EXHIBIT 99.1
For Immediate Release
Investor Contact: Kurt R. Harrington 703.312.9647 or kharrington@fbr.com
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Media Contact: Robert Leahy 703.312.9745 or bleahy@fbr.com or
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Bill Dixon 703.469.1092 or bdixon@fbr.com
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FBR Asset Investment Corporation Reports
Record Second Quarter Results
Earnings per Share Increase 45% versus Second Quarter 2001
ARLINGTON, Va., July 23, 2002 - FBR Asset Investment Corporation (NYSE: FB)
today announced record second quarter earnings. Net Income was $31.6 million or
$1.67 per fully diluted share for the quarter ended June 30, 2002 compared to
$4.0 million or $1.11 per fully diluted share in the second quarter of 2001. For
the six months ended June 30, 2002, net income was $49.5 million or $3.17 per
fully diluted share compared to $4.2 million or $1.14 per fully diluted share
for the six months ended June 30, 2001. The company had 25.1 million shares
outstanding at June 30, 2002, and average outstanding shares of 18.9 million
during the quarter. FBR Asset declared a quarterly dividend of $1.25 per share
payable on July 15, 2002, to shareholders of record as of June 24, 2002.
At June 30, 2002, the company's portfolio of mortgage-backed securities (MBS)
totaled $3.83 billion and the company's corresponding liabilities were $3.37
billion resulting in leverage of 7.3 to 1 at the end of the second quarter.
Leverage in the MBS portfolio was 8.3 to 1 at March 31, 2002. At the end of the
second quarter, the company's investments in equity securities totaled $38.4
million and notes receivable were $5 million. Total equity at June 30, 2002 was
$690 million and book value per outstanding common share was $27.54. Book value
increased by 15.7% during the quarter primarily as a result of two accretive
equity offerings.
The weighted average annual yield on the MBS portfolio was 4.93% for the second
quarter and the company's weighted average interest rate on repurchase
agreements used to finance the acquisition of mortgage-backed securities was
1.85% resulting in a net interest spread of 3.08% during the period. During the
second quarter, the company shortened the estimated duration in its
mortgage-backed portfolio from 1.81 at the end of the first quarter to 1.27 at
June 30, 2002, resulting in lower price sensitivity to changes in interest
rates. At the end of the second quarter the weighted average remaining maturity
of the company's borrowings was 38 days.
Net interest income from the MBS portfolio totaled $27.3 million in the second
quarter, contributing approximately 73% of the company's net revenue (net
interest, dividends, fees and net gains). Dividends and net gains from equity
investments totaled $8.9 million in the second quarter and represented
approximately 24% of net revenue. Fees earned from Friedman, Billings, Ramsey
Group, Inc. investment banking transactions totaled $0.3 million during the
second quarter and contributed approximately 1% of net revenue. Interest on
notes receivable was $0.6 million for the period and represented approximately
2% of net revenue for the quarter.
During the second quarter of 2002, the company completed two follow-on
offerings, each of which was accretive to both book value per share and earnings
per share. In April 2002, the company issued 4.6 million additional shares of
common stock at a price per share of $27.90. This offering resulted in net
proceeds to the company of $121.7 million. On June 28, 2002, the company issued
6.0 million shares of common stock at a price per share of $33.35, resulting in
net proceeds to the company of $189.9 million. The proceeds of the offerings
were used primarily to invest in mortgage-backed securities. At June 30, 2002,
the company had committed to purchase an additional $1.8 billion in MBS to
settle in the first half of the third quarter.
Subsequent to the end of the second quarter, the company entered into two
interest rate swaps with notional amounts totaling $2 billion under which the
company will pay a fixed rate of interest averaging 2.22% for a period of one
year. These transactions have the effect of mitigating the potential impact of
interest rate increases on our funding costs for the next year on the notional
amounts swapped.
Commenting on the quarter and the company's recent activity, Eric F. Billings,
Chairman and CEO said, "FBR Asset continues to deliver solid earnings in what is
becoming a very challenging environment for corporate America. We believe our
strategy to maintain a conservative balance sheet and to pursue the best
risk-adjusted returns available to us in all environments will result in
continued strong performance. Our recent decision to move a portion of our
funding to a fixed rate is in keeping with our philosophy of looking constantly
at the economic value of our capital and funding decisions and pursuing those
opportunities that we believe will in the long term deliver the highest
risk-adjusted returns. As we move forward, we will continue to evaluate and
pursue opportunities to increase earnings quality and sustainability."
The company also announced today that its Board of Directors has voted to
increase the company's existing share repurchase authorization to 3 million
shares. Richard J. Hendrix, the company's President and COO said, "We have
successfully completed four offerings of common stock over the last year and
through those offerings have raised in excess of $540 million and increased book
value to in excess of $27.50 per share. Management is aware that in the current
environment for equities it is possible that we may have opportunities to
accretively repurchase our shares. This authorization from our Board insures
that we will be in a position to pursue all available avenues to maximize
value."
FBR Asset is a Real Estate Investment Trust (REIT) that was formed in December
1997. FBR Asset invests in mortgage-backed securities and makes opportunistic
investments in debt and equity securities of companies engaged in real
estate-related and other businesses.
This news release shall not constitute an offer to sell or a solicitation of an
offer to buy nor shall there be any sale of these securities in any state or
jurisdiction in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state or
jurisdiction.
A live webcast of FBR's conference call will be available at 9 a.m. (Eastern
Time) via:
http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=FB&script=1020&item_
id=ew,648629,1&layout=-6
Replays of the webcast will be available afterward.
# # #
The company makes forward-looking statements in this document that are
subject to risks and uncertainties in addition to those set forth
above. These forward-looking statements include information about
possible or assumed future results of the company's operations. Also,
when the company uses any of the words "believes," "expects,"
"anticipates" or similar expressions, it is making forward-looking
statements. Many possible events or factors could affect the company's
future financial results and performance. This could cause the
company's results or performance to differ materially from those
expressed in the forward-looking statements. These and other risks are
described in the company's publicly filed documents and reports that
are available from the company and from the SEC.
Note to Editors: Please note that "FBR Asset Investment Corporation" and
"Friedman, Billings, Ramsey Group, Inc." are two different companies. FBR Asset
is a REIT, which is required as a result of its tax status, to pay a dividend.
FBR Asset (NYSE: FB) is externally managed by Friedman, Billings, Ramsey
Investment Management, Inc., a subsidiary of Friedman, Billings, Ramsey Group,
Inc. Friedman, Billings, Ramsey Group, Inc. (NYSE: FBR) is a publicly held
company, which has historically never paid a dividend. Friedman, Billings,
Ramsey Group, Inc. is a minority owner of FBR Asset.
Three pages of financial data follow this page.
[GRAPHIC FBR ASSET INVESTMENT CORPORATION
OMITTED] CONDENSED STATEMENT OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three months ended
June 30,
Revenue: 2002 2001
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Interest $ 42,845 $ 3,361
Dividends 1,426 1,064
Fee income 284 1,702
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Total Revenue 44,555 6,127
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Expenses:
Interest 14,924 1,770
Management fees:
Base 1,975 218
Incentive 2,841 267
Professional fees & other 725 196
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Total Expenses 20,465 2,451
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Net realized gains 7,608 348
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Net income before income taxes 31,698 4,024
Income tax provision (111) --
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Net income $ 31,587 $ 4,024
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Basic income per share $ 1.67 $ 1.16
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Diluted income per share $ 1.67 $ 1.11
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Basic weighted average shares 18,893 3,472
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Diluted weighted average shares 18,917 3,617
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[GRAPHIC FBR ASSET INVESTMENT CORPORATION
OMITTED] CONDENSED STATEMENT OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Six months ended
June 30,
Revenue: 2002 2001
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Interest $ 62,428 $ 6,341
Dividends 1,964 1,264
Fee income 572 1,702
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Total Revenue 64,964 9,307
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Expenses:
Interest 21,559 3,674
Management fees:
Base 3,124 423
Incentive 4,539 395
Professional fees & other 908 446
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Total Expenses 30,130 4,938
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Net realized gains 14,823 328
Recognized loss on available for-sale
equity securities -- (545)
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Net income before income taxes 49,657 4,152
Income tax provision (166) --
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Net income $ 49,491 $ 4,152
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Basic income per share $ 3.17 $ 1.17
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Diluted income per share $ 3.17 $ 1.14
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Basic weighted average shares 15,599 3,543
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Diluted weighted average shares 15,620 3,642
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[GRAPHIC FBR ASSET INVESTMENT CORPORATION
OMITTED] CONDENSED STATEMENT OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Selected Balance Sheet Data
2nd Quarter
Average Daily
June 30, 2002 December 31, 2001 Balance
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Mortgage- backed securities 3,826,374,634 1,238,365,511 3,430,829,493
Reverse repurchase agreements 3,369,638,266 1,105,145,000 3,118,813,114
Equity securities 38,358,750 61,692,660 28,727,086
Loans 5,000,000 8,000,000 10,890,110
Equity capital(a) 690,037,481 203,865,546 493,727,667
2nd Quarter
Average Daily
June 30, 2001 December 31, 2000 Balance
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Mortgage- backed securities 246,502,538 154,848,205 182,289,194
Reverse repurchase agreements 214,024,000 133,896,000 155,417,374
Equity securities 51,932,056 28,110,190 33,451,028
Loans 12,000,000 4,000,000 12,000,000
Equity capital(a) 91,321,202 86,840,584 88,366,797
(a) Equity Capital's average daily balance is the average of the month-end balances