Exhibit 99.1
For Immediate Release
Investor Contact: Kurt R. Harrington 703-312-9647 orkharrington@fbr.com
Media Contact: Bill Dixon 703-469-1092 orbdixon@fbr.com
FBR Reports Record Earnings per Share of $0.49 (Diluted)
for the Fourth Quarter 2003
Record Net Income for Fourth Quarter and Full Year
Earnings per share increased 48% year over year
and 133% in the fourth quarter versus same period last year
ARLINGTON, Va., February 4, 2004 –Friedman, Billings, Ramsey Group, Inc. (NYSE: FBR) today announced record earnings for full year 2003 and for the quarter ended December 31, 2003. Net income was $201.4 million, or $1.68 (basic) and $1.63 (diluted) per share, for the year ended December 31, 2003 compared to $53.3 million, or $1.16 (basic) and $1.10 (diluted) per share, for the year ended December 31, 2002. For the quarter ended December 31, 2003, net income was $80 million, or $0.50 (basic) and $0.49 (diluted) per share, compared to $10.1 million, or $0.22 (basic) and $0.21 (diluted) per share, for the prior year’s comparable period.
Reflected in these results is the negative impact of purchase accounting adjustments related to FBR’s merger with FBR Asset Investment Corporation (FBR Asset) on March 31, 2003. Adjusting for the impact of these purchase accounting adjustments on asset yields and cost of funds would increase the full year diluted earnings per share of $1.63 by $0.10 to $1.73 and the fourth quarter diluted earnings per share of $0.49 by $0.01 to $0.50.
The company had 165.2 million shares outstanding at December 31, 2003 and weighted average diluted shares outstanding during the year were 123.3 million. FBR declared a quarterly dividend of $0.34 per share on December 11, 2003, to shareholders of record as of December 31, 2003. For the full year, the company declared a total of $1.36 per share in dividends and increased its book value per share by 78% from $5.28 at December 31, 2002 to $9.41 at December 31, 2003. The dividends and increase in book value per share provided a 104% total return on equity to shareholders in 2003.
FBR’s record performance in 2003 is attributable to a number of factors, including the company’s merger with FBR Asset at the end of the first quarter, the continued growth and success of each of the company’s operating businesses, particularly its investment and merchant banking businesses, and the strong performance of the company’s mortgage-backed securities (MBS) business despite a challenging third quarter environment.
The company’s fourth quarter reflected continued strong performance in its investment banking business and a normalization of the net interest margin in its mortgage-backed securities business as the extremely high prepayment speeds in the third quarter moderated significantly in the last three months of 2003. In addition, the company achieved record earnings during the quarter despite running lower than its targeted leverage in the MBS portfolio as it invested proceeds from its $450 million follow-on offering in October. Additionally, the
company realized no gains in its merchant banking business during the quarter. Unrealized gains, however, did increase from $50.7 million at September 30, 2003 to $96 million at December 31, 2003.
“The last three months of 2003 represented a record quarter for the company and the culmination of a record year. In reflecting on 2003, several things clearly contributed to our success. First and foremost, our merger with FBR Asset represented a historic event for our company. In addition, our unwavering discipline has allowed us to continue our industry-leading after-market performance*, and is further evidenced by the returns and performance in all aspects of our business. Finally, this discipline and performance has allowed us to create a company that possesses what we believe is the broadest, deepest institutional distribution for equity securities in the United States today. These factors, together, have allowed us to become one of the leading investment banking firms in the United States,” said Eric F. Billings, Co-Chairman and Co-CEO. “With regard to our balance sheet businesses, as we predicted in the third quarter call, prepayment speeds slowed considerably in the fourth quarter allowing the net interest spread in our MBS portfolio to trend back closer to historical averages. As of the end of December we have fully deployed the capital we raised in October in our merchant banking and MBS portfolios. Consequently, we expect higher earnings in the first quarter of 2004 from both our MBS portfolio, as we anticipate operating with full leverage, and our merchant banking business, assuming normalized realized income from this portfolio.”
For the full year in investment banking, FBR ranked as the #3 lead manager of IPOs** and the #10 lead manager for all public equity offerings*** (ranked by dollar volume according to Dealogic/CommScan EquiDesk). In addition, the company raised approximately $2.5 billion in equity for issuers in private placements during the year. For the quarter, the company completed six IPOs, seven follow-on offerings, and three private equity placements, representing over $3 billion in total dollars raised. For the full year, investment banking revenues totaled $278.6 million versus $143.9 million in 2002 and for the fourth quarter $127.8 million versus $24.3 million in the same quarter last year. Following this strong performance in the latest quarter and for the full year 2003, the company continued to have a pipeline of over $5 billion for lead managed equity and merger and acquisition transactions leading into 2004.
The company’s institutional brokerage revenues totaled $74.1 million during 2003, an increase of 17% over the 2002 total of $63.2 million. For the fourth quarter of 2003 institutional brokerage revenue totaled $23.5 million versus $14.7 million during the fourth quarter of 2002, an increase of 60%. These results were achieved despite the continuation of industry-wide pricing pressure in this part of the business. Illustrating this market condition is the fact that the company’s customer share trading volume increased 32% year over year.
The company’s asset management business also performed well during the year. Assets under management increased in both the company’s mutual fund and hedge fund businesses. Net assets under management (excluding FBR Asset prior to the merger) increased 34.3% year over year. Total revenues from this line of business increased by 48.6% to $30.4 million in 2003 from $20.4 million in 2002 (excluding revenues from FBR Asset).
“During 2003 the company’s private investment partnerships provided exceptional returns to investors, building on what is a very strong track record of performance in our managed fund products,” said Emanuel J. Friedman, Co-Chairman and Co-CEO. “This performance and the performance of our underwritten transactions are the result of our commitment to recognizing and delivering value for investors and issuers.”
At December 31, 2003, the fair value of the company’s mortgage-backed securities portfolio totaled $10.6 billion and the company’s corresponding repurchase agreement and commercial paper liabilities (including those with Georgetown Funding) were $9.5 billion, resulting in leverage (debt to equity) in the mortgage backed portfolio of 9.3 to 1 at the end of the year and 8 to 1 on average for the fourth quarter. The company’s overall leverage was 6.1 to 1 at December 31, 2003.
The weighted average annual yield of the MBS portfolio was 3.23% for the fourth quarter and the company’s weighted average financing rate was 1.21% (including the cost of hedging), resulting in a net interest spread of 2.02%. Adjusting the net interest spread for merger related purchase accounting adjustments would increase the net interest spread to approximately 2.14% for the fourth quarter. The spread in the fourth quarter was higher by 77 basis points than the third quarter spread of 1.25% due to higher asset yields as a result of a significantly lower constant prepayment rate (CPR) during the quarter. For the final three months of the year, the company experienced an average one-month CPR of 27, down from the 41 CPR experienced in the third quarter. The weighted average net interest spread for the full year was 1.69%, compared to an average net interest spread of 2.76% for FBR Asset’s predecessor portfolio in 2002. The weighted average net interest spread without purchase accounting adjustments for the year would have been approximately 1.91%. The average unamortized cost of the company’s portfolio was 101.99 at December 31, 2003.
The company continues to own only adjustable rate mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac, or Ginnie Mae. At year-end, the company had $4.1 billion of pay-fixed, receive-floating interest rate swaps outstanding with a 1.43% funding rate and a weighted average maturity of 314 days. Also at year-end, the company continued to maintain a low effective duration of 0.94. In addition, at the date of this release, the company has increased its total fixed rate swaps to $5.1 billion with an average maturity of 330 days and an average funding rate of 1.48%.
In its merchant banking portfolio, FBR generated dividends of $1.3 million during the quarter ended December 31, 2003 and realized no gains despite a $45.3 million increase in unrealized gains during the quarter. The company did, however, recognize $7.4 million in income from its alternative asset investments. FBR’s merchant banking portfolio and other long term investments totaled $379 million at December 31, 2003, or 24% of the company’s equity, approximately the same percentage level as September 30, 2003, prior to the equity capital raise. Of this total, $261.2 million was held in the merchant banking portfolio, $69.8 million was held in alternative asset funds, and $48.0 million was held in broker-dealer investments.
Looking forward, the company anticipates that full deployment of allocated capital in the MBS strategy, combined with historical returns from merchant banking, should provide the opportunity for REIT level income in 2004 to exceed its current annual dividend of $1.36 per share. REIT level earnings exceeding the current dividend would typically be paid out to shareholders in the form of a special dividend. The company’s capital markets businesses have continued their momentum into the first quarter as institutional brokerage realized record revenues in January and in investment banking the company has completed seven transactions, including its first two IPOs of the year. Additionally, the company believes that based upon its current backlog, new marketing and branding initiatives, including the recently completed FBR Open, a PGA TOUR event, and the continuation of its industry-leading after-market underwriting performance,* it will continue to have success in growing its capital markets businesses throughout 2004.
Investors wishing to listen to the joint conference call at 9:00 a.m. U.S. EST tomorrow may do so via the web at: http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=FBR
Replays of the web cast will be available after the call.
Friedman, Billings, Ramsey Group, Inc. provides investment banking****, institutional brokerage****, asset management, and private client services through its operating subsidiaries and invests in mortgage-backed securities and merchant banking opportunities. FBR focuses capital and financial expertise on six industry sectors: financial services, real estate, technology, healthcare, energy and diversified industries. FBR, headquartered in the Washington, D.C. metropolitan area, with offices in Arlington, Va. and Bethesda, Md., also has offices in Atlanta, Boston, Chicago, Cleveland, Denver, Houston, Irvine, London, New York, Portland, San Francisco, Seattle, and Vienna. For more information, seehttp://www.fbr.com.
| * | Source is Dealogic/CommScan EquiDesk. Relates to all public U.S. equity transactions (IPOs and secondaries/follow-ons, excluding closed-end funds) and all industries. Transactions and performance priced through December 31, 2003. Non-weighted average aftermarket performance. Ranked #1 among lead managing underwriters of more than 10 transactions for the one year period and more than 30 transactions for the three and five year periods ended December 31, 2003. |
| ** | Source is Dealogic/CommScan EquiDesk. Relates to total dollar amount, with over-allotment, of U.S. IPOs priced between January 1, 2003 and December 31, 2003, with apportioned amount to all bookrunners, excluding American Depository Receipts and closed-end funds. |
| *** | Source is Dealogic/CommScan EquiDesk. Relates to total dollar amount, with over-allotment, of U.S. IPOs and secondaries/follow-ons priced between January 1, 2003 and December 31, 2003, with apportioned amount to all bookrunners, excluding American Depository Receipts and closed-end funds. |
| **** | Investment banking and institutional brokerage provided in the United States by Friedman, Billings, Ramsey & Co., Inc. and FBR Investment Services Inc., and in Europe, the Middle East and Asia by Friedman, Billings, Ramsey International, Ltd. |
The company believes that thepro forma information about purchase accounting adjustments related to the merger with FBR Asset Investment Corporation, when read in conjunction with the company’s GAAP financial information, can provide useful supplemental information for investors analyzing period to period comparisons of the company’s financial statements because it is the result of the company’s merger on March 31, 2003.
Financial data follows.
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| | FRIEDMAN, BILLINGS, RAMSEY GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share amounts) (Unaudited) |
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| | | Quarter ended December 31,
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| | | 2003
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| | | 2002
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REVENUES: | | | | | | | | | | | | | |
Investment banking: | | | | | | | | | | | | | |
Underwriting | | $ | 47,015 | | | 21.3 | % | | $ | 8,890 | | 15.3 | % |
Corporate finance | | | 73,347 | | | 33.2 | % | | | 11,119 | | 19.1 | % |
Investment gains | | | 7,443 | | | 3.4 | % | | | 4,312 | | 7.4 | % |
Institutional brokerage: | | | | | | | | | | | | | |
Principal transactions | | | 7,089 | | | 3.2 | % | | | 6,339 | | 10.9 | % |
Agency commissions | | | 16,447 | | | 7.4 | % | | | 8,344 | | 14.3 | % |
Asset management: | | | | | | | | | | | | | |
Base management fees | | | 6,120 | | | 2.8 | % | | | 8,119 | | 13.9 | % |
Incentive allocations and fees | | | 5,723 | | | 2.6 | % | | | 5,291 | | 9.1 | % |
Net investment income | | | 7,563 | | | 3.4 | % | | | 4,474 | | 7.7 | % |
Technology sector investment and incentive (loss)/income | | | (264 | ) | | -0.1 | % | | | 111 | | 0.2 | % |
Principal investment: | | | | | | | | | | | | | |
Interest | | | 69,961 | | | 31.7 | % | | | — | | 0.0 | % |
Realized gains | | | 89 | | | 0.0 | % | | | — | | 0.0 | % |
Dividends | | | 1,278 | | | 0.6 | % | | | — | | 0.0 | % |
Other | | | 3,776 | | | 1.7 | % | | | 1,868 | | 3.2 | % |
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Total revenues | | | 245,587 | | | 111.2 | % | | | 58,867 | | 101.1 | % |
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Interest expense | | | 24,656 | | | 11.2 | % | | | 665 | | 1.1 | % |
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Revenues, net of interest expense | | | 220,931 | | | 100.0 | % | | | 58,202 | | 100.0 | % |
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EXPENSES: | | | | | | | | | | | | | |
Compensation and benefits | | | 91,239 | | | 41.3 | % | | | 31,617 | | 54.3 | % |
Business development and professional services | | | 15,159 | | | 6.9 | % | | | 7,545 | | 13.0 | % |
Clearing and brokerage fees | | | 1,977 | | | 0.9 | % | | | 1,467 | | 2.5 | % |
Occupancy and equipment | | | 2,743 | | | 1.3 | % | | | 2,274 | | 3.9 | % |
Communications | | | 3,168 | | | 1.4 | % | | | 1,910 | | 3.3 | % |
Other operating expenses | | | 5,603 | | | 2.5 | % | | | 2,608 | | 4.5 | % |
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Total expenses | | | 119,889 | | | 54.3 | % | | | 47,421 | | 81.5 | % |
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Net income before income taxes | | | 101,042 | | | 45.7 | % | | | 10,781 | | 18.5 | % |
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Income tax provision | | | 21,084 | | | 9.5 | % | | | 692 | | 1.2 | % |
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Net Income | | $ | 79,958 | | | 36.2 | % | | $ | 10,089 | | 17.3 | % |
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Basic earnings per share | | $ | 0.50 | | | | | | $ | 0.22 | | | |
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Diluted earnings per share | | $ | 0.49 | | | | | | $ | 0.21 | | | |
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Weighted average shares—basic | | | 159,984 | | | | | | | 46,403 | | | |
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Weighted average shares—diluted | | | 163,470 | | | | | | | 49,089 | | | |
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| | FRIEDMAN, BILLINGS, RAMSEY GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share amounts) |
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| | | Year ended December 31,
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| | | 2003
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| | | 2002
| | | %
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REVENUES: | | | | | | | | | | | | | | |
Investment banking: | | | | | | | | | | | | | | |
Underwriting | | $ | 117,296 | | | 21.0 | % | | $ | 76,556 | | | 28.8 | % |
Corporate finance | | | 144,086 | | | 25.7 | % | | | 58,595 | | | 22.0 | % |
Investment gains | | | 17,204 | | | 3.1 | % | | | 8,725 | | | 3.3 | % |
Institutional brokerage: | | | | | | | | | | | | | | |
Principal transactions | | | 23,965 | | | 4.3 | % | | | 27,512 | | | 10.3 | % |
Agency commissions | | | 50,178 | | | 9.0 | % | | | 35,672 | | | 13.4 | % |
Asset management: | | | | | | | | | | | | | | |
Base management fees | | | 24,782 | | | 4.4 | % | | | 28,956 | | | 10.9 | % |
Incentive allocations and fees | | | 14,205 | | | 2.5 | % | | | 14,258 | | | 5.4 | % |
Net investment income | | | 22,484 | | | 4.0 | % | | | 16,276 | | | 6.1 | % |
Technology sector investment and incentive (loss) | | | (1,591 | ) | | -0.3 | % | | | (5,622 | ) | | -2.1 | % |
Principal investment: | | | | | | | | | | | | | | |
Interest | | | 168,393 | | | 30.1 | % | | | — | | | 0.0 | % |
Realized gains | | | 32,276 | | | 5.8 | % | | | — | | | 0.0 | % |
Dividends | | | 5,019 | | | 0.9 | % | | | — | | | 0.0 | % |
Other | | | 10,228 | | | 1.8 | % | | | 7,275 | | | 2.7 | % |
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Total revenues | | | 628,525 | | | 112.3 | % | | | 268,203 | | | 100.8 | % |
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Interest expense | | | 68,995 | | | 12.3 | % | | | 2,073 | | | 0.8 | % |
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Revenues, net of interest expense | | | 559,530 | | | 100.0 | % | | | 266,130 | | | 100.0 | % |
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EXPENSES: | | | | | | | | | | | | | | |
Compensation and benefits | | | 226,389 | | | 40.5 | % | | | 147,072 | | | 55.3 | % |
Business development and professional services | | | 43,044 | | | 7.7 | % | | | 30,589 | | | 11.5 | % |
Clearing and brokerage fees | | | 7,014 | | | 1.2 | % | | | 5,353 | | | 2.0 | % |
Occupancy and equipment | | | 9,585 | | | 1.7 | % | | | 8,838 | | | 3.3 | % |
Communications | | | 10,574 | | | 1.9 | % | | | 8,185 | | | 3.1 | % |
Other operating expenses | | | 16,919 | | | 3.0 | % | | | 10,652 | | | 4.0 | % |
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Total expenses | | | 313,525 | | | 56.0 | % | | | 210,689 | | | 79.2 | % |
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Net income before income taxes and extraordinary gain | | | 246,005 | | | 44.0 | % | | | 55,441 | | | 20.8 | % |
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Income tax provision | | | 44,591 | | | 8.0 | % | | | 3,035 | | | 1.1 | % |
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Net income before extraordinary gain | | | 201,414 | | | 36.0 | % | | | 52,406 | | | 19.7 | % |
Extraordinary gain | | | — | | | 0.0 | % | | | 1,413 | | | 0.5 | % |
Income tax provision on extraordinary gain | | | — | | | 0.0 | % | | | 536 | | | 0.2 | % |
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Net income | | $ | 201,414 | | | 36.0 | % | | $ | 53,283 | | | 20.0 | % |
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Basic earnings per share before extraordinary gain | | $ | 1.68 | | | | | | $ | 1.14 | | | | |
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Diluted earnings per share before extraordinary gain | | $ | 1.63 | | | | | | $ | 1.08 | | | | |
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Basic earnings per share | | $ | 1.68 | | | | | | $ | 1.16 | | | | |
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Diluted earnings per share | | $ | 1.63 | | | | | | $ | 1.10 | | | | |
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Weighted average shares—basic | | | 119,801 | | | | | | | 46,098 | | | | |
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Weighted average shares—diluted | | | 123,307 | | | | | | | 48,442 | | | | |
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| | FRIEDMAN, BILLINGS, RAMSEY GROUP, INC. Financial & Statistical Supplement – Operating Results (unaudited) (Dollars in thousands, except per share data) |
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| | | YTD 2003
| | | Q-4 03
| | | Q-3 03
| | | Q-2 03
| | | Q-1 03
| | | YTD 2002
| | | Q-4 02
| | | Q-3 02
| | | Q-2 02
| | | Q-1 02
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Revenues | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Investment banking: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Underwriting | | $ | 117,296 | | | $ | 47,015 | | | $ | 37,518 | | | $ | 23,975 | | | $ | 8,788 | | | $ | 76,556 | | | $ | 8,890 | | | $ | 30,108 | | | $ | 25,248 | | | $ | 12,310 | |
Corporate finance | | | 144,086 | | | | 73,347 | | | | 51,637 | | | | 13,383 | | | | 5,719 | | | | 58,595 | | | | 11,119 | | | | 26,175 | | | | 9,827 | | | | 11,474 | |
Investment gains | | | 17,204 | | | | 7,443 | | | | 1,096 | | | | 5,433 | | | | 3,232 | | | | 8,725 | | | | 4,312 | | | | 2,627 | | | | 1,595 | | | | 191 | |
Institutional brokerage: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Principal transactions | | | 23,965 | | | | 7,089 | | | | 6,549 | | | | 6,576 | | | | 3,751 | | | | 27,512 | | | | 6,339 | | | | 5,743 | | | | 8,372 | | | | 7,058 | |
Agency commissions | | | 50,178 | | | | 16,447 | | | | 13,145 | | | | 13,049 | | | | 7,537 | | | | 35,672 | | | | 8,344 | | | | 8,629 | | | | 9,954 | | | | 8,745 | |
Asset management: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Base management fees | | | 24,782 | | | | 6,120 | | | | 5,602 | | | | 5,369 | | | | 7,691 | | | | 28,956 | | | | 8,119 | | | | 7,208 | | | | 7,633 | | | | 5,996 | |
Incentive income | | | 14,205 | | | | 5,723 | | | | 1,770 | | | | 1,133 | | | | 5,579 | | | | 14,258 | | | | 5,291 | | | | 4,282 | | | | 2,902 | | | | 1,783 | |
Net investment income (loss) | | | 22,484 | | | | 7,563 | | | | 3,327 | | | | 8,968 | | | | 2,626 | | | | 16,276 | | | | 4,474 | | | | (2,737 | ) | | | 8,517 | | | | 6,022 | |
Technology sector investment and incentive income (loss) | | | (1,591 | ) | | | (264 | ) | | | (824 | ) | | | (66 | ) | | | (437 | ) | | | (5,622 | ) | | | 111 | | | | (2,202 | ) | | | (2,432 | ) | | | (1,099 | ) |
Principal investment: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Interest | | | 168,393 | | | | 69,961 | | | | 46,849 | | | | 49,088 | | | | 2,495 | | | | — | | | | — | | | | — | | | | — | | | | — | |
Realized gains | | | 32,276 | | | | 89 | | | | 14,358 | | | | 17,770 | | | | 59 | | | | — | | | | — | | | | — | | | | — | | | | — | |
Dividends | | | 5,019 | | | | 1,278 | | | | 1,258 | | | | 1,542 | | | | 941 | | | | — | | | | — | | | | — | | | | — | | | | — | |
Other | | | 10,228 | | | | 3,776 | | | | 2,675 | | | | 2,219 | | | | 1,558 | | | | 7,275 | | | | 1,868 | | | | 1,879 | | | | 1,638 | | | | 1,890 | |
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Total revenues | | | 628,525 | | | | 245,587 | | | | 184,960 | | | | 148,439 | | | | 49,539 | | | | 268,203 | | | | 58,867 | | | | 81,712 | | | | 73,254 | | | | 54,370 | |
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Expenses | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Compensation and benefits | | | 226,389 | | | | 91,239 | | | | 67,505 | | | | 42,841 | | | | 24,804 | | | | 147,072 | | | | 31,617 | | | | 45,725 | | | | 38,411 | | | | 31,319 | |
Business development & professional services | | | 43,044 | | | | 15,159 | | | | 11,328 | | | | 10,678 | | | | 5,879 | | | | 30,589 | | | | 7,545 | | | | 8,650 | | | | 7,982 | | | | 6,412 | |
Clearing and brokerage fees | | | 7,014 | | | | 1,977 | | | | 2,057 | | | | 1,748 | | | | 1,232 | | | | 5,353 | | | | 1,467 | | | | 1,443 | | | | 1,817 | | | | 626 | |
Occupancy & equipment | | | 9,585 | | | | 2,743 | | | | 2,426 | | | | 2,217 | | | | 2,199 | | | | 8,838 | | | | 2,274 | | | | 2,309 | | | | 2,046 | | | | 2,209 | |
Communications | | | 10,574 | | | | 3,168 | | | | 2,969 | | | | 2,228 | | | | 2,209 | | | | 8,185 | | | | 1,910 | | | | 2,009 | | | | 2,187 | | | | 2,079 | |
Interest expense | | | 68,995 | | | | 24,656 | | | | 22,972 | | | | 19,721 | | | | 1,646 | | | | 2,073 | | | | 665 | | | | 608 | | | | 430 | | | | 370 | |
Other operating expenses | | | 16,919 | | | | 5,603 | | | | 4,259 | | | | 4,053 | | | | 3,004 | | | | 10,652 | | | | 2,608 | | | | 2,976 | | | | 2,602 | | | | 2,466 | |
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Total expenses | | | 382,520 | | | | 144,545 | | | | 113,516 | | | | 83,486 | | | | 40,973 | | | | 212,762 | | | | 48,086 | | | | 63,720 | | | | 55,475 | | | | 45,481 | |
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Net income before taxes and extraordinary gain | | | 246,005 | | | | 101,042 | | | | 71,444 | | | | 64,953 | | | | 8,566 | | | | 55,441 | | | | 10,781 | | | | 17,992 | | | | 17,779 | | | | 8,889 | |
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Income tax provision | | | 44,591 | | | | 21,084 | | | | 14,483 | | | | 6,181 | | | | 2,843 | | | | 3,035 | | | | 692 | | | | 2,343 | | | | — | | | | — | |
Net income before extraordinary gain | | $ | 201,414 | | | $ | 79,958 | | | $ | 56,961 | | | $ | 58,772 | | | $ | 5,723 | | | $ | 52,406 | | | $ | 10,089 | | | $ | 15,649 | | | $ | 17,779 | | | $ | 8,889 | |
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Extraordinary gain | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,413 | | | | — | | | | — | | | | — | | | | 1,413 | |
Income tax provision on extraordinary gain | | | — | | | | — | | | | — | | | | — | | | | — | | | | 536 | | | | — | | | | 536 | | | | — | | | | — | |
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Net income | | $ | 201,414 | | | $ | 79,958 | | | $ | 56,961 | | | $ | 58,772 | | | $ | 5,723 | | | $ | 53,283 | | | $ | 10,089 | | | $ | 15,113 | | | $ | 17,779 | | | $ | 10,302 | |
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Net income before taxes and extraordinary gain as a percentage of revenue | | | 39.1 | % | | | 41.1 | % | | | 38.6 | % | | | 43.8 | % | | | 17.3 | % | | | 20.7 | % | | | 18.3 | % | | | 22.0 | % | | | 24.3 | % | | | 16.3 | % |
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ROE (annualized) | | | 22.4 | % | | | 24.4 | % | | | 20.7 | % | | | 21.9 | % | | | 3.6 | % | | | 24.8 | % | | | 16.8 | % | | | 26.7 | % | | | 34.4 | % | | | 21.7 | % |
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Total shareholders' equity | | $ | 1,554,339 | | | $ | 1,554,339 | | | $ | 1,068,153 | | | $ | 1,136,093 | | | $ | 1,011,647 | | | $ | 245,165 | | | $ | 245,165 | | | $ | 234,625 | | | $ | 218,368 | | | $ | 194,590 | |
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Basic earnings per share | | $ | 1.68 | | | $ | 0.50 | | | $ | 0.42 | | | $ | 0.43 | | | $ | 0.12 | | | $ | 1.16 | | | $ | 0.22 | | | $ | 0.33 | | | $ | 0.39 | | | $ | 0.23 | |
Diluted earnings per share | | $ | 1.63 | | | $ | 0.49 | | | $ | 0.41 | | | $ | 0.43 | | | $ | 0.12 | | | $ | 1.10 | | | $ | 0.21 | | | $ | 0.31 | | | $ | 0.36 | | | $ | 0.22 | |
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Ending shares outstanding (in thousands) | | | 165,189 | | | | 165,189 | | | | 136,180 | | | | 136,087 | | | | 131,576 | | | | 46,456 | | | | 46,456 | | | | 46,396 | | | | 46,339 | | | | 45,751 | |
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Book value per share | | $ | 9.41 | | | $ | 9.41 | | | $ | 7.84 | | | $ | 8.35 | | | $ | 7.69 | | | $ | 5.28 | | | $ | 5.28 | | | $ | 5.06 | | | $ | 4.71 | | | $ | 4.25 | |
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| | | YTD 2003
| | Q-4 03
| | Q-3 03
| | Q-2 03
| | Q-1 03
| | YTD 2002
| | Q-4 02
| | Q-3 02
| | Q-2 02
| | Q-1 02
|
Gross assets under management (in millions) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Managed accounts | | $ | 60.6 | | $ | 60.6 | | $ | 63.8 | | $ | 69.6 | | $ | 818.8 | | $ | 6,538.0 | | $ | 6,538.0 | | $ | 7,356.0 | | $ | 4,152.3 | | $ | 2,757.7 |
Hedge & offshore funds | | | 330.2 | | | 330.2 | | | 245.9 | | | 234.8 | | | 237.5 | | | 247.0 | | | 247.0 | | | 232.3 | | | 216.0 | | | 209.2 |
Mutual funds | | | 1,654.5 | | | 1,654.5 | | | 1,492.1 | | | 1,419.6 | | | 1,196.8 | | | 1,188.5 | | | 1,188.5 | | | 1,071.2 | | | 1,313.4 | | | 1,270.4 |
Private equity funds | | | 42.9 | | | 42.9 | | | 40.6 | | | 32.5 | | | 32.7 | | | 34.7 | | | 34.7 | | | 41.7 | | | 46.1 | | | 46.4 |
Technology sector funds | | | 50.3 | | | 50.3 | | | 46.1 | | | 44.8 | | | 49.7 | | | 63.8 | | | 63.8 | | | 54.0 | | | 56.6 | | | 60.4 |
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Total | | $ | 2,138.5 | | $ | 2,138.5 | | $ | 1,888.5 | | $ | 1,801.3 | | $ | 2,335.5 | | $ | 8,072.0 | | $ | 8,072.0 | | $ | 8,755.2 | | $ | 5,784.4 | | $ | 4,344.1 |
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Net assets under management (in millions) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Managed accounts | | $ | 60.6 | | $ | 60.6 | | $ | 63.8 | | $ | 69.6 | | $ | 82.7 | | $ | 871.5 | | $ | 871.5 | | $ | 849.7 | | $ | 748.5 | | $ | 394.5 |
Hedge & offshore funds | | | 277.2 | | | 277.2 | | | 222.3 | | | 196.8 | | | 159.4 | | | 162.4 | | | 162.4 | | | 162.9 | | | 188.5 | | | 157.7 |
Mutual funds | | | 1,642.6 | | | 1,642.6 | | | 1,480.5 | | | 1,410.5 | | | 1,191.6 | | | 1,173.3 | | | 1,173.3 | | | 1,064.4 | | | 1,297.7 | | | 1,214.1 |
Private equity funds | | | 37.5 | | | 37.5 | | | 33.2 | | | 30.9 | | | 28.6 | | | 30.9 | | | 30.9 | | | 40.1 | | | 45.5 | | | 45.5 |
Technology sector funds | | | 43.3 | | | 43.3 | | | 39.7 | | | 40.4 | | | 45.4 | | | 48.2 | | | 48.2 | | | 48.6 | | | 52.3 | | | 55.8 |
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Total | | $ | 2,061.2 | | $ | 2,061.2 | | $ | 1,839.5 | | $ | 1,748.2 | | $ | 1,507.7 | | $ | 2,286.3 | | $ | 2,286.3 | | $ | 2,165.7 | | $ | 2,332.5 | | $ | 1,867.6 |
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Productive assets under management (in millions) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Managed accounts | | $ | 60.6 | | $ | 60.6 | | $ | 63.8 | | $ | 69.6 | | $ | 818.8 | | $ | 6,538.0 | | $ | 6,538.0 | | $ | 7,356.0 | | $ | 4,152.3 | | $ | 2,757.7 |
Hedge & offshore funds | | | 277.2 | | | 277.2 | | | 222.3 | | | 196.8 | | | 159.4 | | | 162.4 | | | 162.4 | | | 162.9 | | | 188.5 | | | 157.7 |
Mutual funds | | | 1,642.6 | | | 1,642.6 | | | 1,480.5 | | | 1,410.5 | | | 1,191.6 | | | 1,173.3 | | | 1,173.3 | | | 1,064.4 | | | 1,297.7 | | | 1,214.1 |
Private equity funds | | | 91.9 | | | 91.9 | | | 88.6 | | | 88.1 | | | 90.9 | | | 91.2 | | | 91.2 | | | 92.5 | | | 94.8 | | | 95.3 |
Technology sector funds | | | 91.6 | | | 91.6 | | | 92.2 | | | 89.5 | | | 249.2 | | | 249.0 | | | 249.0 | | | 248.5 | | | 248.1 | | | 249.3 |
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Total | | $ | 2,163.9 | | $ | 2,163.9 | | $ | 1,947.4 | | $ | 1,854.5 | | $ | 2,509.9 | | $ | 8,213.9 | | $ | 8,213.9 | | $ | 8,924.3 | | $ | 5,981.4 | | $ | 4,474.1 |
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Employee count | | | 494 | | | 494 | | | 479 | | | 500 | | | 493 | | | 481 | | | 481 | | | 464 | | | 445 | | | 441 |
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| | FRIEDMAN, BILLINGS, RAMSEY GROUP, INC. CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except per share amounts) |
| | | | | | | | |
| | | 31-Dec-03
| | | 31-Dec-02
| |
| ASSETS | | | | | | | | |
| | |
Cash and cash equivalents | | $ | 92,688 | | | $ | 90,007 | |
Receivables: | | | | | | | | |
Interest | | | 44,674 | | | | — | |
Asset management fees | | | 5,517 | | | | 13,494 | |
Investment banking | | | 8,464 | | | | 1,725 | |
Affiliates | | | 4,861 | | | | 7,117 | |
Other | | | 3,779 | | | | 5,786 | |
Investments: | | | | | | | | |
Mortgage-backed securities, at fair value | | | 10,551,570 | | | | 38,505 | |
Trading securities, at market value | | | 4,932 | | | | 8,298 | |
Long-term investments | | | 379,002 | | | | 150,447 | |
Due from clearing broker | | | 89,940 | | | | 43,146 | |
Bank loans, net | | | — | | | | 15,052 | |
MMA acquired management contracts | | | 16,090 | | | | 17,629 | |
Goodwill | | | 108,013 | | | | — | |
Building, furniture, equipment and leasehold improvements, net | | | 6,969 | | | | 9,156 | |
Other assets | | | 17,114 | | | | 5,823 | |
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Total assets | | $ | 11,333,613 | | | $ | 406,185 | |
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LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | |
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Liabilities: | | | | | | | | |
Trading account securities sold short, at market value | | $ | 9,525 | | | $ | 19,932 | |
Repurchase agreements | | | 5,095,676 | | | | 16,352 | |
Commercial paper | | | 4,397,993 | | | | — | |
Interest rate swaps | | | 5,366 | | | | — | |
Dividends payable | | | 56,744 | | | | — | |
Interest payable | | | 6,188 | | | | — | |
Accounts payable and accrued expenses | | | 52,692 | | | | 16,412 | |
Accrued compensation and benefits | | | 100,901 | | | | 41,255 | |
Bank deposits | | | — | | | | 51,215 | |
Short-term loans payable | | | — | | | | 10,588 | |
Long-term debt | | | 54,189 | | | | 5,266 | |
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Total liabilities | | | 9,779,274 | | | | 161,020 | |
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Shareholders’ equity: | | | | | | | | |
Common stock, 166,893 and 50,456 shares | | | 1,669 | | | | 505 | |
Additional paid-in capital | | | 1,443,228 | | | | 211,724 | |
Employee stock loan receivable including accrued interest (1,289 and 4,000 shares) | | | (8,277 | ) | | | (24,182 | ) |
Deferred compensation | | | (2,203 | ) | | | — | |
Accumulated other comprehensive income | | | 60,505 | | | | 4,345 | |
Retained earnings | | | 59,417 | | | | 52,773 | |
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Total shareholders’ equity | | | 1,554,339 | | | | 245,165 | |
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Total liabilities and shareholders’ equity | | $ | 11,333,613 | | | $ | 406,185 | |
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Book Value per Share | | $ | 9.41 | | | $ | 5.28 | |
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Shares Outstanding | | | 165,189 | | | | 46,456 | |
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 on Form 10-K and Quarterly Reports on Form 10-Q that is available from the company (by calling Investor Relations 703.469.1080, or from the company’s websitewww.fbr.com) and from the SEC’s website atwww.sec.gov.
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