FBR Group Announces First Quarter 2007 Financial Results

ARLINGTON, Va., April 26 /PRNewswire-FirstCall/ -- Friedman, Billings, Ramsey Group, Inc. (FBR Group) (NYSE: FBR) today announced results for the quarter ended March 31, 2007. FBR Group reported a net after-tax loss for the quarter of $185.9 million, or $1.08 per share (diluted), compared to after-tax earnings of $26.6 million, or $0.16 per share (diluted), for the first quarter of 2006. Core book value net of Accumulated Other Comprehensive Income (AOCI) at the close of the quarter was $5.75 compared to $6.87 at the end of the fourth quarter of 2006(1).

Non-Prime Mortgage Businesses and Investments

FBR Group's loss for the first quarter was attributable to its non-prime mortgage-related businesses, of which First NLC (FNLC), FBR Group's non-prime mortgage origination subsidiary, is the principal component. During the first quarter, FNLC lost $124.2 million on an after-tax basis, a figure that includes a $36.1 million write-down of goodwill and intangible assets and $5.2 million of restructuring and other costs.

In addition, there were $21.8 million in realized losses and write-downs in the value of certain investments in non-prime mortgage companies in FBR Group's merchant banking and other long-term investment portfolio. Lastly, the company revalued its non-prime mortgage loan investment portfolio, recognizing a $34.4 million non-cash, lower-of-cost or market value write-down.

FBR Group announced in March that it is evaluating all strategic alternatives for FNLC that would reduce all of FBR Group's exposure to the non-prime sector. These include, among other alternatives, the possibility of a sale or third-party recapitalization of the business. While we cannot give any assurances with regard to the execution of a specific alternative, we intend to implement one of the alternatives during the second quarter. Further, FNLC has taken extensive steps described below to reduce the current risk in the business. Those steps, together with the implementation of any one of the alternatives under consideration, will substantially reduce FBR Group's financial risk with respect to its ownership of this business.

"This has been an extremely difficult operating environment for the entire non-prime mortgage banking industry, and it has resulted in a series of distressed sales and bankruptcies," said Eric F. Billings, Chairman and Chief Executive Officer of FBR Group. "We believe that FNLC's management has taken aggressive steps designed to limit foreseeable major risks with respect to the business."

Among the actions FNLC has taken are a substantial modification in lending guidelines and significant cost restructuring initiatives. These guideline changes are resulting in substantially lower origination volumes - from approximately $8 billion on an annualized basis in the fourth quarter of 2006 to less than $2 billion currently - and an increase in the value of loans originated. FNLC recently closed on the sale of approximately $712 million of warehouse loans, substantially reducing its unsold loan inventory since the end of the first quarter.

Mortgage Investment Portfolios

In the first quarter, FBR Group's investments in mortgages and mortgage- backed securities generated net interest income of $35.0 million, compared to $37.4 million in the fourth quarter of 2006. The average balance of these portfolios was $11.2 billion during the first quarter and yielded gross income of 6.21% with associated cost of funds of 5.18%, resulting in earned net interest income of 1.03%.

Merchant Banking

Excluding the previously mentioned realized losses and write-downs in certain of the company's investments in non-prime mortgage companies, the investment gains and dividends in FBR Group's merchant banking and other long- term investment portfolio totaled $3.4 million during the first quarter. The total value of FBR Group's merchant banking and other long-term investments at the close of the first quarter was $114.5 million.

FBR Capital Markets Initial Public Offering

In March, FBR Capital Markets Corporation (FBR Capital Markets), FBR Group's 71%-owned equity capital markets and asset management taxable REIT subsidiary, filed an S-1 registration statement with the Securities and Exchange Commission in connection with a planned initial public offering of up to 13,512,500 shares of its common stock that are beneficially owned by FBR Group and certain other selling stockholders. The net proceeds of the offering will all go to FBR Group and the other selling stockholders, if any. If all of the FBR Capital Markets shares that are being offered by FBR Group are sold in the proposed offering, FBR Group's beneficial ownership of FBR Capital Markets common stock will be reduced to 50.5%.

"It is important to note that the difficulties in the non-prime businesses have no direct impact on FBR Capital Markets, which is a separately capitalized company with $430 million in cash and no exposure to FBR Group's non-prime mortgage businesses," Mr. Billings said.

FBR Capital Markets Corporation First Quarter 2007 Results

FBR Capital Markets Corporation reported first quarter pre-tax earnings of $25.8 million on net revenues of $143.2 million. Excluding FASB 123R-related non-cash tax charges of $3.4 million, after-tax earnings were $14.4 million, or $0.22 per share (diluted). Net after-tax earnings for the first quarter were $11.0 million, or $0.17 cents per share (diluted), compared to net after- tax earnings of $4.8 million, or $0.10 per share (diluted), in the first quarter of 2006. The company expects to return to a normalized tax rate in the second quarter.

FBR Capital Market's book value at the close of the quarter was $7.81 per share compared to $7.57 at the end of the fourth quarter of 2006. At the close of the first quarter, FBR Capital Markets had $502 million in equity, $430 million of cash, and no funded liabilities or debt. Complete financial results for FBR Capital Markets are included in the tabular material in this release.

Equity Capital Markets

In the first quarter, FBR Capital Markets generated investment banking revenues of $103.7 million compared to $69.2 million in the first quarter of 2006 and $81.1 million in the fourth quarter of 2006. The firm raised a total of $3.0 billion in 13 capital markets transactions, including four initial public offerings. FBR Capital Markets acted as sole or joint book runner for eight of the 13 transactions and completed seven advisory assignments during the quarter.

In a very competitive market environment, FBR Capital Markets recorded agency commissions and principal transactions revenues of $25.8 million in the first quarter of 2007 compared to $29.1 million in the first quarter of 2006 and $24.7 million in the fourth quarter of 2006.

Asset Management

In FBR Capital Markets' asset management/private wealth business, asset management base fees and incentive fees were $5.6 million for the first quarter of 2007, compared to $5.5 million in the fourth quarter of 2006. During the quarter we opened two new mutual funds and reopened a fund that had been closed to new investors since October 2004. Assets under management as of March 31, 2007 were $2.8 billion compared to $2.4 billion at the end of the fourth quarter of 2006, an increase of 17%.

"Our investment banking activity was well diversified across our industry groups during the quarter," said Richard J. Hendrix, President and Chief Operating Officer of FBR Capital Markets," and our new M&A team has already had a positive impact on our business development activities. Most importantly, in support of the evolution and growth of our business, we made a series of important leadership appointments during the quarter that included the naming of co-heads of investment banking, a new head of research, a new director of human capital, and several key positions in our growing international operations."

Mr. Billings added, "We are very pleased with our capital markets businesses and the progress we have made in executing our strategic plan."

The firm will host an earnings conference call on Thursday, April 26, 2007 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 after the call.

Friedman, Billings, Ramsey Group, Inc. (FBR Group) provides investment banking*, merger and acquisition advisory services*, institutional brokerage*, asset management and private wealth services through majority ownership of FBR Capital Markets Corporation (FBR Capital Markets). FBR Capital Markets focuses capital and financial expertise on eight industry sectors: consumer, diversified industrials, energy & natural resources, financial institutions, healthcare, insurance, real estate, and technology, media & telecommunications. For the benefit of its shareholders, FBR Group also invests in mortgage-related assets and merchant banking opportunities. FBR is headquartered in the Washington, D.C. metropolitan area with offices in Arlington, VA, Boston, Dallas, Houston, Irvine, London, New York, Phoenix and San Francisco. Friedman, Billings, Ramsey Group, Inc. is the parent company of First NLC Financial Services, Inc., a non-conforming residential mortgage originator headquartered in Deerfield Beach, Florida. For more information, please visit http://www.fbr.com.

*Friedman, Billings, Ramsey & Co., Inc.

(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.

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, the overall environment for interest rates, costs of borrowing, interest spreads, mortgage pre-payment speeds, the adverse impact of delinquencies, losses and declining real estate values on the non-conforming mortgage loan origination business, credit and regulatory risks associated with the business of originating, holding and securitizing non-conforming residential mortgage loans which can result in losses on these assets, sustainability of loan origination volumes and levels of origination costs, continued availability of credit facilities for the origination of mortgage loans, the ability to sell or securitize loans originated by FNLC on favorable terms or at all, deterioration in the performance of loans sold by FNLC and the related repurchase activities, 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., followed by FBR Capital Markets Corporation).

###

FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share amounts)

(Unaudited)

	Quarterended March31,
	2007			%			2006			%
REVENUES:
Investment banking:
Capital raising	$	97,247			787.6	%	$	66,335			37.5	%
Advisory		6,458			52.3	%		2,869			1.6	%
Institutional brokerage:
Principal transactions		2,036			16.5	%		5,720			3.2	%
Agency commissions		23,818			192.9	%		23,409			13.2	%
Mortgage trading interest		-			0.0	%		17,650			10.0	%
Mortgage trading net investment loss		-			0.0	%		(1,237	)		-0.7	%
Asset management:
Base management fees		5,528			44.8	%		5,097			2.9	%
Incentive allocations and fees		104			0.8	%		1,008			0.6	%
Principal investment:
Interest		181,696			1471.6	%		149,126			84.3	%
Net investment (loss) income		(59,713	)		-483.6	%		26,185			14.8	%
Dividends		959			7.8	%		3,699			2.1	%
Mortgage banking:
Interest		26,530			214.9	%		23,113			13.1	%
Net investment (loss) income		(106,859	)		-865.5	%		10,738			6.1	%
Other		4,094			33.1	%		4,987			2.8	%
Total revenues		181,898			1473.2	%		338,699			191.5	%
Interest expense		169,551			1373.2	%		153,483			86.8	%
Provision for loan losses		-			0.0	%		8,392			4.7	%
Revenues, net of interest expense and provision for loan losses		12,347			100.0	%		176,824			100.0	%
NON-INTEREST EXPENSES:
Compensation and benefits		103,982			842.2	%		83,497			47.2	%
Professional services		13,854			112.2	%		14,265			8.1	%
Business development		13,769			111.5	%		14,085			8.0	%
Clearing and brokerage fees		2,701			21.9	%		2,316			1.3	%
Occupancy and equipment		13,117			106.2	%		11,242			6.3	%
Communications		7,051			57.1	%		5,607			3.2	%
Other operating expenses		31,716			256.9	%		20,977			11.9	%
Impairment of goodwill		25,852			209.4	%		-			0.0	%
Restructuring charges		15,485			125.4	%		-			0.0	%
Total non-interest expenses		227,527			1842.8	%		151,989			86.0	%
Operating (loss) income		(215,180	)		-1742.8	%		24,835			14.0	%
OTHER INCOME:
Gain on sale of subsidiary shares		831			6.7	%		-			0.0	%
Net (loss) income before income taxes and minority interest		(214,349	)		-1736.0	%		24,835			14.0	%

Income tax benefit		(31,550	)	-255.5	%		(1,719	)	-1.0	%
Minority interest in earnings of consolidated subsidiary		3,079		24.9	%		-		0.0	%
Net (loss) income	$	(185,878	)	-1505.4	%	$	26,554		15.0	%
Basic (loss) earnings per share	$	(1.08	)			$	0.16
Diluted (loss) earnings per share	$	(1.08	)			$	0.16
Weighted average shares - basic		172,850					170,728
Weighted average shares - diluted		172,850					171,031

FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.

Financial & Statistical Supplement - Operating Results

(Dollars in thousands, except per share data)

(Unaudited)

	Q-1 07
Revenues
Investment banking:
Capital raising	$	97,247
Advisory		6,458
Institutional brokerage:
Principal transactions		2,036
Agency commissions		23,818
Asset management:
Base management fees		5,528
Incentive allocations and fees		104
Principal investment:
Interest		181,696
Net investment loss		(59,713	)
Dividends		959
Mortgage banking:
Interest		26,530
Net investment loss		(106,859	)
Other		4,094
Total revenues		181,898
Interest expense		169,551
Revenues, net of interest expense		12,347
Non-interest expenses
Compensation and benefits		103,982
Professional services		13,854
Business development		13,769
Clearing and brokerage fees		2,701
Occupancy and equipment		13,117
Communications		7,051
Other operating expenses		31,716
Impairment of goodwill		25,852
Restructuring charges		15,485
Total non-interest expenses		227,527

Operating loss		(215,180	)
Other Income
Gain on sale of subsidiary shares		831
Net lossbefore income taxesand minority interest		(214,349	)
Income tax benefit		(31,550	)
Minorityinterest in earnings of consolidated subsidiary		3,079
Net loss	$	(185,878	)
Net lossbefore income taxes and minority interest as a percentage of net revenue		-1736.0	%
ROE (annualized)		-68.8	%
ROE (annualized-excluding AOCI) (1)		-68.2	%
Total shareholders' equity	$	989,213
Total shareholders' equity, net of AOCI (1)	$	993,753
Basic loss per share	$	(1.08	)
Diluted loss per share	$	(1.08	)
Ending shares outstanding (in
thousands)		172,846
Book value per share	$	5.72
Book value per share, net of AOCI (1)	$	5.75
Gross assets under management (in millions)
Managedaccounts	$	258.8
Hedge &offshore funds		67.1
Mutual funds		2,412.9
Privateequity and venture capital funds		41.2
Total	$	2,780.0
Net assets under management (in millions)
Managedaccounts	$	258.8
Hedge &offshore funds		62.5
Mutual funds		2,406.4
Privateequity and venture capital funds		38.0
Total	$	2,765.7
Employeecount		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 - OperatingResults

(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
Institutionalbrokerage:
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 managementfees		20,093			5,051			4,880			5,065			5,097
Incentive allocations andfees		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
Totalrevenues		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 loanlosses		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 andbrokerage fees		11,820			3,505			2,917			3,082			2,316
Occupancy andequipment		50,051			13,668			12,909			12,232			11,242
Communications		24,398			6,307			6,471			6,013			5,607
Other operatingexpenses		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			-			-
Net (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 ofconsolidatedsubsidiary		(2,751	)		1,957			(4,708	)		-			-
Net (loss) income		(67,275	)		3,810			(67,392	)		(30,247	)		26,554
Net (loss) incomebefore income taxesand minority interest as apercentage of netrevenue		-22.3			10.0			118.6			-26.2			14.0
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)earningsper 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 in thousands, exceptper shareamounts)

(Unaudited)

ASSETS	31-Mar-07		31-Dec-06
Cash and cash equivalents	$	450,979	$	189,956
Restricted cash		92		132
Receivables		227,765		217,249
Investments:
Mortgage-backed securities, at fairvalue		5,783,273		6,870,661
Loans held for sale, net		5,169,489		5,367,934

Long-term investments		149,793			185,492
Trading securities, at fair value		22,400			18,180
Due from clearing broker		30,452			28,999
Derivative assets, at fair value		22,011			36,875
Goodwill		136,913			162,765
Intangible assets, net		11,600			21,825
Furniture, equipment, software and leasehold improvements, net		43,428			44,111
Prepaid expenses and other assets		222,088			208,339
Total assets	$	12,270,283		$	13,352,518
LIABILITIES AND SHAREHOLDERS ' EQUITY
Liabilities:
Trading account securities sold short but not yet purchased, at fair value	$	759		$	202
Commercial paper		3,425,432			3,971,389
Repurchase agreements		3,013,827			3,059,330
Derivative liabilities, at fair value		41,247			44,582
Dividends payable		8,736			8,743
Interest payable		14,579			12,239
Accrued compensation and benefits		48,906			57,227
Accounts payable, accrued expenses and other liabilities		160,395			81,819
Securitization financing, net		4,100,975			4,486,046
Long-term debt		323,466			324,453
Total liabilities		11,138,322			12,046,030
Minority Interest		142,748			135,443
Shareholders' equity:
Common stock, 174,433 and 174,712 shares		1,744			1,747
Additional paid-in capital		1,564,671			1,562,497
Employee stock loan receivable(2 and 2 shares)		(12	)		(12	)
Accumulated other comprehensive loss,net of taxes		(4,540	)		(15,136	)
Accumulated deficit		(572,650	)		(378,051	)
Total shareholders' equity		989,213			1,171,045
Total liabilities and shareholders' equity	$	12,270,283		$	13,352,518

FBR CAPITAL MARKETS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per shareamounts)

(Unaudited)

		QuarterEnded March31,
		2007	%			2006		%
REVENUES:
Investment banking:
Capital raising	$	97,236	67.9	%	$	66,335		59.9	%
Advisory		6,458	4.5	%		2,869		2.6	%
Institutional brokerage:
Principal transactions		2,036	1.4	%		5,720		5.2	%
Agency commissions		23,776	16.6	%		23,366		21.1	%
Mortgage trading interest		-	0.0			17,650		15.9	%
Mortgage trading net investment loss		-	0.0	%		(1,234	)	-1.1	%
Asset management:
Base management fees		5,528	3.9	%		4,876		4.4	%
Incentive allocations and fees		104	0.1	%		1,008		0.9	%
Interest income		11,114	7.8	%		2,613		2.4	%
Net investment income		1,495	1.0	%		3,046		2.8	%
Other		76	0.1	%		1,315		1.1	%
Total revenues		147,823	103.3	%		127,564		115.2	%
Interest expense		4,662	3.3	%		16,862		15.2	%
Revenues, net of interest expense		143,161	100.0	%		110,702		100.0	%
NON-INTEREST EXPENSES:
Compensation and benefits		77,791	54.3	%		63,552		57.4	%
Professional services		10,824	7.6	%		10,004		9.0	%
Business development		11,315	7.9	%		12,376		11.2	%
Clearing and brokerage fees		2,666	1.9	%		2,266		2.0	%
Occupancy and equipment		7,493	5.2	%		7,273		6.6	%
Communications		5,409	3.8	%		4,583		4.1	%
Other operating expenses		1,820	1.2	%		3,264		3.0	%
Total non-interest expenses		117,318	81.9	%		103,318		93.3	%
Net income before income taxes		25,843	18.1	%		7,384		6.7	%
Income tax provision		14,837	10.4	%		2,566		2.3	%
Net income	$	11,006	7.7	%	$	4,818		4.4	%
Basic earnings per share	$	0.17			$	0.10
Diluted earnings per share	$	0.17			$	0.10
Weighted average shares - basic		64,149				46,000
Weighted average shares - diluted		64,155				46,000

FBR CAPITALMARKETS CORPORATION

Financial &Statistical Supplement- OperatingResults

(Dollars inthousands, except pershare data)

(Unaudited)

	Q-1 07
Revenues
Investmentbanking:
Capital raising	$	97,236
Advisory		6,458
Institutional brokerage:
Principal transactions		2,036
Agency commissions		23,776
Asset management:
Base management fees		5,528
Incentive allocations and fees		104
Interest		11,114
Net investment income		1,495
Other		76
Total revenues		147,823
Interest expense		4,662
Revenues, net of interest expense		143,161
Non-interest expenses
Compensation and benefits		77,791
Professional services		10,824
Business development		11,315
Clearing and brokerage fees		2,666
Occupancy and equipment		7,493
Communications		5,409
Other operating expenses		1,820
Total non-interest expenses		117,318
Net income before income taxes		25,843
Income tax provision		14,837
Net income	$	11,006
Net income before income taxes as a percentage of net revenue		18.1	%
ROE (annualized)		8.9	%
Total shareholders' equity		501,858
Basic earnings per share	$	0.17
Diluted earnings per share	$	0.17
Ending shares outstanding (in thousands)		64,282
Book value per share	$	7.81
Gross assets under management (in millions)
Managed accounts	$	258.8
Hedge & offshore funds		67.1
Mutual funds		2,412.9
Private equity and venture capital funds		41.2
Total	$	2,780.0
Net assets under management (in millions)
Managed accounts	$	258.8
Hedge & offshore funds		62.5
Mutual funds		2,406.4

Private equity and venture capital funds		38.0
Total	$	$2,765.7
Employee count		751

FBR CAPITAL MARKETS CORPORATION

Financial & Statistical Supplement - OperatingResults

(Dollars in thousands, except pershare 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	$	190,576		$	71,879		$	6,852		$	45,510		$	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		100,855			24,683			24,359			28,447			23,366
Mortgage trading interest		51,148			2,510			13,845			17,143			17,650
Mortgage trading net investment loss		(3,298	)		(309	)		(1,546	)		(209	)		(1,234	)
Asset management:
Base management fees		19,871			5,051			4,879			5,065			4,876
Incentive allocations and fees		1,327			403			(30	)		(54	)		1,008
Interest		20,934			5,235			8,439			4,647			2,613
Net investment income (loss)		3,372			3,288			(3,070	)		108			3,046
Other		3,892			1,279			482			816			1,315
Total revenues		418,639			123,183			58,378			109,514			127,564
Interest expense		54,543			3,136			16,390			18,155			16,862
Revenues, net of interest expense		364,096			120,047			41,988			91,359			110,702
Non-interest expenses
Compensation and benefits		225,712			61,326			46,398			54,436			63,552
Professional services		43,712			13,809			9,069			10,830			10,004
Business development		33,772			9,458			5,229			6,709			12,376
Clearing and brokerage fees		11,715			3,504			2,892			3,053			2,266
Occupancy and equipment		30,039			7,918			7,349			7,499			7,273
Communications		20,039			5,024			5,442			4,990			4,583
Other operating expenses		12,219			1,434			4,561			2,960			3,264
Total non-interest expenses		377,208			102,473			80,940			90,477			103,318
Net (loss) income before income taxes		(13,112	)		17,574			(38,952	)		882			7,384
Income tax (benefit) provision		(3,271	)		10,614			(16,346	)		(105	)		2,566
Net (loss) income	$	(9,841	)	$	6,960		$	(22,606	)	$	987		$	4,818
Net (loss) income before income taxes as a percentage of net revenue		-3.6	%		14.6	%		-92.8	%		1.0	%		6.7	%

ROE (annualized)		-2.7	%		7.6	%		-24.9	%		1.6	%		7.7	%
Total shareholders' equity		484,388			484,388			476,098			248,965			253,812
Basic (loss) earnings per share	$	(0.18	)	$	0.11		$	(0.37	)	$	0.02		$	0.10
Diluted (loss) earnings per share	$	(0.18	)	$	0.11		$	(0.37	)	$	0.02		$	0.10
Ending shares outstanding (in thousands)		64,000			64,000			64,000			46,000			46,000
Book value per share	$	7.57		$	7.57		$	7.44		$	5.41		$	5.52
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		702			702			702			726			752

FBR CAPITAL MARKETS CORPORATION

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share amounts)

(Unaudited)

ASSETS	31-Mar-07		31-Dec-06
Cash and cash equivalents	$	430,426	$	151,417
Receivables		15,462		43,013
Investments:
Mortgage-backed securities, at fair value		5,961		415,391
Long-term investments		35,249		32,343
Trading securities, at fair value		22,400		18,180
Due from clearing broker		30,117		28,691
Intangible assets, net		11,600		11,000
Furniture, equipment and leasehold improvements, net		30,271		31,222
Prepaid expenses and other assets		27,244		28,162
Total assets	$	608,730	$	759,419
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Trading account securities sold short but not yet purchased, at fair value	$	759	$	202
Repurchase agreements		-		189,155
Accrued compensation and benefits		39,247		43,836
Accounts payable, accrued expenses and other liabilities		66,752		36,602
Due to affiliates		114		5,236
Total liabilities		106,872		275,031
Shareholders' equity:
Common stock - 64,623 and 64,000 shares		65		64
Additional paid-in capital		402,509		395,778
Accumulated other comprehensive income, net of taxes		275		543
Retained earnings		99,009		88,003
Total shareholders' equity		501,858		484,388
Total liabilities and shareholders' equity	$	608,730	$	759,419

SOURCE Friedman, Billings, Ramsey Group, Inc.

-0-    04/26/2007

/CONTACT: Media: Lauren Burk at +1-703-469-1004 or lburk@fbr.com;

Investors: Paul Beattie at +1-703-312-9673 or pbeattie@fbr.com /

/Web site: http://www.fbr.com/

(FBR)