Exhibit 99.1
_
Investor Contact: Kurt Harrington 703.312.9647 or kharrington@fbr.com
Media Contacts: Bob Leahy 703.312.9745 or bleahy@fbr.com or
Bill Dixon 703.469.1092 or bdixon@fbr.com
Friedman, Billings, Ramsey Group Reports Fourth Quarter 2002 Results
Net Income of $10.1 million, or $0.22 per Share (Basic) for the Quarter
Company Reports Annual Net Income of $52.4 Million, or $1.14 per Share (Basic)
ARLINGTON, Va., January 29, 2002 - Friedman, Billings, Ramsey Group, Inc. (NYSE:
FBR) today reported net income after tax of $10.1 million, or $0.22 (basic),
$0.21 (diluted) per share on revenues of $58.9 million, for the quarter ended
December 31, 2002, compared to net income before extraordinary gain of $9.6
million, or $0.21 (basic and diluted) per share on revenues of $61.4 million in
the fourth quarter of 2001. The company fully utilized its operating loss carry
forwards and began recording income tax expense during the second half of 2002;
pre-tax net income for the fourth quarter 2002 was $10.8 million, compared to
$7.8 million before extraordinary gain for the fourth quarter of 2001.
These results do not include any impact from the planned re-deployment of $70
million of excess capital into a leveraged mortgage backed security (MBS)
investment strategy that the company began to implement at the end of the fourth
quarter. The company closed on the first tranche of MBS purchases this week with
the purchase of $350 million of MBS, utilizing $35 million of re-deployed equity
capital.
For the full year 2002, FBR reported net income before extraordinary gain of
$52.4 million or $1.14 (basic), $1.08 (diluted) per share, on revenues of $268.2
million, compared to a net loss before extraordinary gain of $(13.9) million or
$(0.29) (basic and diluted) per share on revenues of $160.8 million the previous
year.
"FBR's record annual results were driven by continued revenue growth across
investment banking, institutional brokerage and asset management," said Emanuel
J. Friedman, Chairman and Co-CEO. "For full year 2002 revenue growth was 67%
compared to 2001, including revenue growth of 73% in investment banking, 18% in
institutional brokerage and 264% in asset management. We continue to actively
hire senior producers across our business."
"We are gratified with our 2002 results which confirm the success of our
continued expansion, and which run counter to the performance of many in our
industry," said Vice Chairman and Co-CEO Eric F. Billings. "FBR remains strongly
positioned to grow revenues, offering innovative capital solutions and
independent research views. The combination of over $269 million in equity
(including employee stock purchase loans) with virtually no leverage, prudent
hiring and cost discipline allow us to achieve good cash returns on our equity
capital, even in a difficult market- as evidenced by our return on average
equity for the year of 25%."
For the quarter, total revenues of $58.9 million comprised $24.3 million for
investment banking, $14.7 million in institutional brokerage, $18.0 million in
asset management and $1.9 million in interest and dividends.
In investment banking, FBR continued to be a top ranked lead-managing equity
underwriter in 2002. FBR ranked #1 among major underwriters for the 1 and 5 year
periods ended December 31, 2002 in aftermarket performance of its lead-managed
public transactions (lead managers of more than 10 transactions for the one year
period and 25 transactions for the five year period across all industries and
all capitalizations, according to CommScan Equidesk).
Also, for 2002, FBR ranked 8th (by dollar volume raised) as a lead manager of
IPOs and secondaries across all industries for issuers with market caps below $1
billion and 12th for all issuers regardless of market capitalization (20 deals,
$1.9 billion raised), according to CommScan Equidesk.
In institutional brokerage, FBR continued to expand its research, institutional
sales and trading capabilities, hiring 7 research analysts, 5 institutional
brokers and 2 traders during the quarter.
In its asset management business, at December 31, 2002, FBR had approximately
$2.7 billion in gross assets under management, excluding FBR Asset Investment
Corp. (NYSE: FB). Of FBR's four equity mutual funds with track records of more
than one year, three have 5 star ratings and one has a 4 star rating from
Morningstar.*
Shareholders' equity and basic book value calculations as of December 31, 2002
exclude $24.2 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 December 31, 2002, shareholders' equity would be $269.3
million and book value per share would be $5.34. FBR had 46.5 million common
shares outstanding, shareholders' equity of $245.1 million, and book value per
share of $5.28 as of December 31, 2002, compared with 45.6 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 December 31, 2002 were $406.2
million, including net cash and liquid assets of $111.9 million (net of
short-term debt of $9.6 million).
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 private client
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.
Financial data follows.
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(Unaudited)
Quarter ended
December 31,
2002 % 2001 %
-------------- ------------- -------------- -------------
REVENUES:
Investment banking $ 24,321 41.3% $ 29,356 47.8%
Institutional brokerage 14,683 24.9% 19,440 31.7%
Asset management
Base fees 8,119 13.8% 5,810 9.4%
Incentive and investment income 9,765 16.6% 7,509 12.2%
Technology sector investment and incentive income (loss) 111 0.2% (2,722) -4.4%
Interest, dividends and other 1,868 3.2% 2,008 3.3%
-------------- ------------- -------------- -------------
Total revenues 58,867 100.0% 61,401 100.0%
-------------- ------------- -------------- -------------
EXPENSES:
Compensation and benefits 31,617 53.7% 34,829 56.7%
Business development and professional services 7,545 12.8% 7,709 12.5%
Interest 665 1.1% 346 0.6%
Other 8,259 14.0% 10,720 17.5%
-------------- ------------- -------------- -------------
Total expenses 48,086 81.6% 53,604 87.3%
-------------- ------------- -------------- -------------
Net income before income taxes and
extraordinary gain 10,781 18.4% 7,797 12.7%
Income tax provision (benefit) 692 1.2% (1,760) -2.9%
-------------- ------------- -------------- -------------
Net income before extraordinary gain 10,089 17.2% 9,557 15.6%
Extraordinary gain - 0.0% 1,148 1.9%
-------------- ------------- -------------- -------------
Net income $ 10,089 17.2% $ 10,705 17.5%
============== ============= ============== =============
Basic earnings per share before extraordinary gain $ 0.22 $ 0.21
============== ==============
Diluted earnings per share before extraordinary gain $ 0.21 $ 0.21
============== ==============
Basic earnings per share $ 0.22 $ 0.24
============== ==============
Diluted earnings per share $ 0.21 $ 0.24
============== ==============
Weighted average shares - basic 46,403 45,517
============== ==============
Weighted average shares - diluted 49,089 45,531
============== ==============
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
Year ended
December 31,
2002 % 2001 %
-------------- ------------- -------------- -------------
REVENUES:
Investment banking $143,876 53.6% $ 83,149 51.7%
Institutional brokerage 63,184 23.6% 53,414 33.2%
Asset management
Base fees 28,956 10.8% 19,744 12.3%
Incentive and investment income 30,534 11.4% 13,160 8.2%
Technology sector investment and incentive loss (5,622) -2.1% (18,100) -11.3%
Interest, dividends and other 7,275 2.7% 9,422 5.9%
-------------- ------------- -------------- -------------
Total revenues 268,203 100.0% 160,789 100.0%
-------------- ------------- -------------- -------------
EXPENSES:
Compensation and benefits 147,072 54.8% 108,112 67.2%
Business development and professional services 30,589 11.4% 28,879 18.0%
Interest 2,073 0.8% 1,083 0.7%
Other 33,028 12.3% 38,337 23.8%
-------------- ------------- -------------- -------------
Total expenses 212,762 79.3% 176,411 109.7%
-------------- -------------- -------------- -------------
Net income (loss) before income taxes
and extraordinary gain 55,441 20.7% (15,622) -9.7%
Income tax provision (benefit) 3,035 1.1% (1,760) -1.1%
-------------- ------------- -------------- -------------
Net income (loss) before extraordinary gain 52,406 19.6% (13,862) -8.6%
Extraordinary gain 1,413 0.5% 1,148 0.7%
Income tax provision on extraordinary gain 536 0.2% - 0.0%
-------------- ------------- -------------- -------------
Net income (loss) $ 53,283 19.9% $ (12,714) -7.9%
============== ============= ============== =============
Basic earnings (loss) per share before extraordinary gain $ 1.14 $ (0.29)
============== ==============
Diluted earnings (loss) per share before extraordinary gain $ 1.08 $ (0.29)
============== ==============
Basic earnings (loss) per share $ 1.16 $ (0.27)
============== ==============
Diluted earnings (loss) per share $ 1.10 $ (0.27)
============== ==============
Weighted average shares - basic 46,098 47,466
============== ==============
Weighted average shares - diluted 48,442 47,466
============== ==============
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
Financial & Statistical Supplement -Operating Results (unaudited)
(Dollars in thousands, except per share data)
YTD 2002 Q-4 02 Q-3 02 Q-2 02 Q-1 02
-------------- --------------- -------------- -------------- -------------
Revenues
Investment banking:
Underwriting $ 76,556 $ 8,890 $ 30,108 $ 25,248 $ 12,310
Corporate finance 58,595 11,119 26,175 9,827 11,474
Investment gains 8,725 4,312 2,627 1,595 191
Institutional brokerage:
Principal transactions 27,512 6,339 5,743 8,372 7,058
Agency commissions 35,672 8,344 8,629 9,954 8,745
Asset management:
Base management fees 28,956 8,119 7,208 7,633 5,996
Incentive income 14,258 5,291 4,282 2,902 1,783
Net investment income loss 16,276 4,474 (2,737) 8,517 6,022
Technology sector investment and incentive loss (5,622) 111 (2,202) (2,432) (1,099)
Interest, dividends and other 7,275 1,868 1,879 1,638 1,890
-------------- --------------- -------------- -------------- -------------
Total revenues 268,203 58,867 81,712 73,254 54,370
-------------- --------------- -------------- -------------- -------------
Expenses
Compensation and benefits 147,072 31,617 45,725 38,411 31,319
Business development & professional services 30,589 7,545 8,650 7,982 6,412
Clearing and brokerage fees 5,353 1,467 1,443 1,817 626
Occupancy & equipment 8,838 2,274 2,309 2,046 2,209
Communications 8,185 1,910 2,009 2,187 2,079
Interest expense 2,073 665 608 430 370
Other operating expenses 10,652 2,608 2,976 2,602 2,466
-------------- --------------- -------------- -------------- -------------
Total expenses 212,762 48,086 63,720 55,475 45,481
-------------- --------------- -------------- -------------- -------------
Net income before taxes and extraordinary gain 55,441 10,781 17,992 17,779 8,889
-------------- --------------- -------------- -------------- -------------
Income tax provision 3,035 692 2,343 - -
Net income before extraordinary gain $ 52,406 $ 10,089 $ 15,649 $ 17,779 $ 8,889
============== =============== ============== ============== =============
Extraordinary gain 1,413 - - - 1,413
Income tax provision on extraordinary gain 536 - 536 - -
Net income $ 53,283 $ 10,089 $ 15,113 $ 17,779 $ 10,302
============== =============== ============== ============== =============
Net income before taxes and extraordinary gain
as a percentage of revenue 20.7% 18.3% 22.0% 24.3% 16.3%
ROE (annualized) 24.8% 16.8% 26.7% 34.4% 21.7%
Total shareholders' equity $ 245,165 $245,165 $234,625 $218,368 $194,590
Basic earnings per share $ 1.16 $ 0.22 $ 0.33 $ 0.39 $ 0.23
Diluted earnings per share $ 1.10 $ 0.21 $ 0.31 $ 0.36 $ 0.22
Ending shares outstanding (in thousands) 46,456 46,456 46,396 46,339 45,751
Book value per share $ 5.28 $ 5.28 $ 5.06 $ 4.71 $ 4.25
Gross assets under management (in millions)
Managed accounts $6,538.0 $ 6,538.0 $ 7,356.0 $ 4,152.3 $ 2,757.7
Hedge & offshore funds 247.0 247.0 232.3 216.0 209.2
Mutual funds 1,188.5 1,188.5 1,071.2 1,313.4 1,270.4
Private equity funds 34.7 34.7 41.7 46.1 46.4
Technology sector funds 63.8 63.8 54.0 56.6 60.4
-------------- --------------- -------------- -------------- -------------
Total $8,072.0 $ 8,072.0 $ 8,755.2 $ 5,784.4 $ 4,344.1
============== =============== ============== ============== =============
Net assets under management (in millions)
Managed accounts $ 871.5 $ 871.5 $ 849.7 $ 748.5 $ 394.5
Hedge & offshore funds 162.4 162.4 162.9 188.5 157.7
Mutual funds 1,173.3 1,173.3 1,064.4 1,297.7 1,214.1
Private equity funds 30.9 30.9 40.1 45.5 45.5
Technology sector funds 48.2 48.2 48.6 52.3 55.8
-------------- --------------- -------------- -------------- -------------
Total $2,286.3 $ 2,286.3 $ 2,165.7 $ 2,332.5 $ 1,867.6
============== =============== ============== ============== =============
Productive assets under management (in millions)
Managed accounts $6,538.0 $ 6,538.0 $ 7,356.0 $ 4,152.3 $ 2,757.7
Hedge & offshore funds 162.4 162.4 162.9 188.5 157.7
Mutual funds 1,173.3 1,173.3 1,064.4 1,297.7 1,214.1
Private equity funds 91.2 91.2 92.5 94.8 95.3
Technology sector funds 249.0 249.0 248.5 248.1 249.3
-------------- --------------- -------------- -------------- -------------
Total $8,213.9 $ 8,213.9 $ 8,924.3 $ 5,981.4 $ 4,474.1
============== =============== ============== ============== =============
Employee count 481 481 464 445 441
============== =============== ============== ============== =============
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
Financial & Statistical Supplement -Operating Results (unaudited)
(Dollars in thousands, except per share data)
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
========= ================== ==================
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.
Proxy Information In connection with the proposed transactions, Friedman,
Billings, Ramsey Group, Inc., FBR Asset Investment Corporation and Forest Merger
Corporation have filed a preliminary joint proxy statement/prospectus with the
Securities and Exchange Commission. In addition, FBR Group, FBR Asset and Forest
Merger Corporation will prepare and file a definitive joint proxy
statement/prospectus and other documents regarding the proposed transaction with
the SEC. Investors and security holders are urged to carefully read the
definitive joint proxy statement/prospectus regarding the proposed transactions
when it becomes available, because it will contain important information.
Investors and security holders may obtain a free copy of the definitive joint
proxy statement/prospectus (when it is available) and other documents containing
information about FBR Group and FBR Asset, without charge, at the SEC's web site
at http://www.sec.gov. Free copies of both companies' filings may be obtained by
directing a request to 1001 Nineteenth Street North, Arlington, Virginia 22209,
Attention: Investor Relations.
Participants in Solicitation FBR Group, FBR Asset and their respective
directors, executive officers and other members of their management and
employees may be soliciting proxies from their respective stockholders in
connection with the proposed merger. Information concerning FBR Group's
participants in the solicitation is set forth in FBR Group's proxy statement for
its annual meeting of stockholders, filed with the SEC on May 30, 2002.
Information concerning FBR Asset's participants in the solicitation is set forth
in FBR Asset's proxy statement for its annual meeting of stockholders, filed
with the SEC on April 23, 2002. Additional information is set forth in the
preliminary joint proxy statement/prospectus and will be set forth in the
definitive preliminary joint proxy statement/prospectus when it is filed with
the SEC.
- --------------------------------------------------------------------------------
*Past performance is no guarantee of future results. For each fund with at least
a three-year history, Morningstar calculates a Morningstar Rating(TM) based on a
Morningstar Risk-Adjusted Return measure that accounts for variation in a fund's
monthly performance (including the effects of sales charges, loads and
redemption fees), placing more emphasis on downward variations and rewarding
consistent performance. The top 10% of funds in each category receive 5 stars,
the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5%
receive 2 stars and the bottom 10% receive 1 star. (Each share class is counted
as a fraction of one fund within this scale and rated separately, which may
cause slight variations in the distribution percentages.) The Overall
Morningstar Rating for a fund is derived from a weighted average of the
performance figures associated with its 3-,5- and10-year (if applicable)
Morningstar Rating metrics. The FBR Small Cap Financial Fund received 5 stars
for the 3-and 5-years and was rated among 72 and 42 U.S. domiciled specialty
financial funds. The FBR Financial Services received 4 stars for the 3- and
5-year period and was rated among 72 and 42 U.S. domiciled specialty financial
funds. The FBR Small Cap Value Fund received 5 stars for the 3- and 5-year
periods and was rated among 406 and 276 U.S. domiciled small growth funds. The
FBR American Gas Index Fund received 5 stars for the 3-, 5-years and 4 stars for
the 10-year periods and was rated among 83, 77 and 21 U.S. domiciled specialty
utility funds respectively. (C)2002 Morningstar, Inc. All Rights Reserved. The
information contained herein: (1) is proprietary to Morningstar and/or its
content providers; (2) may not be copied or distributed; and (3) is not
warranted to be accurate, complete or timely. Neither Morningstar nor its
content providers are responsible for any damages or losses arising from any use
of this information.
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