Unassociated Document

0001144204-07-056209.txt : 20071025 0001144204-07-056209.hdr.sgml : 20071025 20071025085716 ACCESSION NUMBER: 0001144204-07-056209 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20071025 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20071025 DATE AS OF CHANGE: 20071025 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FRIEDMAN BILLINGS RAMSEY GROUP INC CENTRAL INDEX KEY: 0001209028 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 541873198 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-50230 FILM NUMBER: 071189621 BUSINESS ADDRESS: STREET 1: 1001 19TH STREET NORTH CITY: ARLINGTON STATE: VA ZIP: 22209 BUSINESS PHONE: 7033129500 FORMER COMPANY: FORMER CONFORMED NAME: FOREST MERGER CORP DATE OF NAME CHANGE: 20021205 8-K 1 v091300_8k.htm Unassociated Document

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

October 25, 2007

Date of Report (Date of earliest event reported)

FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.

(Exact Name of Registrant as Specified in its Charter)

Virginia

(State or Other Jurisdiction of Incorporation)

000-50230		54-1873198
Commission File Number		(IRS Employer Identification No.)

1001 Nineteenth Street North

Arlington, VA 22209

(Address of Principal Executive Office) (Zip Code)

(703) 312-9500

(Registrant's Telephone Number, Including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02

Results of Operations and Financial Condition.

On October 25, 2007, Friedman, Billings, Ramsey Group, Inc. issued a press release announcing its earnings for the quarter ended September 30, 2007. A copy of the press release is furnished herewith and attached hereto as Exhibit 99.1.

Item 9.01

Financial Statements and Exhibits.

Exhibit.

99.1	Friedman, Billings, Ramsey Group, Inc. Press Release dated October 25, 2007

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.


	Friedman, Billings, Ramsey Group, Inc.

Date: October 25, 2007	By:	/s/ Kurt R. Harrington
		Kurt R. Harrington Executive Vice President, Chief Financial Officer and Treasurer

EX-99.1 2 v091300_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

Third Quarter 2007 Financial Results

ARLINGTON, VA, October 25, 2007 - Friedman, Billings, Ramsey Group, Inc. (NYSE: FBR) today announced its results for the quarter ended September 30, 2007. The company reported a net after-tax loss for the quarter of $214.7 million, or $1.28 per share, compared to a net after-tax loss of $67.4 million, or $0.39 per share, for the third quarter of 2006. FBR Group’s net after-tax loss for the first nine months of 2007 was $389.9 million, or $2.28 per share, compared to a net after-tax loss of $71.1 million, or $0.41 per share, for the first nine months of 2006. Core book value net of Accumulated Other Comprehensive Income (AOCI) at the close of the third quarter was $4.49 compared to $5.76 at the end of the second quarter of 2007⁽¹⁾.

FBR Group ended the quarter with $904 million of consolidated tangible capital, including approximately $320 million of trust preferred securities. Of this tangible capital, $270 million is attributable to FBR Group’s 52% ownership interest in FBR Capital Markets Corporation (FBR Capital Markets). Of the remaining $634 million of tangible capital, FBR Group has approximately $480 million in cash and liquid securities, which is available for investment.

The four principal components of the third quarter results are:

$90 million of write downs and losses relating to the company’s on-balance sheet securitized loan portfolio (“residual interests”) that reduce the company’s economic risk in this portfolio to zero,

a net loss of $67 million from the company’s mortgage-backed securities portfolio and operations, including the previously announced $57 million loss on the sale of approximately $4.95 billion of agency mortgage-backed securities,

an economic loss of $17.2 million⁽²⁾ associated with restructuring and operating costs at First NLC Financial Services (FNLC), of which $15 million was incurred prior to the agreement announced in July to sell FNLC to an affiliate of Sun Capital Partners (Sun Capital), and

a $27 million valuation loss relating to the portfolio of conforming and non-conforming loans originated by FNLC and for which FBR Group took ownership under the Sun Capital sale agreement, reducing the value of those loans to $203 million.

Share Buyback Program

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. Since that date, the company has repurchased 22.8 million shares at an average price of $4.66 a share.

Merchant Banking

Excluding merchant banking investments of $59.9 million at FBR Capital Markets, the total value of the merchant banking investments held by FBR Group at the close of the third quarter was $57.7 million. During the third quarter, FBR Group recognized $25 million in net gains from its merchant banking portfolio.

First NLC

As disclosed on July 26, 2007, an agreement entered into with Sun Capital limits FBR Group’s ongoing economic exposure to FNLC to $15 million, representing a 20% ownership interest. At the end of the third quarter, this exposure to FNLC was $12 million. However, FBR Group will continue to consolidate FNLC for financial reporting purposes until the transfer of ownership to Sun Capital is completed. The company currently expects this transfer to be completed by year end.

Looking Ahead

“Economic exposure to our securitized, non-recourse mortgage loan portfolio has been eliminated, and our remaining exposure to FNLC is $12 million,” said Eric F. Billings, Chairman and Chief Executive Officer of FBR Group. “With nearly $500 million in cash and highly liquid securities in addition to our 52% ownership of FBR Capital Markets, our risk profile is significantly reduced. Going forward, we are pleased to have the financial flexibility to execute our core agency mortgage backed security strategy through which we believe we will be able to achieve very acceptable returns.”

FBR Capital Markets Corporation

FBR Capital Markets (NASDAQ: FBCM), a majority-owned subsidiary of FBR Group, yesterday reported net after-tax third quarter 2007 earnings of $0.3 million, compared to an after-tax loss of $22.6 million, or $0.37 per share (diluted), in the third quarter of 2006. Net revenues for the third quarter of 2007 were $106.2 million compared to net revenues of $42.0 million in the third quarter of 2006.

For the nine months ending September 30, 2007, FBR Capital Markets earned $33.0 million after tax, or $0.51 per share (diluted), compared to an after-tax loss of $16.8 million, or $0.33 per share (diluted), for the first nine months of 2006. Net revenues for the first nine months of 2007 were $418.8 million compared to $244.0 million for the first nine months of 2006.

At the close of the third quarter, FBR Capital Markets had $527.0 million in equity, $387.1 million of cash, and no debt, and its book value was $8.25 per share compared to $8.20 per share at the end of the second quarter of 2007. Complete financial results and tables for FBR Capital Markets can be found at www.fbr.com.

FBR Group will host an earnings conference call on Thursday, October 25, 2007 at 9:00 A.M. U.S. EDT. Investors wishing to listen to the earnings conference call may do so via the web at: http://phx.corporate-ir.net/phoenix.zhtml?c=71352&p=irol-irhome.

Replays of the web cast will be available after the call.

Friedman, Billings, Ramsey Group, Inc. (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). 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. 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; New York; Phoenix; San Francisco; London, England; and Sydney, Australia. For more information, please visit www.fbr.com.

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

¹Accumulated 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.

²During the third quarter, FBR Group recorded consolidated GAAP losses, excluding valuation losses related to the mortgage loans assumed under the agreement with Sun Capital, totaling $28 million associated with FNLC operations. However, the economic loss to the company, once the Sun Capital transaction closes, will be $17.2 million. There are several components to the economic loss. As noted in the announcement regarding the agreement with Sun Capital, FBR Group funded approximately $15 million in FNLC operating losses and restructuring costs that were incurred prior to signing the agreement with Sun Capital. The company also recorded net interest on the loans assumed under the agreement with Sun Capital and recognized an additional $14 million of losses and restructuring expenses subsequent to signing the agreement, but its economic exposure to these costs is limited to $3 million, corresponding to FBR Group’s 20% economic ownership interest in FNLC. The remaining $11 million recorded during the third quarter by FBR Group will be recaptured upon the final closing of the agreement with Sun Capital.

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 September 30,

	2007			%			2006			%
REVENUES:
Investment banking:
Capital raising	$	49,692			-99.9	%	$	6,852			-8.3	%
Advisory		16,480			-33.1	%		5,826			-7.0	%
Institutional brokerage:
Principal transactions		968			-1.9	%		(1,658	)		2.0	%
Agency commissions		26,257			-52.8	%		24,388			-29.5	%
Mortgage trading interest		-			0.0	%		13,845			-16.7	%
Mortgage trading investment loss		-						(1,546	)		1.9	%
Asset management:
Base management fees		6,119			-12.3	%		4,880			-5.9	%
Incentive allocations and fees		82			-0.2	%		(31	)		0.0	%
Principal investment:
Interest		115,450			-232.0	%		150,649			-182.0	%
Net investment loss		(136,475	)		274.3	%		(170,621	)		206.1	%
Dividends		526			-1.1	%		4,750			-5.7	%
Mortgage banking:
Interest		7,194			-14.5	%		22,476			-27.1	%
Net investment (loss) income		(27,968	)		56.2	%		16,092			-19.4	%
Other		3,990			-7.9	%		6,540			-8.0	%
Total revenues		62,315			-125.2	%		82,442			-99.6	%
Interest expense		112,072			-225.2	%		165,237			-199.6	%
Revenues, net of interest expense		(49,757	)		100.0	%		(82,795	)		100.0	%

NON-INTEREST EXPENSES:
Compensation and benefits		80,955			-162.7	%		69,405			-83.8	%
Professional services		12,281			-24.7	%		14,308			-17.3	%
Business development		7,713			-15.5	%		7,577			-9.2	%
Clearing and brokerage fees		3,953			-7.9	%		2,917			-3.5	%
Occupancy and equipment		12,695			-25.5	%		12,909			-15.6	%
Communications		7,148			-14.4	%		6,471			-7.8	%
Other operating expenses		16,140			-32.4	%		23,291			-28.1	%
Restructuring charges		6,172			-12.4	%		-			0.0	%
Total non-interest expenses		147,057			-295.5	%		136,878			-165.3	%

Operating loss		(196,814	)		395.5	%		(219,673	)		265.3	%

OTHER (LOSS) INCOME:
(Loss) gain on sale of subsidiary shares		(2,450	)		4.9	%		121,511			-146.8	%

Loss before income taxes and minority interest		(199,264	)		400.5	%		(98,162	)		118.6	%

Income tax provision (benefit)		15,288			-30.7	%		(26,062	)		31.5	%
Minority interest in earnings (losses) of consolidated subsidiary		165			-0.3	%		(4,708	)		5.7	%

Net loss	$	(214,717	)		431.5	%	$	(67,392	)		81.4	%

Basic loss per share	$	(1.28	)				$	(0.39	)
Diluted loss per share	$	(1.28	)				$	(0.39	)

Weighted average shares - basic		167,874						172,091
Weighted average shares - diluted		167,874						172,091

FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share amounts)

(Unaudited)

				Nine Months Ended
				September 30,
		2007		%			2006		%
REVENUES:
Investment banking:
Capital raising	$	256,971		184.8	%	$	118,304		57.8	%
Advisory		29,090		20.9	%		14,976		7.3	%
Institutional brokerage:
Principal transactions		7,156		5.1	%		5,822		2.8	%
Agency commissions		78,639		56.6	%		76,289		37.3	%
Mortgage trading interest		-		0.0	%		48,638		23.8	%
Mortgage trading net investment loss		-		0.0	%		(2,992	)	-1.5	%
Asset management:
Base management fees		18,007		13.0	%		15,042		7.4	%
Incentive allocations and fees		302		0.2	%		924		0.5	%
Principal investment:
Interest		450,073		323.8	%		413,388		202.0	%
Net investment loss		(199,629	)	-143.6	%		(175,726	)	-85.9	%
Dividends		2,368		1.7	%		12,508		6.1	%
Mortgage banking:
Interest		47,186		33.9	%		66,856		32.7	%
Net investment (loss) income		(138,858	)	-99.9	%		56,231		27.5	%
Other		12,566		9.1	%		16,992		8.3	%
Total revenues		563,871		405.6	%		667,252		326.1	%
Interest expense		424,854		305.6	%		446,909		218.4	%
Provision for loan losses		-		0.0	%		15,740		7.7	%
Revenues, net of interest expense and provision for loan losses		139,017		100.0	%		204,603		100.0	%

NON-INTEREST EXPENSES:
Compensation and benefits		291,822		209.9	%		224,634		109.8	%
Professional services		40,143		28.9	%		41,498		20.3	%
Business development		32,640		23.5	%		30,266		14.8	%
Clearing and brokerage fees		9,717		7.0	%		8,315		4.1	%
Occupancy and equipment		38,511		27.7	%		36,383		17.8	%
Communications		21,791		15.7	%		18,091		8.8	%
Other operating expenses		66,540		47.9	%		69,261		33.9	%
Impairment of goodwill		54,752		39.4	%		-		0.0	%
Restructuring charges		25,519		18.4	%		-		0.0	%
Total non-interest expenses		581,435		418.4	%		428,448		209.5	%

Operating loss		(442,418	)	-318.4	%		(223,845	)	-109.4	%

OTHER INCOME:
Gain on sale of subsidiary shares		104,058		74.9	%		121,511		59.4	%

Loss before income taxes and minority interest		(338,360	)	-243.4	%		(102,334	)	-50.0	%

Income tax provision (benefit)		38,749		27.9	%		(26,541	)	-13.0	%
Minority interest in earnings (losses) of consolidated subsidiary		12,782		9.2	%		(4,708	)	-2.3	%

Net loss	$	(389,891	)	-280.5	%	$	(71,085	)	-34.7	%

Basic loss per share	$	(2.28	)			$	(0.41	)
Diluted loss per share	$	(2.28	)			$	(0.41	)

Weighted average shares - basic		171,308					171,376
Weighted average shares - diluted		171,308					171,376

FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.

Financial & Statistical Supplement - Operating Results

(Dollars in thousands, except per share data)

(Unaudited)

	For the
	nine months ended
	September 30, 2007			Q-3 07			Q-2 07			Q-1 07
Revenues
Investment banking:
Capital raising	$	256,971		$	49,692		$	110,032		$	97,247
Advisory		29,090			16,480			6,152			6,458
Institutional brokerage:
Principal transactions		7,156			968			4,152			2,036
Agency commissions		78,639			26,257			28,564			23,818
Asset management:
Base management fees		18,007			6,119			6,360			5,528
Incentive allocations and fees		302			82			116			104
Principal investment:
Interest		450,073			115,450			152,927			181,696
Net investment loss		(199,629	)		(136,475	)		(3,441	)		(59,713	)
Dividends		2,368			526			883			959
Mortgage banking:
Interest		47,186			7,194			13,462			26,530
Net investment loss		(138,858	)		(27,968	)		(4,031	)		(106,859	)
Other		12,566			3,990			4,482			4,094
Total revenues		563,871			62,315			319,658			181,898
Interest expense		424,854			112,072			143,231			169,551
Revenues, net of interest expense		139,017			(49,757	)		176,427			12,347

Non-interest expenses
Compensation and benefits		291,822			80,955			106,885			103,982
Professional services		40,143			12,281			14,008			13,854
Business development		32,640			7,713			11,158			13,769
Clearing and brokerage fees		9,717			3,953			3,063			2,701
Occupancy and equipment		38,511			12,695			12,699			13,117
Communications		21,791			7,148			7,592			7,051
Other operating expenses		66,540			16,140			18,684			31,716
Impairment of goodwill		54,752			-			28,900			25,852
Restructuring charges		25,519			6,172			3,862			15,485
Total non-interest expenses		581,435			147,057			206,851			227,527

Operating loss		(442,418	)		(196,814	)		(30,424	)		(215,180	)

Other income (loss)
Gain (loss) on sale of subsidiary shares		104,058			(2,450	)		105,677			831

(Loss) income before income taxes
and minority interest		(338,360	)		(199,264	)		75,253			(214,349	)

Income tax provision (benefit)		38,749			15,288			55,011			(31,550	)
Minority interest in earnings of consolidated subsidiary		12,782			165			9,538			3,079

Net (loss) income	$	(389,891	)	$	(214,717	)	$	10,704		$	(185,878	)


ROE (annualized)		-55.6	%		-91.9	%		3.9	%		-68.8	%
ROE (annualized-excluding AOCI) (1)		-54.8	%		-90.5	%		3.9	%		-68.2	%


Total shareholders' equity	$	698,214		$	698,214		$	1,012,635		$	989,213
Total shareholders' equity, net of AOCI (1)	$	711,693		$	711,693		$	1,000,071		$	993,753

Basic loss (earnings) per share	$	(2.28	)	$	(1.28	)	$	0.06		$	(1.08	)
Diluted loss (earnings) per share	$	(2.28	)	$	(1.28	)	$	0.06		$	(1.08	)

Ending shares outstanding (in thousands)		158,671			158,671			173,756			172,846

Book value per share	$	4.40		$	4.40		$	5.83		$	5.72
Book value per share, net of AOCI (1)	$	4.49		$	4.49		$	5.76		$	5.75

Gross assets under management (in millions)
Managed accounts	$	345.6		$	345.6		$	291.3		$	258.8
Hedge & offshore funds		61.7			61.7			61.7			67.1
Mutual funds		2,292.3			2,292.3			2,482.6			2,412.9
Private equity and venture capital funds		31.3			31.3			33.8			41.2
Total	$	2,730.9		$	2,730.9		$	2,869.4		$	2,780.0

Net assets under management (in millions)
Managed accounts	$	345.6		$	345.6		$	291.3		$	258.8
Hedge & offshore funds		58.1			58.1			58.1			62.5
Mutual funds		2,285.1			2,285.1			2,474.7			2,406.4
Private equity and venture capital funds		29.8			29.8			32.0			38.0
Total	$	2,718.6		$	2,718.6		$	2,856.1		$	2,765.7

Employee count		1,290			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 in thousands, except per share amounts)

(Unaudited)

ASSETS	30-Sep-07			31-Dec-06

Cash and cash equivalents	$	692,737		$	189,956
Restricted cash		116			132
Receivables		68,735			217,249
Investments:
Mortgage-backed securities, at fair value		470,749			6,870,661
Loans held for sale, net		3,255,807			5,367,934
Long-term investments		181,098			185,492
Trading securities, at fair value		19,120			18,180
Due from clearing broker		11,675			28,999
Derivative assets, at fair value		12,159			36,875
Goodwill		108,013			162,765
Intangible assets, net		10,228			21,825
Furniture, equipment, software and leasehold improvements, net		45,782			44,111
Prepaid expenses and other assets		243,050			208,339
Total assets	$	5,119,269		$	13,352,518

LIABILITIES AND SHAREHOLDERS ’ EQUITY

Liabilities:
Trading account securities sold short but
not yet purchased, at fair value	$	10,066		$	202
Commercial paper		-			3,971,389
Repurchase agreements		497,926			3,059,330
Derivative liabilities, at fair value		1,938			44,582
Dividends payable		8,001			8,743
Interest payable		6,329			12,239
Accrued compensation and benefits		39,381			57,227
Accounts payable, accrued expenses and other liabilities		79,962			81,819
Short-term debt		60,000			-
Securitization financing, net		3,141,773			4,486,046
Long-term debt		323,609			324,453
Total liabilities		4,168,985			12,046,030

Minority interest		252,070			135,443

Shareholders' equity:
Common stock, 160,055 and 174,712 shares		1,601			1,747
Additional paid-in capital		1,503,509			1,562,485
Accumulated other comprehensive loss, net of taxes		(13,479	)		(15,136	)
Accumulated deficit		(793,417	)		(378,051	)
Total shareholders' equity		698,214			1,171,045

Total liabilities and shareholders' equity	$	5,119,269		$	13,352,518

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