EX-99.1 3 presentation02.txt FIRST QUARTER 2002 EARNINGS PRESENTATION FIRST QUARTER 2002 EARNINGS PRESENTATION May 2, 2002 Statements concerning future performance, developments, events, market forecasts, earnings models, earnings, revenues, expenses, 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 those expressed in the forward looking information. These factors include, but are not limited to, the effect of demand for public offerings, activity in the secondary securities markets, the high degree of risk associated with technology and other venture capital investments, changes in interest rates, competition for business and personnel, and general economic, political and market conditions. These and other risks are described in the company's Annual Report on Form 10-K that is available from the company and from the SEC. FBR Group Overview As of March 31, 2002 o Institutional research capital markets company (NYSE: FBR) o 441 full-time employees in 14 offices o 6 focused industry verticals (Financial Services, Real Estate, Technology, Energy, Diversified Industries, Healthcare) o Top 10 lead-managing equity underwriter o Strong balance sheet: * Total assets of $284.5 million and shareholders' equity of $194.6 million- $4.25 per share ($4.37 assuming repayment of loans under the Employee Stock Purchase and Loan program). * Combined FBR Group and FBR Asset Investment Corporation (NYSE: FB) equity of more than $600 million o 3 profit centers driven by research: * Institutional brokerage sales and trading * Investment banking * Asset management, including FBR Asset Investment Corporation
Business Overview ----------------------- --------------------- -------------------- --------------------- -------------------- Research Institutional Sales Investment Banking Asset Management Private Client & Trading Group ----------------------- --------------------- -------------------- --------------------- -------------------- ----------------------- --------------------- -------------------- --------------------- -------------------- 60 Analysts 50 Institutional 75 investment More than $5 Investment Brokers bankers billion a of April services for high Over 350 companies 30, 2002 net worth under coverage 27 Traders & Sales 6 focused industry individuals, Traders sectors FBR Asset foundations and Independence Investment endowments Market-maker in Financial Services Corporation In-depth company over 440 equity and (NYSE:FB) Investment analysis debt securities Real Estate Management Mutual funds Theme-driven industry Covering over 1,000 Technology Restricted (144) coverage institutional Hedge funds stock sales accounts Energy Daily meetings with Private equity Credit lines sales force Mutual funds Diversified Industries Venture capital Hedging and Frequent management Hedge funds monetization roadshows Healthcare Money managers Employee stock Annual investor Top 10 option management conferences Pension funds lead-managing underwriter Cash management FBR National Bank & Trust* ----------------------- --------------------- -------------------- --------------------- --------------------
All numbers approximate as of April 30, 2002 unless otherwise stated. *Member FDIC and an equal housing lender. Products offered by other FBR subsidiaries are not FDIC insured, not offered, guaranteed or endorsed by FBR National Bank & Trust, and may lose value. First Quarter 2002 Financial Highlights o Earnings of $10.3 million or $0.23 per share o Revenues up 142% over first quarter 2001, $54.4 million * Institutional brokerage revenues up 26% at $15.8 million * Investment banking revenues up 142% at $24.0 million * Asset management revenues up 183% at $13.8 million * Venture capital losses down 85% at $(1.1) million * Expense containment o Gross assets under management up 54% at $4.3 billion Gross assets under management up 54% at $4.3 billion o Top 10 lead managing underwriter by dollar volume raised for mid-market issuers (market-cap less than $1 billion) o #1 lead managing underwriter by weighted aftermarket performance through 4/30/02, with performance of 33.54% year-to-date (vs. industry average of 7.19%) Drivers of FBR's Business and Revenue Growth o High-quality, objective and timely research o Increasing business with the largest institutional investors in the United States and Europe o In-depth focus on industry verticals and mid-market focus o Growing assets under management
Research ------------------- ------------------- ------------------ -------------- ------------------- ----------------- Financial Services Real Estate Technology Energy Diversified/High Healthcare Yield ------------------- ------------------- ------------------ -------------- ------------------- ----------------- ------------------- ------------------- ------------------ -------------- ------------------- ----------------- Asset Managers Apartment Communication Coal Consumer Products Genomics & Infrastructure Proteomics Brokers Lodging Exploration Debt, Equity and Communication & Production Distressed Specialty Community Banks Mortgage Semiconductors & (E&P) Securities Pharmaceuticals Intellectual Government Office/Industrial Property Integrated High Yield Sponsored Oil & Enterprises Triple-Net Lease Display & Refineries Special Situations (GSE's) Semiconductor Technologies Pipelines Insurance Enterprise Money Center Banks Platform & Application Mortgage Bankers Software Mortgage Companies Enterprise Services Regional Banks Media Specialty Finance Infrastructure Thrifts Network Software Telecom Equipment & Services ------------------- ------------------- ------------------ -------------- ------------------- -----------------
Over 350 companies under coverage.
Sales & Trading Revenue Growth --------------------------- -------------------- ----------------------- -------------------- Principal Agency Total --------------------------- -------------------- ----------------------- -------------------- --------------------------- -------------------- ----------------------- -------------------- 1999 24.3 15.0 $39.3M --------------------------- -------------------- ----------------------- -------------------- --------------------------- -------------------- ----------------------- -------------------- 2000 25.5 21.1 $46.6M --------------------------- -------------------- ----------------------- -------------------- --------------------------- -------------------- ----------------------- -------------------- 2001 24.3 27.1 $51.4M --------------------------- -------------------- ----------------------- -------------------- --------------------------- -------------------- ----------------------- -------------------- 12 Months Ended 03/31/02 25.8 29.2 $55.0M --------------------------- -------------------- ----------------------- -------------------- --------------------------- -------------------- ----------------------- -------------------- Q1 2002 29.8 35.0 $64.8M --------------------------- -------------------- ----------------------- -------------------- Excludes trading gains and losses.
Revenue Growth 2001 - 2002 = 10.3% Q1 2001 - Q1 2002 = 26% 55 Institutional Brokers 27 Traders & Sales Traders
Investment Banking --------------------------------------- ---------------------------------------- 2001 Q1 2002 --------------------------------------- ---------------------------------------- --------------------------------------- ---------------------------------------- 50 capital markets assignments 20 capital markets assignments $2.7 billion in transaction value $1.8 billion in transaction value 29 capital raising transactions 11 capital raising transactions -1 lead-managed IPO - 1 co-managed IPO -15 lead-managed secondaries - 6 lead-managed secondaries -9 co-managed secondaries - 3 co-managed secondaries -4 sole-managed private - 1 sole-managed private placements placement 22 M&A and advisory assignments 9 M&A and advisory assignments $426 million* of transaction $599 million* of transaction value value --------------------------------------- ---------------------------------------- *Some figures not publicly disclosed
Investment Banking Revenue Growth --------------------------- -------------------- ----------------------- -------------------- Corporate Finance Underwriting Total --------------------------- -------------------- ----------------------- -------------------- --------------------------- -------------------- ----------------------- -------------------- 1999 22.5 22.7 $45.2M --------------------------- -------------------- ----------------------- -------------------- --------------------------- -------------------- ----------------------- -------------------- 2000 31.4 21.1 $52.5M --------------------------- -------------------- ----------------------- -------------------- --------------------------- -------------------- ----------------------- -------------------- 2001 28.5 47.9 $76.4M --------------------------- -------------------- ----------------------- -------------------- --------------------------- -------------------- ----------------------- -------------------- 12 Months Ended 03/31/02 37.8 52.5 $90.3M --------------------------- -------------------- ----------------------- -------------------- --------------------------- -------------------- ----------------------- -------------------- Q1 2002 45.9 49.2 $95.1M --------------------------- -------------------- ----------------------- --------------------
Revenue Growth 2000-2001 = 45.5% Q1 2001 - Q1 2002 = 142% 75 Investment Bankers Excludes investment gains. Investment Banking Aftermarket Performance Across All Industries Criteria: Lead Managed Secondary and IPO equity transactions Pricing date: 01/01/01-04/30/02 Performance from pricing through 04/30/02 Performance does not include dividends
January 1, 2001 through May 1, 2002 Aggregate Deal Value Over $150 Million --------------------------------------------- ---------------------- --------------------------------- Lead Manager # of Deals % Change Offer to Current --------------------------------------------- ---------------------- --------------------------------- --------------------------------------------- ---------------------- --------------------------------- Friedman, Billings, Ramsey 23 33.54 --------------------------------------------- ---------------------- --------------------------------- --------------------------------------------- ---------------------- --------------------------------- Robert W. Baird & Co. Incorporated 3 32.32 --------------------------------------------- ---------------------- --------------------------------- --------------------------------------------- ---------------------- --------------------------------- Jolson Merchant Partners 4 22.11 --------------------------------------------- ---------------------- --------------------------------- --------------------------------------------- ---------------------- --------------------------------- Raymond James 10 18.28 --------------------------------------------- ---------------------- --------------------------------- --------------------------------------------- ---------------------- --------------------------------- Deutsche Bank Securities 19 16.94 --------------------------------------------- ---------------------- --------------------------------- --------------------------------------------- ---------------------- --------------------------------- William Blair & Company 3 16.47 --------------------------------------------- ---------------------- --------------------------------- --------------------------------------------- ---------------------- --------------------------------- Bear, Stearns & Co. 20 14.30 --------------------------------------------- ---------------------- --------------------------------- --------------------------------------------- ---------------------- --------------------------------- Wachovia Securities 8 12.99 --------------------------------------------- ---------------------- --------------------------------- --------------------------------------------- ---------------------- --------------------------------- Needham & Company, Inc. 4 9.59 --------------------------------------------- ---------------------- --------------------------------- --------------------------------------------- ---------------------- --------------------------------- SG Cowen Securities Corporation 5 8.82 --------------------------------------------- ---------------------- --------------------------------- --------------------------------------------- ---------------------- --------------------------------- Robertson Stephens 13 7.49 --------------------------------------------- ---------------------- --------------------------------- --------------------------------------------- ---------------------- --------------------------------- A.G. Edwards & Sons, Inc. 9 7.42 --------------------------------------------- ---------------------- --------------------------------- --------------------------------------------- ---------------------- --------------------------------- Merrill Lynch & Co. 92 7.25 --------------------------------------------- ---------------------- --------------------------------- --------------------------------------------- ---------------------- --------------------------------- Credit Suisse First Boston 89 6.59 --------------------------------------------- ---------------------- --------------------------------- --------------------------------------------- ---------------------- --------------------------------- Salomon Smith Barney Inc. 99 6.24 --------------------------------------------- ---------------------- --------------------------------- --------------------------------------------- ---------------------- --------------------------------- UBS Warburg LLC 50 4.61 --------------------------------------------- ---------------------- --------------------------------- --------------------------------------------- ---------------------- --------------------------------- Jeffries & Company, Inc. 6 2.97 --------------------------------------------- ---------------------- --------------------------------- --------------------------------------------- ---------------------- --------------------------------- U.S. Bancorp Piper Jaffray Inc. 14 2.56 --------------------------------------------- ---------------------- --------------------------------- --------------------------------------------- ---------------------- --------------------------------- Morgan Stanley 38 0.93 --------------------------------------------- ---------------------- --------------------------------- --------------------------------------------- ---------------------- --------------------------------- J.P. Morgan Securities Inc. 29 0.23 --------------------------------------------- ---------------------- --------------------------------- --------------------------------------------- ---------------------- --------------------------------- Banc of America Securities 20 -0.99 --------------------------------------------- ---------------------- --------------------------------- --------------------------------------------- ---------------------- --------------------------------- Goldman, Sachs & Co. 57 -3.05 --------------------------------------------- ---------------------- --------------------------------- --------------------------------------------- ---------------------- --------------------------------- Lehman Brothers 43 -5.90 --------------------------------------------- ---------------------- --------------------------------- --------------------------------------------- ---------------------- --------------------------------- CIBC World Markets 11 -10.96 --------------------------------------------- ---------------------- --------------------------------- --------------------------------------------- ---------------------- --------------------------------- Thomas Weisel Partners L.L.C. 3 -30.88 --------------------------------------------- ---------------------- --------------------------------- --------------------------------------------- ---------------------- --------------------------------- Total: 672 Average: 7.19 --------------------------------------------- ---------------------- --------------------------------- Source: CommScan LLC
Asset Management ------------------------------------- ----------------------------------- ----------------------------------- Alternative Assets FBR Asset Mutual Funds and other managed accounts ------------------------------------- ----------------------------------- ----------------------------------- ------------------------------------- ----------------------------------- ----------------------------------- More than $300 million More than $2.7 billion More than $1.3 billion Hedge Funds: FBR Asset Investment Corp. Equity funds, Morningstar Rated, -FBR Ashton -NYSE: FB 4 & 5 Stars over 3 & 5 years -FBR Weston -REIT Tax Status ended 12/21/01*: -FBR Arbitrage -Mortgage Backed Securities -FBR Biotech -Mezzanine or Senior Loans FBR Small Cap Financial -FBR Pegasus (fund of funds) -Equity Securities (Five Stars) Venture Capital: Private Client Group FBR Financial Services -FBR Technology Venture -Asset Allocation and other (Four Stars) Partners I & II Managed Accounts -FBR Co-Motion -Investment Management FBR Small Cap Value -ETP/FBR Genomic I & II -Wealth Planning (Five Stars) -FBR Infinity II -Access to FBR Proprietary Products American Gas Index Private Equity: (Four Stars) -FBR Private Equity Fund -FBR Future Financial Fund Our newest fund (02/02): -FBR Financial Services Partners -FBR Technology Fund Fixed income and money market funds: -Fund for Government Investors (Money Market) -Rushmore Fund for Tax-Free Investors (VA,MD and Money Market) -The Rushmore Fund (Bond Fund) ------------------------------------- ----------------------------------- -----------------------------------
All numbers approximate as of April 30, 2002. Stated asset amounts represent total gross assets under management. *copyright 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. Past performance is no guarantee of future results.
Assets Under Management --------------------------- -------------------- ----------------------- Net Assets Under Total Management# --------------------------- -------------------- ----------------------- --------------------------- -------------------- ----------------------- 12/31/1999 $694M $990M --------------------------- -------------------- ----------------------- --------------------------- -------------------- ----------------------- 12/31/2000 $721M $1,004M --------------------------- -------------------- ----------------------- --------------------------- -------------------- ----------------------- 12/31/2001* $1,518M $2,757M --------------------------- -------------------- ----------------------- --------------------------- -------------------- ----------------------- 03/31/2002 $1,868M $4,344M --------------------------- -------------------- -----------------------
AUM Growth 12/31/2001 - 03/31/2001 = 57% # Net assets under management represents total gross assets under management, net of any repo debt, margin loans, securities sold but not yet purchased, lines of credit, and any other liabilities. * Includes technology sector assets of $71.0M ($64.9M net).
Equity Mutual Funds Equity Mutual Funds More than $1.3 billion under management in 10 equity, fixed income and money market mutual funds. Overall Morningstar Rating(TH) Q4'01 1-Year 3-Years 5-Years* 10-Years (among 4,811 domestic equity funds) Small Cap Value (FBRVX)1 ***** 18.23% 32.63% 13.11% 15.05% n/a Small Cap Financial (FBRSX)2 ***** 4.93% 23.85% 15.76% 16.23% n/a Financial Services (FBRFX)2 **** 2.77% -1.72% 6.48% 13.06% n/a American Gas Index Fund (GASFX)3 **** 3.34% -14.78% 8.55% 10.83% 11.94%
*The FBR Funds commenced operations on 12/31/96. The American Gas Index Fund commenced operations on 05/10/89 TOTAL RETURNS REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS. Please read the prospectus carefully before you invest or send money. Investment return and principal will fluctuate so that investor's shares when redeemed, may be worth more or less than their original value. FBR Funds are NOT FDIC insured and not bank guaranteed. All results assume reinvestment of distributions. FBR Fund Advisors, Inc. and FBR Investment Services Inc., member NASD/SIPC, each a subsidiary of Friedman, Billings Ramsey Group Inc., serve as advisor to, and distributor of the FBR Funds respectively. For each fund with at least a three-year history, Morningstar calculates a Morningstar Rating metric each month by subtracting the return on a 90-day U.S. Treasury Bill from the fund's load-adjusted return for the same period, and then adjusting this excess return for risk. The top 10% of funds in each broad asset class 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. The Overall Morningstar Rating for a fund is derived from a weighted average of the performance figures associated with its 3-, 5- and 10-year (if applicable) Morningstar metrics. Both the FBR Small Cap Value and Small Cap Financial Funds received 5 stars for the 3- and 5-year periods and were rated among 4811 and 3160 domestic equity funds. The FBR Financial Services fund received 4 stars for the 3- and 5-year periods and was rated among 4811 and 3160 domestic equity funds. The American Gas Index Fund received 4 stars for the 3- and 5-year periods and 3 stars for the prior 10 years and was rated among 4811, 3160 and 895 domestic equity funds respectively. 1The non-diversified nature of the fund may subject investors to greater volatility than other diversified funds. Small capitalization stocks as a group may not respond to market rallies or downturns as much as other types of equity securities. 2Fund investments are focused on the financial services industry, which may be adversely affected by regulatory or other market conditions, such as rising interest rates. Small capitalization stocks as a group may not respond to market rallies or downturns as much as other types of equity securities. 3The gas industry is sensitive to increased interest rates because of the capital-intensive nature of the industry. Typically, a significant portion of the financing of the gas industry's assets is obtained through debt. As interest rates increase, such refinanced debt would be acquired at higher-rates thereby adversely affecting earnings. Copyright 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. Past performance is no guarantee of future results.
Fixed Income Mutual Funds Fixed Income Mutual Funds Q1 2002 1-Year 3-Years 5-Years 10-Years Fund for Government Investors (RSGVX) 1 0.27% 2.29% 3.94% 4.10% 3.90% Tax-Free Money Market Portfolio (FFTXX) 1,2 0.26% 1.63% 2.48% 2.60% 2.47% Maryland Tax-Free Portfolio (RSXLX)1,2 0.93% 3.57% 3.87% 5.26% 5.67% Virginia Tax-Free Portfolio (RSXIX)1,2 0.98% 2.92% 3.69% 5.21% 5.70% U.S. Government Bond Portfolio (FUSXX) 1.84% 4.29% 5.79% 8.50% 7.92%
TOTAL RETURNS REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS. Investment return and principal will fluctuate so that investor's shares when redeemed, may be worth more or less than their original value. All results assume reinvestment of distributions. 1Investment in the money market funds are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although money market funds seek to preserve the value at $1 per share, it is possible to lose money by investing in the funds. 2Some income earned in the tax-free portfolios may be subject to the federal alternative minimum tax. Income earned by non-Maryland or non-Virginian residents will be subject to applicable state and local taxes. For more complete information about the FBR Money Market Portfolios, including fees and expenses, call 1.800.622.1386 for a free prospectus. Please read the prospectus carefully before you invest or send money. FBR Money Market Portfolios are distributed by FBR Investment Services, Inc., member NASD/SIPC.
Asset Management Revenue Growth ------------------ ------------------------------- ------------------------ --------------- Net investment and incentive Base management fees. Total income* ------------------ ------------------------------- ------------------------ --------------- ------------------ ------------------------------- ------------------------ --------------- 1999 $2.7M $9.4M $12.1M ------------------ ------------------------------- ------------------------ --------------- ------------------ ------------------------------- ------------------------ --------------- 2000 $12.5M $9.7M $22.2M ------------------ ------------------------------- ------------------------ --------------- ------------------ ------------------------------- ------------------------ --------------- 2001 $13.2M $19.7M $32.9M ------------------ ------------------------------- ------------------------ --------------- ------------------ ------------------------------- ------------------------ --------------- 12 months ended $19.0M $22.8M $41.8M 03/31/02 ------------------ ------------------------------- ------------------------ --------------- ------------------ ------------------------------- ------------------------ --------------- Q1 2002 $31.2M $24.0M $55.2M Annualized ------------------ ------------------------------- ------------------------ ---------------
Revenue Growth 2000 - 2001 = 48.2% Q1 2001 - Q2 2002 = 183% *Excludes technology sector net investment and incentive gain or loss of $36.4M, $41.6M, $(18.1)M and $(1.1)M or $(4.4)M annualized for 1999, 2000, 2001, and Q1 2002 respectively. Friedman Billings Ramsey Group, Inc. Washington, D.C. Headquarters 1001 Nineteenth Street North Arlington, Virginia 22209 Tel: 703.312.9500 Fax: 703.312.9501 Atlanta 3475 Lennox Road, Suite 400 Atlanta, Georgia 30326 866.249.4640 Bethesda 4922 Fairmont Avenue Bethesda, Maryland 20814 301.657.1500 Boston 101 Federal Street, Suite 2130 Boston, Massachusetts 02110 617.439.9550 Charlotte 100 N. Tryon Street, 51st Floor Charlotte, North Carolina 28202 704.348.2631 Cleveland 3201 Enterprise Parkway, Suite 320 Cleveland, Ohio 44122 216.593.7000 Dallas 200 Crescent Court, Suite 520 Dallas, Texas 75201 214.559.7172 Denver 1200 17th Street , Suite 950 Denver, Colorado 80202 303.534.6060 Irvine (Los Angeles) 18101 Von Karman Avenue, Suite 1000 Irvine, California 92612 949.477.3100 New York 330 Madison Avenue, Suite 900 New York, New York 10017 646.495.5239 Portland 208 SW First Avenue, Suite 300 Portland, Oregon 97204 503. 221.0200 Seattle 1111 Third Avenue, Suite 2400 Seattle, Washington 98104 206. 382.9191 Austria Millenium Tower - 23rd floor Handelskai 94-96 A-1201 Vienna 43.1.240.27250 London 9-11 Grosvenor Gardens London SW1W OBD 44.207.663.9100 www.fbr.com NOTE: Not all services are available from all offices. Why is FBR Unique? We believe that FBR occupies a unique position in the capital markets. We are neither Wall Street nor regional; neither bulge bracket nor boutique. Our research, institutional brokerage and investment banking services have placed us, with the Wall Street bulge bracket, among the top 10 lead-managed equity underwriters* and among the leading research-driven national brokerages, in the United States. Yet, like a boutique, we achieve success through knowing our industries extremely well. This proprietary thought process enables us to provide independent research and investment ideas and to provide creative capital to issuers. We focus across research, brokerage, investment banking and asset management on six industry sectors: financial services, real estate, technology, energy, healthcare and diversified industries. Our research analysts write on or have detailed knowledge and understanding of the S&P 500 issuers in their respective spaces, as well as small- and mid-cap names. Our process combines our deep understanding of individual businesses in the context of their industries, with our significant experience in the capital markets. This, along with our broad institutional distribution, has enabled us to raise billions of dollars of capital as a lead-managing underwriter, including transactions in excess of $500 million in size.