Exhibit 99.1
Contacts:
Media:
Bill Dixon at 703-469-1092 orbdixon@fbr.com
Lauren Burk at 703-469-1004 orlburk@fbr.com
Investors:
Kurt Harrington at 703-312-9647 orkharrington@fbr.com
FBR Announces Financial Results
for the Second Quarter of 2005
After-Tax Net Earnings of $53.2 Million, Diluted Earnings per Share of $0.31
ARLINGTON, Va., July 27, 2005 – Friedman, Billings, Ramsey Group, Inc. (NYSE: FBR) today announced net income after tax for the quarter ended June 30, 2005 of $53.2 million, or $0.31 per share (diluted), compared to $81.2 million, or $0.48 per share (diluted), for the second quarter of 2004. Net revenue for the quarter was $207.2 million, up 16% from net revenue of $178.4 million in the second quarter of 2004.
On June 9, 2005, FBR declared a quarterly regular dividend of $0.34 per share for the second quarter of 2005, which will be paid on July 29, 2005 to shareholders of record on June 30, 2005.
The company’s net after-tax earnings for the first six months of 2005 were $77.7 million, or $0.46 per share (diluted), compared to $170.8 million, or $1.01 per share (diluted), for the first half of 2004. Net revenue for the first two quarters of 2005 was $370.2 million, compared to $399.2 million for the first six months of 2004. Book value per share as of June 30, 2005 was $8.96, and book value per share net of Accumulated Other Comprehensive Income (AOCI) was $9.62.1
“These second quarter results demonstrate the benefits of the diversified and complementary business model created by our merger, which married the growth engine of our capital markets franchise to the strength and resiliency of our balance sheet business,” said Eric F. Billings, Chairman and Chief Executive Officer of FBR. “Our ability to generate returns on equity for shareholders of 14%, despite the headwinds of a rising rate environment and an industry-wide slowdown in brokerage and banking activity, is the reason we are excited about our business. Our confidence in our model is solidly rooted in the growing equity capital markets share we are achieving, the increasing market recognition of the unique capabilities of this franchise, and the success of the execution of our mortgage strategy and merchant investing.”
Equity Capital Markets
| • | Investment banking revenue for the quarter was $101.2 million, an increase of 63% over the second quarter of last year. Revenue for the first six months of 2005 was $189.2 million, an increase of more than 24% over the first half of 2004. |
| • | Revenue from institutional brokerage during the quarter declined 12% on a year-to-year basis, from $26.5 million in the second quarter of 2004 to $23.4 million in the second quarter of 2005, continuing to reflect reduced volumes across the industry. |
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| • | For the first half of 2005, brokerage revenue totaled $51.1 million, a decrease of 17% from the $61.6 million generated in the first six months of 2004. |
| • | For the second quarter and first half of the year, FBR was ranked as the number one (#1) book-running manager of common equity capital raises for U.S. companies with a market capitalization of $2 billion or less.2 |
| • | In the second quarter, FBR completed 39 transactions with an aggregate value of $10.9 billion, including: |
| • | Five initial public offerings with a combined value of $2.8 billion |
| • | Six asset-backed securities (ABS) transactions with a total value of $4.1 billion |
| • | Four private equity placements with a value of $1.1 billion. |
| • | In the first half of this year, FBR’s ABS banking group completed eleven transactions and produced revenue that more than doubled from the first to the second quarters. |
| • | For the first six months of 2005, the real estate banking group maintained its leadership position in its sector, ranking as the number one (#1) book-running manager for U.S. real estate equity capital raises.3 |
| • | In the first half of this year, FBR’s energy banking team ranked as the number two (#2) book-running manager for domestic oil and gas equity capital raises.3 |
“This growth in our business and the headway we have made in diversifying the franchise have coincided with significant reductions in equity capital markets volumes across our industry, leading to appreciable gains in market share for FBR,” said J. Rock Tonkel, President and Head of Investment Banking. “As more and more businesses requiring capital and advice become aware of our accomplishments and expertise, we have every expectation that successes like the breakout performance of our energy business in the second quarter will continue across all of our industry groups.”
Principal Investment and Mortgage Banking
FBR’s principal investing and mortgage banking revenue, net of total interest expense and the provision for loan losses, was $70.6 million during the second quarter of 2005, compared to $83.4 million during the second quarter of 2004 and $36.6 million for the first quarter of 2005.
As of June 30, 2005, FBR’s mortgage portfolio totaled $13.7 billion.
“The second quarter included the eighth and ninth increases in the Federal Funds rate since June of 2004. Over that time, short-term interest rates have increased from 1% to 3.25%, resulting in an increasingly flat yield curve. This has led to spread compression for virtually all portfolio lenders. Despite this adverse environment, our mortgage portfolio achieved an annualized return on equity of 12% for the quarter, compared to 14% in the first quarter and 19% in the second quarter of 2004,” said Richard J. Hendrix, President and Chief Operating Officer. “The strategic decision to grow and diversify our mortgage business that we made in 2004 is proceeding as planned, and should continue to benefit shareholders. We expect returns from our mortgage portfolio to trend higher over the course of the next several quarters.”
| • | During the second quarter of 2005, FBR’s mortgage portfolio had a weighted average annual yield of 3.98%, and the weighted average financing rate was 3.07% (including the benefit of hedging), resulting in a net interest spread of 0.91% for the quarter. This compares to a net interest spread of 1.02% for the portfolio in the first quarter. |
2
| • | Quarter-end leverage (debt-to-equity) in the mortgage portfolio was 12.9, compared to 12.3 on March 31, 2005. |
| • | Amortization of mortgage premiums during the second quarter of 2005 was $18.5 million, compared to $14.6 million for the first quarter of 2005. One month constant prepayment rates (CPRs) in the mortgage portfolio moved higher in the second quarter, averaging 25.15, compared to 21.8 in the first quarter. |
| • | On June 30, 2005, the mortgage portfolio continued to maintain a low effective duration (a measure of interest rate sensitivity) of 1.12, compared to 1.27 as of March 31, 2005. |
The total value of FBR’s merchant banking portfolio and other long-term investments was $433.2 million as of June 30, 2005. Of this total, $351.4 million was held in the merchant banking equity portfolio, $59.4 million was held in alternative asset funds, and $22.4 million was held in other long-term investments.
| • | During the second quarter of 2005, FBR recorded $8.4 million of dividend income. |
| • | FBR realized $14.8 million in merchant banking gains during the quarter, primarily due to the sale of the companies in its portfolio. |
| • | The merchant banking equities portfolio had net unrealized gains of $11.1 million as of June 30, 2005 that are included in accumulated other comprehensive income, compared to a net unrealized loss of $5.4 million as of March 31, 2005. |
Having completed the acquisition of mortgage originator First NLC in February of this year, this quarter marks the first time FNLC’s financial results have been fully consolidated into FBR’s operational performance. The second quarter was a record period for FNLC, with the company originating mortgages with an aggregate value of $1.5 billion, an increase of 79% over its second quarter last year. During this quarter, FNLC’s contribution to revenue, including gain-on-sale of mortgage loans and net interest income on loans held for sale, was $21.7 million.
Asset Management
| • | Base and incentive fees were $8.5 million for the quarter and $16.6 million for the first six months of 2005, increases of 72.9% and 17.7%, respectively, over the comparable periods of 2004. |
| • | Total funds under management were $3.2 billion as of June 30, 2005, compared to $3.1 billion on March 31, 2005. |
| • | Mutual fund assets totaled $2.2 billion at the end of the second quarter, substantively unchanged from the first quarter of 2005 and an increase of 38% over the $1.6 billion held at the close of the second quarter of 2004. |
“Overall, the firm’s results demonstrate an ongoing track record of growth in our capital markets business and we continue to generate exceptional returns on equity in this part of our business,” Mr. Billings said. “As we look forward, we remain committed to achieving outstanding investment returns for our clients and our shareholders and are excited about the opportunities we see in each of our portfolio businesses.”
The firm will host an earnings conference call tomorrow morning, Thursday, July 28, 2005, at 9:00 a.m. U.S. EDT. Investors wishing to listen to the conference call may do so via the web at:http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=FBR.
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Replays of the webcast will be available after the call.
Friedman, Billings, Ramsey Group, Inc. provides investment banking4, institutional brokerage4, asset management, and private client services through its operating subsidiaries and invests in mortgage-related assets and merchant banking opportunities. FBR focuses capital and financial expertise on eight industry sectors: consumer, diversified industrials, energy and natural resources, financial institutions, healthcare, insurance, real estate, and technology, media and telecommunications. FBR, headquartered in the Washington, D.C. metropolitan area, with offices in Arlington, Va. and Bethesda, Md., also has offices in Boston, Cleveland, Dallas, Denver, Houston, Irvine, London, New York, Phoenix, San Francisco, Seattle, and Vienna. For more information,visit http://www.fbr.com.
| 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 | Source: Dealogic. Relates to total dollar amount, with over-allotment, of all U.S. IPOs, secondary offerings and private placements for issuers valued at $2 billion or less; priced between 4/1/05 and 6/30/05 and 1/1/05 and 6/30/05, respectively, with apportioned credit to all book-runners. Excludes closed-end funds. |
| 3 | Source: Dealogic. Relates to total dollar amount, with over-allotment, of all U.S. IPOs, secondary offerings and private placements for issuers in the real estate and oil and gas general industry groups, respectively; priced between 1/1/05 and 6/30/05, with apportioned credit to all book-runners. Excludes closed-end funds. |
| 4 | Friedman, Billings, Ramsey & Co., Inc. |
Financial data follows.
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(Unaudited)
Three months ended June 30, | |||||||||||||
| 2005 | % | 2004 | % | ||||||||||
REVENUES: | |||||||||||||
Investment banking: | |||||||||||||
Capital raising | $ | 95,039 | 45.9 | % | $ | 52,883 | 29.6 | % | |||||
Advisory | 6,180 | 3.0 | % | 9,107 | 5.1 | % | |||||||
Institutional brokerage: | |||||||||||||
Principal transactions | 4,680 | 2.3 | % | 5,426 | 3.0 | % | |||||||
Agency commissions | 18,677 | 9.0 | % | 21,060 | 11.8 | % | |||||||
Asset management: | |||||||||||||
Base management fees | 7,813 | 3.8 | % | 6,384 | 3.6 | % | |||||||
Incentive allocations and fees | 730 | 0.4 | % | (1,444 | ) | -0.8 | % | ||||||
Principal investment: | |||||||||||||
Interest | 116,724 | 56.3 | % | 87,111 | 48.8 | % | |||||||
Net investment income | 17,738 | 8.6 | % | 28,832 | 16.2 | % | |||||||
Dividends | 8,371 | 4.0 | % | 1,683 | 0.9 | % | |||||||
Mortgage banking: | |||||||||||||
Interest | 18,118 | 8.7 | % | — | 0.0 | % | |||||||
Gain on sale of loans, net | 14,559 | 7.0 | % | — | 0.0 | % | |||||||
Other | 3,455 | 1.6 | % | 1,683 | 1.0 | % | |||||||
Total revenues | 312,084 | 150.6 | % | 212,725 | 119.2 | % | |||||||
Interest expense | 103,725 | 50.1 | % | 34,276 | 19.2 | % | |||||||
Provision for loan losses | 1,138 | 0.5 | % | — | 0.0 | % | |||||||
Revenues, net of interest expense and provision for loan losses | 207,221 | 100.0 | % | 178,449 | 100.0 | % | |||||||
NON-INTEREST EXPENSES: | |||||||||||||
Compensation and benefits | 80,015 | 38.6 | % | 57,698 | 32.3 | % | |||||||
Professional services | 20,186 | 9.7 | % | 15,050 | 8.4 | % | |||||||
Business development | 11,962 | 5.8 | % | 8,885 | 5.0 | % | |||||||
Clearing and brokerage fees | 2,040 | 1.0 | % | 2,608 | 1.5 | % | |||||||
Occupancy and equipment | 8,772 | 4.2 | % | 3,326 | 1.9 | % | |||||||
Communications | 5,300 | 2.6 | % | 3,442 | 1.9 | % | |||||||
Other operating expenses | 12,540 | 6.1 | % | 5,351 | 3.0 | % | |||||||
Total non-interest expenses | 140,815 | 68.0 | % | 96,360 | 54.0 | % | |||||||
Net income before taxes | 66,406 | 32.0 | % | 82,089 | 46.0 | % | |||||||
Income tax provision | 13,163 | 6.3 | % | 910 | 0.5 | % | |||||||
Net Income | $ | 53,243 | 25.7 | % | $ | 81,179 | 45.5 | % | |||||
Basic earnings per share | $ | 0.31 | $ | 0.49 | |||||||||
Diluted earnings per share | $ | 0.31 | $ | 0.48 | |||||||||
Weighted average shares — basic | 169,364 | 167,277 | |||||||||||
Weighted average shares — diluted | 170,101 | 168,566 | |||||||||||
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FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(Unaudited)
Six months ended June 30, | ||||||||||||
| 2005 | % | 2004 | % | |||||||||
REVENUES: | ||||||||||||
Investment banking: | ||||||||||||
Capital raising | $ | 181,852 | 49.1 | % | $ | 142,676 | 35.7 | % | ||||
Advisory | 7,318 | 2.0 | % | 10,425 | 2.6 | % | ||||||
Institutional brokerage: | ||||||||||||
Principal transactions | 10,307 | 2.8 | % | 11,445 | 2.9 | % | ||||||
Agency commissions | 40,834 | 11.0 | % | 50,197 | 12.6 | % | ||||||
Asset management: | ||||||||||||
Base management fees | 16,281 | 4.4 | % | 12,919 | 3.2 | % | ||||||
Incentive allocations and fees | 355 | 0.1 | % | 1,221 | 0.3 | % | ||||||
Principal investment: | ||||||||||||
Interest | 215,620 | 58.2 | % | 176,106 | 44.1 | % | ||||||
Net investment income | 13,880 | 3.7 | % | 55,441 | 13.9 | % | ||||||
Dividends | 11,811 | 3.2 | % | 2,655 | 0.7 | % | ||||||
Mortgage banking: | ||||||||||||
Interest | 27,610 | 7.5 | % | — | 0.0 | % | ||||||
Gain on sale of loans, net | 18,040 | 4.9 | % | — | 0.0 | % | ||||||
Other | 5,951 | 1.6 | % | 2,997 | 0.8 | % | ||||||
Total revenues | 549,859 | 148.5 | % | 466,082 | 116.8 | % | ||||||
Interest expense | 178,547 | 48.2 | % | 66,923 | 16.8 | % | ||||||
Provision for loan losses | 1,138 | 0.3 | % | — | 0.0 | % | ||||||
Revenues, net of interest expense and provision for loan losses | 370,174 | 100.0 | % | 399,159 | 100.0 | % | ||||||
NON-INTEREST EXPENSES: | ||||||||||||
Compensation and benefits | 155,814 | 42.1 | % | 132,587 | 33.2 | % | ||||||
Professional services | 33,836 | 9.2 | % | 25,214 | 6.3 | % | ||||||
Business development | 27,400 | 7.4 | % | 25,423 | 6.4 | % | ||||||
Clearing and brokerage fees | 4,072 | 1.1 | % | 5,381 | 1.3 | % | ||||||
Occupancy and equipment | 14,496 | 3.9 | % | 6,230 | 1.6 | % | ||||||
Communications | 9,332 | 2.5 | % | 6,384 | 1.6 | % | ||||||
Other operating expenses | 28,834 | 7.8 | % | 11,322 | 2.8 | % | ||||||
Total non-interest expenses | 273,784 | 74.0 | % | 212,541 | 53.2 | % | ||||||
Net income before taxes | 96,390 | 26.0 | % | 186,618 | 46.8 | % | ||||||
Income tax provision | 18,735 | 5.0 | % | 15,800 | 4.0 | % | ||||||
Net income | $ | 77,655 | 21.0 | % | $ | 170,818 | 42.8 | % | ||||
Basic earnings per share | $ | 0.46 | $ | 1.02 | ||||||||
Diluted earnings per share | $ | 0.46 | $ | 1.01 | ||||||||
Weighted average shares — basic | 168,741 | 166,678 | ||||||||||
Weighted average shares — diluted | 169,670 | 168,462 | ||||||||||
5
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
Financial & Statistical Supplement — Operating Results (unaudited)
(Dollars in thousands, except per share data)
| YTD 2005 | Q-2 05 | Q-1 05 | YTD 2004 | |||||||||||||
Revenues | ||||||||||||||||
Investment banking: | ||||||||||||||||
Capital raising | $ | 181,852 | $ | 95,039 | $ | 86,813 | $ | 398,183 | ||||||||
Advisory | 7,318 | 6,180 | 1,138 | 30,115 | ||||||||||||
Institutional brokerage: | ||||||||||||||||
Principal transactions | 10,307 | 4,680 | 5,627 | 20,444 | ||||||||||||
Agency commissions | 40,834 | 18,677 | 22,157 | 89,650 | ||||||||||||
Asset management: | ||||||||||||||||
Base management fees | 16,281 | 7,813 | 8,468 | 28,307 | ||||||||||||
Incentive income | 355 | 730 | (375 | ) | 10,940 | |||||||||||
Principal investment: | ||||||||||||||||
Interest | 215,620 | 116,724 | 98,896 | 350,691 | ||||||||||||
Net investment income | 13,880 | 17,738 | (3,858 | ) | 101,973 | |||||||||||
Dividends | 11,811 | 8,371 | 3,440 | 14,644 | ||||||||||||
Mortgage banking: | ||||||||||||||||
Interest | 27,610 | 18,118 | 9,492 | — | ||||||||||||
Gain on sale of loans, net | 18,040 | 14,559 | 3,481 | — | ||||||||||||
Other | 5,951 | 3,455 | 2,496 | 7,155 | ||||||||||||
Total revenues | 549,859 | 312,084 | 237,775 | 1,052,102 | ||||||||||||
Interest expense | 178,547 | 103,725 | 74,822 | 164,156 | ||||||||||||
Provision for loan losses | 1,138 | 1,138 | — | — | ||||||||||||
Revenues, net of interest expense and provision for loan losses | 370,174 | 207,221 | 162,953 | 887,946 | ||||||||||||
Non-interest expenses | ||||||||||||||||
Compensation and benefits | 155,814 | 80,015 | 75,799 | 323,524 | ||||||||||||
Professional services | 33,836 | 20,186 | 13,650 | 50,467 | ||||||||||||
Business development | 27,400 | 11,962 | 15,438 | 44,955 | ||||||||||||
Clearing and brokerage fees | 4,072 | 2,040 | 2,032 | 9,123 | ||||||||||||
Occupancy & equipment | 14,496 | 8,772 | 5,724 | 14,458 | ||||||||||||
Communications | 9,332 | 5,300 | 4,032 | 13,959 | ||||||||||||
Other operating expenses | 28,834 | 12,540 | 16,294 | 22,740 | ||||||||||||
Total non-interest expenses | 273,784 | 140,815 | 132,969 | 479,226 | ||||||||||||
Net income before taxes | 96,390 | 66,406 | 29,984 | 408,720 | ||||||||||||
Income tax provision | 18,735 | 13,163 | 5,572 | 59,161 | ||||||||||||
Net income | $ | 77,655 | $ | 53,243 | $ | 24,412 | $ | 349,559 | ||||||||
Net income before taxes as a percentage of net revenue | 26.0 | % | 32.0 | % | 18.4 | % | 46.0 | % | ||||||||
ROE (annualized) | 10.0 | % | 14.3 | % | 6.4 | % | 22.3 | % | ||||||||
Total shareholders’ equity | $ | 1,519,021 | $ | 1,519,021 | $ | 1,458,861 | $ | 1,578,524 | ||||||||
Basic earnings per share | $ | 0.46 | $ | 0.31 | $ | 0.15 | $ | 2.09 | ||||||||
Diluted earnings per share | $ | 0.46 | $ | 0.31 | $ | 0.14 | $ | 2.07 | ||||||||
Ending shares outstanding (in thousands) | 169,617 | 169,617 | 169,214 | 166,932 | ||||||||||||
Book value per share | $ | 8.96 | $ | 8.96 | $ | 8.62 | $ | 9.46 | ||||||||
Book value per share, net of AOCI(1) | $ | 9.62 | $ | 9.62 | $ | 9.63 | $ | 9.68 | ||||||||
Gross assets under management (in millions) | ||||||||||||||||
Managed accounts | $ | 510.4 | $ | 510.4 | $ | 242.4 | $ | 196.1 | ||||||||
Hedge & offshore funds | $ | 463.1 | 463.1 | 601.1 | 631.6 | |||||||||||
Mutual funds | $ | 2,185.0 | 2,185.0 | 2,213.9 | 2,320.4 | |||||||||||
Private equity and venture capital funds | $ | 41.3 | 41.3 | 69.5 | 52.5 | |||||||||||
Total | $ | 3,199.8 | $ | 3,199.8 | $ | 3,126.9 | $ | 3,200.6 | ||||||||
Net assets under management (in millions) | ||||||||||||||||
Managed accounts | $ | 257.3 | $ | 257.3 | $ | 223.0 | $ | 196.1 | ||||||||
Hedge & offshore funds | $ | 401.1 | 401.1 | 490.3 | 589.6 | |||||||||||
Mutual funds | $ | 2,176.6 | 2,176.6 | 2,204.2 | 2,305.5 | |||||||||||
Private equity and venture capital funds | $ | 37.8 | 37.8 | 66.3 | 49.7 | |||||||||||
Total | $ | 2,872.8 | $ | 2,872.8 | $ | 2,983.8 | $ | 3,140.9 | ||||||||
Productive assets under management (in millions) | ||||||||||||||||
Managed accounts | $ | 257.3 | $ | 257.3 | $ | 223.0 | $ | 196.1 | ||||||||
Hedge & offshore funds | $ | 332.8 | 332.8 | 425.3 | 488.7 | |||||||||||
Mutual funds | $ | 2,176.6 | 2,176.6 | 2,204.2 | 2,305.5 | |||||||||||
Private equity and venture capital funds | $ | 51.2 | 51.2 | 79.9 | 70.9 | |||||||||||
Total | $ | 2,817.9 | $ | 2,817.9 | $ | 2,932.4 | $ | 3,061.2 | ||||||||
Employee count | 2,226 | 2,226 | 2,123 | 698 | ||||||||||||
| Q-4 04 | Q-3 04 | Q-2 04 | Q-1 04 | |||||||||||||
Revenues | ||||||||||||||||
Investment banking: | ||||||||||||||||
Capital raising | $ | 125,488 | $ | 130,019 | $ | 52,883 | $ | 89,793 | ||||||||
Advisory | 8,088 | 11,602 | 9,107 | 1,318 | ||||||||||||
Institutional brokerage: | ||||||||||||||||
Principal transactions | 4,758 | 4,241 | 5,426 | 6,019 | ||||||||||||
Agency commissions | 20,948 | 18,505 | 21,060 | 29,137 | ||||||||||||
Asset management: | ||||||||||||||||
Base management fees | 8,344 | 7,044 | 6,384 | 6,535 | ||||||||||||
Incentive income | 7,982 | 1,737 | (1,444 | ) | 2,665 | |||||||||||
Principal investment: | ||||||||||||||||
Interest | 86,550 | 88,035 | 87,111 | 88,995 | ||||||||||||
Net investment income | 27,442 | 19,090 | 28,832 | 26,609 | ||||||||||||
Dividends | 6,169 | 5,820 | 1,683 | 972 | ||||||||||||
Mortgage banking: | ||||||||||||||||
Interest | — | — | — | — | ||||||||||||
Gain on sale of loans, net | — | — | — | — | ||||||||||||
Other | 2,329 | 1,827 | 1,683 | 1,316 | ||||||||||||
Total revenues | 298,098 | 287,920 | 212,725 | 253,359 | ||||||||||||
Interest expense | 52,968 | 44,265 | 34,276 | 32,647 | ||||||||||||
Provision for loan losses | — | — | — | — | ||||||||||||
Revenues, net of interest expense and provision for loan losses | 245,130 | 243,655 | 178,449 | 220,712 | ||||||||||||
Non-interest expenses | ||||||||||||||||
Compensation and benefits | 95,113 | 95,824 | 57,698 | 74,889 | ||||||||||||
Professional services | 11,832 | 13,421 | 15,050 | 10,164 | ||||||||||||
Business development | 11,248 | 8,284 | 8,885 | 16,538 | ||||||||||||
Clearing and brokerage fees | 2,186 | 1,556 | 2,608 | 2,773 | ||||||||||||
Occupancy & equipment | 4,330 | 3,898 | 3,326 | 2,904 | ||||||||||||
Communications | 4,227 | 3,348 | 3,442 | 2,942 | ||||||||||||
Other operating expenses | 6,570 | 4,846 | 5,351 | 5,973 | ||||||||||||
Total non-interest expenses | 135,506 | 131,177 | 96,360 | 116,183 | ||||||||||||
Net income before taxes | 109,624 | 112,478 | 82,089 | 104,529 | ||||||||||||
Income tax provision | 23,032 | 20,329 | 910 | 14,890 | ||||||||||||
Net income | $ | 86,592 | $ | 92,149 | $ | 81,179 | $ | 89,639 | ||||||||
Net income before taxes as a percentage of net revenue | 44.7 | % | 46.2 | % | 46.0 | % | 47.4 | % | ||||||||
ROE (annualized) | 22.2 | % | 24.8 | % | 20.8 | % | 22.1 | % | ||||||||
Total shareholders’ equity | $ | 1,578,524 | $ | 1,543,361 | $ | 1,431,345 | $ | 1,685,673 | ||||||||
Basic earnings per share | $ | 0.52 | $ | 0.55 | $ | 0.49 | $ | 0.54 | ||||||||
Diluted earnings per share | $ | 0.51 | $ | 0.55 | $ | 0.48 | $ | 0.54 | ||||||||
Ending shares outstanding (in thousands) | 166,932 | 166,753 | 166,632 | 165,623 | ||||||||||||
Book value per share | $ | 9.46 | $ | 9.26 | $ | 8.59 | $ | 10.18 | ||||||||
Book value per share, net of AOCI(1) | $ | 9.68 | $ | 9.52 | $ | 9.30 | $ | 9.30 | ||||||||
Gross assets under management (in millions) | ||||||||||||||||
Managed accounts | $ | 196.1 | $ | 168.7 | $ | 160.3 | $ | 78.8 | ||||||||
Hedge & offshore funds | 631.6 | 519.3 | 430.0 | 435.4 | ||||||||||||
Mutual funds | 2,320.4 | 1,963.7 | 1,612.2 | 1,897.4 | ||||||||||||
Private equity and venture capital funds | 52.5 | 49.7 | 50.7 | 76.5 | ||||||||||||
Total | $ | 3,200.6 | $ | 2,701.4 | $ | 2,253.2 | $ | 2,488.1 | ||||||||
Net assets under management (in millions) | ||||||||||||||||
Managed accounts | $ | 196.1 | $ | 168.7 | $ | 160.3 | $ | 78.8 | ||||||||
Hedge & offshore funds | 589.6 | 482.8 | 409.0 | 350.5 | ||||||||||||
Mutual funds | 2,305.5 | 1,951.7 | 1,606.9 | 1,874.0 | ||||||||||||
Private equity and venture capital funds | 49.7 | 46.4 | 46.5 | 70.4 | ||||||||||||
Total | $ | 3,140.9 | $ | 2,649.6 | $ | 2,222.7 | $ | 2,373.7 | ||||||||
Productive assets under management (in millions) | ||||||||||||||||
Managed accounts | $ | 196.1 | $ | 168.7 | $ | 160.3 | $ | 78.8 | ||||||||
Hedge & offshore funds | 488.7 | 393.8 | 329.9 | 263.8 | ||||||||||||
Mutual funds | 2,305.5 | 1,951.7 | 1,606.9 | 1,874.0 | ||||||||||||
Private equity and venture capital funds | 70.9 | 70.9 | 111.6 | 131.2 | ||||||||||||
Total | $ | 3,061.2 | $ | 2,585.1 | $ | 2,208.7 | $ | 2,347.8 | ||||||||
Employee count | 698 | 665 | 626 | 549 | ||||||||||||
6
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amounts)
(Unaudited)
June 30, 2005 | December 31, 2004 | |||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | 311,804 | $ | 231,527 | ||||
Receivables | 169,317 | 74,880 | ||||||
Investments: | ||||||||
Mortgage-backed securities, at fair value | 10,622,271 | 11,726,689 | ||||||
Long-term investments | 433,206 | 441,499 | ||||||
Loans held for investment, net | 2,431,061 | — | ||||||
Loans held for sale, net | 644,692 | — | ||||||
Reverse repurchase agreements | 243,222 | 183,375 | ||||||
Trading securities, at fair value | 489,293 | 7,744 | ||||||
Due from clearing broker | 45,519 | 95,247 | ||||||
Goodwill | 160,525 | 108,013 | ||||||
Intangible assets, net | 29,026 | 14,404 | ||||||
Furniture, equipment and leasehold improvements, net | 34,203 | 18,733 | ||||||
Other assets | 42,618 | 26,177 | ||||||
Total assets | $ | 15,656,757 | $ | 12,928,288 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Liabilities: | ||||||||
Trading account securities sold short, at fair value | $ | 173,523 | $ | 17,176 | ||||
Commercial paper | 7,765,230 | 7,294,949 | ||||||
Repurchase agreements | 4,923,394 | 3,467,569 | ||||||
Securitization financing on loans held for investment | 702,636 | — | ||||||
Securities purchased | 35,358 | 144,430 | ||||||
Dividends payable | 58,439 | 65,870 | ||||||
Interest payable | 14,851 | 5,894 | ||||||
Accrued compensation and benefits | 75,450 | 131,218 | ||||||
Accounts payable, accrued expenses and other liabilities | 65,864 | 94,288 | ||||||
Temporary subordinated loan payable | 100,000 | — | ||||||
Long-term debt | 222,991 | 128,370 | ||||||
Total liabilities | 14,137,736 | 11,349,764 | ||||||
Shareholders’ equity: | ||||||||
Common stock, 171,900 and 171,592 shares | 1,719 | 1,689 | ||||||
Additional paid-in capital | 1,537,260 | 1,483,640 | ||||||
Employee stock loan receivable including accrued interest (591 and 711 shares) | (4,176 | ) | (4,890 | ) | ||||
Deferred compensation | (18,802 | ) | (16,863 | ) | ||||
Accumulated other comprehensive loss, net | (112,934 | ) | (38,162 | ) | ||||
Retained earnings | 115,954 | 153,110 | ||||||
Total shareholders’ equity | 1,519,021 | 1,578,524 | ||||||
Total liabilities and shareholders’ equity | $ | 15,656,757 | $ | 12,928,288 | ||||
Book value per share | $ | 8.96 | $ | 9.46 | ||||
Book value per share, net of AOCI(1) | $ | 9.62 | $ | 9.68 | ||||
Shares Outstanding | 169,617 | 166,932 | ||||||
Statements concerning future performance, developments, events, market forecasts, revenue, 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 S.E.C.
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7
