Exhibit 99.1
Contacts:
Media: Lauren Burk at 703-469-1004 orlburk@fbr.com
Investors: Paul Beattie at 703-312-9673 orpbeattie@fbr.com
FBR Reports 4th Quarter and 2006 Financial Results
ARLINGTON, VA, February 22, 2007 – Friedman, Billings, Ramsey Group, Inc. (FBR Group; NYSE: FBR) today reported net after-tax earnings of $3.8 million, or $0.02 per share (diluted), for the quarter ended December 31, 2006 compared to a net after-tax loss of $271.6 million, or $1.60 per share (diluted) in the fourth quarter of 2005. For the year, FBR had a net after-tax loss of $67.3 million, or $0.39 per share (diluted), compared to a net after-tax loss of $170.9 million, or $1.01 per share (diluted), in 2005. Core book value net of Accumulated Other Comprehensive Income (AOCI) at year end was $6.87 compared to $7.67 at year end 2005(1).
The fourth quarter results for FBR Group included higher than historical income tax expense of $6.4 million or $0.04 per share (diluted) attributable primarily to the effects of FASB 123R (an accounting rule adopted in 2006 relating to stock compensation), deferred tax valuation allowances and other tax items. In addition, the company incurred “other than temporary impairment” charges of $17.2 million, or $0.10 per share (diluted), on merchant banking investments in the sub-prime mortgage industry.
FBR Capital Markets Corporation Results
FBR Capital Markets Corporation (FBR Capital Markets), FBR Group’s 72%-owned investment banking, institutional brokerage and asset management subsidiary, reported for the fourth quarter pre-tax earnings of $17.6 million on net revenues of $120.0 million. Net after-tax earnings for the fourth quarter were $7.0 million. Excluding FASB 123R-related and other non-cash tax charges of $3 million, after-tax earnings were $10.0 million. Complete financial results for FBR Capital Markets, which is a privately held company, are included in the tabular material in this release along with those of FBR Group.
Investment Banking
In the fourth quarter, FBR Capital Markets generated investment banking revenues of $81.1 million. The firm raised a total of $4.2 billion in 17 transactions and undertook eight merger and acquisition advisory assignments. Also in the fourth quarter, the firm
executed a $777 million private placement and advisory assignment for a power generation company, FBR’s first capital raise in that sector. Because the transaction was subject to regulatory approval by power authorities, it did not close until the first quarter of 2007. As a result, $40 million of the revenues associated with this capital raise will be recognized in that quarter.
In 2006, FBR was ranked as:
• | #1 book-running manager of all common stock offerings for U.S. companies with a market capitalization of $1 billion or less,(2) |
• | #7 book-running manager for all U.S. IPOs and 144A equity placements combined for all industries,(3) |
• | #1 book-running manager of all common stock offerings for domestic mining, oil and gas, and utility and energy companies, with a market capitalization of $1 billion or less,(4) and |
• | #1 book-running manager of all common stock offerings for U.S. and Bermuda finance and insurance companies with a market capitalization of $1 billion or less.(5) |
On February 8, 2007, FBR Capital Markets announced the completion of an important step in further expanding its M&A platform. The company acquired the 26-person banking team along with certain assets from Legacy Partners Group, LLC. With offices in New York and Washington, D.C., this banking unit specializes in middle market merger and acquisition advisory services and in the raising of private capital.
Institutional Brokerage and Research
In a very competitive market environment, FBR Capital Markets grew its agency commission revenue from $82.5 million in 2005 to $100.9 million in the year just ended, a 22% increase. Overall, agency commissions and revenue from principal transactions increased 8% year to year.
Asset Management
In FBR Capital Markets’ asset management/private wealth business, asset management base fees and incentive fees were $5.5 million for the fourth quarter of 2006. Assets under management increased slightly between the close of the third quarter of 2006 and year end, and continued asset growth is anticipated in the first quarter of 2007. This reverses a trend of asset outflows that began with the closing and repositioning of some of the firm’s alternative investment products in 2005.
In October 2006 a new long/short hedge fund was launched, and in January 2007, the FBR Small Cap Mutual Fund, which had been closed to new investors since October 2004, was reopened to investors.
Investors should consider the investment objectives, risks, charges and expenses carefully before investing. This and other important information about the investment company can be found in the Fund’s prospectus. To obtain a free prospectus, please call 888.200.4710. Please read the prospectus carefully before investing.
The FBR Funds are distributed by FBR Investment Services, Inc. Member NASD/SIPC.
FBR Group Results
Mortgage Investment Portfolios
For the fourth quarter, FBR Group’s mortgage investments generated portfolio earnings of $20.7 million on average investment balances of $11.1 billion held during the quarter. These portfolios yielded gross income of 6.40% with associated cost of funds of 5.15%, resulting in earned net interest income of 1.25%.
Merchant Banking
For the fourth quarter, earnings from the consolidated merchant banking portfolio and other long-term investments were $3.7 million. These earnings include a $17.2 million write-down in the value of certain non-prime mortgage company investment positions, the largest of which was a $13.7 million reduction in the carrying value of shares in Fieldstone Investment Corp., which has agreed to be acquired for cash. Excluding the Fieldstone Investment position, merchant banking investments in non-prime companies at year end was $19 million. The total value of FBR’s merchant banking portfolio and other long-term equity securities was $150 million as of December 31, 2006.
First NLC
First NLC (FNLC), our non-conforming mortgage origination subsidiary, lost $1.8 million on a pre-tax basis in the fourth quarter. During the quarter, FNLC continued to build additional reserves related to the impact of an industry-wide increase in requests for buy-backs of loans related to early pay defaults (EPDs). Loan provisions, including EPD expense, averaged 70 basis points for the fourth quarter.
FNLC originated $2.1 billion in loans in the fourth quarter and $7.5 billion for the full year, compared to $1.5 billion in the final quarter of 2005 and $6.0 billion for all of 2005. FNLC’s cost to originate loans dropped from an average of 244 basis points in 2005 to an average of 191 basis points in 2006. In 2007, FNLC management has further reduced expenses and has aggressively adapted its lending standards to a continuing difficult environment.
Looking Ahead
“The acquisition of Legacy Partners was a major step in the execution of our strategic plan, broadening our array of banking services and increasing our ability to significantly grow our advisory practice,” said Eric F. Billings, FBR Group Chairman and Chief Executive Officer. “In addition, as we continue to execute our plan by selling our non- prime mortgage residuals and exiting our non-prime merchant banking investments, we believe that the stability and predictability of our earnings will become more apparent. Although 2006 was a challenging and difficult year, we closed with a solid fourth quarter in our capital markets businesses, and we are off to a strong start in 2007.”
The firm will host an earnings conference call this morning, Thursday, February 22, 2007 at 9:00 A.M. U.S. EST. Investors wishing to listen to the call may do so via the web at:http://phx.corporate-ir.net/phoenix.zhtml?c=71352&p=irol-irhome. Replays of the webcast will be available following the call.
Friedman, Billings, Ramsey Group, Inc. (FBR) invests in mortgage-related assets and merchant banking opportunities. Through its 72% owned FBR Capital Markets Corporation (FBRCM) subsidiary, FBR provides investment banking*, merger and acquisition advisory services*, institutional brokerage*, asset management, and private wealth services. FBRCM 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 is headquartered in the Washington, D.C. metropolitan area with offices in Arlington, Va., Boston, Dallas, Houston, Irvine, London, New York, Phoenix and San Francisco. Friedman, Billings, Ramsey Group, Inc. is the parent company of First NLC Financial Services, Inc., a non-conforming residential mortgage originator headquartered in Deerfield Beach, Florida. For more information, seewww.fbr.com.
* | Friedman, Billings, Ramsey & Co., Inc. |
1 | Accumulated Other Comprehensive Income (AOCI) includes changes in the value of available-for-sale securities and cash flow hedges. FBR believes that such changes represent temporary market fluctuations, are not reflective of our market strategy, and, therefore, the exclusion of AOCI provides a reasonable basis for calculating returns. |
2 | Source: Dealogic. Relates to total deal value of all common stock or common equity, including private placements, offered for all U.S. companies with a market capitalization of $1 billion or less. Transactions priced between 1/1/06 and 12/31/06, with apportioned credit to all book-runners. Includes only rank eligible transactions. |
3 | Source: Dealogic. Relates to total deal value of all common stock of U.S. issuers offered in IPOs or transactions exempt from SEC registration pursuant to rule 144A, on a combined basis. Transactions priced between 1/1/06 through 12/31/06 with apportioned credit to all book-runners. Includes only rank eligible transactions. |
4 | Source: Dealogic. Relates to total deal value of all common stock or common equity, including private placements, offered for all U.S. mining, oil and gas, and utility and energy companies with a market capitalization of $1 billion or less. Transactions priced between 1/1/06 and 12/31/06, with apportioned credit to all book-runners. Includes only rank eligible transactions. |
5 | Source: Dealogic. Relates to total deal value of all common stock or common equity, including private placements, offered for all U.S. and Bermuda finance and insurance companies with a market capitalization of $1 billion or less. Transactions priced between 1/1/06 and 12/31/06, with apportioned credit to all book-runners. Includes only rank eligible transactions. |
Statements concerning future performance, developments, events, market forecasts, revenues, expenses, earnings, run rates and any other guidance on present or future periods, constitute forward-looking statements that are subject to a number of factors, risks and uncertainties that might cause actual results to differ materially from stated expectations or current circumstances. These factors include, but are not limited to, the effect of demand for public offerings, activity in the secondary securities markets, interest rates, costs of borrowing, interest spreads, mortgage pre-payment speeds, risks associated with merchant banking investments, the realization of gains and losses on principal investments, available technologies, competition for business and personnel, and general economic, political and market conditions. These and other risks are described in the Company’s Annual Report and Form 10-K and quarterly reports on Form 10-Q that are available from the company and from the SEC.
Financial data follows.
# # #
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share amounts) (Unaudited) |
Quarter ended December 31, | ||||||||||||||
2006 | % | 2005 | % | |||||||||||
REVENUES: | ||||||||||||||
Investment banking: | ||||||||||||||
Capital raising | $ | 71,883 | 40.9 | % | $ | 88,866 | -77.9 | % | ||||||
Advisory | 9,172 | 5.2 | % | 7,415 | -6.5 | % | ||||||||
Institutional brokerage: | ||||||||||||||
Principal transactions | (8 | ) | 0.0 | % | 3,788 | -3.3 | % | |||||||
Agency commissions | 24,720 | 14.1 | % | 21,006 | -18.4 | % | ||||||||
Mortgage trading interest | 2,509 | 1.4 | % | 19,555 | -17.1 | % | ||||||||
Mortgage trading net investment loss | (309 | ) | -0.2 | % | (1,419 | ) | 1.2 | % | ||||||
Asset management: | ||||||||||||||
Base management fees | 5,051 | 2.9 | % | 6,153 | -5.4 | % | ||||||||
Incentive allocations and fees | 403 | 0.2 | % | 742 | -0.7 | % | ||||||||
Principal investment: | ||||||||||||||
Interest | 181,491 | 103.3 | % | 189,811 | -166.3 | % | ||||||||
Net investment loss | (8,826 | ) | -5.0 | % | (258,500 | ) | 226.5 | % | ||||||
Dividends | 2,043 | 1.2 | % | 16,039 | -14.1 | % | ||||||||
Mortgage banking: | ||||||||||||||
Interest | 21,806 | 12.4 | % | 28,825 | -25.3 | % | ||||||||
Net investment income (loss) | 27,555 | 15.6 | % | (21,899 | ) | 19.2 | % | |||||||
Other | 3,162 | 1.8 | % | 5,164 | -4.4 | % | ||||||||
Total revenues | 340,652 | 193.8 | % | 105,546 | -92.5 | % | ||||||||
Interest expense | 164,891 | 93.8 | % | 211,393 | -185.3 | % | ||||||||
Provision for loan losses | — | 0.0 | % | 8,263 | -7.2 | % | ||||||||
Revenues, net of interest expense and provision for loan losses | 175,761 | 100.0 | % | (114,110 | ) | 100.0 | % | |||||||
NON-INTEREST EXPENSES: | ||||||||||||||
Compensation and benefits | 84,431 | 48.0 | % | 87,330 | -76.5 | % | ||||||||
Professional services | �� | 18,224 | 10.4 | % | 16,556 | -14.5 | % | |||||||
Business development | 11,884 | 6.8 | % | 10,433 | -9.2 | % | ||||||||
Clearing and brokerage fees | 3,505 | 2.0 | % | 2,447 | -2.1 | % | ||||||||
Occupancy and equipment | 13,668 | 7.8 | % | 10,151 | -8.9 | % | ||||||||
Communications | 6,307 | 3.6 | % | 5,741 | -5.0 | % | ||||||||
Other operating expenses | 20,116 | 11.4 | % | 24,984 | -21.9 | % | ||||||||
Total non-interest expenses | 158,135 | 90.0 | % | 157,642 | -138.1 | % | ||||||||
Operating income (loss) | 17,626 | 10.0 | % | (271,752 | ) | 238.1 | % | |||||||
OTHER INCOME: | ||||||||||||||
Gain on sale of subsidiary shares | — | 0.0 | % | — | 0.0 | % | ||||||||
Net income (loss) before income taxes and minority interest | 17,626 | 10.0 | % | (271,752 | ) | 238.1 | % | |||||||
Income tax provision (benefit) | 11,859 | 6.7 | % | (142 | ) | 0.1 | % | |||||||
Minority interest in earnings of consolidated subsidiary | 1,957 | 1.1 | % | — | 0.0 | % | ||||||||
Net income (loss) | $ | 3,810 | 2.2 | % | $ | (271,610 | ) | 238.0 | % | |||||
Basic earnings (loss) per share | $ | 0.02 | $ | (1.60 | ) | |||||||||
Basic earnings (loss) per share | $ | 0.02 | $ | (1.60 | ) | |||||||||
Weighted average shares - basic | 172,531 | 169,921 | ||||||||||||
Weighted average shares - diluted | 172,600 | 169,921 | ||||||||||||
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share amounts) (Unaudited) |
Years Ended December 31, | ||||||||||||||
2006 | % | 2005 | % | |||||||||||
REVENUES: | ||||||||||||||
Investment banking: | ||||||||||||||
Capital raising | $ | 190,187 | 50.0 | % | $ | 356,753 | 82.1 | % | ||||||
Advisory | 24,148 | 6.3 | % | 17,759 | 4.1 | % | ||||||||
Institutional brokerage: | ||||||||||||||
Principal transactions | 5,814 | 1.5 | % | 17,950 | 4.1 | % | ||||||||
Agency commissions | 101,009 | 26.6 | % | 82,778 | 19.0 | % | ||||||||
Mortgage trading interest | 51,147 | 13.4 | % | 30,859 | 7.1 | % | ||||||||
Mortgage trading net investment loss | (3,301 | ) | -0.9 | % | (3,820 | ) | -0.9 | % | ||||||
Asset management: | ||||||||||||||
Base management fees | 20,093 | 5.3 | % | 30,348 | 7.0 | % | ||||||||
Incentive allocations and fees | 1,327 | 0.3 | % | 1,929 | 0.4 | % | ||||||||
Principal investment: | ||||||||||||||
Interest | 594,879 | 156.4 | % | 549,832 | 126.5 | % | ||||||||
Net investment loss | (184,552 | ) | -48.5 | % | (239,754 | ) | -55.2 | % | ||||||
Dividends | 14,551 | 3.8 | % | 36,622 | 8.4 | % | ||||||||
Mortgage banking: | ||||||||||||||
Interest | 88,662 | 23.3 | % | 78,007 | 17.9 | % | ||||||||
Net investment income | 83,786 | 22.0 | % | 13,741 | 3.2 | % | ||||||||
Other | 20,154 | 5.3 | % | 22,302 | 5.1 | % | ||||||||
Total revenues | 1,007,904 | 264.8 | % | 995,306 | 228.8 | % | ||||||||
Interest expense | 611,800 | 160.8 | % | 546,313 | 125.7 | % | ||||||||
Provision for loan losses | 15,740 | 4.0 | % | 14,291 | 3.1 | % | ||||||||
Revenues, net of interest expense and provision for loan losses | 380,364 | 100.0 | % | 434,702 | 100.0 | % | ||||||||
NON-INTEREST EXPENSES: | ||||||||||||||
Compensation and benefits | 309,065 | 81.3 | % | 331,492 | 76.3 | % | ||||||||
Professional services | 59,722 | 15.7 | % | 66,550 | 15.3 | % | ||||||||
Business development | 42,150 | 11.1 | % | 46,648 | 10.7 | % | ||||||||
Clearing and brokerage fees | 11,820 | 3.1 | % | 8,882 | 2.0 | % | ||||||||
Occupancy and equipment | 50,051 | 13.2 | % | 34,044 | 7.8 | % | ||||||||
Communications | 24,398 | 6.4 | % | 20,634 | 4.7 | % | ||||||||
Other operating expenses | 89,377 | 23.5 | % | 70,679 | 16.4 | % | ||||||||
Total non-interest expenses | 586,583 | 154.3 | % | 578,929 | 133.2 | % | ||||||||
Operating loss | (206,219 | ) | -54.4 | % | (144,227 | ) | -33.2 | % | ||||||
OTHER INCOME: | ||||||||||||||
Gain on sale of subsidiary shares | 121,511 | 31.9 | % | — | 0.0 | % | ||||||||
Net loss before income taxes and minority interest | (84,708 | ) | -22.3 | % | (144,227 | ) | -33.2 | % | ||||||
Income tax (benefit) provision | (14,682 | ) | -3.9 | % | 26,683 | 6.1 | % | |||||||
Minority interest in loss of consolidated subsidiary | (2,751 | ) | -0.7 | % | — | 0.0 | % | |||||||
Net loss | $ | (67,275 | ) | -17.7 | % | $ | (170,910 | ) | -39.3 | % | ||||
Basic loss per share | $ | (0.39 | ) | $ | (1.01 | ) | ||||||||
Diluted loss per share | $ | (0.39 | ) | $ | (1.01 | ) | ||||||||
Weighted average shares - basic | 171,667 | 169,333 | ||||||||||||
Weighted average shares - diluted | 171,667 | 169,333 | ||||||||||||
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC. Financial & Statistical Supplement - Operating Results (Dollars in thousands, except per share data) (Unaudited) |
For the year ended | Q-4 06 | Q-3 06 | Q-2 06 | Q-1 06 | ||||||||||||||||
Revenues | ||||||||||||||||||||
Investment banking: | ||||||||||||||||||||
Capital raising | $ | 190,187 | $ | 71,883 | $ | 6,852 | $ | 45,117 | $ | 66,335 | ||||||||||
Advisory | 24,148 | 9,172 | 5,826 | 6,281 | 2,869 | |||||||||||||||
Institutional brokerage: | ||||||||||||||||||||
Principal transactions | 5,814 | (8 | ) | (1,658 | ) | 1,760 | 5,720 | |||||||||||||
Agency commissions | 101,009 | 24,720 | 24,388 | 28,492 | 23,409 | |||||||||||||||
Mortgage trading interest | 51,147 | 2,509 | 13,845 | 17,143 | 17,650 | |||||||||||||||
Mortgage trading net investment loss | (3,301 | ) | (309 | ) | (1,546 | ) | (209 | ) | (1,237 | ) | ||||||||||
Asset management: | ||||||||||||||||||||
Base management fees | 20,093 | 5,051 | 4,880 | 5,065 | 5,097 | |||||||||||||||
Incentive allocations and fees | 1,327 | 403 | (31 | ) | (53 | ) | 1,008 | |||||||||||||
Principal investment: | ||||||||||||||||||||
Interest | 594,879 | 181,491 | 150,649 | 113,613 | 149,126 | |||||||||||||||
Net investment (loss) income | (184,552 | ) | (8,826 | ) | (170,621 | ) | (31,290 | ) | 26,185 | |||||||||||
Dividends | 14,551 | 2,043 | 4,750 | 4,059 | 3,699 | |||||||||||||||
Mortgage banking: | ||||||||||||||||||||
Interest | 88,662 | 21,806 | 22,476 | 21,267 | 23,113 | |||||||||||||||
Net investment income | 83,786 | 27,555 | 16,092 | 29,401 | 10,738 | |||||||||||||||
Other | 20,154 | 3,162 | 6,540 | 5,465 | 4,987 | |||||||||||||||
Total revenues | 1,007,904 | 340,652 | 82,442 | 246,111 | 338,699 | |||||||||||||||
Interest expense | 611,800 | 164,891 | 165,237 | 128,189 | 153,483 | |||||||||||||||
Provision for loan losses | 15,740 | — | — | 7,348 | 8,392 | |||||||||||||||
Revenues, net of interest expense and provision for loan losses | 380,364 | 175,761 | (82,795 | ) | 110,574 | 176,824 | ||||||||||||||
Non-interest expenses | ||||||||||||||||||||
Compensation and benefits | 309,065 | 84,431 | 69,405 | 71,732 | 83,497 | |||||||||||||||
Professional services | 59,722 | 18,224 | 14,308 | 12,925 | 14,265 | |||||||||||||||
Business development | 42,150 | 11,884 | 7,577 | 8,604 | 14,085 | |||||||||||||||
Clearing and brokerage fees | 11,820 | 3,505 | 2,917 | 3,082 | 2,316 | |||||||||||||||
Occupancy and equipment | 50,051 | 13,668 | 12,909 | 12,232 | 11,242 | |||||||||||||||
Communications | 24,398 | 6,307 | 6,471 | 6,013 | 5,607 | |||||||||||||||
Other operating expenses | 89,377 | 20,116 | 23,291 | 24,993 | 20,977 | |||||||||||||||
Total non-interest expenses | 586,583 | 158,135 | 136,878 | 139,581 | 151,989 | |||||||||||||||
Operating (loss) income | (206,219 | ) | 17,626 | (219,673 | ) | (29,007 | ) | 24,835 | ||||||||||||
Other income | ||||||||||||||||||||
Gain on sale of subsidiary shares | 121,511 | — | 121,511 | — | — | |||||||||||||||
Net (loss) income before income taxes and minority interest | (84,708 | ) | 17,626 | (98,162 | ) | (29,007 | ) | 24,835 | ||||||||||||
Income tax (benefit) provision | (14,682 | ) | 11,859 | (26,062 | ) | 1,240 | (1,719 | ) | ||||||||||||
Minority interest in (loss) earnings of consolidated subsidiary | (2,751 | ) | 1,957 | (4,708 | ) | — | — | |||||||||||||
Net (loss) income | $ | (67,275 | ) | $ | 3,810 | $ | (67,392 | ) | $ | (30,247 | ) | $ | 26,554 | |||||||
Net (loss) income before income taxes and minority interest as a percentage of net revenue | -22.3 | % | 10.0 | % | 118.6 | % | -26.2 | % | 14.0 | % | ||||||||||
ROE (annualized) | -5.4 | % | 1.3 | % | -22.1 | % | -9.4 | % | 8.2 | % | ||||||||||
ROE (annualized-excluding AOCI) (1) | -5.4 | % | 1.3 | % | -22.2 | % | -9.5 | % | 8.1 | % | ||||||||||
Total shareholders’ equity | $ | 1,171,045 | $ | 1,171,045 | $ | 1,163,681 | $ | 1,270,361 | $ | 1,301,949 | ||||||||||
Total shareholders’ equity, net of AOCI (1) | $ | 1,186,181 | $ | 1,186,181 | $ | 1,181,372 | $ | 1,250,117 | $ | 1,306,450 | ||||||||||
Basic (loss) earnings per share | $ | (0.39 | ) | $ | 0.02 | $ | (0.39 | ) | $ | (0.18 | ) | $ | 0.16 | |||||||
Diluted (loss) earnings per share | $ | (0.39 | ) | $ | 0.02 | $ | (0.39 | ) | $ | (0.18 | ) | $ | 0.16 | |||||||
Ending shares outstanding (in thousands) | 172,759 | 172,759 | 172,506 | 171,812 | 171,236 | |||||||||||||||
Book value per share | $ | 6.78 | $ | 6.78 | $ | 6.75 | $ | 7.39 | $ | 7.60 | ||||||||||
Book value per share, net of AOCI (1) | $ | 6.87 | $ | 6.87 | $ | 6.85 | $ | 7.28 | $ | 7.63 | ||||||||||
Gross assets under management (in millions) | ||||||||||||||||||||
Managed accounts | $ | 259.9 | $ | 259.9 | $ | 376.6 | $ | 386.8 | $ | 383.9 | ||||||||||
Hedge & offshore funds | 97.5 | 97.5 | 102.1 | 125.8 | 136.6 | |||||||||||||||
Mutual funds | 1,961.9 | 1,961.9 | 1,825.1 | 1,750.6 | 1,849.5 | |||||||||||||||
Private equity and venture capital funds | 42.2 | 42.2 | 48.5 | 48.2 | 50.5 | |||||||||||||||
Total | $ | 2,361.5 | $ | 2,361.5 | $ | 2,352.3 | $ | 2,311.4 | $ | 2,420.5 | ||||||||||
Net assets under management (in millions) | ||||||||||||||||||||
Managed accounts | $ | 259.9 | $ | 259.9 | $ | 376.6 | $ | 386.8 | $ | 380.9 | ||||||||||
Hedge & offshore funds | 96.4 | 96.4 | 98.3 | 116.1 | 125.4 | |||||||||||||||
Mutual funds | 1,954.7 | 1,954.7 | 1,817.8 | 1,742.6 | 1,843.4 | |||||||||||||||
Private equity and venture capital funds | 40.5 | 40.5 | 46.9 | 46.7 | 49.1 | |||||||||||||||
Total | $ | 2,351.5 | $ | 2,351.5 | $ | 2,339.6 | $ | 2,292.2 | $ | 2,398.8 | ||||||||||
Employee count | 3,019 | 3,019 | 2,909 | 2,651 | 2,531 | |||||||||||||||
(1) | Accumulated Other Comprehensive Income (AOCI) includes changes in value of available-for-sale securities and cash flow hedges. We believe that such changes represent temporary market fluctuations, are not reflective of our market strategy, and therefore, exclusion of AOCI provides a reasonable basis for calculating returns. |
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC. Financial & Statistical Supplement - Operating Results (Dollars in thousands, except per share data) (Unaudited) | ||
For the year ended | Q-4 05 | Q-3 05 | Q-2 05 | Q-1 05 | ||||||||||||||||
Revenues | ||||||||||||||||||||
Investment banking: | ||||||||||||||||||||
Capital raising | $ | 356,753 | $ | 88,866 | $ | 86,035 | $ | 95,039 | $ | 86,813 | ||||||||||
Advisory | 17,759 | 7,415 | 3,026 | 6,180 | 1,138 | |||||||||||||||
Institutional brokerage: | ||||||||||||||||||||
Principal transactions | 17,950 | 3,788 | 4,348 | 4,187 | 5,627 | |||||||||||||||
Agency commissions | 82,778 | 21,006 | 20,445 | 19,170 | 22,157 | |||||||||||||||
Mortgage trading interest | 30,859 | 19,555 | 11,304 | — | — | |||||||||||||||
Mortgage trading net investment loss | (3,820 | ) | (1,419 | ) | (2,401 | ) | — | — | ||||||||||||
Asset management: | ||||||||||||||||||||
Base management fees | 30,348 | 6,153 | 7,914 | 7,813 | 8,468 | |||||||||||||||
Incentive allocations and fees | 1,929 | 742 | 832 | 730 | (375 | ) | ||||||||||||||
Principal investment: | ||||||||||||||||||||
Interest | 549,832 | 189,811 | 144,401 | 116,724 | 98,896 | |||||||||||||||
Net investment (loss) income | (239,754 | ) | (258,500 | ) | 4,866 | 17,738 | (3,858 | ) | ||||||||||||
Dividends | 36,622 | 16,039 | 8,772 | 8,371 | 3,440 | |||||||||||||||
Mortgage banking: | ||||||||||||||||||||
Interest | 78,007 | 28,825 | 27,280 | 15,543 | 6,359 | |||||||||||||||
Net investment income (loss) | 13,741 | (21,899 | ) | 17,600 | 14,559 | 3,481 | ||||||||||||||
Other | 22,302 | 5,164 | 5,479 | 6,030 | 5,629 | |||||||||||||||
Total revenues | 995,306 | 105,546 | 339,901 | 312,084 | 237,775 | |||||||||||||||
Interest expense | 546,313 | 211,393 | 156,373 | 103,725 | 74,822 | |||||||||||||||
Provision for loan losses | 14,291 | 8,263 | 4,890 | 1,138 | — | |||||||||||||||
Revenues, net of interest expense and provision for loan losses | 434,702 | (114,110 | ) | 178,638 | 207,221 | 162,953 | ||||||||||||||
Non-interest expenses | ||||||||||||||||||||
Compensation and benefits | 331,492 | 87,330 | 88,348 | 80,015 | 75,799 | |||||||||||||||
Professional services | 66,550 | 16,556 | 16,158 | 20,186 | 13,650 | |||||||||||||||
Business development | 46,648 | 10,433 | 8,815 | 11,962 | 15,438 | |||||||||||||||
Clearing and brokerage fees | 8,882 | 2,447 | 2,363 | 2,040 | 2,032 | |||||||||||||||
Occupancy and equipment | 34,044 | 10,151 | 9,397 | 8,772 | 5,724 | |||||||||||||||
Communications | 20,634 | 5,741 | 5,561 | 5,300 | 4,032 | |||||||||||||||
Other operating expenses | 70,679 | 24,984 | 16,861 | 12,540 | 16,294 | |||||||||||||||
Total non-interest expenses | 578,929 | 157,642 | 147,503 | 140,815 | 132,969 | |||||||||||||||
Net (loss) income before income taxes | (144,227 | ) | (271,752 | ) | 31,135 | 66,406 | 29,984 | |||||||||||||
Income tax provision (benefit) | 26,683 | (142 | ) | 8,090 | 13,163 | 5,572 | ||||||||||||||
Net (loss) income | $ | (170,910 | ) | $ | (271,610 | ) | $ | 23,045 | $ | 53,243 | $ | 24,412 | ||||||||
Net (loss) income before income taxes as a percentage of net revenue | -33.2 | % | 238.1 | % | 17.4 | % | 32.0 | % | 18.4 | % | ||||||||||
ROE (annualized) | -11.9 | % | -80.5 | % | 6.3 | % | 14.3 | % | 6.4 | % | ||||||||||
ROE (annualized-excluding AOCI) (1) | -11.7 | % | -74.7 | % | 5.9 | % | 13.8 | % | 6.0 | % | ||||||||||
Total shareholders’ equity | $ | 1,304,170 | $ | 1,304,170 | $ | 1,394,137 | $ | 1,519,021 | $ | 1,458,861 | ||||||||||
Total shareholders’ equity, net of AOCI (1) | $ | 1,305,147 | $ | 1,305,147 | $ | 1,603,305 | $ | 1,631,955 | $ | 1,629,293 | ||||||||||
Basic (loss) earnings per share | $ | (1.01 | ) | $ | (1.60 | ) | $ | 0.14 | $ | 0.31 | $ | 0.15 | ||||||||
Diluted (loss) earnings per share | $ | (1.01 | ) | $ | (1.60 | ) | $ | 0.14 | $ | 0.31 | $ | 0.14 | ||||||||
Ending shares outstanding (in thousands) | 170,264 | 170,264 | 169,891 | 169,617 | 169,214 | |||||||||||||||
Book value per share | $ | 7.66 | $ | 7.66 | $ | 8.21 | $ | 8.96 | $ | 8.62 | ||||||||||
Book value per share, net of AOCI (1) | $ | 7.67 | $ | 7.67 | $ | 9.44 | $ | 9.62 | $ | 9.63 | ||||||||||
Gross assets under management (in millions) | ||||||||||||||||||||
Managed accounts | $ | 463.4 | $ | 463.4 | $ | 437.2 | $ | 510.4 | $ | 242.4 | ||||||||||
Hedge & offshore funds | 154.3 | 154.3 | 239.0 | 463.1 | 601.1 | |||||||||||||||
Mutual funds | 1,883.3 | 1,883.3 | 2,078.1 | 2,185.0 | 2,213.9 | |||||||||||||||
Private equity and venture capital funds | 56.2 | 56.2 | 42.7 | 41.3 | 69.5 | |||||||||||||||
Total | $ | 2,557.2 | $ | 2,557.2 | $ | 2,797.0 | $ | 3,199.8 | $ | 3,126.9 | ||||||||||
Net assets under management (in millions) | ||||||||||||||||||||
Managed accounts | $ | 329.5 | $ | 329.5 | $ | 255.5 | $ | 257.3 | $ | 223.0 | ||||||||||
Hedge & offshore funds | 150.5 | 150.5 | 227.8 | 401.1 | 490.3 | |||||||||||||||
Mutual funds | 1,872.8 | 1,872.8 | 2,069.9 | 2,176.6 | 2,204.2 | |||||||||||||||
Private equity and venture capital funds | 46.8 | 46.8 | 39.9 | 37.8 | 66.3 | |||||||||||||||
Total | $ | 2,399.6 | $ | 2,399.6 | $ | 2,593.1 | $ | 2,872.8 | $ | 2,983.8 | ||||||||||
Employee count | 2,449 | 2,449 | 2,455 | 2,226 | 2,123 | |||||||||||||||
(1) | Accumulated Other Comprehensive Income (AOCI) includes changes in value of available-for-sale securities and cash flow hedges. We believe that such changes represent temporary market fluctuations, are not reflective of our market strategy, and therefore, exclusion of AOCI provides a reasonable basis for calculating returns. |
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC. CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except per share amounts) (Unaudited) |
31-Dec-06 | 31-Dec-05 | |||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | 189,956 | $ | 238,615 | ||||
Restricted cash | 132 | 6,101 | ||||||
Receivables | 217,249 | 259,519 | ||||||
Investments: | ||||||||
Mortgage-backed securities, at fair value | 6,870,661 | 8,002,561 | ||||||
Loans held for investment, net | — | 6,841,266 | ||||||
Loans held for sale, net | 5,367,934 | 963,807 | ||||||
Long-term investments | 185,492 | 347,644 | ||||||
Reverse repurchase agreements | — | 283,824 | ||||||
Trading securities, at fair value | 18,180 | 1,032,638 | ||||||
Due from clearing broker | 28,999 | 71,065 | ||||||
Derivative assets, at fair value | 36,875 | 70,636 | ||||||
Goodwill | 162,765 | 162,765 | ||||||
Intangible assets, net | 21,825 | 26,485 | ||||||
Furniture, equipment and leasehold improvements, net | 44,111 | 46,382 | ||||||
Prepaid expenses and other assets | 208,339 | 82,482 | ||||||
Total assets | $ | 13,352,518 | $ | 18,435,790 | ||||
LIABILITIES AND SHAREHOLDERS ‘ EQUITY | ||||||||
Liabilities: | ||||||||
Trading account securities sold short but not yet purchased, at fair value | $ | 202 | $ | 150,547 | ||||
Commercial paper | 3,971,389 | 6,996,950 | ||||||
Repurchase agreements | 3,059,330 | 2,698,619 | ||||||
Derivative liabilities, at fair value | 44,582 | 31,952 | ||||||
Dividends payable | 8,743 | 34,588 | ||||||
Interest payable | 12,239 | 12,039 | ||||||
Accrued compensation and benefits | 57,227 | 82,465 | ||||||
Accounts payable, accrued expenses and other liabilities | 81,819 | 82,576 | ||||||
Temporary subordinated loan payable | — | 75,000 | ||||||
Securitization financing, net | 4,486,046 | 6,642,198 | ||||||
Long-term debt | 324,453 | 324,686 | ||||||
Total liabilities | 12,046,030 | 17,131,620 | ||||||
Minority Interest | 135,443 | — | ||||||
Shareholders’ equity: | ||||||||
Common stock, 174,712 and 172,854 shares | 1,747 | 1,729 | ||||||
Additional paid-in capital | 1,562,497 | 1,547,128 | ||||||
Employee stock loan receivable including accrued interest (2 and 551 shares) | (12 | ) | (4,018 | ) | ||||
Deferred compensation, net | — | (15,602 | ) | |||||
Accumulated other comprehensive loss, net of taxes | (15,136 | ) | (977 | ) | ||||
Accumulated deficit | (378,051 | ) | (224,090 | ) | ||||
Total shareholders’ equity | 1,171,045 | 1,304,170 | ||||||
Total liabilities and shareholders’ equity | $ | 13,352,518 | $ | 18,435,790 | ||||
FBR CAPITAL MARKETS CORPORATION CONSOLIDATED STATEMENT OF OPERATIONS (Dollars in thousands, except per share data) (Unaudited) |
For the year ended | Q-4 06 | Q-3 06 | Q-2 06 | Q-1 06 | ||||||||||||||||
Revenues | ||||||||||||||||||||
Investment banking: | ||||||||||||||||||||
Capital raising | $ | 190,576 | $ | 71,879 | $ | 6,852 | $ | 45,510 | $ | 66,335 | ||||||||||
Advisory | 24,148 | 9,172 | 5,826 | 6,281 | 2,869 | |||||||||||||||
Institutional brokerage: | ||||||||||||||||||||
Principal transactions | 5,814 | (8 | ) | (1,658 | ) | 1,760 | 5,720 | |||||||||||||
Agency commissions | 100,855 | 24,683 | 24,359 | 28,447 | 23,366 | |||||||||||||||
Mortgage trading interest | 51,147 | 2,509 | 13,845 | 17,143 | 17,650 | |||||||||||||||
Mortgage trading net investment loss | (3,298 | ) | (309 | ) | (1,546 | ) | (209 | ) | (1,234 | ) | ||||||||||
Asset management: | ||||||||||||||||||||
Base management fees | 19,871 | 5,051 | 4,879 | 5,065 | 4,876 | |||||||||||||||
Incentive allocations and fees | 1,327 | 403 | (30 | ) | (54 | ) | 1,008 | |||||||||||||
Interest | 20,934 | 5,235 | 8,439 | 4,647 | 2,613 | |||||||||||||||
Net investment income (loss) | 3,372 | 3,288 | (3,070 | ) | 108 | 3,046 | ||||||||||||||
Other | 3,893 | 1,280 | 482 | 816 | 1,315 | |||||||||||||||
Total revenues | 418,639 | 123,183 | 58,378 | 109,514 | 127,564 | |||||||||||||||
Interest expense | 54,543 | 3,136 | 16,390 | 18,155 | 16,862 | |||||||||||||||
Revenues, net of interest expense | 364,096 | 120,047 | 41,988 | 91,359 | 110,702 | |||||||||||||||
Non-interest expenses | ||||||||||||||||||||
Compensation and benefits | 225,712 | 61,326 | 46,398 | 54,436 | 63,552 | |||||||||||||||
Professional services | 43,712 | 13,809 | 9,069 | 10,830 | 10,004 | |||||||||||||||
Business development | 33,772 | 9,458 | 5,229 | 6,709 | 12,376 | |||||||||||||||
Clearing and brokerage fees | 11,715 | 3,504 | 2,892 | 3,053 | 2,266 | |||||||||||||||
Occupancy and equipment | 30,039 | 7,918 | 7,349 | 7,499 | 7,273 | |||||||||||||||
Communications | 20,039 | 5,024 | 5,442 | 4,990 | 4,583 | |||||||||||||||
Other operating expenses | 12,219 | 1,434 | 4,561 | 2,960 | 3,264 | |||||||||||||||
Total non-interest expenses | 377,208 | 102,473 | 80,940 | 90,477 | 103,318 | |||||||||||||||
Net (loss) income before income taxes | (13,112 | ) | 17,574 | (38,952 | ) | 882 | 7,384 | |||||||||||||
Income tax (benefit) provision | (3,271 | ) | 10,614 | (16,346 | ) | (105 | ) | 2,566 | ||||||||||||
Net (loss) income | $ | (9,841 | ) | $ | 6,960 | $ | (22,606 | ) | $ | 987 | $ | 4,818 | ||||||||
Basic & diluted (loss) earnings per share | $ | (0.18 | ) | $ | 0.11 | (1) | $ | (0.37 | ) | $ | 0.02 | $ | 0.10 | |||||||
Weighted average shares - basic & diluted | 54,136,986 | 64,000,000 | 60,282,609 | 46,000,000 | 46,000,000 |
(1) | Non-GAAP earnings per share determined by using a 43% tax rate would be $0.16. Management believes this information is relevant because it expects the effective tax rate to approximate 43% after FASB 123R and other non-cash tax charges. |