FBR & Co (FBRC) 8-K Second Quarter 2007 Financial Results

EXHIBIT 99.1

Contacts:

Media: Lauren Burk at 703.469.1004 or lburk@fbr.com

Investors: Paul Beattie at 703.312.9673 or pbeattie@fbr.com

FBR Capital Markets Announces

Second Quarter 2007 Financial Results

Earnings of $21.8 Million on Net Revenue of $169.5 Million

ARLINGTON, VA, July 25, 2007 - FBR Capital Markets Corporation (NASDAQ: FBCM) (FBR Capital Markets) today reported second quarter after-tax earnings of $21.8 million, or $0.34 per share (diluted), compared to after-tax earnings of $1.0 million, or $0.02 per share (diluted), in the second quarter of 2006. For the six months ending June 30, 2007, FBR Capital Markets earned $32.8 million after tax, or $0.51 per share (diluted), compared to after-tax earnings of $5.8 million, or $0.13 per share (diluted), for the first half of 2006. Net revenues for the second quarter of 2007 were $169.5 million compared to net revenues of $91.4 million in the second quarter of 2006. Net revenues for the first six months of 2007 were $312.6 million compared to $202.1 million for the first six months of 2006.

FBR Capital Markets’ book value at the close of the second quarter was $8.20 per share compared to $7.81 per share at the end of the first quarter of 2007. At the close of the second quarter, FBR Capital Markets had $528.3 million in equity, $471.0 million of cash, and no debt.  

“We are very pleased with FBR Capital Markets’ results for the second quarter and the first six months of 2007,” said Richard J. Hendrix, President and Chief Operating Officer of FBR Capital Markets. “We were ranked #3 in the second quarter for all initial common equity offerings⁽¹⁾ and continue to be the leading firm in Rule 144A equity offerings, raising $1.6 billion in six of these transactions during the second quarter⁽²⁾. Our expanded merger and acquisition group is having a positive impact on the business, and we currently have a solid investment banking pipeline across all our industry groups.”

During the quarter the company announced enhancements to its proprietary Rule 144A trading platform, FBR PLUS(TM). These enhancements make it easier for qualified institutional investors to obtain, via Bloomberg, trading information about Rule 144A equity offerings that FBR Capital Markets has brought to market. There are currently 15 of these securities trading on this platform and a broad group of institutional investors with password-protected access to current and historical information on these securities.

Equity Capital Markets

In the second quarter, FBR Capital Markets generated investment banking revenues of $123.1 million compared to $103.7 million in the first quarter of 2007 and $51.8 million in the second quarter of 2006. The firm raised a total of $5.6 billion in 22 capital markets transactions, including 12 initial public and private capital raises. FBR Capital Markets acted as sole or joint book runner for ten of the 22 capital raising transactions and completed ten advisory assignments during the quarter.

In its institutional brokerage business, FBR Capital Markets recorded agency commissions and principal transactions revenue of $32.7 million in the second quarter of 2007 compared to $25.8 million in the first quarter of 2007 and $30.2 million in the second quarter of 2006.

Asset Management

In FBR Capital Markets' asset management/private wealth business, base management and incentive fees were $6.5 million for the second quarter of 2007, compared to $5.6 million in the first quarter of 2007 and $5.0 million in the second quarter of 2006. Assets under management as of June 30, 2007 were $2.9 billion compared to $2.8 billion at the end of the first quarter and $2.3 billion at the end of the second quarter of 2006.

Merchant Banking

As of June 30, 2007, FBR Capital Markets had eight merchant banking portfolio investments with an aggregate initial investment value of $25.8 million. The company intends to continue to deploy capital into a diversified portfolio of merchant banking opportunities in the coming quarters.

“FBR Capital Markets continued to make great progress during first half of the year, including the completion of its initial public offering early in June,” said Eric F. Billings, Chairman and Chief Executive Officer. “The period ending June 30^th was another quarter of solid growth in investment banking revenues. We are clearly benefiting from the steps taken over the last 12 months as part of the execution of our strategic plan, including the build-out of our industry verticals, the expansion of our merger and acquisition advisory services, and the strengthening of our institutional trading platform.”

The firm will host an earnings conference call on Wednesday, July 25, 2007 at 9:00 A.M. U.S. EDT. Investors wishing to listen to the call may do so via the web at: http://phx.corporate-ir.net/phoenix.zhtml?c=204322&p=irol-irhome. Replays of the webcast will be available after the call.

FBR Capital Markets Corporation (FBR Capital Markets)(NASDAQ:FBCM), a majority-owned subsidiary of Friedman, Billings, Ramsey Group, Inc.(FBR)(NYSE:FBR), provides investment banking*, merger and acquisition advisory services*, institutional brokerage*, asset management and private wealth services. FBR Capital Markets focuses capital and financial expertise on eight industry sectors: consumer, diversified industrials, energy & natural resources, financial institutions, healthcare, insurance, real estate, and technology, media & telecom. 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. For more information, please visit www.fbrcapitalmarkets.com.

*Friedman, Billings, Ramsey & Co., Inc.

1) Source: Dealogic. Relates to total deal value of all initial public stock offerings and 144A equity private placements offered for U.S. and Bermuda issuers; priced between 4/1/07 and 6/30/07, with apportioned credit to all book-runners; includes only rank eligible transactions.

2) FBR Capital Markets is the #1 ranked investment bank for U.S. Rule 144A private equity capital raises. Source: Dealogic. Relates to total deal value of all 144A equity private placements offered for U.S. issuers; priced between 4/1/07 and 6/30/07, with apportioned credit to all book-runners; includes only rank eligible transactions.

Financial data follow.

# # #

  FBR CAPITAL MARKETS CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share amounts) (Unaudited)

						Quarter ended
							June 30
	2007		%				2006			%
REVENUES:
Investment banking:
Capital raising	$	116,972		69.0	%		$	45,510			49.8	%
Advisory		6,152		3.6	%			6,281			6.9	%
Institutional brokerage:
Principal transactions		4,152		2.4	%			1,760			1.9	%
Agency commissions		28,526		16.8	%			28,447			31.1	%
Mortgage trading interest		-		0.0	%			17,143			18.8	%
Mortgage trading net investment loss		-		0.0	%			(209	)		-0.2	%
Asset management:
Base management fees		6,360		3.8	%			5,065			5.5	%
Incentive allocations and fees		116		0.1	%			(54	)		-0.1	%
Interest		5,798		3.4	%			4,647			5.1	%
Net investment income		1,218		0.7	%			108			0.1	%
Other		465		0.4	%			816			1.0	%
Total revenues		169,759		100.2	%			109,514			119.9	%
Interest expense		274		0.2	%			18,155			19.9	%
Revenues, net of interest expense		169,485		100.0	%			91,359			100.0	%
NON-INTEREST EXPENSES:
Compensation and benefits		89,877		53.0	%			54,436			59.6	%
Professional services		12,686		7.5	%			10,830			11.9	%
Business development		9,931		5.9	%			6,709			7.3	%
Clearing and brokerage fees		3,022		1.8	%			3,053			3.3	%
Occupancy and equipment		7,816		4.6	%			7,499			8.2	%
Communications		5,805		3.4	%			4,990			5.5	%
Other operating expenses		3,706		2.2	%			2,960			3.2	%
Total non-interest expenses		132,843		78.4	%			90,477			99.0	%
Net income before income taxes		36,642		21.6	%			882			1.0	%
Income tax provision (benefit)		14,882		8.8	%			(105	)		-0.1	%
Net income	$	21,760		12.8	%		$	987			1.1	%
Basic earnings per share	$	0.34					$	0.02
Diluted earnings per share	$	0.34					$	0.02
Weighted average shares - basic		64,297						46,000
Weighted average shares - diluted		64,354						46,000

 

  FBR CAPITAL MARKETS CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share amounts) (Unaudited)

			Six Months Ended
			June 30
	2007		%			2006			%
REVENUES:
Investment banking:
Capital raising	$	214,208		68.5	%	$	111,845			55.4	%
Advisory		12,610		4.0	%		9,150			4.5	%
Institutional brokerage:
Principal transactions		6,188		2.0	%		7,480			3.7	%
Agency commissions		52,302		16.7	%		51,813			25.6	%
Mortgage trading interest		-		0.0	%		34,793			17.2	%
Mortgage trading net investment loss		-		0.0	%		(1,443	)		-0.7	%
Asset management:
Base management fees		11,888		3.8	%		9,941			4.9	%
Incentive allocations and fees		220		0.1	%		954			0.5	%
Interest		16,912		5.4	%		7,260			3.6	%
Net investment income		2,713		0.9	%		3,154			1.6	%
Other		541		0.2	%		2,131			1.0	%
Total revenues		317,582		101.6	%		237,078			117.3	%
Interest expense		4,936		1.6	%		35,017			17.3	%
Revenues, net of interest expense		312,646		100.0	%		202,061			100.0	%
NON-INTEREST EXPENSES:
Compensation and benefits		167,668		53.6	%		117,988			58.4	%
Professional services		23,510		7.5	%		20,834			10.3	%
Business development		21,246		6.8	%		19,085			9.4	%
Clearing and brokerage fees		5,688		1.8	%		5,319			2.6	%
Occupancy and equipment		15,309		4.9	%		14,772			7.3	%
Communications		11,214		3.6	%		9,573			4.7	%
Other operating expenses		5,526		1.8	%		6,224			3.2	%
Total non-interest expenses		250,161		80.0	%		193,795			95.9	%
Net income before income taxes		62,485		20.0	%		8,266			4.1	%
Income tax provision		29,719		9.5	%		2,461			1.2	%
Net income	$	32,766		10.5	%	$	5,805			2.9	%
Basic earnings per share	$	0.51				$	0.13
Diluted earnings per share	$	0.51				$	0.13
Weighted average shares - basic		64,223					46,000
Weighted average shares - diluted		64,247					46,000

FBR CAPITAL MARKETS CORPORATION Financial & Statistical Supplement - Operating Results (Dollars in thousands, except per share amounts) (Unaudited)

	For the
	six months ended
	June 30, 2007			Q-2 07			Q-1 07
Revenues
Investment banking:
Capital raising	$	214,208		$	116,972		$	97,236
Advisory		12,610			6,152			6,458
Institutional brokerage:
Principal transactions		6,188			4,152			2,036
Agency commissions		52,302			28,526			23,776
Asset management:
Base management fees		11,888			6,360			5,528
Incentive allocations and fees		220			116			104
Interest		16,912			5,798			11,114
Net investment income		2,713			1,218			1,495
Other		541			465			76
Total revenues		317,582			169,759			147,823
Interest expense		4,936			274			4,662
Revenues, net of interest expense		312,646			169,485			143,161
Non-interest expenses
Compensation and benefits		167,668			89,877			77,791
Professional services		23,510			12,686			10,824
Business development		21,246			9,931			11,315
Clearing and brokerage fees		5,688			3,022			2,666
Occupancy and equipment		15,309			7,816			7,493
Communications		11,214			5,805			5,409
Other operating expenses		5,526			3,706			1,820
Total non-interest expenses		250,161			132,843			117,318
Net income before income taxes		62,485			36,642			25,843
Income tax provision		29,719			14,882			14,837
Net income	$	32,766		$	21,760		$	11,006
Net income before income taxes
as a percentage of net revenue		20.0	%		21.6	%		18.1	%
ROE (annualized)		12.9	%		17.2	%		8.9	%
Total shareholders' equity	$	528,341		$	528,341		$	501,858
Basic earnings per share	$	0.51		$	0.34		$	0.17
Diluted earnings per share	$	0.51		$	0.34		$	0.17
Ending shares outstanding (in thousands)		64,411			64,411			64,282
Book value per share	$	8.20		$	8.20		$	7.81
Gross assets under management (in millions)
Managed accounts	$	291.3		$	291.3		$	258.8
Hedge & offshore funds		61.7			61.7			67.1
Mutual funds		2,482.6			2,482.6			2,412.9
Private equity and venture capital funds		33.8			33.8			41.2
Total	$	2,869.4		$	2,869.4		$	2,780.0
Net assets under management (in millions)
Managed accounts	$	291.3		$	291.3		$	258.8
Hedge & offshore funds		58.1			58.1			62.5
Mutual funds		2,474.7			2,474.7			2,406.4
Private equity and venture capital funds		32.0			32.0			38.0
Total	$	2,856.1		$	2,856.1		$	2,765.7
Employee count		745			745			751

FBR CAPITAL MARKETS CORPORATION Financial & Statistical Supplement - Operating Results (Dollars in thousands, except per share amounts) (Unaudited)

	For the
	year ended
	December 31, 2006			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		51,148			2,510			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		3,892			1,279			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
Net (loss) income before income taxes		-3.6	%		14.6	%		-92.8	%		1.0	%		6.7	%
as a percentage of net revenue
ROE (annualized)		-2.7	%		7.6	%		-24.9	%		1.6	%		7.7	%
Total shareholders' equity		484,388			484,388			476,098			248,965			253,812
Basic (loss) earnings per share	$	(0.18	)	$	0.11		$	(0.37	)	$	0.02		$	0.10
Diluted (loss) earnings per share	$	(0.18	)	$	0.11		$	(0.37	)	$	0.02		$	0.10
Ending shares outstanding (in thousands)		64,000			64,000			64,000			46,000			46,000
Book value per share	$	7.57		$	7.57		$	7.44		$	5.41		$	5.52
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		702			702			702			726			752

FBR CAPITAL MARKETS CORPORATION CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except per share amounts) (Unaudited)

ASSETS	30-Jun-07		31-Dec-06
Cash and cash equivalents	$	471,015	$	151,417
Receivables		18,168		43,013
Investments:
Mortgage-backed securities, at fair value		-		415,391
Long-term investments		52,511		32,343
Trading securities, at fair value		43,363		18,180
Due from clearing broker		19,229		28,691
Intangible assets, net		11,274		11,000
Furniture, equipment and leasehold improvements, net		30,433		31,222
Prepaid expenses and other assets		30,633		28,162
Total assets	$	676,626	$	759,419
LIABILITIES AND SHAREHOLDERS ’ EQUITY
Liabilities:
Trading account securities sold short but
not yet purchased, at fair value	$	601	$	202
Repurchase agreements		-		189,155
Accrued compensation and benefits		88,131		43,836
Accounts payable, accrued expenses and other liabilities		43,750		36,602
Due to affiliates		15,803		5,236
Total liabilities		148,285		275,031
Shareholders' equity:
Common stock		66		64
Additional paid-in capital		407,167		395,778
Accumulated other comprehensive income, net of taxes		339		543
Retained earnings		120,769		88,003
Total shareholders' equity		528,341		484,388
Total liabilities and shareholders' equity	$	676,626	$	759,419