Ex. 99.1
For Immediate Release
Investor Contact: Kurt R. Harrington 703.312.9647 or kharrington@fbr.com
-------------------
Media Contact: Robert Leahy 703.312.9745 or bleahy@fbr.com or Bill Dixon
703.469.1092 or bdixon@fbr.com
-------------- --------------
FBR Asset Investment Corporation Reports
Record Third Quarter Results
Earnings per Share Increase 60% versus Third Quarter 2001
ARLINGTON, Va., October 22, 2002 - FBR Asset Investment Corporation (NYSE: FB)
today announced record third quarter earnings. Net income was $34.7 million or
$1.38 per fully diluted share for the quarter ended September 30, 2002 compared
to $5.6 million or $0.86 per fully diluted share in the third quarter of 2001.
For the nine months ended September 30, 2002, net income was $84.2 million or
$4.47 per fully diluted share compared to $9.8 million or $2.12 per fully
diluted share for the nine months ended September 30, 2001. The Company had 25.1
million shares outstanding at September 30, 2002. FBR Asset paid a quarterly
dividend of $1.25 per share on October 15, 2002, to shareholders of record as of
September 27, 2002.
At September 30, 2002, FBR Asset Investment Corporation's (the Company)
portfolio of mortgage-backed securities (MBS) totaled $5.82 billion and the
Company's corresponding repurchase agreement liabilities were $5.15 billion
resulting in leverage of 8.2 to 1 at the end of the third quarter. Leverage in
the MBS portfolio was 7.3 to 1 at June 30, 2002. The average balance of MBS for
the quarter was $4.9 billion and the average leverage for the quarter was 6.4 to
1. The Company did not fully deploy the proceeds of its June 2002 equity
offering until the end of the quarter. At the end of the third quarter, the
Company's investments in equity securities totaled $99.3 million. Total equity
at September 30, 2002 was $728 million and book value per outstanding common
share was $29.06.
The weighted average annual yield on the MBS portfolio was 4.73% for the third
quarter and the company's weighted average interest rate of financing for the
mortgage-backed securities was 2.00% (including the impact of interest rate
swaps) resulting in a net interest spread of 2.73% during the period.
Net interest income and gains from the MBS portfolio totaled $36.8 million in
the third quarter, contributing approximately 83% of the Company's net revenue
(net interest, dividends, fees and net gains). Dividends and net gains from
equity investments totaled $1.9 million in the third quarter and represented
approximately 4% of net revenue. Fees earned from Friedman, Billings, Ramsey
Group, Inc. (FBR) investment banking transactions totaled $5.3 million during
the second quarter and contributed approximately 12% of net revenue. Interest on
notes receivable and cash was $0.3 million for the period and represented
approximately 1% of net revenue for the quarter.
During the third quarter, the Company maintained a short duration of 1.37 at
September 30, 2002 as it deployed the proceeds of the equity offering completed
in June. Also during the quarter, the Company entered into three interest rate
swap agreements under which the Company has agreed to pay a fixed rate on $3
billion of its financing. The impact of these swaps was to significantly reduce
the Company's exposure to rising short-term interest rates for the term of the
agreements, which expire in July 2003. The Company's cost of funds excluding the
impact of hedging was 1.79% for the quarter. At September 30, 2002, the weighted
average remaining maturity of the Company's borrowings was 34 days. Including
the impact of the swaps, the weighted average number of days to repricing of
liabilities was 183 days.
During the quarter, the Company experienced an average one month CPR (constant
pre-payment rate) of 24%. The average unamoritized cost of its MBS portfolio was
101.59 at September 30, 2002. The Company's return on equity for the third
quarter was 19.4% and its annualized dividend yield based upon today's closing
price is 16.9%.
The Company made two significant investments during the quarter for its equity
portfolio. Total capital deployed in those investments was approximately $70
million. In each case the Company's broker-dealer subsidiary earned an advisory
fee from FBR, the underwriter and/or placement agent for the securities,
pursuant to the fee agreement entered into by FBR and the Company in 2001.
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 securities of FBR Asset 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 Asset's conference call on Wednesday, October 23rd 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. Three pages of
financial data follow this page.
FBR ASSET INVESTMENT CORPORATION
CONDENSED STATEMENT OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three months ended
September 30,
-------------------------------------------------------------
Revenue: 2002 2001
----------------------- --------------------
Interest $ 56,739 $ 8,536
Dividends - 1,046
Fee income 5,286 -
----------------------- --------------------
Total Revenue 62,025 9,582
Expenses:
Interest 22,511 4,120
Management fees:
Base 2,593 539
Incentive 4,195 417
Professional fees & other 770 144
----------------------- --------------------
Total Expenses 30,069 5,220
----------------------- --------------------
Net realized gains 4,823 1,282
----------------------- --------------------
Net income before income taxes 36,779 5,644
Income tax provision (2,114) -
----------------------- --------------------
Net income $ 34,665 $ 5,644
======================= ====================
Basic earnings per share $ 1.38 $ 0.88
======================= ====================
Diluted earnings per share $ 1.38 $ 0.86
======================= ====================
Basic weighted-average shares 25,054 6,408
======================= ====================
Diluted weighted-average shares 25,079 6,547
======================= ====================
FBR ASSET INVESTMENT CORPORATION
CONDENSED STATEMENT OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Nine months ended
September 30,
-------------------------------------------------------------
Revenue: 2002 2001
----------------------- --------------------
Interest $ 119,167 $ 14,877
Dividends 1,964 2,310
Fee income 5,858 1,702
----------------------- --------------------
Total Revenue 126,989 18,889
Expenses:
Interest 44,070 7,794
Management fees:
Base 5,717 963
Incentive 8,733 811
Professional fees & other 1,679 590
----------------------- --------------------
Total Expenses 60,199 10,158
----------------------- --------------------
Net realized gains 19,646 1,610
Recognized loss on available for-
sale equity securities -- (545)
----------------------- --------------------
Net income before income taxes 86,436 9,796
Income tax provision (2,280) --
----------------------- --------------------
Net income $ 84,156 $ 9,796
======================= ====================
Basic earnings per share $ 4.48 $ 2.17
======================= ====================
Diluted earnings per share $ 4.47 $ 2.12
======================= ====================
Basic weighted-average shares 18,785 4,507
======================= ====================
Diluted weighted-average shares 18,808 4,620
======================= ====================
FBR ASSET INVESTMENT CORPORATION
CONDENSED STATEMENT OF OPERATIONS
(Unaudited)
Selected Balance Sheet Data
3rd Quarter
Average Daily Balance
September 30, 2002 December 31, 2001 2002
------------------ ----------------- ----
Mortgage-Backed securities(1) 5,822,504,819 1,238,365,511 4,905,067,532
Repurchase agreements 5,151,038,600 1,105,145,000 4,398,712,730
Equity securities(1) 99,307,501 61,692,660 35,892,807
Notes receivable - 8,000,000 543,478
Equity capital(a) 728,026,265 203,865,546 722,255,731
3rd Quarter
Average Daily Balance
September 30, 2001 December 31, 2000 2001
------------------ ----------------- ----
Mortgage-Backed securities(1) 1,187,818,805 154,848,205 726,669,915(a)
Repurchase agreements 983,614,000 133,896,000 450,233,871
Equity securities(1) 51,768,538 28,110,190 40,382,955
Notes receivable 12,000,000 4,000,000 12,000,000
Equity capital(a) 191,316,537 86,840,584 158,982,841
(a) The average daily balance is the average of the month-end balances
(1) At fair value