Friedman, Billings, Ramsey Group, Inc. (“FBR Group”)
This document is intended solely for the use of the party to whom FBR has provided it, and is not to be reprinted
or redistributed without the permission of FBR. All references to “FBR” refer to Friedman, Billings, Ramsey Group,
Inc., and its predecessors and subsidiaries as appropriate. Investment banking, sales, trading, and research
services are provided by Friedman, Billings, Ramsey & Co., Inc. (FBR & Co.), except for those online offering,
mutual fund distribution and discount brokerage services provided by FBR Investment Services, Inc. (FBRIS),
and those services in the U.K., Europe and elsewhere outside the United States and Canada provided
by Friedman, Billings, Ramsey International, Ltd. (FBRIL). FBR & Co. and FBRIS are broker-dealers registered
with the SEC and are members of the NASD. FBRIL, based in the U.K, is regulated by the Financial Services
Authority. Asset management services, including managed hedge funds, mutual funds, private equity and venture
capital funds, are provided by FBR subsidiaries FBR Investment Management, Inc. (FBRIM), FBR Fund Advisers,
Inc., and Money Management Advisers, Inc., which are investment advisers registered with the SEC.
Trust services, including mutual fund custody and administration, are provided by FBR National Trust Company.
On March 31, 2003, Friedman, Billings, Ramsey Group, Inc. merged with FBR Asset Investment Corporation,
a real estate investment trust (“REIT”) managed by FBR prior to the merger. The merged company, Friedman,
Billings, Ramsey Group, Inc. is structured as a REIT for U.S. Federal Income Tax purposes and conducts its
brokerage, sales and trading, investment banking, asset management and banking business through taxable REIT
subsidiaries.
This document is intended for information purposes only, and shall not constitute a solicitation or an offer to buy
or sell, any security or services, or an endorsement of any particular investment strategy.
For additional important information, please visit our website, www.fbr.com.
CAUTIONS ABOUT FORWARD-LOOKING INFORMATION
This presentation and the information incorporated by reference in this presentation include forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended. Some of the forward-looking statements can be identified by the use of forward-looking words such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “plans,” “estimates” or “anticipates” or the negative of those
words or other comparable terminology. Statements concerning projections, future performance developments, events, revenues, expenses, earnings, run rates, and any other guidance on present or future periods constitute forward-looking
statements. Such statements include, but are not limited to, those relating to the effects of growth, revenues and earnings, our principal investing activities, levels of assets under management and our current equity capital levels. Forward-looking
statements involve risks and uncertainties. You should be aware that a number of important factors could cause our actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to,
the overall environment for interest rates, repayment speeds within the mortgage backed securities market, risk associated with equity investments, the demand for public offerings, activity in the secondary securities markets, competition among
financial services firms for business and personnel, the high degree of risk associated with venture capital investments, the effect of demand for public offerings, mutual fund and 401(k) pension plan inflows or outflows in the securities markets, volatility
of the securities markets, available technologies, the effect of government regulation and of general economic conditions on our own business and on the business in the industry areas on which we focus, fluctuating quarterly operating results, the availability
of capital to us and risks related to online commerce. We will not necessarily update the information presented or incorporated by reference in this presentation if any of these forward looking statements turn out to be inaccurate. Risks affecting our
business are described throughout our Form 10-K, especially in the section entitled “Risk Factors” beginning on page 29. The entire Form 10-K, including the Consolidated Financial Statements and the notes and any other documents incorporated
by reference into the Form 10-K, as well as, the Forms 10G and 8-K filed subsequent to the forms 10K, should be read for a complete understanding of our business and the risks associated with that business.
FBR Group
Market Capitalization of Approximately $3.5 Billion
Pro Forma Equity Capitalization of Approximately $1.5 Billion
Pro Forma Book Value Per Share of Approximately $9.00
Annualized Dividend: $1.36, Yield of 6.4%1
Approximately 500 Full-time Employees in 15 Offices
Five Profit Centers:
Investment Banking
Institutional Brokerage Sales and Trading
Asset Management
Mortgage-Backed Portfolio
Merchant Banking
1 Share price as of November 30, 2003.
FBR Group
Capital Markets
Asset Management
Principal Investing:
MBS and Merchant Banking
* Trust and Custody Services.
Friedman, Billings,
Ramsey Group, Inc.
(NYSE: FBR)
REIT Election
FBR Taxable REIT Subsidiary (“TRS”)
Holdings, Inc.
(Full Taxpayer)
FBR Capital
Markets Holdings,
Inc.
FBR Asset
Management
Holdings, Inc.
FBR Bancorp, Inc.*
36 Senior Analysts
Department total 85
Approximately 400 companies under coverage
Private equity
Hedge funds
Venture capital
Equity mutual funds
Fixed income mutual funds
Tax-exempt funds
Money market funds
Private client group
Restricted 144A stock
sales
Financial planning /
trust & estate services
Credit lines
Hedging &
monetization
Employee stock option
management
Cash management
92 Investment Banking
personnel in 6 focused
industry sectors
Financial Institutions
Real Estate
Technology
Healthcare
Energy
Diversified Industrials
Top 10 lead managing equity
underwriter first nine months
2003:
43 transactions with
$4.5B in total transaction
value
20 lead and sole
managed public / private
transactions
15 M&A and advisory
assignments
54 Institutional Brokers; 32
Traders and Sales Traders
Market-maker in over 500
equity and debt securities
Cover over 1,000 institutions
Financial Institutions
Real Estate
Technology
Healthcare
Energy
Diversified Industrials
Institutional
Sales & Trading
Research
Investment
Banking
Business Overview
Research is provided by FBR & Co.’s Research department, which is independent from the Investment Banking department of FBR & Co., and has the sole authority to determine which companies receive research coverage and the
recommendation contained in the coverage. In the normal course of its business, FBR & Co. seeks to perform investment banking and other fee generating services for companies that are the subject of FBR & Co. research reports.
Research analysts are eligible to receive bonus compensation that is based on FBR & Co.’s overall operating revenues, including revenues generated by FBR & Co.’s investment banking department. Specific information is contained
in each research report concerning FBR & Co.’s relationship with the company that is the subject of the report.
Asset
Management
Assets approximately $8.4
billion, as of September 30,
2003
Mortgage-backed
securities guaranteed
by Freddie Mac,
Fannie Mae or Ginnie
Mae GSEs)
Portfolio composition
1/1 Arms and 3/1 and
5/1 Hybrid ARMs
Dedicated stable
funding source
Mortgage-Backed
Securities
Approximately $170 million
of invested capital as of
September 30, 2003
Non-levered portfolio
Preferred and
common equity
Senior secured and
mezzanine loans
Interest in
proprietary funds
Direct assets
Merchant Banking
REIT Principal Activities (2 Profit Centers)
Taxable Subsidiaries (TRSs) (3 Profit Centers and Research)
Highlights
Unique Capital Markets Investment and Distribution Franchise
Only Independent Publicly Owned Broker / Dealer Formed
Since 1972
Greater than 27% Compound Annual Growth Rate (“CAGR”)
Since 1992
Lowest Cost Platform and Most Efficient Tax Structure in
Broker / Dealer Industry
Highest Return on Equity of any Public Capital Markets Firm
Significant New Business Opportunities in Investment
Banking and Asset Management
Investment and Distribution Franchise
Fundamental Valuation Approach
Premier Investment Banking / Institutional Brokerage Platform
#1 Lead Managing Underwriter in Aftermarket Performance*
#5 Lead Managing Underwriter in Initial Public Offering Equity Raised Across All
Industries**
Top Ten Equity Underwriter – Over $5.0 Billion Raised Year-to-date
Market Leader in Innovative Transaction Structures (144A, Private Block Secondaries,
Public Corporate Formations)
Superior Proprietary Investment Returns also Drives Growth in Fees
31.0% IRR Since Inception
Portfolio Investments have Generated Approximately $210 Million in Investment
Banking Fees Since January 1, 2001
Top Tier Asset Management Products
Three Mutual Funds Rated Five Star by Morningstar
Two Hedge Funds with 10 Year Annualized Returns of 18% and 22%, respectively
* See page 10
** See page 11.
$15.0
$21.1
$27.1
$35.7
$45.0
$21.6
$32.3
$24.5
$26.5
$22.5
$36.6
$53.4
$51.6
$67.5
$62.2
10
20
30
40
50
60
70
$80
1999
2000
2001
2002
2003
Nine Months
Annualized
Agency
Principal
Sales & Trading Revenue 1
Capital Markets Revenue Growth
1 Adjusted for elimination of all revenue from and fees paid to FBR Asset (including trading gains).
Investment Banking Revenue 1
$22.6
$21.1
$44.6
$68.5
$93.7
$31.4
$30.3
$62.1
$94.3
$13.0
$49.0
$53.9
$81.7
$139.3
$201.0
$22.5
$6.8
$1.4
$3.9
$8.7
20
40
60
80
100
120
140
160
180
$200
1999
2000
2001
2002
2003
Nine Months
Annualized
Underwriting
Corporate Finance
Gains
Investment Banking
Evaluate All Underwritings and Provide Financial Advice Based
on Disciplined Investment Approach
Concentrate on Specific Industries Where FBR has Developed In-
depth Expertise
Creative Solutions Where Business / Investment Merits Fit FBR
Expertise
144A Equity Placements
Private Block Trades
Public / Private Recapitalizations
M & A
Other More Traditional Capital Events
Premier Track Record
Top 10 Equity Underwriter by Dollar Volume
Leading Firm in Aftermarket Performance
New Business Opportunities
Investment Banking
Rankings by Aftermarket Performance
1 Of more than 25 transactions, IPOs and Secondaries only, excludes closed-end funds.
2 Of more than 10 transactions IPOs and Secondaries only, excludes closed–end funds.
3 Of more than 1 transaction, IPOs and Secondaries only, excludes closed-end funds.
4 Non-weighted average aftermarket performance. Results for each of the offerings vary
considerably, and may be significantly different from the average figure quoted. Past
performance is no guarantee of future results.
Source: CommScan and FBR internal data.
** Inclusion of Dividends and 144A Institutional Placements
resulted in a weighted return of 15.65% and a non-weighted return
of 13.30% from our internal calculations for FBR deals 1/01/2002 - -
12/31/2002.
* Inclusion of Dividends and 144A Institutional Placements resulted
in a weighted return of 24.36% and a non-weighted return of
22.66% from our internal calculations for FBR deals 1/01/1998 - -
12/31/2002.
5 YEARS
1 YEAR
YEAR TO DATE 2003
Aftermarket Performance Across All Industries
January 1, 1998 through December 31, 2002
Aftermarket Performance Across All Industries
January 1, 2002 through December 31, 2002
Aftermarket Performance Across All Industries
January 1, 2003 through November 30, 2003
# of
Aftermarket
# of
Aftermarket
# of
Aftermarket
Lead Manager
1
Deals
Performance
4
(%)
Lead Manager
2
Deals
Performance
4
(%)
Lead Manager
2
Deals
Performance
4
(%)
1
Friedman, Billings, Ramsey*
60
3.80
1
Friedman, Billings, Ramsey**
20
8.06
1
Friedman, Billings, Ramsey
19
30.98
2
A.G. Edwards & Sons
41
2.37
2
Goldman, Sachs & Co.
32
(0.36)
2
Goldman, Sachs & Co.
47
24.05
3
Wachovia Securities
35
(13.91)
3
JP Morgan Chase
16
(1.29)
3
SG Cowen Securities Corp
16
23.70
4
Goldman, Sachs & Co.
331
(15.55)
4
Merrill Lynch & Co.
39
(3.91)
4
CIBC World Markets
11
20.41
5
UBS Warburg LLC
120
(20.76)
5
Deutsche Bank Securities
16
(6.16)
5
Bear, Stearns & Co.
24
19.45
6
Bear, Stearns & Co.
119
(20.96)
6
Bear, Stearns & Co.
21
(7.11)
6
Morgan Stanley
58
18.20
7
JP Morgan Chase
84
(21.98)
7
Salomon Smith Barney
30
(10.24)
7
Credit Suisse First Boston
51
17.55
8
Chase H&Q
91
(22.52)
8
Morgan Stanley
36
(10.51)
8
JP Morgan Chase
48
16.53
9
Merrill Lynch & Co.
329
(23.83)
9
Banc of America Securities
18
(15.81)
9
Lehman Brothers
40
16.51
10
Raymond James
27
(24.49)
10
Credit Suisse First Boston
56
(16.72)
10
Citigroup Global Markets
52
15.62
11
Salomon Smith Barney
195
(25.58)
11
UBS Warburg LLC
24
(17.75)
11
Merrill Lynch & Co.
49
15.17
12
Credit Suisse First Boston
328
(25.61)
12
Lehman Brothers
23
(19.44)
12
RBC Capital Markets
11
14.83
1,760
(17.42)
331
(8.44)
426
19.42
Investment Banking
First Three Quarters 2003 Rankings by Dollar Amount Raised
* In addition, FBR has raised approximately $2.4 billion from January 1, 2003 to November 30, 2003 in 144A Institutional Equity Placements
and PIPE transactions.
Note: Lead Managed deals, excludes closed-end funds.
Source: CommScan.
Issuer Market Cap Under $1B - All Industries
1/1/2003 - 9/30/2003 IPOs and Secondaries
All Market Caps - All Industries
1/1/2003 - 9/30/2003 IPOs and Secondaries
All Market Caps - All Industries
1/1/2003 - 9/30/2003 IPOs Only
Lead Manager
$ Millions
# of Deals
Lead Manager
$ Millions
# of Deals
Lead Manager
$ Millions
# of Deals
1
Credit Suisse First Boston
$
2,516.7
16
1
Citigroup Global Markets
$
13,317.8
34
1
Credit Suisse First Boston
$
2,668.6
7
2
Lehman Brothers
1,505.3
14
2
Morgan Stanley
12,772.7
43
2
Citigroup Global Markets
1,681.4
3
3
UBS AG
1,423.9
16
3
Goldman, Sachs & Co.
10,991.1
37
3
Goldman, Sachs & Co.
1,541.3
4
4
Merrill Lynch & Co.
1,379.8
10
4
Merrill Lynch & Co.
10,369.2
36
4
Merrill Lynch & Co.
1,451.6
6
5
Citigroup Global Markets
1,359.0
8
5
JP Morgan Chase
8,650.3
30
5
Friedman, Billings, Ramsey*
1,319.4
4
6
Morgan Stanley
1,262.0
14
6
Credit Suisse First Boston
8,136.6
35
6
Morgan Stanley
1,050.8
4
7
Bear, Stearns & Co.
1,234.4
11
7
Lehman Brothers
6,265.9
31
7
Banc of America Securities
937.1
2
8
Friedman, Billings, Ramsey*
1,125.4
12
8
Banc of America Securities
5,556.7
20
8
Lehman Brothers
788.6
3
9
Goldman, Sachs & Co.
818.8
7
9
UBS AG
4,136.0
31
9
Sandler O’Neill & Partners LP
596.0
1
10
Societe Generale
678.3
11
10
Bear, Stearns & Co.
2,350.0
16
10
Deutsche Bank AG
480.7
1
11
Sandler O’Neill & Partners LP
596.0
1
11
Deutsche Bank AG
2,305.4
14
11
JP Morgan Chase
393.3
2
12
JP Morgan Securities Inc.
576.6
6
12
Friedman, Billings, Ramsey*
1,999.9
14
12
Wachovia Capital Markets
339.7
1
13
CIBC World Markets
576.1
7
13
Wachovia Capital Markets
1,693.6
13
13
Robert W. Baird
297.6
1
14
Banc of America Securities
512.3
4
14
CIBC World Markets
1,138.5
9
14
Jefferies & Co.
173.2
2
15
RBC Capital Markets
505.0
7
15
RBC Capital Markets
878.8
8
15
Keefe, Bruyette & Woods
167.4
1
16
Thomas Weisel Partners LLC
413.2
6
16
Societe Generale
760.8
12
16
CIBC World Markets
132.8
1
17
Jefferies & Co.
346.9
5
17
Sandler O’Neill & Partners LP
596.0
1
17
Ferris, Baker Watts
113.9
1
18
Ryan, Beck & Co.
319.1
3
18
Raymond James
550.5
8
18
SG Cowen Securities
104.5
2
19
Deutsche Bank AG
309.9
6
19
Jefferies & Co.
468.0
7
19
Bear, Stearns & Co.
90.0
1
20
Raymond James
296.6
6
20
Thomas Weisel Partners LLC
413.2
6
20
SunTrust Robinson Humphrey
59.3
1
Institutional Sales & Trading / Research
Unparalleled Capability to
Distribute Primary Product
54 Senior Brokers’
Understanding of Investment
Philosophy Leads to Powerful
Distribution Platform
32.8% CAGR Volume Growth
Since 1999
Currently Provide Research on
43% of S&P 500 by Market
Capitalization, Near Term Goal
Equals 60%
36 Senior Analysts with Over
400 Companies Under
Coverage
Customer Trading Volumes 1999 – 2003
(Shares in 000s)
Principal Investing
Mortgage-Backed Securities
Approximately $8.4 Billion as of September 30, 2003
Mortgage-Backed Securities Guaranteed by Freddie Mac, Fannie
Mae, Ginnie Mae (All Adjustable Rate Securities)
Low Duration of 1 to 2 – Limits Price Risk
Leverage Guideline – 6x to 11x Debt to Equity, 9.5x Long-term
Target
Allocation of FBR Equity Capital: 50% - 90% (Long-term Average
Target 60% - 65%)
Established A1+/P1 Commercial Paper Diversified Funding Source
Consistent Prepayments Allow for Continuous Reinvestment
Long-term Average ROE of Approximately 24% (2.2% X 9.5x
Leverage + 3.5% Asset Yield)
Ginnie 7.8%
Fannie 58.6%
Freddie 33.6%
Principal Investing
Mortgage-Backed Securities As of September 30, 2003
1/1 ARM 17.0%
2/1 ARM
27.2%
3/1 ARM 26.1%
4/1 ARM
10.7%
5/1 ARM
19.1%
(Dollars in 000s)
Note: Excludes principal receivables.
Current
Book
Market
Average
Book
Cost
WTD
Average
Effective
Face
Value
Value
Coupon
Yield
Premium
CPR
Life
Duration
8,004,011
$
8,186,378
$
8,186,336
$
4.303%
2.317%
102.28
41.87
2.05
.93
Principal Investing
Merchant Banking
All Investment Decisions Driven by Fundamental Valuation
Approach
Proprietary Deal Flow Through FBR & Co., Inc.
Independent Due Diligence and Investment Committee Process
Deep Industry Knowledge Allows for Expedited Execution and
Innovative Structures Leading to Premium Returns
Ability to Evaluate Liquidity Outcomes with Great Certainty
Non-levered Portfolio
10% - 30% FBR Equity Allocation
IRR of 31.0% from Inception to September 30, 2003
Access to Capital Drives Investment Banking Growth
Period of
Investment
Investment
Amount
Total Banking
Fees Earned
Fieldstone Mortgage Company
Nov-03
50,000,000
$
42,000,000
$
Americredit
Sep-02
40,329,295
26,462,476
American Financial
Sep-02
40,000,001
1
43,883,007
Quanta
Aug-03
25,000,000
35,090,698
Southwest Royalties
Apr-02
18,333,333
2
1,714,662
Oxford
Mar-02
14,650,000
3
2,889,359
MCG Capital
Nov-01
9,934,375
13,776,396
Saxon
Jul-01
9,300,000
15,058,315
Annaly
Jan-01
7,144,000
8,274,551
Accredited Home Lenders
Feb-03
6,789,586
4,163,044
Equity Inns
Jul-03
5,750,000
1,191,423
Franklin
Oct-02
5,580,000
4,369,198
Anworth
Dec-01
3,890,650
11,568,421
Atlas Pipeline
Sep-03
-
4
375,000
Quaker
Nov-02
-
5
113,789
236,701,240
$
210,930,339
$
1
Includes $5 million note which has been repaid and $35,000,001 equity investment.
2
Represents a loan commitment of up to $25,000,000, of which $18,333,333 was funded and has been repaid.
3
Includes $10 million note which has been repaid and $4,650,000 equity investment.
4
Represents a loan commitment of up to $25,000,000. None of this commitment has been funded to date.
Asset Management
Broad Spectrum of Products – Mutual Funds / Alternative Asset Investments
Highly Rated Mutual Funds
Financial Services
FBR Small Cap Financial Fund
FBR Financial Services Fund
Small Cap Stocks
Small Cap Value Fund
Energy and Utilities
American Gas Index
Outstanding Alternative Asset Investment Vehicles, Including Hedge Funds
Private Client Group Provides Customized Wealth Management Solutions to
Individuals, Families and Foundations Controlling Significant Assets
* Source: Comparison of FBR, Ashton and Weston performance against Hedgefund.net database.
Asset Management
12/31/99
12/31/00
12/31/01
3.0B
2.5B
2.0B
1.5B
1.0B
0.5B
0
09/30/03
$660M
$778M
$589M
$634M
$1,314M
$1,432M
AUM Growth
Gross assets under management
Net assets under management 1
12/31/98
$518M
$435M
$1,889M
$1,840M
1 Net assets under management represents total gross assets under management, net of any repo debt, margin
loans, securities sold but not yet purchased, lines of credit, and any other liabilities. Excludes FBR Asset.
Asset Management
As of September 30, 2003
Financial
$582M
Energy
$184M
Fixed Income /
Money Market
Mutual Funds
$521M
Diversified /
Other
$556M
Technology /
Healthcare
$46M
Conclusion
Unique Capital Markets Investment and Distribution Franchise
Leading Investment Banking Platform
#1 Lead Managing Underwriter in After-Market Performance Across
All Industries*
#5 Lead Managing Underwriter in Initial Public Offering Equity Raised
Across All Industries**
Top Ten Equity Underwriter – Over $5.0 Billion Raised Year-to-date**
Lowest Cost Platform and Most Efficient Tax Structure in Broker /
Dealer Industry
Consistent Superior Risk Adjusted Returns on Invested Capital
Shareholder Alignment
Greater than 25% Employee Ownership
No Selling Shareholders
Attractive Dividend with Growth through Retained Earnings
* See page 10.
** See page 11.
APPENDIX
$0.00
$4.00
$8.00
$12.00
$16.00
$20.00
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
Trading Volume
Price
FBR Group Common Shares
FBR Stock Performance from the Announce Date of the Merger, November 14, 2002 to November 26, 2003
March 31, 2003:
Merger of FBR Group
and FBR Asset Closed
Market Capitalization: $3.5 Billion
Price/Book: 2.33x
Dividend Yield: 6.4%
Shares Outstanding: 166.6MM
Float: 147.0MM
Source: Bloomberg, Federal Reserve
Notes:
CMT is the 1 Year Constant Maturity Treasury. For purposes of estimating spread, this chart assumes a margin of 225 bps.
On January 9, 2003, the Federal Reserve Board made a policy change regarding the discount rate in an effort to reduce the stigma of borrowing from the federal government
and raised the discount rate above the federal funds rate. However, because the Federal Reserve’s monetary stance, as reflected by the federal funds rate, has remained
unchanged, this chart assumes a constant discount rate from January 9, 2003 through August 31, 2003 of 75 bps., as it stood prior to the Federal Reserve’s policy change.
Principal Investing –
Mortgage-Backed Securities
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
9.00
Spread Between CMT+225 bps and LIBOR
Average Spread of 220 bps (Standard Deviation of 45 bps)
Discount Rate
Merchant Banking Portfolio
Merchant Banking Investments
Shares
Price Per
Share
as of 11/10/03
Cost Basis
(000s)
Fair Value as of
9/30/03 (000s)
Accredited Home Lenders Holding Co.
1
510,697
26.28
$
4,080
$
11,087
American Financial Realty Trust
1
3,763,441
15.15
39,554
53,065
Americredit Corporation
3,200,000
14.34
10,560
32,960
Franklin Bank Corp.
1, 2
600,000
10.00
6,000
6,000
Fieldstone Mortgage Company
1,2
5,376,344
10.00
50,000
50,000
3
MCG Capital
625,000
18.11
6,100
9,750
Oxford Finance Corp.
2
500,000
7.50
3,750
3,750
Quanta Capital Holdings
1,2
2,688,172
10.00
25,000
25,000
Saxon Capital Inc.
1,000,000
18.80
12,930
17,140
Kelson Physician Partners (Loan)
7,500
7,500
Other
3,494
3,503
168,968
$
219,755
$
3
Investment Partnership Interests Accounted for Under the Equity Method
54,356
$
Investment Partnership Interests Accounted for Under the Cost Method
2,026
Cost Method Investments
196
Other
28,497
Total Long-term Investments
304,830
$
3
Notes:
1
FBR is restricted from selling its shares based on the terms of its purchase.
2
These shares are not registered for public trading.
3
FBR's investment in Fieldstone was made in November of 2003.
Income Statement
(Dollars in 000s)
Nine months ended September 30,
2003
2002
Revenues
Total investment banking
$150,781
$119,555
Total institutional brokerage
50,607
48,501
Total asset management
40,738
35,873
Total principal investment
134,360
0
Total other
6,452
5,407
Total revenues
382,938
209,336
Interest expense
44,339
1,408
Revenues, net of interest expense
338,599
207,928
Expenses
Compensation and benefits
135,150
115,455
Business development and professional services
27,885
23,044
Other operating expenses
30,601
24,769
Total expenses
193,636
163,268
Net income before taxes and extraordinary gain
144,963
44,660
Income tax provision
23,507
2,343
Net income before extraordinary gain
121,456
42,317
Extraordinary gain and income tax provision on gain
—
877
Net income
$121,456
$43,194
Basic earnings per share
$1.14
$0.94
Diluted earnings per share
$1.11
$0.90
Dividends declared per share
$1.02
—
Weighted average shares outstanding
Basic
106,279
45,955
Diluted
109,103
48,218
Balance Sheet
(Dollars in 000s)
September 30, 2003
ASSETS
Cash and cash equivalents
$252,102
Accounts receivable
64,100
Mortgage-backed securities, at fair value
8,408,164
Long-term investments
254,830
Trading securities, at fair value
6,745
Due from clearing broker
84,062
Goodwill
108,013
Management contract intangible
16,643
Building, furniture, equipment, software and leasehold improvements, net
5,545
Prepaid expenses and other assets
17,607
Total assets
$9,217,811
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Trading account securities sold but not yet purchased, at fair value
$24,002
Repurchase agreements
3,880,788
Commercial paper
4,046,645
Interest rate swaps
3,877
Dividends payable
47,621
Interest payable
3,404
Accounts payable and accrued expenses
44,193
Accrued compensation and benefits
53,512
Long-term debt
45,616
Total liabilities
8,149,658
Total shareholders' equity
1,068,153
Total liabilities and shareholders' equity
$9,217,811