Contacts:
Media: 703.469.1004 or media@fbr.com
Investors: Kurt Harrington at 703.469.1080 or ir@fbr.com
Friedman, Billings, Ramsey Group Reports
Third Quarter Financial Results
ARLINGTON, Va., October 23, 2008 -- Friedman, Billings, Ramsey Group, Inc. (FBR Group) (NYSE: FBR) today reported a net after-tax loss of $169.0 million for the quarter ended September 30, 2008, or $1.12 per share (diluted), compared to net after-tax loss of $210.6 million, or $1.25 per share (diluted), for the third quarter of 2007. FBR Group's net after-tax loss for the first nine months of 2008 was $149.0 million, or $0.99 per share (diluted), compared to a net after-tax loss of $388.2 million, or $2.27 per share (diluted) in the first nine months of 2007.
FBR Group also announced that it has retained financial advisors to evaluate strategic alternatives for the purpose of maximizing the value of its assets and liabilities including all of its trust preferred debt. Potential strategic alternatives include the sale of the company or its assets or distribution of its assets to shareholders.
Excluding its ownership interest in FBR Capital Markets, as of September 30, 2008, FBR Group had assets of $2.3 billion including MBS of $1.7 billion and cash of $82 million, and repurchase agreements of $1.7 billion. Total tangible capital was $349 million including trust preferred debt but excluding its ownership interest in FBR Capital Markets. FBR Group’s interest in FBR Capital Markets’ tangible capital was $223 million at September 30, 2008. FBR Group’s consolidated tangible capital on September 30, 2008 was $572 million and consolidated shareholders’ equity was $268 million.
Book value net of Accumulated Other Comprehensive Income (AOCI) (1) as of September 30, 2008 was $1.81 per share compared to book value net of AOCI of $2.89 per share as of June 30, 2008.
As of September 30, 2008, approximately $188 million of tangible capital, or $1.24 per share, was invested in cash and readily marketable agency securities. During the third quarter, $19 million of liquidations and pay-downs of capital invested in non-agency MBS securities and other investments was recovered. Remaining non-prime securities totaled $10 million at the end of the third quarter.
During the quarter and subsequent to the quarter end, FBR Group implemented a program to downsize its MBS portfolio in order to reduce exposure to deteriorating market conditions while at the same time generating additional cash to fund the extinguishment of its trust preferred debt at a significant discount to face value.
In the third quarter, the Company extinguished $6.8 million of trust preferred debt and realized a $4.1 million gain versus face value on the debt. Subsequent to quarter end, the Company extinguished an additional $38 million of trust preferred debt for a gain of $23 million leaving $273 million of trust preferred debt outstanding. Also subsequent to quarter end, the Company further reduced its MBS portfolio by $1.1 billion resulting in a net loss of $42 million after deducting the $23 million gain from the extinguishment of trust preferred debt.
After giving effect to these post-third quarter transactions, FBR Group has agency MBS of $503 million, super senior AAA MBS of $195 million, and total repurchase agreements of $568 million.
Third Quarter Highlights
The third quarter 2008 results reflect cash and non-cash items.
Operating and realized Investment Losses of $36.0 million include:
§ | $1.5 million of operating cash loss at FBR Group |
§ | $4.1 million gain on the extinguishment of $6.8 million of trust preferred debt. |
§ | $23.9 million of realized investment loss related to sales of agency MBS and a hedge instrument during the quarter, of which $2.8 million was recorded in AOCI as of June 30, 2008. |
§ | $14.7 million of losses, net of minority interest, relating to FBR Capital Markets. |
Non-Cash and Impairment Charges of $133.0 million include:
§ | $129.2 million of impairment related investment losses including: |
o | $119.0 million of other than temporary impairment on MBS and related hedges, of which $85.5 million was recorded in AOCI as of June 30, 2008. |
o | $7.1 million of other than temporary impairment on merchant banking Investments. |
o | $3.1 million related to investment partnerships and sub-prime NIMs. |
§ | $3.8 million of non-cash compensation charges. |
Merchant Banking
Excluding FBR Capital Markets, the total value of the merchant banking investments held by FBR Group at the end of the third quarter was $27.3 million. During the quarter, the Company recorded $7.1 million in other than temporary impairments related to merchant banking investments. No additional investments were made in the portfolio during the quarter.
FBR Capital Markets Corporation
Friedman Billings Ramsey Group, Inc. results have no effect or impact on the financial strength, performance, or ongoing operations of FBR Group’s majority owned subsidiary, FBR Capital Markets Corporation (NASDAQ:FBCM), which is a separately traded and managed public company. FBR Group does, however, consolidate FBR Capital Markets’ financial results on a proportionate basis.
FBR Capital Markets reported a net after-tax loss of $28.6 million, or $0.44 per share (diluted), for the quarter ended September 30, 2008, compared to net after-tax earnings of $0.3 million in the third quarter of 2007. For the nine months ending September 30, 2008, FBR Capital Markets reported a net loss of $64.0 million after tax, or $0.99 per share (diluted), compared to net after-tax earnings of $33.0 million, or $0.51 per share (diluted), for the first nine months of 2007. At quarter’s end, book value per share was $6.96.
FBR Capital Markets also reported a balance sheet reflecting $452 million in capital - all equity - and approximately $294 million of cash and net cash invested in floating rate securities. In line with its strategic plan and market conditions, FBR Capital Markets announced it is taking additional aggressive steps to lower break even levels. The Company plans to take maximum advantage of the adverse economic environment and dislocation in the industry and fully expects to participate in a substantial number capital raising opportunities such as the recapitalizations of financial institutions.
Looking Ahead
“These are undoubtedly the most challenging times that we have ever seen in the financial markets,” said Eric Billings, Chairman and Chief Executive Officer of FBR Group. “We believe we have taken and are continuing to take all necessary steps to position the Company to be able to patiently realize the maximum value of all of our assets and liabilities.”
Complete third quarter 2008 financial results and tables for FBR Capital Markets can be found at www.fbrcapitalmarkets.com.
Investors wishing to listen to the FBR Group earnings conference call at 9:00 A.M. U.S. EDT, October 23, 2008, 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) invests in mortgage-related assets, merchant banking opportunities and is the majority owner of FBR Capital Market Corporation, a separate publicly traded company. FBR is headquartered in the Washington, D.C. metropolitan area. For more information, please visit www.fbr.com.
(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, changes in interest rates, increased costs of borrowing, decreased interest spreads, changes in 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 follow.
# # #
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share amounts) (Unaudited) |
Quarter Ended | |||||||||||||
September 30, | |||||||||||||
2008 | % | 2007 | % | ||||||||||
REVENUES: | |||||||||||||
Investment banking: | |||||||||||||
Capital raising | $ | 6,763 | -6.5 | % | $ | 49,692 | -108.8 | % | |||||
Advisory | 5,999 | -5.8 | % | 16,480 | -36.1 | % | |||||||
Institutional brokerage: | |||||||||||||
Principal transactions | 2,610 | -2.5 | % | 968 | -2.1 | % | |||||||
Agency commissions | 33,813 | -32.6 | % | 26,257 | -57.5 | % | |||||||
Asset management: | |||||||||||||
Base management fees | 3,710 | -3.6 | % | 6,119 | -13.4 | % | |||||||
Incentive allocations and fees | - | 0.0 | % | 82 | -0.2 | % | |||||||
Principal investment: | |||||||||||||
Interest | 31,057 | -29.9 | % | 115,007 | -251.7 | % | |||||||
Net investment loss | (164,153 | ) | 158.2 | % | (131,960 | ) | 288.8 | % | |||||
Dividends | 307 | -0.3 | % | 526 | -1.2 | % | |||||||
Mortgage banking: | |||||||||||||
Interest | - | 0.0 | % | 7,194 | -15.7 | % | |||||||
Net investment loss | - | 0.0 | % | (27,968 | ) | 61.2 | % | ||||||
Other | 1,548 | -1.5 | % | 3,990 | -8.6 | % | |||||||
Total revenues | (78,346 | ) | 75.5 | % | 66,387 | -145.3 | % | ||||||
Interest expense | 25,387 | -24.5 | % | 112,072 | -245.3 | % | |||||||
Revenues, net of interest expense | (103,733 | ) | 100.0 | % | (45,685 | ) | 100.0 | % | |||||
NON-INTEREST EXPENSES: | |||||||||||||
Compensation and benefits | 61,111 | -58.9 | % | 80,955 | -177.2 | % | |||||||
Professional services | 10,442 | -10.1 | % | 12,281 | -26.9 | % | |||||||
Business development | 5,262 | -5.1 | % | 7,713 | -16.9 | % | |||||||
Clearing and brokerage fees | 3,834 | -3.7 | % | 3,953 | -8.7 | % | |||||||
Occupancy and equipment | 8,282 | -8.0 | % | 12,695 | -27.8 | % | |||||||
Communications | 5,773 | -5.6 | % | 7,148 | -15.6 | % | |||||||
Other operating expenses | 6,668 | -6.4 | % | 16,140 | -35.3 | % | |||||||
Restructuring charges | - | 0.0 | % | 6,172 | -13.5 | % | |||||||
Total non-interest expenses | 101,372 | -97.8 | % | 147,057 | -321.9 | % | |||||||
Operating loss | (205,105 | ) | 197.8 | % | (192,742 | ) | 421.9 | % | |||||
OTHER INCOME (LOSS): | |||||||||||||
Gain on reduction in long-term debt | 4,078 | -4.0 | % | - | 0.0 | % | |||||||
Loss on subsidiary share transactions and other losses | (4 | ) | 0.0 | % | (2,450 | ) | 5.4 | % | |||||
Loss before income taxes and minority interest | (201,031 | ) | 193.8 | % | (195,192 | ) | 427.3 | % | |||||
Income tax (benefit) provision | (18,123 | ) | 17.5 | % | 15,288 | -33.4 | % | ||||||
Minority interest in (losses) earnings of consolidated subsidiary | (13,886 | ) | 13.4 | % | 165 | -0.4 | % | ||||||
Net loss | $ | (169,022 | ) | 162.9 | % | $ | (210,645 | ) | 461.1 | % | |||
Basic loss per share | $ | (1.12 | ) | $ | (1.25 | ) | |||||||
Diluted loss per share | $ | (1.12 | ) | $ | (1.25 | ) | |||||||
Weighted average shares - basic | 151,301 | 167,874 | |||||||||||
Weighted average shares - diluted | 151,301 | 167,874 | |||||||||||
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share amounts) (Unaudited) |
Nine Months Ended | |||||||||||||
September 30, | |||||||||||||
2008 | % | 2007 | % | ||||||||||
REVENUES: | |||||||||||||
Investment banking: | |||||||||||||
Capital raising | $ | 75,635 | 198.9 | % | $ | 256,971 | 182.6 | % | |||||
Advisory | 15,267 | 40.2 | % | 29,090 | 20.7 | % | |||||||
Institutional brokerage: | |||||||||||||
Principal transactions | 13,455 | 35.4 | % | 7,156 | 5.1 | % | |||||||
Agency commissions | 89,581 | 235.6 | % | 78,639 | 55.9 | % | |||||||
Asset management: | |||||||||||||
Base management fees | 12,507 | 32.9 | % | 18,007 | 12.8 | % | |||||||
Incentive allocations and fees | - | 0.0 | % | 302 | 0.2 | % | |||||||
Principal investment: | |||||||||||||
Interest | 83,798 | 220.4 | % | 446,258 | 317.1 | % | |||||||
Net investment loss | (188,637 | ) | -496.2 | % | (194,102 | ) | -137.9 | % | |||||
Dividends | 994 | 2.6 | % | 2,368 | 1.7 | % | |||||||
Mortgage banking: | |||||||||||||
Interest | 36 | 0.1 | % | 47,186 | 33.5 | % | |||||||
Net investment income (loss) | 463 | 1.2 | % | (138,858 | ) | -98.7 | % | ||||||
Other | 5,815 | 15.3 | % | 12,566 | 8.9 | % | |||||||
Total revenues | 108,914 | 286.4 | % | 565,583 | 401.9 | % | |||||||
Interest expense | 70,895 | 186.4 | % | 424,854 | 301.9 | % | |||||||
Revenues, net of interest expense | 38,019 | 100.0 | % | 140,729 | 100.0 | % | |||||||
NON-INTEREST EXPENSES: | |||||||||||||
Compensation and benefits | 192,035 | 505.1 | % | 291,822 | 207.4 | % | |||||||
Professional services | 33,401 | 87.9 | % | 40,143 | 28.5 | % | |||||||
Business development | 24,368 | 64.1 | % | 32,640 | 23.2 | % | |||||||
Clearing and brokerage fees | 10,857 | 28.6 | % | 9,717 | 6.9 | % | |||||||
Occupancy and equipment | 26,051 | 68.5 | % | 38,511 | 27.4 | % | |||||||
Communications | 18,046 | 47.5 | % | 21,791 | 15.5 | % | |||||||
Other operating expenses | 19,107 | 50.3 | % | 66,540 | 47.3 | % | |||||||
Goodwill impairment | - | 0.0 | % | 54,752 | 38.9 | % | |||||||
Restructuring charges | - | 0.0 | % | 25,519 | 18.1 | % | |||||||
Total non-interest expenses | 323,865 | 852.0 | % | 581,435 | 413.2 | % | |||||||
Operating loss | (285,846 | ) | -752.0 | % | (440,706 | ) | -313.2 | % | |||||
OTHER INCOME: | |||||||||||||
(Loss) gain on subsidiary share transactions | (189 | ) | -0.5 | % | 104,058 | 74.0 | % | ||||||
Gain on reduction in long-term debt | 4,078 | 10.8 | % | - | 0.0 | % | |||||||
Gain on disposition of subsidiary and other income | 73,030 | 192.1 | % | - | 0.0 | % | |||||||
Loss before income taxes and minority interest | (208,927 | ) | -549.5 | % | (336,648 | ) | -239.2 | % | |||||
Income tax (benefit) provision | (28,903 | ) | -76.0 | % | 38,749 | 27.5 | % | ||||||
Minority interest in (losses) earnings of consolidated subsidiary | (31,053 | ) | -81.7 | % | 12,782 | 9.1 | % | ||||||
Net loss | $ | (148,971 | ) | -391.8 | % | $ | (388,179 | ) | -275.8 | % | |||
Basic loss per share | $ | (0.99 | ) | $ | (2.27 | ) | |||||||
Diluted loss per share | $ | (0.99 | ) | $ | (2.27 | ) | |||||||
Weighted average shares - basic | 151,134 | 171,308 | |||||||||||
Weighted average shares - diluted | 151,134 | 171,308 |
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC. Financial & Statistical Supplement - Operating Results (Dollars in thousands, except per share data) (Unaudited) |
Nine Months Ended | |||||||||||||
September 30, 2008 | Q-3 08 | Q-2 08 | Q-1 08 | ||||||||||
Revenues | |||||||||||||
Investment banking: | |||||||||||||
Capital raising | $ | 75,635 | $ | 6,763 | $ | 3,962 | $ | 64,910 | |||||
Advisory | 15,267 | 5,999 | 4,192 | 5,076 | |||||||||
Institutional brokerage: | |||||||||||||
Principal transactions | 13,455 | 2,610 | 4,888 | 5,957 | |||||||||
Agency commissions | 89,581 | 33,813 | 29,918 | 25,850 | |||||||||
Asset management: | |||||||||||||
Base management fees | 12,507 | 3,710 | 4,153 | 4,644 | |||||||||
Principal investment: | |||||||||||||
Interest | 83,798 | 31,057 | 26,827 | 25,914 | |||||||||
Net investment loss | (188,637 | ) | (164,153 | ) | (4,797 | ) | (19,687 | ) | |||||
Dividends | 994 | 307 | 258 | 429 | |||||||||
Mortgage banking: | |||||||||||||
Interest | 36 | - | - | 36 | |||||||||
Net investment income (loss) | 463 | - | (5 | ) | 468 | ||||||||
Other | 5,815 | 1,548 | 1,932 | 2,335 | |||||||||
Total revenues | 108,914 | (78,346 | ) | 71,328 | 115,932 | ||||||||
Interest expense | 70,895 | 25,387 | 21,858 | 23,650 | |||||||||
Revenues, net of interest expense | 38,019 | (103,733 | ) | 49,470 | 92,282 | ||||||||
Non-interest expenses | |||||||||||||
Compensation and benefits | 192,035 | 61,111 | 53,970 | 76,954 | |||||||||
Professional services | 33,401 | 10,442 | 10,492 | 12,467 | |||||||||
Business development | 24,368 | 5,262 | 6,812 | 12,294 | |||||||||
Clearing and brokerage fees | 10,857 | 3,834 | 3,393 | 3,630 | |||||||||
Occupancy and equipment | 26,051 | 8,282 | 8,580 | 9,189 | |||||||||
Communications | 18,046 | 5,773 | 6,255 | 6,018 | |||||||||
Other operating expenses | 19,107 | 6,668 | 7,055 | 5,384 | |||||||||
Total non-interest expenses | 323,865 | 101,372 | 96,557 | 125,936 | |||||||||
Operating loss | (285,846 | ) | (205,105 | ) | (47,087 | ) | (33,654 | ) | |||||
Other income (loss) | 76,919 | 4,074 | (192 | ) | 73,037 | ||||||||
(Loss) income before income taxes and minority interest | (208,927 | ) | (201,031 | ) | (47,279 | ) | 39,383 | ||||||
Income tax benefit | (28,903 | ) | (18,123 | ) | (9,974 | ) | (806 | ) | |||||
Minority interest in losses of consolidated subsidiary | (31,053 | ) | (13,886 | ) | (12,254 | ) | (4,913 | ) | |||||
Net (loss) income | $ | (148,971 | ) | $ | (169,022 | ) | $ | (25,051 | ) | $ | 45,102 | ||
ROE (annualized) | -60.0 | % | -204.3 | % | -27.2 | % | 48.9 | % | |||||
ROE (annualized-excluding AOCI) (1) | -58.3 | % | -198.5 | % | -23.8 | % | 41.8 | % | |||||
Total shareholders' equity | $ | 268,097 | $ | 268,097 | $ | 343,686 | $ | 344,408 | |||||
Total shareholders' equity, net of AOCI (1) | $ | 274,547 | $ | 274,547 | $ | 436,093 | $ | 455,761 | |||||
Basic (loss) earnings per share | $ | (0.99 | ) | $ | (1.12 | ) | $ | (0.17 | ) | $ | 0.30 | ||
Diluted (loss) earnings per share | $ | (0.99 | ) | $ | (1.12 | ) | $ | (0.17 | ) | $ | 0.30 | ||
Ending shares outstanding (in thousands) | 151,352 | 151,352 | 150,989 | 150,915 | |||||||||
Book value per share | $ | 1.77 | $ | 1.77 | $ | 2.28 | $ | 2.28 | |||||
Book value per share, net of AOCI (1) | $ | 1.81 | $ | 1.81 | $ | 2.89 | $ | 3.02 | |||||
Gross assets under management (in millions) | |||||||||||||
Managed accounts | $ | 276.8 | $ | 276.8 | $ | 275.7 | $ | 333.9 | |||||
Hedge & offshore funds | 29.6 | 29.6 | 35.5 | 45.1 | |||||||||
Mutual funds | 1,433.2 | 1,433.2 | 1,553.4 | 1,702.9 | |||||||||
Private equity and venture capital funds | 17.2 | 17.2 | 21.1 | 21.4 | |||||||||
Total | $ | 1,756.8 | $ | 1,756.8 | $ | 1,885.7 | $ | 2,103.3 | |||||
Net assets under management (in millions) | |||||||||||||
Managed accounts | $ | 276.8 | $ | 276.8 | $ | 275.7 | $ | 333.9 | |||||
Hedge & offshore funds | 27.5 | 27.5 | 33.4 | 40.4 | |||||||||
Mutual funds | 1,427.1 | 1,427.1 | 1,533.8 | 1,698.0 | |||||||||
Private equity and venture capital funds | 16.2 | 16.2 | 20.2 | 20.2 | |||||||||
Total | $ | 1,747.6 | $ | 1,747.6 | $ | 1,863.1 | $ | 2,092.5 | |||||
Employee count | 666 | 666 | 719 | 726 |
(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) |
Year Ended | ||||||||||||||||
December 31, 2007 | Q-4 07 | Q-3 07 | Q-2 07 | Q-1 07 | ||||||||||||
Revenues | ||||||||||||||||
Investment banking: | ||||||||||||||||
Capital raising | $ | 282,619 | $ | 25,648 | $ | 49,692 | $ | 110,032 | $ | 97,247 | ||||||
Advisory | 34,063 | 4,973 | 16,480 | 6,152 | 6,458 | |||||||||||
Institutional brokerage: | ||||||||||||||||
Principal transactions | 10,152 | 2,996 | 968 | 4,152 | 2,036 | |||||||||||
Agency commissions | 104,792 | 26,153 | 26,257 | 28,564 | 23,818 | |||||||||||
Asset management: | ||||||||||||||||
Base management fees | 23,549 | 5,542 | 6,119 | 6,360 | 5,528 | |||||||||||
Incentive allocations and fees | 401 | 99 | 82 | 116 | 104 | |||||||||||
Principal investment: | ||||||||||||||||
Interest | 497,256 | 50,998 | 115,007 | 152,368 | 178,883 | |||||||||||
Net investment loss | (216,429 | ) | (22,327 | ) | (131,960 | ) | (3,377 | ) | (58,765 | ) | ||||||
Dividends | 3,173 | 805 | 526 | 883 | 959 | |||||||||||
Mortgage banking: | ||||||||||||||||
Interest | 51,245 | 4,059 | 7,194 | 13,462 | 26,530 | |||||||||||
Net investment loss | (222,032 | ) | (83,174 | ) | (27,968 | ) | (4,031 | ) | (106,859 | ) | ||||||
Other | 15,808 | 3,242 | 3,990 | 4,482 | 4,094 | |||||||||||
Total revenues | 584,597 | 19,014 | 66,387 | 319,163 | 180,033 | |||||||||||
Interest expense | 477,437 | 52,583 | 112,072 | 143,231 | 169,551 | |||||||||||
Revenues, net of interest expense | 107,160 | (33,569 | ) | (45,685 | ) | 175,932 | 10,482 | |||||||||
Non-interest expenses | ||||||||||||||||
Compensation and benefits | 361,355 | 69,533 | 80,955 | 106,885 | 103,982 | |||||||||||
Professional services | 55,741 | 15,598 | 12,281 | 14,008 | 13,854 | |||||||||||
Business development | 43,518 | 10,878 | 7,713 | 11,158 | 13,769 | |||||||||||
Clearing and brokerage fees | 12,514 | 2,797 | 3,953 | 3,063 | 2,701 | |||||||||||
Occupancy and equipment | 52,302 | 13,791 | 12,695 | 12,699 | 13,117 | |||||||||||
Communications | 28,690 | 6,899 | 7,148 | 7,592 | 7,051 | |||||||||||
Other operating expenses | 82,246 | 15,706 | 16,140 | 18,684 | 31,716 | |||||||||||
Impairment of goodwill | 162,765 | 108,013 | - | 28,900 | 25,852 | |||||||||||
Restructuring charges | 46,985 | 21,466 | 6,172 | 3,862 | 15,485 | |||||||||||
Total non-interest expenses | 846,116 | 264,681 | 147,057 | 206,851 | 227,527 | |||||||||||
Operating loss | (738,956 | ) | (298,250 | ) | (192,742 | ) | (30,919 | ) | (217,045 | ) | ||||||
Other income (loss) | 104,062 | 4 | (2,450 | ) | 105,677 | 831 | ||||||||||
(Loss) income before income taxes | ||||||||||||||||
and minority interest | (634,894 | ) | (298,246 | ) | (195,192 | ) | 74,758 | (216,214 | ) | |||||||
Income tax provision (benefit) | 22,932 | (15,817 | ) | 15,288 | 55,011 | (31,550 | ) | |||||||||
Minority interest in earnings (losses) of consolidated subsidiary | 774 | (12,008 | ) | 165 | 9,538 | 3,079 | ||||||||||
Net (loss) income | $ | (658,600 | ) | $ | (270,421 | ) | $ | (210,645 | ) | $ | 10,209 | $ | (187,743 | ) | ||
ROE (annualized) | -84.2 | % | -138.3 | % | -90.2 | % | 3.7 | % | -69.5 | % | ||||||
ROE (annualized-excluding AOCI) (1) | -82.7 | % | -135.8 | % | -88.7 | % | 3.7 | % | -69.0 | % | ||||||
Total shareholders' equity | $ | 393,691 | $ | 393,691 | $ | 698,214 | $ | 1,012,635 | $ | 989,213 | ||||||
Total shareholders' equity, net of AOCI (1) | $ | 406,762 | $ | 406,762 | $ | 714,566 | $ | 996,283 | $ | 990,460 | ||||||
Basic (loss) earnings per share | $ | (3.94 | ) | $ | (1.77 | ) | $ | (1.25 | ) | $ | 0.06 | $ | (1.09 | ) | ||
Diluted (loss) earnings per share | $ | (3.94 | ) | $ | (1.77 | ) | $ | (1.25 | ) | $ | 0.06 | $ | (1.09 | ) | ||
Ending shares outstanding (in thousands) | 150,674 | 150,674 | 158,671 | 173,756 | 172,846 | |||||||||||
Book value per share | $ | 2.61 | $ | 2.61 | $ | 4.40 | $ | 5.83 | $ | 5.72 | ||||||
Book value per share, net of AOCI (1) | $ | 2.70 | $ | 2.70 | $ | 4.50 | $ | 5.73 | $ | 5.73 | ||||||
Gross assets under management (in millions) | ||||||||||||||||
Managed accounts | $ | 347.1 | $ | 347.1 | $ | 345.6 | $ | 291.3 | $ | 258.8 | ||||||
Hedge & offshore funds | 52.1 | 52.1 | 61.7 | 61.7 | 67.1 | |||||||||||
Mutual funds | 2,046.5 | 2,046.5 | 2,292.3 | 2,482.6 | 2,412.9 | |||||||||||
Private equity and venture capital funds | 23.8 | 23.8 | 31.3 | 33.8 | 41.2 | |||||||||||
Total | $ | 2,469.5 | $ | 2,469.5 | $ | 2,730.9 | $ | 2,869.4 | $ | 2,780.0 | ||||||
Net assets under management (in millions) | ||||||||||||||||
Managed accounts | $ | 347.1 | $ | 347.1 | $ | 345.6 | $ | 291.3 | $ | 258.8 | ||||||
Hedge & offshore funds | 50.7 | 50.7 | 58.1 | 58.1 | 62.5 | |||||||||||
Mutual funds | 2,034.6 | 2,034.6 | 2,285.1 | 2,474.7 | 2,406.4 | |||||||||||
Private equity and venture capital funds | 22.6 | 22.6 | 29.8 | 32.0 | 38.0 | |||||||||||
Total | $ | 2,455.0 | $ | 2,455.0 | $ | 2,718.6 | $ | 2,856.1 | $ | 2,765.7 | ||||||
Employee count | 1,025 | 1,025 | 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. |
(2) | Effective January 1, 2008, the Company elected to change its method of amortizing and accreting premiums, discounts and other deferred costs on its mortgage-backed securities portfolio to the "Contractual Method", in accordance with SFAS 91. See the Company's quarterly filing filed with with the Securities and Exchange Commission for the period ending March 31, 2008 for further discussion. |
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC. CONSOLIDATED BALANCE SHEETS (Dollars and shares in thousands, except per share amounts) (Unaudited) |
ASSETS | 30-Sep-08 | 31-Dec-07 | |||||
Cash and cash equivalents | $ | 227,162 | $ | 692,360 | |||
Restricted cash | 172 | 14,166 | |||||
Receivables | 429,253 | 75,357 | |||||
Investments: | |||||||
Mortgage-backed securities, at fair value | 2,592,379 | 1,791,480 | |||||
Loans held for sale, net | - | 65,074 | |||||
Long-term investments | 106,795 | 169,274 | |||||
Trading securities, at fair value | 25,092 | 19,057 | |||||
Due from clearing broker | 17,168 | - | |||||
Derivative assets, at fair value | 6,767 | 3,514 | |||||
Intangible assets, net | 9,372 | 9,837 | |||||
Furniture, equipment, software and leasehold improvements, net | 25,998 | 30,451 | |||||
Prepaid expenses and other assets | 65,790 | 74,385 | |||||
Total assets | $ | 3,505,948 | $ | 2,944,955 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Liabilities: | |||||||
Trading account securities sold but | $ | 4,601 | $ | 206 | |||
not yet purchased, at fair value | |||||||
Repurchase agreements | 2,374,715 | 1,744,377 | |||||
Securities purchased | 227,191 | - | |||||
Derivative liabilities, at fair value | 3,788 | 3,558 | |||||
Interest payable | 4,438 | 5,746 | |||||
Accrued compensation and benefits | 39,237 | 57,000 | |||||
Due to clearing broker | - | 7,059 | |||||
Accounts payable, accrued expenses and other liabilities | 50,616 | 105,456 | |||||
Short-term loan financing | - | 63,981 | |||||
Long-term debt | 313,358 | 320,820 | |||||
Total liabilities | 3,017,944 | 2,308,203 | |||||
Minority interest | 219,907 | 243,061 | |||||
Shareholders' equity: | |||||||
Common stock, 159,360 and 151,883 shares | 1,594 | 1,519 | |||||
Additional paid-in capital | 1,485,482 | 1,468,801 | |||||
Accumulated other comprehensive loss, net of taxes | (6,450 | ) | (13,071 | ) | |||
Accumulated deficit | (1,212,529 | ) | (1,063,558 | ) | |||
Total shareholders' equity | 268,097 | 393,691 | |||||
Total liabilities and shareholders' equity | $ | 3,505,948 | $ | 2,944,955 |