EXHIBIT 99.1
[GRAPHIC OMITTED][GRAPHIC OMITTED]
Investor Contact: Kurt Harrington 703.312.9647 or kharrington@fbr.com
Media Contacts: Bob Leahy 703.312.9745 or bleahy@fbr.com Bill Dixon 703.469.1092
or bdixon@fbr.com
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Friedman, Billings, Ramsey Group Reports
Third Quarter 2002 Results
Net Income of $15.1 million, or $0.33 per share (basic)
ARLINGTON, Va., October 30, 2002 - Friedman, Billings, Ramsey Group, Inc. (NYSE:
FBR) today reported net income after tax of $15.1 million, or $0.33 (basic),
$0.31 (diluted) per share, for the quarter ended September 30, 2002, compared
with a loss of $22.4 million, or $(0.49) (basic), $(0.49) (diluted) per share in
the third quarter of 2001. Revenue in the third quarter of 2002 was $81.7
million, compared with $21.8 million in the third quarter of 2001.
The company's results for the quarter reflect almost $9.0 million of non-cash
markdowns in the company's asset management and technology sector investments,
primarily attributable to publicly-traded securities due to the volatility of
the public equity markets in the quarter. As of September 30, the company's
long-term equity investments (excluding FBR Asset Investment Corporation and
trading securities) were valued at approximately $62 million.
For the first nine months of the year, FBR reported net income after tax of
$43.2 million (including an extraordinary gain of $0.9 million), or $0.94
(basic), $0.90 (diluted) per share on revenue of $209.3 million, versus a net
loss of $23.4 million, or $(0.49) (basic), $(0.49) (diluted) per share on
revenue of $99.4 million for the first nine months of 2001.
"Third quarter revenue was the highest since the first quarter of 1998," said
Emanuel J. Friedman, Chairman and Co-CEO. "Our results were driven by continued
year over year revenue growth and earnings improvement across investment
banking, institutional brokerage and asset management."
By business unit, the company reported investment banking revenues for the
quarter of $58.9 million, a 431% increase over the same quarter a year ago.
Institutional brokerage revenue in Q3 was $14.4 million, a 42% increase over the
third quarter of 2001. Asset management revenue for the quarter was $8.7
million, a 117% increase over the third quarter of the previous year.
Additionally, the company recorded a $(2.2) million technology sector net
investment and incentive loss for the quarter, compared with a $(6.6) million
loss in the third quarter of 2001.
"We continue to be pleased with the achievements of the first nine months of the
year across all sectors of our business, particularly in view of the ongoing
state of the capital markets," said Vice Chairman and Co-Chief Executive Officer
Eric F. Billings. "FBR is strongly positioned to capture revenues despite
changing conditions in the U.S. capital markets, offering innovative funding
solutions and contrarian research views. While our financial institutions and
real estate investment banking groups were particularly strong in the quarter,
we continued to build out our capabilities across all of our sectors, with new
hires and the opening of our San Francisco office. The combination of our
relatively debt free status, almost $260 million in equity (including employee
loans), prudent hiring and cost discipline should allow us to achieve acceptable
returns even in difficult markets."
In investment banking, FBR continued to be a top ranking lead-managing
underwriter. For the first nine months of 2002, according to CommScan Equidesk,
FBR ranked 12th (by dollar volume raised) as a lead manager of IPOs and
secondaries across all industries and all market capitalizations (16 deals, $1.7
billion raised). This dollar volume excludes the more than $450 million that FBR
raised in two 144A institutional equity placements. Including this amount, FBR's
dollar volume would exceed $2.14 billion. Additionally, FBR ranked first for the
quarter ended September 30 in weighted aftermarket performance of its
lead-managed public transactions priced from January 1, 2001 through September
30, 2002 (for lead managers of more than 5 transactions) across all industries
and all capitalizations (29 transactions) according to CommScan Equidesk.
During the third quarter of 2002, FBR raised approximately $1.1 billion in
capital and advised on transactions with a total value of $120 million. The firm
completed 6 equity raises, lead-managing 2 public underwritings - including a
more than $500 million sole managed follow-on offering for AmeriCredit Corp.
(NYSE:ACF) - and 3 private placements - including a more than $400 million
institutional equity placement for American Financial Realty Trust - co-managed
1 public underwriting; and completed 2 M&A as well as 3 other advisory
assignments.
In institutional brokerage, year over year performance was up significantly with
sequential quarter revenue down slightly due to the seasonal weakness of the
third quarter. FBR expanded to 8 the number of offices with sales and trading
operations through the opening of its San Francisco office, and relocated its
New York operations to expanded permanent facilities in midtown Manhattan.
In asset management, at September 30, 2002, FBR had approximately $8.8 billion
in gross assets under management and net assets of $2.2 billion. Of these net
assets, FBR has the potential to earn incentive fees on more than $750 million.
FBR manages ten equity, fixed income and money market mutual funds, five hedge
funds, and four private equity and venture capital funds, in addition to FBR
Asset Investment Corp. (NYSE: FB) and other separate accounts. While base and
incentive asset management fees remained strong in the quarter, overall asset
management revenue declined from the previous quarter reflecting the effect of
market volatility on the company's equity investment portfolio.
FBR continued to benefit from the growth and performance of FBR Asset in the
quarter. In its asset management business, FBR generates revenue as manager of
FBR Asset in the form of base and incentive management fees, and also generates
income as a minority shareholder of FBR Asset. During the third quarter, FBR
Group generated asset management fee revenue (before expenses) of $6.8 million
from FBR Asset, and income from its minority stake in FBR Asset of $3.6 million.
FBR Asset is a separate public company that invests in mortgage-backed
securities, mezzanine and senior loans and equity securities.
Shareholders' equity and basic book value calculations as of September 30, 2002
exclude $23.8 million and 4 million shares relating to the Employee Stock
Purchase and Loan Program that was implemented during 2001. Assuming repayment
of these loans as of September 30, 2002, book value per share would be $5.13.
FBR had 46.4 million common shares outstanding, shareholders' equity of $234.6
million, and basic book value per share of $5.06 as of September 30, 2002,
compared with 45.5 million common shares outstanding, shareholders' equity of
$185.3 million and book value per share of $4.06 as of December 31, 2001. Total
assets as of September 30, 2002 were $499.1 million, including net cash and
liquid assets of $130.1 million (net of short-term debt of $70.1 million, $40
million of which was repaid in early October, and the proceeds of a $76.4
million syndicate short position related to an underwriting in late September
which was covered in October).
Friedman, Billings, Ramsey Group, Inc., headquartered in Arlington, Va., is a
financial holding company for businesses that provide investment banking,
institutional brokerage, specialized asset management, and banking products and
services. FBR focuses capital and financial expertise on six industry sectors:
financial services, real estate, technology, energy, healthcare, and diversified
industries. FBR also has offices in Atlanta, Bethesda, Boston, Charlotte,
Chicago, Cleveland, Dallas, Denver, Irvine, London, New York, Portland, San
Francisco, Seattle, and Vienna. Bank products and services are offered by FBR
National Bank & Trust, member FDIC and an Equal Housing Lender. For more
information, see http://www.fbr.com.
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=FBR. Replays of
the webcast will be available afterward.
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# # #
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, the high
degree of risk associated with technology and other venture capital
investments, available technologies, competition for business and
personnel, and general economic, political and market conditions.
Financial information follows:
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(Unaudited)
Quarter ended
September 30,
2002 % 2001 %
REVENUES:
Investment banking $58,910 72.1% $11,084 50.9%
Institutional brokerage 14,372 17.6% 10,092 46.3%
Asset management
Base fees 7,208 8.8% 5,836 26.8%
Incentive and investment income
(loss) 1,545 1.9% (1,805) -8.3%
Technology sector investment and
incentive loss (2,202) -2.7% (6,592) -30.3%
Interest, dividends and other 1,879 2.3% 3,168 14.6%
Total revenues 81,712 100.0% 21,783 100.0%
EXPENSES:
Compensation and benefits 45,725 56.0% 24,276 111.4%
Business development and professional
services 8,650 10.6% 7,639 35.1%
Interest 608 0.7% 322 1.5%
Other 8,737 10.7% 11,936 54.8%
Total expenses 63,720 78.0% 44,173 202.8%
Net income (loss) before income
taxes and extraordinary gain 17,992 22.0% (22,390) -102.8%
Income tax provision 2,343 2.9% -- 0.0%
Net income (loss) before
extraordinary gain 15,649 19.1% (22,390) -102.8%
Extraordinary gain -- 0.0% -- 0.0%
Income tax provision on
extraordinary gain 536 0.6% -- 0.0%
Net income (loss) $15,113 18.5% $(22,390) -102.8%
Basic earnings (loss) per share
before extraordinary gain $0.34 $(0.49)
Diluted earnings (loss) per share
before extraordinary gain $0.32 $(0.49)
Basic earnings (loss) per share $0.33 $(0.49)
Diluted earnings (loss) per share $0.31 $(0.49)
Weighted average shares - basic 46,370 45,808
Weighted average shares - diluted 49,526 45,808
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(Unaudited)
Nine months ended
September 30,
2002 % 2001 %
REVENUES:
Investment banking $119,555 57.1% $53,793 54.1%
Institutional brokerage 48,501 23.2% 33,974 34.2%
Asset management
Base fees 20,837 9.9% 13,934 14.0%
Incentive and investment income 20,769 9.9% 5,651 5.7%
Technology sector investment and
incentive loss (5,733) -2.7% (15,378) -15.5%
Interest, dividends and other 5,407 2.6% 7,414 7.5%
Total revenues 209,336 100.0% 99,388 100.0%
EXPENSES:
Compensation and benefits 115,455 55.2% 73,283 73.7%
Business development and professional
services 23,044 11.0% 21,170 21.3%
Interest 1,408 0.7% 737 0.8%
Other 24,769 11.8% 27,617 27.8%
Total expenses 164,676 78.7% 122,807 123.6%
Net income (loss) before income
taxes and extraordinary gain 44,660 21.3% (23,419) -23.6%
Income tax provision 2,343 1.1% -- 0.0%
Net income (loss) before
extraordinary gain 42,317 20.2% (23,419) -23.6%
Extraordinary gain 1,413 0.7% -- 0.0%
Income tax provision on
extraordinary gain 536 0.3% -- 0.0%
Net income (loss) $43,194 20.6% $(23,419) -23.6%
Basic earnings (loss) per share
before extraordinary gain $0.92 $(0.49)
Diluted earnings (loss) per share
before extraordinary gain $0.88 $(0.49)
Basic earnings (loss) per share $0.94 $(0.49)
Diluted earnings (loss) per share $0.90 $(0.49)
Weighted average shares - basic 45,995 48,122
Weighted average shares - diluted 48,218 48,122
Financial & Statistical Supplement -Operating Results (unaudited)
(Dollars in thousands, except per share data)
YTD 2002 Q-3 02 Q-2 02 Q-1 02
Revenues
Investment banking:
Underwriting $67,666 $30,108 $25,248 $12,310
Corporate finance 47,476 26,175 9,827 11,474
Investment gains 4,413 2,627 1,595 191
Institutional brokerage:
Principal transactions 21,173 5,743 8,372 7,058
Agency commissions 27,328 8,629 9,954 8,745
Asset management:
Base management fees 20,837 7,208 7,633 5,996
Incentive income 8,967 4,282 2,902 1,783
Net investment income loss 11,802 (2,737) 8,517 6,022
Technology sector investment and
incentive loss (5,733) (2,202) (2,432) (1,099)
Interest, dividends and other 5,407 1,879 1,638 1,890
Total revenues 209,336 81,712 73,254 54,370
Expenses
Compensation and benefits 115,455 45,725 38,411 31,319
Business development &
professional services 23,044 8,650 7,982 6,412
Clearing and brokerage fees 3,886 1,443 1,817 626
Occupancy & equipment 6,564 2,309 2,046 2,209
Communications 6,275 2,009 2,187 2,079
Interest expense 1,408 608 430 370
Other operating expenses 8,044 2,976 2,602 2,466
Restructuring and software
impairment charges -- -- -- --
Total expenses 164,676 63,720 55,475 45,481
Net income (loss) before taxes and
extraordinary gain 44,660 17,992 17,779 8,889
Income tax provision (benefit) 2,343 2,343 -- --
Net income (loss) before
extraordinary gain $42,317 $15,649 $17,779 $8,889
Extraordinary gain 1,413 -- -- 1,413
Income tax provision on
extraordinary gain 536 536 -- --
Net income (loss) $43,194 $15,113 $17,779 $10,302
Net income (loss) before taxes and
extraordinary gain as
a percentage of revenue 21.3% 22.0% 24.3% 16.3%
ROE (annualized) 27.4% 26.7% 34.4% 21.7%
Total shareholders' equity $234,625 $234,625 $218,368 $194,590
Basic earnings (loss) per share $0.94 $0.33 $0.39 $0.23
Diluted earnings (loss) per share $0.90 $0.31 $0.36 $0.22
Ending shares outstanding (in
thousands) 46,396 46,396 46,339 45,751
Book value per share $5.06 $5.06 $4.71 $4.25
Assets under management
(in millions)
Managed accounts
Hedge & offshore funds
Mutual funds
Private equity & venture capital
Total
Gross assets under management
(in millions)
Managed accounts $7,356.0 $7,356.0 $4,152.3 $2,757.7
Hedge & offshore funds 232.3 232.3 216.0 209.2
Mutual funds 1,071.2 1,071.2 1,313.4 1,270.4
Private equity funds 41.7 41.7 46.1 46.4
Technology sector funds 54.0 54.0 56.6 60.4
Total $8,755.2 $8,755.2 $5,784.4 $4,344.1
Net assets under management
(in millions)
Managed accounts $849.7 $849.7 $748.5 $394.5
Hedge & offshore funds 162.9 162.9 188.5 157.7
Mutual funds 1,064.4 1,064.4 1,297.7 1,214.1
Private equity funds 40.1 40.1 45.5 45.5
Technology sector funds 48.6 48.6 52.3 55.8
Total $2,165.7 $2,165.7 $2,332.5 $1,867.6
Productive assets under management
(in millions)
Managed accounts $7,356.0 $7,356.0 $4,152.3 $2,757.7
Hedge & offshore funds 162.9 162.9 188.5 157.7
Mutual funds 1,064.4 1,064.4 1,297.7 1,214.1
Private equity funds 92.5 92.5 94.8 95.3
Technology sector funds 248.5 248.5 248.1 249.3
Total $8,924.3 $8,924.3 $5,981.4 $4,474.1
Employee count 464 464 445 441
YTD 2001 Q-4 01 Q-3 01 Q-2 01 Q-1 01
Revenues
Investment banking:
Underwriting $47,853 $20,928 $9,857 $9,414 $7,654
Corporate finance 28,534 7,080 1,153 18,057 2,244
Investment gains 6,762 1,348 74 5,340 --
Institutional brokerage:
Principal transactions 26,330 10,817 4,158 5,383 5,972
Agency commissions 27,084 8,623 5,934 5,962 6,565
Asset management:
Base management fees 19,744 5,810 5,836 5,191 2,907
Incentive income 3,628 1,811 975 474 368
Net investment income
loss 9,532 5,698 (2,780) 5,009 1,605
Technology sector
investment and
incentive loss (18,100) (2,722) (6,592) (1,684) (7,102)
Interest, dividends and
other 9,422 2,008 3,168 2,006 2,240
Total revenues 160,789 61,401 21,783 55,152 22,453
Expenses
Compensation and
benefits 108,112 34,829 24,276 32,756 16,251
Business development &
professional services 28,879 7,709 7,639 8,205 5,326
Clearing and brokerage
fees 7,087 1,981 1,786 1,588 1,732
Occupancy & equipment 10,852 2,468 3,001 2,883 2,500
Communications 5,832 1,612 1,555 1,498 1,167
Interest expense 1,083 346 322 334 81
Other operating expenses 9,415 2,249 2,853 2,778 1,535
Restructuring and
software impairment
charges 5,151 2,410 2,741 -- --
Total expenses 176,411 53,604 44,173 50,042 28,592
Net income (loss) before
taxes and extraordinary
gain (15,622) 7,797 (22,390) 5,110 (6,139)
Income tax provision
(benefit) (1,760) (1,760) -- -- --
Net income (loss) before
extraordinary gain $(13,862) $9,557 $(22,390) $5,110 $(6,139)
Extraordinary gain 1,148 1,148 -- -- --
Income tax provision on
extraordinary gain -- -- -- -- --
Net income (loss) $(12,714) $10,705 $(22,390) $5,110 $(6,139)
Net income (loss) before
taxes and extraordinary
gain as a percentage of
revenue -9.7% 12.7% -102.8% 9.3% -27.3%
ROE (annualized) -6.4% 23.9% -47.9% 9.9% -11.5%
Total shareholders'
equity $185,311 $185,311 $173,667 $200,313 $211,001
Basic earnings (loss)
per share $(0.27) $0.24 $(0.49) $0.10 $(0.12)
Diluted earnings (loss)
per share $(0.27) $0.24 $(0.49) $0.10 $(0.12)
Ending shares outstanding
(in thousands) 45,605 45,605 45,514 46,100 49,391
Book value per share $4.06 $4.06 $3.82 $4.35 $4.27
Assets under management
(in millions)
Managed accounts $250.2 $250.2 $237.5 $142.4 $126.1
Hedge & offshore funds 164.6 164.6 176.1 186.6 164.7
Mutual funds 1,004.0 1,004.0 1,008.3 1,153.1 148.5
Private equity & venture
capital 295.5 295.5 305.6 341.2 336.2
Total $1,714.3 $1,714.3 $1,727.5 $1,823.3 $775.5
Gross assets under
management (in millions)
Managed accounts $1,371.4
Hedge & offshore funds 260.6
Mutual funds 1,005.8
Private equity funds 48.3
Technology sector funds 71.0
Total $2,757.1
Net assets under
management (in millions)
Managed accounts $250.2
Hedge & offshore funds 153.4
Mutual funds 1,001.7
Private equity funds 47.6
Technology sector funds 64.9
Total $1,517.8
Productive assets under
management (in millions)
Managed accounts $1,371.4
Hedge & offshore funds 153.5
Mutual funds 1,001.7
Private equity funds 93.3
Technology sector funds 248.2
Total $2,868.1
Employee count 433 433 502 488 400