904 million of consolidated tangible capital, including approximately $320 million of trust preferred securities. Of this tangible capital, $270 million is attributable to FBR Group’s 52% ownership interest in FBR Capital Markets Corporation (FBR Capital Markets). Of the remaining $634 million of tangible capital, FBR Group has approximately $480 million in cash and liquid securities, which is available for investment.
The four principal components of the third quarter results are:
§ | $90 million of write downs and losses relating to the company’s on-balance sheet securitized loan portfolio (“residual interests”) that reduce the company’s economic risk in this portfolio to zero, |
§ | a net loss of $67 million from the company’s mortgage-backed securities portfolio and operations, including the previously announced $57 million loss on the sale of approximately $4.95 billion of agency mortgage-backed securities, |
§ | an economic loss of $17.2 million(2) associated with restructuring and operating costs at First NLC Financial Services (FNLC), of which $15 million was incurred prior to the agreement announced in July to sell FNLC to an affiliate of Sun Capital Partners (Sun Capital), and |
§ | a $27 million valuation loss relating to the portfolio of conforming and non-conforming loans originated by FNLC and for which FBR Group took ownership under the Sun Capital sale agreement, reducing the value of those loans to $203 million. |
1
Share Buyback Program
On July 25, 2007, FBR Group’s board of directors passed a resolution increasing an existing share buyback authorization from 14 million to 50 million shares. Since that date, the company has repurchased 22.8 million shares at an average price of $4.66 a share.
Merchant Banking
Excluding merchant banking investments of $59.9 million at FBR Capital Markets, the total value of the merchant banking investments held by FBR Group at the close of the third quarter was $57.7 million. During the third quarter, FBR Group recognized $25 million in net gains from its merchant banking portfolio.
First NLC
As disclosed on July 26, 2007, an agreement entered into with Sun Capital limits FBR Group’s ongoing economic exposure to FNLC to $15 million, representing a 20% ownership interest. At the end of the third quarter, this exposure to FNLC was $12 million. However, FBR Group will continue to consolidate FNLC for financial reporting purposes until the transfer of ownership to Sun Capital is completed. The company currently expects this transfer to be completed by year end.
Looking Ahead
“Economic exposure to our securitized, non-recourse mortgage loan portfolio has been eliminated, and our remaining exposure to FNLC is $12 million,” said Eric F. Billings, Chairman and Chief Executive Officer of FBR Group. “With nearly $500 million in cash and highly liquid securities in addition to our 52% ownership of FBR Capital Markets, our risk profile is significantly reduced. Going forward, we are pleased to have the financial flexibility to execute our core agency mortgage backed security strategy through which we believe we will be able to achieve very acceptable returns.”
FBR Capital Markets Corporation
FBR Capital Markets (NASDAQ: FBCM), a majority-owned subsidiary of FBR Group, yesterday reported net after-tax third quarter 2007 earnings of $0.3 million, compared to an after-tax loss of $22.6 million, or $0.37 per share (diluted), in the third quarter of 2006. Net revenues for the third quarter of 2007 were $106.2 million compared to net revenues of $42.0 million in the third quarter of 2006.
2
For the nine months ending September 30, 2007, FBR Capital Markets earned $33.0 million after tax, or $0.51 per share (diluted), compared to an after-tax loss of $16.8 million, or $0.33 per share (diluted), for the first nine months of 2006. Net revenues for the first nine months of 2007 were $418.8 million compared to $244.0 million for the first nine months of 2006.
At the close of the third quarter, FBR Capital Markets had $527.0 million in equity, $387.1 million of cash, and no debt, and its book value was $8.25 per share compared to $8.20 per share at the end of the second quarter of 2007. Complete financial results and tables for FBR Capital Markets can be found at www.fbr.com.
FBR Group will host an earnings conference call on Thursday, October 25, 2007 at 9:00 A.M. U.S. EDT. Investors wishing to listen to the earnings conference call may do so via the web at: http://phx.corporate-ir.net/phoenix.zhtml?c=71352&p=irol-irhome.
Replays of the web cast will be available after the call.
Friedman, Billings, Ramsey Group, Inc. (FBR) 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 & telecom. 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; New York; Phoenix; San Francisco; London, England; and Sydney, Australia. For more information, please visit www.fbr.com.
*Friedman, Billings, Ramsey & Co., Inc.
1Accumulated 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.
2During the third quarter, FBR Group recorded consolidated GAAP losses, excluding valuation losses related to the mortgage loans assumed under the agreement with Sun Capital, totaling $28 million associated with FNLC operations. However, the economic loss to the company, once the Sun Capital transaction closes, will be $17.2 million. There are several components to the economic loss. As noted in the announcement regarding the agreement with Sun Capital, FBR Group funded approximately $15 million in FNLC operating losses and restructuring costs that were incurred prior to signing the agreement with Sun Capital. The company also recorded net interest on the loans assumed under the agreement with Sun Capital and recognized an additional $14 million of losses and restructuring expenses subsequent to signing the agreement, but its economic exposure to these costs is limited to $3 million, corresponding to FBR Group’s 20% economic ownership interest in FNLC. The remaining $11 million recorded during the third quarter by FBR Group will be recaptured upon the final closing of the agreement with Sun Capital.
3
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, interest rates, costs of borrowing, interest spreads, mortgage pre-payment speeds, 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.
# # #
4
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share amounts) (Unaudited) |
Quarter ended September 30, | |||||||||||||
2007 | % | 2006 | % | ||||||||||
REVENUES: | |||||||||||||
Investment banking: | |||||||||||||
Capital raising | $ | 49,692 | -99.9 | % | $ | 6,852 | -8.3 | % | |||||
Advisory | 16,480 | -33.1 | % | 5,826 | -7.0 | % | |||||||
Institutional brokerage: | |||||||||||||
Principal transactions | 968 | -1.9 | % | (1,658 | ) | 2.0 | % | ||||||
Agency commissions | 26,257 | -52.8 | % | 24,388 | -29.5 | % | |||||||
Mortgage trading interest | - | 0.0 | % | 13,845 | -16.7 | % | |||||||
Mortgage trading investment loss | - | (1,546 | ) | 1.9 | % | ||||||||
Asset management: | |||||||||||||
Base management fees | 6,119 | -12.3 | % | 4,880 | -5.9 | % | |||||||
Incentive allocations and fees | 82 | -0.2 | % | (31 | ) | 0.0 | % | ||||||
Principal investment: | |||||||||||||
Interest | 115,450 | -232.0 | % | 150,649 | -182.0 | % | |||||||
Net investment loss | (136,475 | ) | 274.3 | % | (170,621 | ) | 206.1 | % | |||||
Dividends | 526 | -1.1 | % | 4,750 | -5.7 | % | |||||||
Mortgage banking: | |||||||||||||
Interest | 7,194 | -14.5 | % | 22,476 | -27.1 | % | |||||||
Net investment (loss) income | (27,968 | ) | 56.2 | % | 16,092 | -19.4 | % | ||||||
Other | 3,990 | -7.9 | % | 6,540 | -8.0 | % | |||||||
Total revenues | 62,315 | -125.2 | % | 82,442 | -99.6 | % | |||||||
Interest expense | 112,072 | -225.2 | % | 165,237 | -199.6 | % | |||||||
Revenues, net of interest expense | (49,757 | ) | 100.0 | % | (82,795 | ) | 100.0 | % | |||||
NON-INTEREST EXPENSES: | |||||||||||||
Compensation and benefits | 80,955 | -162.7 | % | 69,405 | -83.8 | % | |||||||
Professional services | 12,281 | -24.7 | % | 14,308 | -17.3 | % | |||||||
Business development | 7,713 | -15.5 | % | 7,577 | -9.2 | % | |||||||
Clearing and brokerage fees | 3,953 | -7.9 | % | 2,917 | -3.5 | % | |||||||
Occupancy and equipment | 12,695 | -25.5 | % | 12,909 | -15.6 | % | |||||||
Communications | 7,148 | -14.4 | % | 6,471 | -7.8 | % | |||||||
Other operating expenses | 16,140 | -32.4 | % | 23,291 | -28.1 | % | |||||||
Restructuring charges | 6,172 | -12.4 | % | - | 0.0 | % | |||||||
Total non-interest expenses | 147,057 | -295.5 | % | 136,878 | -165.3 | % | |||||||
Operating loss | (196,814 | ) | 395.5 | % | (219,673 | ) | 265.3 | % | |||||
OTHER (LOSS) INCOME: | |||||||||||||
(Loss) gain on sale of subsidiary shares | (2,450 | ) | 4.9 | % | 121,511 | -146.8 | % | ||||||
Loss before income taxes and minority interest | (199,264 | ) | 400.5 | % | (98,162 | ) | 118.6 | % | |||||
Income tax provision (benefit) | 15,288 | -30.7 | % | (26,062 | ) | 31.5 | % | ||||||
Minority interest in earnings (losses) of consolidated subsidiary | 165 | -0.3 | % | (4,708 | ) | 5.7 | % | ||||||
Net loss | $ | (214,717 | ) | 431.5 | % | $ | (67,392 | ) | 81.4 | % | |||
Basic loss per share | $ | (1.28 | ) | $ | (0.39 | ) | |||||||
Diluted loss per share | $ | (1.28 | ) | $ | (0.39 | ) | |||||||
Weighted average shares - basic | 167,874 | 172,091 | |||||||||||
Weighted average shares - diluted | 167,874 | 172,091 |
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share amounts) (Unaudited) |
Nine Months Ended | |||||||||||||
September 30, | |||||||||||||
2007 | % | 2006 | % | ||||||||||
REVENUES: | |||||||||||||
Investment banking: | |||||||||||||
Capital raising | $ | 256,971 | 184.8 | % | $ | 118,304 | 57.8 | % | |||||
Advisory | 29,090 | 20.9 | % | 14,976 | 7.3 | % | |||||||
Institutional brokerage: | |||||||||||||
Principal transactions | 7,156 | 5.1 | % | 5,822 | 2.8 | % | |||||||
Agency commissions | 78,639 | 56.6 | % | 76,289 | 37.3 | % | |||||||
Mortgage trading interest | - | 0.0 | % | 48,638 | 23.8 | % | |||||||
Mortgage trading net investment loss | - | 0.0 | % | (2,992 | ) | -1.5 | % | ||||||
Asset management: | |||||||||||||
Base management fees | 18,007 | 13.0 | % | 15,042 | 7.4 | % | |||||||
Incentive allocations and fees | 302 | 0.2 | % | 924 | 0.5 | % | |||||||
Principal investment: | |||||||||||||
Interest | 450,073 | 323.8 | % | 413,388 | 202.0 | % | |||||||
Net investment loss | (199,629 | ) | -143.6 | % | (175,726 | ) | -85.9 | % | |||||
Dividends | 2,368 | 1.7 | % | 12,508 | 6.1 | % | |||||||
Mortgage banking: | |||||||||||||
Interest | 47,186 | 33.9 | % | 66,856 | 32.7 | % | |||||||
Net investment (loss) income | (138,858 | ) | -99.9 | % | 56,231 | 27.5 | % | ||||||
Other | 12,566 | 9.1 | % | 16,992 | 8.3 | % | |||||||
Total revenues | 563,871 | 405.6 | % | 667,252 | 326.1 | % | |||||||
Interest expense | 424,854 | 305.6 | % | 446,909 | 218.4 | % | |||||||
Provision for loan losses | - | 0.0 | % | 15,740 | 7.7 | % | |||||||
Revenues, net of interest expense and provision for loan losses | 139,017 | 100.0 | % | 204,603 | 100.0 | % | |||||||
NON-INTEREST EXPENSES: | |||||||||||||
Compensation and benefits | 291,822 | 209.9 | % | 224,634 | 109.8 | % | |||||||
Professional services | 40,143 | 28.9 | % | 41,498 | 20.3 | % | |||||||
Business development | 32,640 | 23.5 | % | 30,266 | 14.8 | % | |||||||
Clearing and brokerage fees | 9,717 | 7.0 | % | 8,315 | 4.1 | % | |||||||
Occupancy and equipment | 38,511 | 27.7 | % | 36,383 | 17.8 | % | |||||||
Communications | 21,791 | 15.7 | % | 18,091 | 8.8 | % | |||||||
Other operating expenses | 66,540 | 47.9 | % | 69,261 | 33.9 | % | |||||||
Impairment of goodwill | 54,752 | 39.4 | % | - | 0.0 | % | |||||||
Restructuring charges | 25,519 | 18.4 | % | - | 0.0 | % | |||||||
Total non-interest expenses | 581,435 | 418.4 | % | 428,448 | 209.5 | % | |||||||
Operating loss | (442,418 | ) | -318.4 | % | (223,845 | ) | -109.4 | % | |||||
OTHER INCOME: | |||||||||||||
Gain on sale of subsidiary shares | 104,058 | 74.9 | % | 121,511 | 59.4 | % | |||||||
Loss before income taxes and minority interest | (338,360 | ) | -243.4 | % | (102,334 | ) | -50.0 | % | |||||
Income tax provision (benefit) | 38,749 | 27.9 | % | (26,541 | ) | -13.0 | % | ||||||
Minority interest in earnings (losses) of consolidated subsidiary | 12,782 | 9.2 | % | (4,708 | ) | -2.3 | % | ||||||
Net loss | $ | (389,891 | ) | -280.5 | % | $ | (71,085 | ) | -34.7 | % | |||
Basic loss per share | $ | (2.28 | ) | $ | (0.41 | ) | |||||||
Diluted loss per share | $ | (2.28 | ) | $ | (0.41 | ) | |||||||
Weighted average shares - basic | 171,308 | 171,376 | |||||||||||
Weighted average shares - diluted | 171,308 | 171,376 |
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC. Financial & Statistical Supplement - Operating Results (Dollars in thousands, except per share data) (Unaudited) |
For the | |||||||||||||
nine months ended | |||||||||||||
September 30, 2007 | Q-3 07 | Q-2 07 | Q-1 07 | ||||||||||
Revenues | |||||||||||||
Investment banking: | |||||||||||||
Capital raising | $ | 256,971 | $ | 49,692 | $ | 110,032 | $ | 97,247 | |||||
Advisory | 29,090 | 16,480 | 6,152 | 6,458 | |||||||||
Institutional brokerage: | |||||||||||||
Principal transactions | 7,156 | 968 | 4,152 | 2,036 | |||||||||
Agency commissions | 78,639 | 26,257 | 28,564 | 23,818 | |||||||||
Asset management: | |||||||||||||
Base management fees | 18,007 | 6,119 | 6,360 | 5,528 | |||||||||
Incentive allocations and fees | 302 | 82 | 116 | 104 | |||||||||
Principal investment: | |||||||||||||
Interest | 450,073 | 115,450 | 152,927 | 181,696 | |||||||||
Net investment loss | (199,629 | ) | (136,475 | ) | (3,441 | ) | (59,713 | ) | |||||
Dividends | 2,368 | 526 | 883 | 959 | |||||||||
Mortgage banking: | |||||||||||||
Interest | 47,186 | 7,194 | 13,462 | 26,530 | |||||||||
Net investment loss | (138,858 | ) | (27,968 | ) | (4,031 | ) | (106,859 | ) | |||||
Other | 12,566 | 3,990 | 4,482 | 4,094 | |||||||||
Total revenues | 563,871 | 62,315 | 319,658 | 181,898 | |||||||||
Interest expense | 424,854 | 112,072 | 143,231 | 169,551 | |||||||||
Revenues, net of interest expense | 139,017 | (49,757 | ) | 176,427 | 12,347 | ||||||||
Non-interest expenses | |||||||||||||
Compensation and benefits | 291,822 | 80,955 | 106,885 | 103,982 | |||||||||
Professional services | 40,143 | 12,281 | 14,008 | 13,854 | |||||||||
Business development | 32,640 | 7,713 | 11,158 | 13,769 | |||||||||
Clearing and brokerage fees | 9,717 | 3,953 | 3,063 | 2,701 | |||||||||
Occupancy and equipment | 38,511 | 12,695 | 12,699 | 13,117 | |||||||||
Communications | 21,791 | 7,148 | 7,592 | 7,051 | |||||||||
Other operating expenses | 66,540 | 16,140 | 18,684 | 31,716 | |||||||||
Impairment of goodwill | 54,752 | - | 28,900 | 25,852 | |||||||||
Restructuring charges | 25,519 | 6,172 | 3,862 | 15,485 | |||||||||
Total non-interest expenses | 581,435 | 147,057 | 206,851 | 227,527 | |||||||||
Operating loss | (442,418 | ) | (196,814 | ) | (30,424 | ) | (215,180 | ) | |||||
Other income (loss) | |||||||||||||
Gain (loss) on sale of subsidiary shares | 104,058 | (2,450 | ) | 105,677 | 831 | ||||||||
(Loss) income before income taxes | |||||||||||||
and minority interest | (338,360 | ) | (199,264 | ) | 75,253 | (214,349 | ) | ||||||
Income tax provision (benefit) | 38,749 | 15,288 | 55,011 | (31,550 | ) | ||||||||
Minority interest in earnings of consolidated subsidiary | 12,782 | 165 | 9,538 | 3,079 | |||||||||
Net (loss) income | $ | (389,891 | ) | $ | (214,717 | ) | $ | 10,704 | $ | (185,878 | ) | ||
ROE (annualized) | -55.6 | % | -91.9 | % | 3.9 | % | -68.8 | % | |||||
ROE (annualized-excluding AOCI) (1) | -54.8 | % | -90.5 | % | 3.9 | % | -68.2 | % | |||||
Total shareholders' equity | $ | 698,214 | $ | 698,214 | $ | 1,012,635 | $ | 989,213 | |||||
Total shareholders' equity, net of AOCI (1) | $ | 711,693 | $ | 711,693 | $ | 1,000,071 | $ | 993,753 | |||||
Basic loss (earnings) per share | $ | (2.28 | ) | $ | (1.28 | ) | $ | 0.06 | $ | (1.08 | ) | ||
Diluted loss (earnings) per share | $ | (2.28 | ) | $ | (1.28 | ) | $ | 0.06 | $ | (1.08 | ) | ||
Ending shares outstanding (in thousands) | 158,671 | 158,671 | 173,756 | 172,846 | |||||||||
Book value per share | $ | 4.40 | $ | 4.40 | $ | 5.83 | $ | 5.72 | |||||
Book value per share, net of AOCI (1) | $ | 4.49 | $ | 4.49 | $ | 5.76 | $ | 5.75 | |||||
Gross assets under management (in millions) | |||||||||||||
Managed accounts | $ | 345.6 | $ | 345.6 | $ | 291.3 | $ | 258.8 | |||||
Hedge & offshore funds | 61.7 | 61.7 | 61.7 | 67.1 | |||||||||
Mutual funds | 2,292.3 | 2,292.3 | 2,482.6 | 2,412.9 | |||||||||
Private equity and venture capital funds | 31.3 | 31.3 | 33.8 | 41.2 | |||||||||
Total | $ | 2,730.9 | $ | 2,730.9 | $ | 2,869.4 | $ | 2,780.0 | |||||
Net assets under management (in millions) | |||||||||||||
Managed accounts | $ | 345.6 | $ | 345.6 | $ | 291.3 | $ | 258.8 | |||||
Hedge & offshore funds | 58.1 | 58.1 | 58.1 | 62.5 | |||||||||
Mutual funds | 2,285.1 | 2,285.1 | 2,474.7 | 2,406.4 | |||||||||
Private equity and venture capital funds | 29.8 | 29.8 | 32.0 | 38.0 | |||||||||
Total | $ | 2,718.6 | $ | 2,718.6 | $ | 2,856.1 | $ | 2,765.7 | |||||
Employee count | 1,290 | 1,290 | 2,151 | 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 | - | - | |||||||||||
(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 | |||
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 | 30-Sep-07 | 31-Dec-06 | |||||
Cash and cash equivalents | $ | 692,737 | $ | 189,956 | |||
Restricted cash | 116 | 132 | |||||
Receivables | 68,735 | 217,249 | |||||
Investments: | |||||||
Mortgage-backed securities, at fair value | 470,749 | 6,870,661 | |||||
Loans held for sale, net | 3,255,807 | 5,367,934 | |||||
Long-term investments | 181,098 | 185,492 | |||||
Trading securities, at fair value | 19,120 | 18,180 | |||||
Due from clearing broker | 11,675 | 28,999 | |||||
Derivative assets, at fair value | 12,159 | 36,875 | |||||
Goodwill | 108,013 | 162,765 | |||||
Intangible assets, net | 10,228 | 21,825 | |||||
Furniture, equipment, software and leasehold improvements, net | 45,782 | 44,111 | |||||
Prepaid expenses and other assets | 243,050 | 208,339 | |||||
Total assets | $ | 5,119,269 | $ | 13,352,518 | |||
LIABILITIES AND SHAREHOLDERS ’ EQUITY | |||||||
Liabilities: | |||||||
Trading account securities sold short but | |||||||
not yet purchased, at fair value | $ | 10,066 | $ | 202 | |||
Commercial paper | - | 3,971,389 | |||||
Repurchase agreements | 497,926 | 3,059,330 | |||||
Derivative liabilities, at fair value | 1,938 | 44,582 | |||||
Dividends payable | 8,001 | 8,743 | |||||
Interest payable | 6,329 | 12,239 | |||||
Accrued compensation and benefits | 39,381 | 57,227 | |||||
Accounts payable, accrued expenses and other liabilities | 79,962 | 81,819 | |||||
Short-term debt | 60,000 | - | |||||
Securitization financing, net | 3,141,773 | 4,486,046 | |||||
Long-term debt | 323,609 | 324,453 | |||||
Total liabilities | 4,168,985 | 12,046,030 | |||||
Minority interest | 252,070 | 135,443 | |||||
Shareholders' equity: | |||||||
Common stock, 160,055 and 174,712 shares | 1,601 | 1,747 | |||||
Additional paid-in capital | 1,503,509 | 1,562,485 | |||||
Accumulated other comprehensive loss, net of taxes | (13,479 | ) | (15,136 | ) | |||
Accumulated deficit | (793,417 | ) | (378,051 | ) | |||
Total shareholders' equity | 698,214 | 1,171,045 | |||||
Total liabilities and shareholders' equity | $ | 5,119,269 | $ | 13,352,518 |