EX-99.1 2 v081919_ex99-1.htm Unassociated Document

 
Contacts:
Media: Lauren Burk at 703.469.1004 or lburk@fbr.com
Investors: Paul Beattie at 703.312.9673 or pbeattie@fbr.com

FBR Group Announces
Second Quarter 2007 Financial Results

Agreement Signed on Sale, Recapitalization of First NLC Financial Services;
Company Increases Share Buyback Authorization

ARLINGTON, VA, July 26, 2007 - Friedman, Billings, Ramsey Group, Inc. (FBR Group) (NYSE: FBR) today announced results for the quarter ended June 30, 2007. The company reported net after-tax earnings of $10.7 million, or $0.06 per share (diluted), compared to a net after-tax loss of $30.2 million, or $0.18 per share (diluted), for the second quarter of 2006. FBR Group’s net after-tax loss for the first six months of 2007 was $175.2 million, or $1.01 per share (diluted), compared to a net after-tax loss of $3.7 million, or $0.02 per share (diluted) in first six months of 2006. Core book value net of Accumulated Other Comprehensive Income (AOCI) at the close of the second quarter was $5.76 compared to $5.75 at the end of the first quarter of 2007(1).

During the quarter, the company sold in an initial public offering 12.7 million shares of common stock of FBR Capital Markets Corporation (FBR Capital Markets) (NASDAQ: FBCM), FBR Group’s investment banking, M&A, institutional brokerage and asset management/private wealth subsidiary. This sale generated net proceeds of $200.1 million, which resulted in an after-tax gain of $61.0 million. Following the initial public offering, which took place on June 8th, FBR continues to maintain just over a 50% beneficial ownership interest in FBR Capital Markets.

The results also reflect a $28.9 million write-down of goodwill associated with FBR Group’s ownership of First NLC Financial Services, Inc. (FNLC), the firm's wholly-owned non-prime mortgage loan origination subsidiary. FBR Group’s earnings of $10.7 million for the quarter, net of this non-cash write-down, were $39.6 million, or $0.23 per share (diluted).
 
Share Buyback Authorization
 
The company additionally announced that on July 25, 2007, FBR Group’s board of directors passed a resolution increasing an existing share buyback authorization from 14 million to 50 million shares.
 
1
 
Non-Prime Origination Businesses
 
On July 25, after the close of the quarter, FBR Group signed a definitive agreement with an affiliate of Sun Capital Partners that will result in a $75 million recapitalization of FNLC and a reduction FBR Group’s ownership interest in FNLC to 20%. Upon completion of the transaction, FNLC will cease to be a consolidated operating subsidiary of FBR Group and will be held, instead, as an equity investment.
 
“Two things are accomplished through this transaction,” said J. Rock Tonkel, Jr., President and Chief Operating Officer of FBR Group. “First, as discussed in our earlier press release today, FBR Group has substantially limited its exposure going forward as a result of FNLC’s recapitalization. The 20% ownership interest FBR Group retains will permit it to participate in FNLC’s upside potential when the mortgage market strengthens. Second, FNLC - with a $75 million cash infusion - will have liquidity to navigate through an exceptionally difficult mortgage market environment and to position itself for future growth.”
 
Mortgage Investment Portfolios
 
The company’s portfolio of mortgage-backed securities averaged $5.7 billion with an average coupon of 6.08%, a one-month CPR of 15.7, and an average net premium of $52.6 million. The net yield for the second quarter was 5.85% with a corresponding cost of funds of 5.43% for a net interest spread of .42%.
 
The company’s investments in non-conforming mortgage loans totaled $3.7 billion as of June 30, 2007, reflecting principal paydowns of $468 million during the quarter. As a result of net cash flows received during the quarter, the company’s equity risk relating to this portfolio, considering both the mortgage loans and related non-recourse debt, was reduced to approximately $90 million as of June 30, 2007. 
 
Merchant Banking and Other Long-Term Investments
 
The investment gains and dividends in FBR Group's merchant banking and other long- term investment portfolio totaled $1.3 million during the second quarter. The total value of FBR Group's merchant banking and other long-term investments at the close of the second quarter was $169.6 million compared to $114.5 million at the close of the first quarter. Net unrealized gains in the portfolio totaled $41.3 million at the end of the second quarter.
 
2
 
FBR Capital Markets Corporation
 
FBR Capital Markets yesterday reported second quarter after-tax earnings of $21.8 million, or $0.34 per share (diluted), compared to after-tax earnings of $1.0 million, or $0.02 per share (diluted) in the second quarter of 2006. FBR Capital Markets contributed $12.2 million to FBR Group’s earnings for the second quarter of 2007.
 
FBR Capital Market's book value at the close of the quarter was $8.20 per share compared to $7.81 at the end of the first quarter of 2007. At the close of the first quarter, FBR Capital Markets had $528.3 million in equity, $471.0 million of cash, and no debt. Complete financial results and tables for FBR Capital Markets can be found at www.fbr.com.
 
Looking Ahead
 
“The sale and recapitalization of FNLC is an important step for us,” said Eric F. Billings, Chairman and Chief Executive Officer of FBR Group. “This transaction coupled with the successful completion of the FBR Capital Markets IPO and strong second quarter results meaningfully alter the character of the company, putting us once again in a position to generate significant shareholder value.”
 
FBR Group firm will host an earnings conference call on Thursday, July 26, 2007 at 9:00 A.M. U.S. EDT. 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)(NYSE:FBR) 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)(NASDAQ:FBCM). 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 & telecom. 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 Boca Raton, Florida. For more information, please visit 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.
 
3
 
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 follow.
 
4
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(Unaudited)
 
   
Quarter ended
June 30,
   
2007
 
%
  
2006
  
%
  
REVENUES:
                  
Investment banking:
                  
Capital raising
  
$
110,032
    
62.4
%
$
45,117
    
40.8
%
Advisory
    
6,152
   
3.5
%
  
6,281
   
5.7
%
Institutional brokerage:
                          
Principal transactions
   
4,152
   
2.4
%
  
1,760
   
1.6
%
Agency commissions
   
28,564
   
16.2
%
  
28,492
   
25.8
%
Mortgage trading interest
    
-
   
0.0
%
  
17,143
   
15.5
%
Mortgage trading net investment loss
    
-
   
0.0
%
  
(209
)
  
-0.2
%
Asset management:
                          
Base management fees
   
6,360
   
3.6
%
  
5,065
   
4.6
%
Incentive allocations and fees
    
116
         
(53
)
  
0.0
%
Principal investment:
                          
Interest
    
152,927
   
86.7
%
  
113,613
   
102.7
%
Net investment loss
    
(3,441
)
  
-2.0
%
  
(31,290
)
  
-28.4
%
Dividends
    
883
   
0.6
%
  
4,059
   
3.7
%
Mortgage banking:
                          
Interest
    
13,462
   
7.6
%
  
21,267
   
19.2
%
Net investment (loss) income
    
(4,031
)
  
-2.3
%
  
29,401
   
26.6
%
Other
    
4,482
   
2.5
%
  
5,465
   
4.9
%
Total revenues
    
319,658
   
181.2
%
  
246,111
   
222.5
%
Interest expense
    
143,231
   
81.2
%
  
128,189
   
115.9
%
Provision for loan losses
    
-
   
0.0
%
  
7,348
   
6.6
%
Revenues, net of interest expense and provision for loan losses
    
176,427
   
100.0
%
  
110,574
   
100.0
%
                           
NON-INTEREST EXPENSES:
                          
Compensation and benefits
    
106,885
   
60.6
%
  
71,732
   
64.9
%
Professional services
    
14,008
   
7.9
%
  
12,925
   
11.7
%
Business development
   
11,158
   
6.3
%
  
8,604
   
7.8
%
Clearing and brokerage fees
   
3,063
   
1.7
%
  
3,082
   
2.8
%
Occupancy and equipment
   
12,699
   
7.2
%
  
12,232
   
11.1
%
Communications
   
7,592
   
4.3
%
  
6,013
   
5.4
%
Other operating expenses
   
18,684
   
10.6
%
  
24,993
   
22.5
%
Goodwill impairment
    
28,900
   
16.4
%
  
-
   
0.0
%
Restructuring charges
    
3,862
   
2.2
%
  
-
   
0.0
%
Total non-interest expenses
    
206,851
   
117.2
%
  
139,581
   
126.2
%
                           
Operating loss
    
(30,424
)
  
-17.2
%
  
(29,007
)
  
-26.2
%
                           
OTHER INCOME:
                          
Gain on sale of subsidiary shares
    
105,677
   
59.9
%
  
-
   
0.0
%
                           
Net income (loss) before income taxes and minority interest
    
75,253
   
42.7
%
  
(29,007
)
  
-26.2
%
                           
Income tax provision
    
55,011
   
31.2
%
  
1,240
   
1.1
%
Minority interest in earnings of consolidated subsidiary
    
9,538
   
5.4
%
  
-
   
0.0
%
                           
Net income (loss)
  
$
10,704
    
6.1
%
$
(30,247
)
  
-27.3
%
                           
Basic earnings (loss) per share
  
$
0.06
        
$
(0.18
)
      
Diluted earnings (loss) per share
  
$
0.06
        
$
(0.18
)
      
                           
Weighted average shares - basic
    
173,256
         
171,294
        
Weighted average shares - diluted
    
173,256
         
171,294
        
 
5
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC. 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(Unaudited)
 
   
Six Months Ended
June 30,
   
2007
  
%
  
2006
  
%
  
REVENUES:
                  
Investment banking:
                  
Capital raising
  
$
207,279
    
109.8
%
$
111,452
    
38.8
%
Advisory
    
12,610
   
6.7
%
  
9,150
   
3.2
%
Institutional brokerage:
                          
Principal transactions
   
6,188
   
3.3
%
  
7,480
   
2.6
%
Agency commissions
   
52,382
   
27.7
%
  
51,901
   
18.1
%
Mortgage trading interest
    
-
   
0.0
%
  
34,793
   
12.1
%
Mortgage trading net investment loss
    
-
   
0.0
%
  
(1,446
)
  
-0.5
%
Asset management:
                          
Base management fees
   
11,888
   
6.3
%
  
10,162
   
3.5
%
Incentive allocations and fees
    
220
   
0.1
%
  
955
   
0.3
%
Principal investment:
                          
Interest
    
334,623
   
177.3
%
  
262,739
   
91.4
%
Net investment loss
    
(63,154
)
  
-33.5
%
  
(5,105
)
  
-1.7
%
Dividends
    
1,842
   
1.0
%
  
7,758
   
2.7
%
Mortgage banking:
                          
Interest
    
39,992
   
21.2
%
  
44,380
   
15.4
%
Net investment (loss) income
   
(110,890
)
  
-58.7
%
  
40,139
   
14.0
%
Other
    
8,576
   
4.5
%
  
10,452
   
3.6
%
Total revenues
    
501,556
   
265.7
%
  
584,810
   
203.5
%
Interest expense
    
312,782
   
165.7
%
  
281,672
   
98.0
%
Provision for loan losses
    
-
   
0.0
%
  
15,740
   
5.5
%
Revenues, net of interest expense and provision for loan losses
    
188,774
   
100.0
%
  
287,398
   
100.0
%
                           
NON-INTEREST EXPENSES:
                          
Compensation and benefits
    
210,867
   
111.7
%
  
155,229
   
54.0
%
Professional services
    
27,862
   
14.8
%
  
27,190
   
9.5
%
Business development
   
24,927
   
13.2
%
  
22,689
   
7.9
%
Clearing and brokerage fees
    
5,764
   
3.1
%
  
5,398
   
1.9
%
Occupancy and equipment
    
25,816
   
13.7
%
  
23,474
   
8.2
%
Communications
    
14,643
   
7.8
%
  
11,620
   
4.0
%
Other operating expenses
    
50,400
   
26.7
%
  
45,970
   
16.0
%
Impairment of goodwill
    
54,752
   
29.0
%
  
-
   
0.0
%
Restructuring charges
    
19,347
   
10.2
%
  
-
   
0.0
%
Total non-interest expenses
    
434,378
   
230.2
%
  
291,570
   
101.5
%
                           
Operating loss
    
(245,604
)
  
-130.2
%
  
(4,172
)
  
-1.5
%
                           
OTHER INCOME:
                          
Gain on sale of subsidiary shares
    
106,508
   
56.5
%
  
-
   
0.0
%
                           
 
                          
Net loss before income taxes and minority interest
    
(139,096
)
  
-73.7
%
  
(4,172
)
  
-1.5
%
                           
Income tax provision (benefit)
    
23,461
   
12.4
%
  
(479
)
  
-0.2
%
Minority interest in earnings of consolidated subsidiary
    
12,617
   
6.7
%
        
0.0
%
                           
Net loss
  
$
(175,174
)
  
-92.8
%
$
(3,693
)
  
-1.3
%
                           
Basic loss per share
  
$
(1.01
)
      
$
(0.02
)
      
Diluted loss per share
  
$
(1.01
)
      
$
(0.02
)
      
                           
Weighted average shares - basic
   
173,054
         
171,012
       
Weighted average shares - diluted
   
173,054
         
171,012
       
 
6
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
Financial & Statistical Supplement - Operating Results
(Dollars in thousands, except per share data)
(Unaudited)
 
   
For the
six months ended
June 30, 2007
  
Q-2 07
  
Q-1 07
  
Revenues
              
Investment banking:
              
Capital raising
  
$
207,279
  
$
110,032
  
$
97,247
  
Advisory
    
12,610
   
6,152
   
6,458
 
Institutional brokerage:
                    
Principal transactions
   
6,188
   
4,152
   
2,036
 
Agency commissions
   
52,382
   
28,564
   
23,818
 
Asset management:
                    
Base management fees
    
11,888
   
6,360
   
5,528
 
Incentive allocations and fees
    
220
   
116
   
104
 
Principal investment:
                    
Interest
    
334,623
   
152,927
   
181,696
 
Net investment loss
    
(63,154
)
  
(3,441
)
  
(59,713
)
Dividends
    
1,842
   
883
   
959
 
Mortgage banking:
                    
Interest
    
39,992
   
13,462
   
26,530
 
Net investment loss
    
(110,890
)
  
(4,031
)
  
(106,859
)
Other
    
8,576
   
4,482
   
4,094
 
Total revenues
    
501,556
   
319,658
   
181,898
 
Interest expense
    
312,782
   
143,231
   
169,551
 
Revenues, net of interest expense
   
188,774
   
176,427
   
12,347
 
                     
Non-interest expenses
                    
Compensation and benefits
    
210,867
   
106,885
   
103,982
 
Professional services
    
27,862
   
14,008
   
13,854
 
Business development
   
24,927
   
11,158
   
13,769
 
Clearing and brokerage fees
    
5,764
   
3,063
   
2,701
 
Occupancy and equipment
    
25,816
   
12,699
   
13,117
 
Communications
    
14,643
   
7,592
   
7,051
 
Other operating expenses
    
50,400
   
18,684
   
31,716
 
Impairment of goodwill
    
54,752
   
28,900
   
25,852
 
Restructuring charges
    
19,347
   
3,862
   
15,485
 
Total non-interest expenses
    
434,378
   
206,851
   
227,527
 
                     
Operating loss
    
(245,604
)
  
(30,424
)
  
(215,180
)
                     
Other Income
                    
Gain on sale of subsidiary shares
    
106,508
   
105,677
   
831
 
                     
Net (loss) earnings before income taxes and minority interest
   
(139,096
)
  
75,253
   
(214,349
)
                     
Income tax provision (benefit)
    
23,461
   
55,011
   
(31,550
)
Minority interest in earnings of consolidated subsidiary
    
12,617
   
9,538
   
3,079
 
                     
Net (loss) earnings
  
$
(175,174
)
$
10,704
  
$
(185,878
)
                     
Net (loss) earnings before income taxes and minority interest as a percentage of net revenue
    
-73.7
%
  
42.7
%
  
-1736.0
%
                     
ROE (annualized)
    
-32.1
%
  
3.9
%
  
-68.8
%
ROE (annualized-excluding AOCI) (1)
    
-32.1
%
  
3.9
%
  
-68.2
%
                     
                     
Total shareholders' equity
  
$
1,012,635
  
$
1,012,635
  
$
989,213
  
Total shareholders' equity, net of AOCI (1)
  
$
1,000,071
  
$
1,000,071
  
$
993,753
  
                     
Basic loss (earnings) per share
  
$
(1.01
)
$
0.06
  
$
(1.08
)
Diluted loss (earnings) per share
  
$
(1.01
)
$
0.06
  
$
(1.08
)
                     
Ending shares outstanding (in thousands)
    
173,756
   
173,756
   
172,846
 
                     
Book value per share
  
$
5.83
  
$
5.83
  
$
5.72
  
Book value per share, net of AOCI (1)
  
$
5.76
  
$
5.76
  
$
5.75
  
                     
Gross assets under management (in millions)
              
Managed accounts
  
$
291.3
  
$
291.3
  
$
258.8
  
Hedge & offshore funds
    
61.7
   
61.7
   
67.1
 
Mutual funds
    
2,482.6
   
2,482.6
   
2,412.9
 
Private equity and venture capital funds
    
33.8
   
33.8
   
41.2
 
Total
  
$
2,869.4
  
$
2,869.4
  
$
2,780.0
  
                     
Net assets under management (in millions)
                    
Managed accounts
  
$
291.3
  
$
291.3
  
$
258.8
  
Hedge & offshore funds
    
58.1
   
58.1
   
62.5
 
Mutual funds
    
2,474.7
   
2,474.7
   
2,406.4
 
Private equity and venture capital funds
    
32.0
   
32.0
   
38.0
 
Total
  
$
2,856.1
  
$
2,856.1
  
$
2,765.7
  
                     
Employee count
    
2,151
    
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.
 
7
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
Financial & Statistical Supplement - Operating Results
(Dollars in thousands, except per share data)
(Unaudited)
 
   
For the
year ended
Decemeber 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
   
-
   
-
 
                                 
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 of consolidated subsidiary
    
(2,751
)
  
1,957
   
(4,708
)
  
-
   
-
 
                                 
Net (loss) income
  
$
(67,275
)
$
3,810
  
$
(67,392
)
$
(30,247
)
$
26,554
  
                                 
                                 
Net (loss) income before income taxes and minority interest as a percentage of net revenue
    
-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) 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.
 
8
 
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amounts)
(Unaudited) 
 
ASSETS
  
30-Jun-07
  
31-Dec-06
  
           
Cash and cash equivalents
  
$
505,940
  
$
189,956
  
Restricted cash
    
110
   
132
 
Receivables:
              
Securities sold
    
261,918
   
-
 
Other
   
168,871
   
217,249
  
Investments:
              
Mortgage-backed securities, at fair value
    
6,047,375
   
6,870,661
 
Loans held for sale, net
    
3,681,090
   
5,367,934
 
Long-term investments
    
222,086
   
185,492
 
Trading securities, at fair value
    
43,363
   
18,180
 
Due from clearing broker
    
19,621
   
28,999
 
Derivative assets, at fair value
    
21,728
   
36,875
 
Goodwill
    
108,013
   
162,765
 
Intangible assets, net
    
11,274
   
21,825
 
Furniture, equipment, software and leasehold improvements, net
    
47,963
   
44,111
 
Prepaid expenses and other assets
    
180,246
   
208,339
 
Total assets
  
$
11,319,598
  
$
13,352,518
  
               
               
LIABILITIES AND SHAREHOLDERS ’ EQUITY
              
               
Liabilities:
              
 
              
Trading account securities sold short but not yet purchased, at fair value
  
$
601
  
$
202
  
Commercial paper
    
3,493,212
   
3,971,389
 
Repurchase agreements
    
2,336,998
   
3,059,330
 
Securities purchased
    
27,025
   
-
 
Derivative liabilities, at fair value
    
4,710
   
44,582
 
Dividends payable
    
8,770
   
8,743
 
Interest payable
    
9,185
   
12,239
 
Accrued compensation and benefits
    
96,921
   
57,227
 
Accounts payable, accrued expenses and other liabilities
    
105,219
   
81,819
 
Securitization financing, net
   
3,645,874
   
4,486,046
 
Long-term debt
    
323,526
   
324,453
 
Total liabilities
    
10,052,041
   
12,046,030
 
               
Minority interest
    
254,922
   
135,443
 
               
Shareholders' equity:
              
Common stock, 175,327 and 174,712 shares
    
1,753
   
1,747
 
Additional paid-in capital
    
1,569,034
   
1,562,497
 
Employee stock loan receivable, 2 and 2 shares
    
(12
)
  
(12
)
Accumulated other comprehensive income (loss), net of taxes
    
12,564
   
(15,136
)
Accumulated deficit
    
(570,704
)
  
(378,051
)
Total shareholders' equity
   
1,012,635
   
1,171,045
 
               
Total liabilities and shareholders' equity
  
$
11,319,598
  
$
13,352,518
  
 
9