ARLINGTON, Va., Feb. 21 /PRNewswire-FirstCall/ -- Friedman,
Billings, Ramsey Group, Inc. (FBR Group; NYSE: FBR) today reported
a net after-tax loss of $270.4 million, or $1.77 per share
(diluted), for the quarter ended December 31, 2007 compared to net
after-tax earnings of $3.8 million, or $0.02 per share (diluted) in
the fourth quarter of 2006. Of the quarterly loss, $108 million is
the result of a non-cash write-down of goodwill. In addition, under
Generally Accepted Accounting Principles (GAAP), upon the discharge
of the First NLC Financial Services (FNLC) bankruptcy - expected to
occur in the first six months of 2008 - the Company estimates $70
million of fourth quarter losses will be recovered. Net of these
two non-cash items, the quarterly loss was $92.4 million. For the
year, FBR Group had a net after-tax loss of $660.3 million, or
$3.95 per share (diluted), compared to a net after-tax loss of
$67.3 million, or $0.39 per share (diluted), in 2006. Net of
intangible asset write-downs of $173 million and the expected $70
million FNLC loss recovery, the loss for 2007 was $417.3 million.
Inclusive of the expected FNLC loss recovery, tangible book value
net of Accumulated Other Comprehensive Income (AOCI) as of December
31, 2007 was $3.10(1) per share. Adjusted for GAAP recovery of $70
million associated with FNLC losses, FBR Group ended the quarter
with $777 million of consolidated tangible capital, including $320
million of trust preferred securities. Of this tangible capital,
$254 million was attributable to FBR Group's 52% ownership interest
in FBR Capital Markets. Of the remaining $523 million of tangible
capital, FBR Group had approximately $370 million invested in cash
and agency-backed securities. Importantly, at December 31, 2007,
FBR Group also had $372 million of net operating loss
carry-forwards and $268 million of capital loss carry-forwards. The
principal economic components of the fourth quarter loss were: --
previously announced (Dec. 21, 2007) $40 million of write-downs and
losses relating to the sale of approximately $200 million of non-
securitized non-prime mortgage loans (net of reserves) originated
by First NLC Financial Services, -- $15.8 million, representing FBR
Group's proportionate share of 52%- owned FBR Capital Markets
Corporation's (NASDAQ:FBCM) fourth quarter loss, and -- $16.2
million in valuation adjustments to securities in FBR Group's
merchant banking and non-prime securities portfolios. "Whole loan
mortgages and on-balance sheet residuals have been eliminated. Our
remaining non-prime securities exposure is below $30 million -
about 1.5% of total assets - and is self-liquidating," said J. Rock
Tonkel, Jr., President and Chief Operating Officer of FBR Group.
"In the fourth quarter, we deployed cash into the company's core
business of investing in agency mortgage-backed securities (MBS).
With current spreads exceeding 175 basis points on a substantially
hedged basis for certain segments of the agency MBS market, we
intend to continue to deploy cash and re-deploy additional
liquidity created from the disposition of our remaining non-agency
assets into the core business." Mortgage Investment Portfolio FBR
Group's investments in mortgage-backed securities, primarily
government agency securities, averaged $1.1 billion with a
one-month CPR of 3.9, and an ending net premium of $1.0 million.
The net yield on mortgage-backed securities for the fourth quarter
was 5.83% with a corresponding cost of funds of 4.88%. Merchant
Banking Excluding merchant banking investments of $58.3 million at
FBR Capital Markets, the total value of the merchant banking
investments held by FBR Group at the close of the fourth quarter
was $53.0 million. Looking Ahead "With non-prime and credit
exposure substantially eliminated, our balance sheet includes $523
million of long-term capital, approximately $370 million of which
is in cash and highly liquid agency securities," said Eric F.
Billings, Chairman and Chief Executive Officer of FBR Group. "That
foundation is permitting us to take advantage of a significantly
steepening yield curve by deploying our capital in a conservative,
substantially hedged agency strategy that, we believe, will provide
very acceptable returns. In addition, we are examining strategies
to maximize the economic benefit that can be derived from the $372
million of net operating loss carry-forwards and $268 million of
capital loss carry-forwards. All of this repositions the company to
focus once again on building the core agency business, growing
capital, increasing earnings and delivering growth in shareholder
value." FBR Capital Markets Corporation FBR Capital Markets
(NASDAQ:FBCM), a majority-owned subsidiary of FBR Group, yesterday
reported a net after-tax loss of $27.8 million, or $0.43 per share
(diluted), for the quarter ended December 31, 2007 compared to net
after-tax income of $7.0 million, or $0.11 per share (diluted) in
the fourth quarter of 2006. For the year ending December 31, 2007,
FBR Capital Markets had pre-tax earnings of $25.3 million, income
tax expense of $20.1 million (including $8 million of non-cash
items), resulting in after-tax earnings of $5.2 million or $0.08
per share (diluted), compared to a net after-tax loss of $9.8
million, or $0.18 per share (diluted), in 2006. Net revenues for
the full year were $479.6 million compared to net revenues of
$364.1 million in 2006. At the close of the fourth quarter, FBR
Capital Markets had $506.7 million in equity, $383.6 million of
cash, no debt, and its book value was $7.91 per share compared to
$8.25 per share at the end of the third quarter of 2007. Complete
financial results and tables for FBR Capital Markets can be found
at http://www.fbrcapitalmarkets.com/. The firm will host an
earnings conference call this morning, Thursday, February 21, 2008
at 9:00 A.M. U.S. EST. Investors wishing to listen to the call may
do so via the web at:
http://phx.corporate-ir.net/phoenix.zhtml?c=71352&p=irol-irhome.
Replays of the webcast will be available following the call.
Friedman, Billings, Ramsey Group, Inc. (FBR) invests in
mortgage-related assets, merchant banking opportunities and is the
majority owner of FBR Capital Market Corporation, a separate
publicly traded company. FBR is headquartered in the Washington,
D.C. metropolitan area. For more information, please visit
http://www.fbr.com/. (1) Accumulated Other Comprehensive Income
(AOCI) includes changes in the value of available-for-sale
securities and cash flow hedges. FBR believes that such changes
represent temporary market fluctuations, are not reflective of our
market strategy, and, therefore, the exclusion of AOCI provides a
reasonable basis for calculating returns. Tangible book value net
of AOCI and excluding the $70 million FNLC loss recovery is $2.63.
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, costs of borrowing, interest spreads, mortgage
pre-payment speeds, risks associated with merchant banking
investments, the realization of gains and losses on principal
investments, available technologies, competition for business and
personnel, and general economic, political and market conditions.
These and other risks are described in the Company's Annual Report
and Form 10-K and quarterly reports on Form 10-Q that are available
from the company and from the SEC. 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, 2007 % 2006 % REVENUES:
Investment banking: Capital raising $25,648 -76.5% $71,883 40.9%
Advisory 4,973 -14.8% 9,172 5.2% Institutional brokerage: Principal
transactions 2,996 -8.9% (8) 0.0% Agency commissions 26,153 -78.0%
24,720 14.1% Mortgage trading interest - 0.0% 2,509 1.4% Mortgage
trading net investment loss - 0.0% (309) -0.2% Asset management:
Base management fees 5,542 -16.5% 5,051 2.9% Incentive allocations
and fees 99 -0.3% 403 0.2% Principal investment: Interest 51,057
-152.4% 181,491 103.3% Net investment loss (22,327) 66.6% (8,826)
-5.0% Dividends 805 -2.4% 2,043 1.2% Mortgage banking: Interest
4,059 -12.1% 21,806 12.4% Net investment (loss) income (83,174)
248.2% 27,555 15.7% Other 3,242 -9.8% 3,162 1.7% Total revenues
19,073 -56.9% 340,652 193.8% Interest expense 52,583 -156.9%
164,891 93.8% Revenues, net of interest expense (33,510) 100.0%
175,761 100.0% NON-INTEREST EXPENSES: Compensation and benefits
69,533 -207.5% 84,431 48.0% Professional services 15,598 -46.5%
18,224 10.4% Business development 10,878 -32.5% 11,884 6.8%
Clearing and brokerage fees 2,797 -8.3% 3,505 2.0% Occupancy and
equipment 13,791 -41.2% 13,668 7.8% Communications 6,899 -20.6%
6,307 3.6% Other operating expenses 15,706 -46.9% 20,116 11.3%
Goodwill impairment 108,013 -322.3% - 0.0% Restructuring charges
21,466 -64.1% - 0.0% Total non-interest expenses 264,681 -789.9%
158,135 89.9% Operating (loss) income (298,191) 889.9% 17,626 10.1%
OTHER INCOME: Gain on sale of subsidiary shares 4 0.0% - 0.0% Net
(loss) income before income taxes and minority interest (298,187)
889.8% 17,626 10.1% Income tax (benefit) provision (15,817) 47.2%
11,859 6.7% Minority interest in (losses) earnings of consolidated
subsidiary (12,008) 35.8% 1,957 1.1% Net (loss) income $(270,362)
806.8% $3,810 2.3% Basic (loss) earnings per share $(1.77) $0.02
Diluted (loss) earnings per share $(1.77) $0.02 Weighted average
shares - basic 152,375 172,531 Weighted average shares - diluted
152,375 172,600 FRIEDMAN, BILLINGS, RAMSEY GROUP, INC. CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except
per share amounts) (Unaudited) Twelve Months Ended December 31,
2007 % 2006 % REVENUES: Investment banking: Capital raising
$282,619 267.9% $190,187 50.0% Advisory 34,063 32.3% 24,148 6.3%
Institutional brokerage: Principal transactions 10,152 9.6% 5,814
1.5% Agency commissions 104,792 99.3% 101,009 26.6% Mortgage
trading interest - 0.0% 51,147 13.4% Mortgage trading net
investment loss - 0.0% (3,301) -0.9% Asset management: Base
management fees 23,549 22.3% 20,093 5.3% Incentive allocations and
fees 401 0.4% 1,327 0.3% Principal investment: Interest 501,130
475.0% 594,879 156.4% Net investment loss (221,956) -210.4%
(184,552) -48.5% Dividends 3,173 3.0% 14,551 3.8% Mortgage banking:
Interest 51,245 48.6% 88,662 23.3% Net investment (loss) income
(222,032) -210.4% 83,786 22.0% Other 15,808 14.9% 20,154 5.4% Total
revenues 582,944 552.5% 1,007,904 264.9% Interest expense 477,437
452.5% 611,800 160.8% Provision for loan losses - 0.0% 15,740 4.1%
Revenues, net of interest expense and provision for loan losses
105,507 100.0% 380,364 100.0% NON-INTEREST EXPENSES: Compensation
and benefits 361,355 342.5% 309,065 81.3% Professional services
55,741 52.8% 59,722 15.7% Business development 43,518 41.2% 42,150
11.1% Clearing and brokerage fees 12,514 11.9% 11,820 3.1%
Occupancy and equipment 52,302 49.6% 50,051 13.2% Communications
28,690 27.2% 24,398 6.4% Other operating expenses 82,246 78.0%
89,377 23.5% Goodwill impairment 162,765 154.3% - 0.0%
Restructuring charges 46,985 44.5% - 0.0% Total non-interest
expenses 846,116 802.0% 586,583 154.3% Operating loss (740,609)
-702.0% (206,219) -54.2% OTHER INCOME: Gain on sale of subsidiary
shares 104,062 98.6% 121,511 31.9% Net loss before income taxes and
minority interest (636,547) -603.3% (84,708) -22.3% Income tax
provision (benefit) 22,932 21.7% (14,682) -3.9% Minority interest
in earnings (losses) of consolidated subsidiary 774 0.7% (2,751)
-0.7% Net loss $(660,253) -625.7% $(67,275) -17.7% Basic loss per
share $(3.95) $(0.39) Diluted loss per share $(3.95) $(0.39)
Weighted average shares - basic 166,975 171,667 Weighted average
shares - diluted 166,975 171,667 FRIEDMAN, BILLINGS, RAMSEY GROUP,
INC. Financial & Statistical Supplement - Operating Results
(Dollars in thousands, except per share data) (Unaudited) For the
twelve months ended December 31, 2007 Q-4 07 Q-3 07 Q-2 07 Q-1 07
Revenues Investment banking: Capital raising $282,619 $25,648
$49,692 $110,032 $97,247 Advisory 34,063 4,973 16,480 6,152 6,458
Institutional brokerage: Principal transactions 10,152 2,996 968
4,152 2,036 Agency commissions 104,792 26,153 26,257 28,564 23,818
Asset management: Base management fees 23,549 5,542 6,119 6,360
5,528 Incentive allocations and fees 401 99 82 116 104 Principal
investment: Interest 501,130 51,057 115,450 152,927 181,696 Net
investment loss (221,956) (22,327) (136,475) (3,441) (59,713)
Dividends 3,173 805 526 883 959 Mortgage banking: Interest 51,245
4,059 7,194 13,462 26,530 Net investment loss (222,032) (83,174)
(27,968) (4,031) (106,859) Other 15,808 3,242 3,990 4,482 4,094
Total revenues 582,944 19,073 62,315 319,658 181,898 Interest
expense 477,437 52,583 112,072 143,231 169,551 Revenues, net of
interest expense 105,507 (33,510) (49,757) 176,427 12,347
Non-interest expenses Compensation and benefits 361,355 69,533
80,955 106,885 103,982 Professional services 55,741 15,598 12,281
14,008 13,854 Business development 43,518 10,878 7,713 11,158
13,769 Clearing and brokerage fees 12,514 2,797 3,953 3,063 2,701
Occupancy and equipment 52,302 13,791 12,695 12,699 13,117
Communications 28,690 6,899 7,148 7,592 7,051 Other operating
expenses 82,246 15,706 16,140 18,684 31,716 Impairment of goodwill
162,765 108,013 - 28,900 25,852 Restructuring charges 46,985 21,466
6,172 3,862 15,485 Total non-interest expenses 846,116 264,681
147,057 206,851 227,527 Operating loss (740,609) (298,191)
(196,814) (30,424) (215,180) Other income (loss) Gain (loss) on
sale of subsidiary shares 104,062 4 (2,450) 105,677 831 (Loss)
income before income taxes and minority interest (636,547)
(298,187) (199,264) 75,253 (214,349) Income tax provision (benefit)
22,932 (15,817) 15,288 55,011 (31,550) Minority interest in
earnings (losses) of consolidated subsidiary 774 (12,008) 165 9,538
3,079 Net (loss) income $(660,253) $(270,362) $(214,717) $10,704
$(185,878) ROE (annualized) -84.4% -138.2% -91.9% 3.9% -68.8% ROE
(annualized-excluding AOCI) (1) -82.9% -135.8% -90.5% 3.9% -68.2%
Total shareholders' equity $393,691 $393,691 $698,214 $1,012,635
$989,213 Total shareholders' equity, net of AOCI (1) $406,537
$406,537 $711,693 $1,000,071 $993,753 Basic (loss) earnings per
share $(3.95) $(1.77) $(1.28) $0.06 $(1.08) Diluted (loss) earnings
per share $(3.95) $(1.77) $(1.28) $0.06 $(1.08) Ending shares
outstanding (in thousands) 150,674 150,674 158,671 173,756 172,846
Book value per share $2.61 $2.61 $4.40 $5.83 $5.72 Book value per
share, net of AOCI (1) $2.70 $2.70 $4.49 $5.76 $5.75 Gross assets
under management (in millions) Managed accounts $347.1 $347.1
$345.6 $291.3 $258.8 Hedge & offshore funds 52.1 52.1 61.7 61.7
67.1 Mutual funds 2,046.5 2,046.5 2,292.3 2,482.6 2,412.9 Private
equity and venture capital funds 23.8 23.8 31.3 33.8 41.2 Total
$2,469.5 $2,469.5 $2,730.9 $2,869.4 $2,780.0 Net assets under
management (in millions) Managed accounts $347.1 $347.1 $ 345.6
$291.3 $258.8 Hedge & offshore funds 50.7 50.7 58.1 58.1 62.5
Mutual funds 2,034.6 2,034.6 2,285.1 2,474.7 2,406.4 Private equity
and venture capital funds 22.6 22.6 29.8 32.0 38.0 Total $2,455.0
$2,455.0 $2,718.6 $2,856.1 $2,765.7 Employee count 1,025 1,025
1,290 2,151 2,592 (1) Accumulated Other Comprehensive Income (AOCI)
includes changes in value of available-for-sale securities and cash
flow hedges. We believe that such changes represent temporary
market fluctuations, are not reflective of our market strategy, and
therefore, exclusion of AOCI provides a reasonable basis for
calculating returns. FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
Financial & Statistical Supplement - Operating Results (Dollars
in thousands, except per share data) (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 $190,187 $71,883 $6,852 $45,117 $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 101,009 24,720 24,388 28,492 23,409 Mortgage trading
interest 51,147 2,509 13,845 17,143 17,650 Mortgage trading net
investment loss (3,301) (309) (1,546) (209) (1,237) Asset
management: Base management fees 20,093 5,051 4,880 5,065 5,097
Incentive allocations and fees 1,327 403 (31) (53) 1,008 Principal
investment: Interest 594,879 181,491 150,649 113,613 149,126 Net
investment (loss) income (184,552) (8,826) (170,621) (31,290)
26,185 Dividends 14,551 2,043 4,750 4,059 3,699 Mortgage banking:
Interest 88,662 21,806 22,476 21,267 23,113 Net investment income
83,786 27,555 16,092 29,401 10,738 Other 20,154 3,162 6,540 5,465
4,987 Total revenues 1,007,904 340,652 82,442 246,111 338,699
Interest expense 611,800 164,891 165,237 128,189 153,483 Provision
for loan losses 15,740 - - 7,348 8,392 Revenues, net of interest
expense and provision for loan losses 380,364 175,761 (82,795)
110,574 176,824 Non-interest expenses Compensation and benefits
309,065 84,431 69,405 71,732 83,497 Professional services 59,722
18,224 14,308 12,925 14,265 Business development 42,150 11,884
7,577 8,604 14,085 Clearing and brokerage fees 11,820 3,505 2,917
3,082 2,316 Occupancy and equipment 50,051 13,668 12,909 12,232
11,242 Communications 24,398 6,307 6,471 6,013 5,607 Other
operating expenses 89,377 20,116 23,291 24,993 20,977 Total
non-interest expenses 586,583 158,135 136,878 139,581 151,989
Operating (loss) income (206,219) 17,626 (219,673) (29,007) 24,835
Other income Gain on sale of subsidiary shares 121,511 - 121,511 -
- (Loss) income before income taxes and minority interest (84,708)
17,626 (98,162) (29,007) 24,835 Income tax (benefit) provision
(14,682) 11,859 (26,062) 1,240 (1,719) Minority interest in (loss)
earnings of consolidated subsidiary (2,751) 1,957 (4,708) - - Net
(loss) income $(67,275) $3,810 $(67,392) $(30,247) $26,554 ROE
(annualized) -5.4% 1.3% -22.1% -9.4% 8.2% ROE (annualized-excluding
AOCI) (1) -5.4% 1.3% -22.2% -9.5% 8.1% Total shareholders' equity
$1,171,045 $1,171,045 $1,163,681 $1,270,361 $1,301,949 Total
shareholders' equity, net of AOCI (1) $1,186,181 $1,186,181
$1,181,372 $1,250,117 $1,306,450 Basic (loss) earnings per share
$(0.39) $0.02 $(0.39) $(0.18) $0.16 Diluted (loss) earnings per
share $(0.39) $0.02 $(0.39) $(0.18) $0.16 Ending shares outstanding
(in thousands) 172,759 172,759 172,506 171,812 171,236 Book value
per share $6.78 $6.78 $6.75 $7.39 $7.60 Book value per share, net
of AOCI (1) $6.87 $6.87 $6.85 $7.28 $7.63 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 3,019 3,019
2,909 2,651 2,531 (1) Accumulated Other Comprehensive Income (AOCI)
includes changes in value of available-for-sale securities and cash
flow hedges. We believe that such changes represent temporary
market fluctuations, are not reflective of our market strategy, and
therefore, exclusion of AOCI provides a reasonable basis for
calculating returns. FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
CONSOLIDATED BALANCE SHEETS (Dollars and shares in thousands,
except per share amounts) (Unaudited) ASSETS 31-Dec-07 31-Dec-06
Cash and cash equivalents $692,360 $189,956 Restricted cash 14,166
132 Receivables 75,357 217,249 Investments: Mortgage-backed
securities, at fair value 1,791,480 6,870,661 Loans held for sale,
net 65,074 5,367,934 Long-term investments 169,274 185,492 Trading
securities, at fair value 19,057 18,180 Due from clearing broker -
28,999 Derivative assets, at fair value 3,514 36,875 Goodwill -
162,765 Intangible assets, net 9,837 21,825 Furniture, equipment,
software and leasehold improvements, net 30,451 44,111 Prepaid
expenses and other assets 74,385 208,339 Total assets $2,944,955
$13,352,518 LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities:
Trading account securities sold short but not yet purchased, at
fair value $206 $202 Commercial paper - 3,971,389 Repurchase
agreements 1,744,377 3,059,330 Derivative liabilities, at fair
value 3,558 44,582 Dividends payable - 8,743 Interest payable 2,991
12,239 Accrued compensation and benefits 57,000 57,227 Due to
clearing broker 7,059 - Accounts payable, accrued expenses and
other liabilities 105,456 81,819 Short-term loan financing 63,981 -
Securitization financing, net - 4,486,046 Long-term debt 323,575
324,453 Total liabilities 2,308,203 12,046,030 Minority interest
243,061 135,443 Shareholders' equity: Common stock, 151,887 and
174,712 shares 1,519 1,747 Additional paid-in capital 1,468,801
1,562,485 Accumulated other comprehensive loss, net of taxes
(12,846) (15,136) Accumulated deficit (1,063,783) (378,051) Total
shareholders' equity 393,691 1,171,045 Total liabilities and
shareholders' equity $2,944,955 $13,352,518 DATASOURCE: Friedman,
Billings, Ramsey Group, Inc. CONTACT: Media, Lauren Burk,
+1-703-469-1004, , Investors, Paul Beattie, +1-703-312-9673, , both
of Friedman, Billings, Ramsey Group, Inc. Web site:
http://www.fbr.com/
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