EX-99.1 2 v129517_ex99-1.htm Unassociated Document

Contacts:
Media: 703.469.1004 or media@fbr.com 
Investors: Kurt Harrington at 703.469.1080 or ir@fbr.com
 
Friedman, Billings, Ramsey Group Reports
Third Quarter Financial Results
 
ARLINGTON, Va., October 23, 2008 -- Friedman, Billings, Ramsey Group, Inc. (FBR Group) (NYSE: FBR) today reported a net after-tax loss of $169.0 million for the quarter ended September 30, 2008, or $1.12 per share (diluted), compared to net after-tax loss of $210.6 million, or $1.25 per share (diluted), for the third quarter of 2007. FBR Group's net after-tax loss for the first nine months of 2008 was $149.0 million, or $0.99 per share (diluted), compared to a net after-tax loss of $388.2 million, or $2.27 per share (diluted) in the first nine months of 2007.
 
FBR Group also announced that it has retained financial advisors to evaluate strategic alternatives for the purpose of maximizing the value of its assets and liabilities including all of its trust preferred debt. Potential strategic alternatives include the sale of the company or its assets or distribution of its assets to shareholders.
 
Excluding its ownership interest in FBR Capital Markets, as of September 30, 2008, FBR Group had assets of $2.3 billion including MBS of $1.7 billion and cash of $82 million, and repurchase agreements of $1.7 billion. Total tangible capital was $349 million including trust preferred debt but excluding its ownership interest in FBR Capital Markets. FBR Group’s interest in FBR Capital Markets’ tangible capital was $223 million at September 30, 2008. FBR Group’s consolidated tangible capital on September 30, 2008 was $572 million and consolidated shareholders’ equity was $268 million.
 
Book value net of Accumulated Other Comprehensive Income (AOCI) (1) as of September 30, 2008 was $1.81 per share compared to book value net of AOCI of $2.89 per share as of June 30, 2008. 
 
As of September 30, 2008, approximately $188 million of tangible capital, or $1.24 per share, was invested in cash and readily marketable agency securities. During the third quarter, $19 million of liquidations and pay-downs of capital invested in non-agency MBS securities and other investments was recovered. Remaining non-prime securities totaled $10 million at the end of the third quarter.
 
During the quarter and subsequent to the quarter end, FBR Group implemented a program to downsize its MBS portfolio in order to reduce exposure to deteriorating market conditions while at the same time generating additional cash to fund the extinguishment of its trust preferred debt at a significant discount to face value.
 

In the third quarter, the Company extinguished $6.8 million of trust preferred debt and realized a $4.1 million gain versus face value on the debt. Subsequent to quarter end, the Company extinguished an additional $38 million of trust preferred debt for a gain of $23 million leaving $273 million of trust preferred debt outstanding. Also subsequent to quarter end, the Company further reduced its MBS portfolio by $1.1 billion resulting in a net loss of $42 million after deducting the $23 million gain from the extinguishment of trust preferred debt.
 
After giving effect to these post-third quarter transactions, FBR Group has agency MBS of $503 million, super senior AAA MBS of $195 million, and total repurchase agreements of $568 million.
 
Third Quarter Highlights
 
The third quarter 2008 results reflect cash and non-cash items.
 
Operating and realized Investment Losses of $36.0 million include:
 
§  
$1.5 million of operating cash loss at FBR Group
 
§  
$4.1 million gain on the extinguishment of $6.8 million of trust preferred debt.
 
§  
$23.9 million of realized investment loss related to sales of agency MBS and a hedge instrument during the quarter, of which $2.8 million was recorded in AOCI as of June 30, 2008.
 
§  
$14.7 million of losses, net of minority interest, relating to FBR Capital Markets.
 
Non-Cash and Impairment Charges of $133.0 million include:
 
§  
$129.2 million of impairment related investment losses including:
 
o  
$119.0 million of other than temporary impairment on MBS and related hedges, of which $85.5 million was recorded in AOCI as of June 30, 2008.
 
o  
$7.1 million of other than temporary impairment on merchant banking Investments.
 
o  
$3.1 million related to investment partnerships and sub-prime NIMs.
 
§  
$3.8 million of non-cash compensation charges.
 
Merchant Banking
 
Excluding FBR Capital Markets, the total value of the merchant banking investments held by FBR Group at the end of the third quarter was $27.3 million. During the quarter, the Company recorded $7.1 million in other than temporary impairments related to merchant banking investments. No additional investments were made in the portfolio during the quarter.
 

FBR Capital Markets Corporation
 
Friedman Billings Ramsey Group, Inc. results have no effect or impact on the financial strength, performance, or ongoing operations of FBR Group’s majority owned subsidiary, FBR Capital Markets Corporation (NASDAQ:FBCM), which is a separately traded and managed public company. FBR Group does, however, consolidate FBR Capital Markets’ financial results on a proportionate basis.
 
FBR Capital Markets reported a net after-tax loss of $28.6 million, or $0.44 per share (diluted), for the quarter ended September 30, 2008, compared to net after-tax earnings of $0.3 million in the third quarter of 2007. For the nine months ending September 30, 2008, FBR Capital Markets reported a net loss of $64.0 million after tax, or $0.99 per share (diluted), compared to net after-tax earnings of $33.0 million, or $0.51 per share (diluted), for the first nine months of 2007. At quarter’s end, book value per share was $6.96.
 
FBR Capital Markets also reported a balance sheet reflecting $452 million in capital - all equity - and approximately $294 million of cash and net cash invested in floating rate securities. In line with its strategic plan and market conditions, FBR Capital Markets announced it is taking additional aggressive steps to lower break even levels. The Company plans to take maximum advantage of the adverse economic environment and dislocation in the industry and fully expects to participate in a substantial number capital raising opportunities such as the recapitalizations of financial institutions.
 
Looking Ahead
 
“These are undoubtedly the most challenging times that we have ever seen in the financial markets,” said Eric Billings, Chairman and Chief Executive Officer of FBR Group. “We believe we have taken and are continuing to take all necessary steps to position the Company to be able to patiently realize the maximum value of all of our assets and liabilities.”
 
Complete third quarter 2008 financial results and tables for FBR Capital Markets can be found at www.fbrcapitalmarkets.com.
 
Investors wishing to listen to the FBR Group earnings conference call at 9:00 A.M. U.S. EDT, October 23, 2008, 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) invests in mortgage-related assets, merchant banking opportunities and is the majority owner of FBR Capital Market Corporation, a separate publicly traded company. FBR is headquartered in the Washington, D.C. metropolitan area. For more information, please visit www.fbr.com.
 
(1) Accumulated Other Comprehensive Income (AOCI) includes changes in the value of available-for-sale securities and cash flow hedges. FBR believes that such changes represent temporary market fluctuations, are not reflective of our market strategy, and, therefore, the exclusion of AOCI provides a reasonable basis for calculating returns.
 
 
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, changes in interest rates, increased costs of borrowing, decreased interest spreads, changes in 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.

# # #
 
 
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(Unaudited)
 
   
Quarter Ended
  
   
September 30,
  
                   
   
2008
 
%
 
2007
 
%
  
REVENUES:
                  
Investment banking:
                  
Capital raising
  
$
6,763
    
-6.5
%
$
49,692
    
-108.8
%
Advisory
    
5,999
   
-5.8
%
  
16,480
   
-36.1
%
Institutional brokerage:
                          
Principal transactions
   
2,610
   
-2.5
%
  
968
   
-2.1
%
Agency commissions
   
33,813
   
-32.6
%
  
26,257
   
-57.5
%
Asset management:
                          
Base management fees
   
3,710
   
-3.6
%
  
6,119
   
-13.4
%
Incentive allocations and fees
    
-
   
0.0
%
  
82
   
-0.2
%
Principal investment:
                          
Interest
    
31,057
   
-29.9
%
  
115,007
   
-251.7
%
Net investment loss
    
(164,153
)
  
158.2
%
  
(131,960
)
  
288.8
%
Dividends
    
307
   
-0.3
%
  
526
   
-1.2
%
Mortgage banking:
                          
Interest
    
-
   
0.0
%
  
7,194
   
-15.7
%
Net investment loss
    
-
   
0.0
%
  
(27,968
)
  
61.2
%
Other
    
1,548
   
-1.5
%
  
3,990
   
-8.6
%
Total revenues
    
(78,346
)
  
75.5
%
  
66,387
   
-145.3
%
Interest expense
    
25,387
   
-24.5
%
  
112,072
   
-245.3
%
Revenues, net of interest expense
   
(103,733
)
  
100.0
%
  
(45,685
)
  
100.0
%
                           
NON-INTEREST EXPENSES:
                          
Compensation and benefits
    
61,111
   
-58.9
%
  
80,955
   
-177.2
%
Professional services
    
10,442
   
-10.1
%
  
12,281
   
-26.9
%
Business development
   
5,262
   
-5.1
%
  
7,713
   
-16.9
%
Clearing and brokerage fees
   
3,834
   
-3.7
%
  
3,953
   
-8.7
%
Occupancy and equipment
   
8,282
   
-8.0
%
  
12,695
   
-27.8
%
Communications
   
5,773
   
-5.6
%
  
7,148
   
-15.6
%
Other operating expenses
   
6,668
   
-6.4
%
  
16,140
   
-35.3
%
Restructuring charges
    
-
   
0.0
%
  
6,172
   
-13.5
%
Total non-interest expenses
    
101,372
   
-97.8
%
  
147,057
   
-321.9
%
                           
Operating loss
    
(205,105
)
  
197.8
%
  
(192,742
)
  
421.9
%
                           
OTHER INCOME (LOSS):
                          
Gain on reduction in long-term debt
    
4,078
   
-4.0
%
  
-
   
0.0
%
Loss on subsidiary share transactions and other losses
    
(4
)
  
0.0
%
  
(2,450
)
  
5.4
%
                           
Loss before income taxes and minority interest
    
(201,031
)
  
193.8
%
  
(195,192
)
  
427.3
%
                           
Income tax (benefit) provision
    
(18,123
)
  
17.5
%
  
15,288
   
-33.4
%
Minority interest in (losses) earnings of consolidated subsidiary
    
(13,886
)
  
13.4
%
  
165
   
-0.4
%
                           
Net loss
  
$
(169,022
)
  
162.9
%
$
(210,645
)
  
461.1
%
                           
Basic loss per share
  
$
(1.12
)
      
$
(1.25
)
      
Diluted loss per share
  
$
(1.12
)
      
$
(1.25
)
      
                           
Weighted average shares - basic
    
151,301
         
167,874
       
Weighted average shares - diluted
    
151,301
         
167,874
       
                           
 

 
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(Unaudited)
 
   
 Nine Months Ended
  
   
September 30,
  
                   
   
2008
 
%
 
2007
 
%
 
REVENUES:
                  
Investment banking:
                          
Capital raising
  
$
75,635
    
198.9
%
$
256,971
    
182.6
%
Advisory
    
15,267
   
40.2
%
  
29,090
   
20.7
%
Institutional brokerage:
                          
Principal transactions
   
13,455
   
35.4
%
  
7,156
   
5.1
%
Agency commissions
   
89,581
   
235.6
%
  
78,639
   
55.9
%
Asset management:
                          
Base management fees
   
12,507
   
32.9
%
  
18,007
   
12.8
%
Incentive allocations and fees
    
-
   
0.0
%
  
302
   
0.2
%
Principal investment:
                          
Interest
    
83,798
   
220.4
%
  
446,258
   
317.1
%
Net investment loss
    
(188,637
)
  
-496.2
%
  
(194,102
)
  
-137.9
%
Dividends
    
994
   
2.6
%
  
2,368
   
1.7
%
Mortgage banking:
                          
Interest
    
36
   
0.1
%
  
47,186
   
33.5
%
Net investment income (loss)
    
463
   
1.2
%
  
(138,858
)
  
-98.7
%
Other
    
5,815
   
15.3
%
  
12,566
   
8.9
%
Total revenues
    
108,914
   
286.4
%
  
565,583
   
401.9
%
Interest expense
    
70,895
   
186.4
%
  
424,854
   
301.9
%
Revenues, net of interest expense
   
38,019
   
100.0
%
  
140,729
   
100.0
%
                           
NON-INTEREST EXPENSES:
                          
Compensation and benefits
    
192,035
   
505.1
%
  
291,822
   
207.4
%
Professional services
    
33,401
   
87.9
%
  
40,143
   
28.5
%
Business development
   
24,368
   
64.1
%
  
32,640
   
23.2
%
Clearing and brokerage fees
   
10,857
   
28.6
%
  
9,717
   
6.9
%
Occupancy and equipment
   
26,051
   
68.5
%
  
38,511
   
27.4
%
Communications
   
18,046
   
47.5
%
  
21,791
   
15.5
%
Other operating expenses
   
19,107
   
50.3
%
  
66,540
   
47.3
%
Goodwill impairment
    
-
   
0.0
%
  
54,752
   
38.9
%
Restructuring charges
    
-
   
0.0
%
  
25,519
   
18.1
%
Total non-interest expenses
    
323,865
   
852.0
%
  
581,435
   
413.2
%
                           
Operating loss
    
(285,846
)
  
-752.0
%
  
(440,706
)
  
-313.2
%
                           
OTHER INCOME:
                          
(Loss) gain on subsidiary share transactions
    
(189
)
  
-0.5
%
  
104,058
   
74.0
%
Gain on reduction in long-term debt
    
4,078
   
10.8
%
  
-
   
0.0
%
Gain on disposition of subsidiary and other income
    
73,030
   
192.1
%
  
-
   
0.0
%
                           
                           
Loss before income taxes and minority interest
    
(208,927
)
  
-549.5
%
  
(336,648
)
  
-239.2
%
                           
Income tax (benefit) provision
    
(28,903
)
  
-76.0
%
  
38,749
   
27.5
%
Minority interest in (losses) earnings of consolidated subsidiary
    
(31,053
)
  
-81.7
%
  
12,782
   
9.1
%
                           
Net loss
  
$
(148,971
)
  
-391.8
%
$
(388,179
)
  
-275.8
%
 
                          
Basic loss per share
  
$
(0.99
)
      
$
(2.27
)
      
Diluted loss per share
  
$
(0.99
)
      
$
(2.27
)
      
                           
Weighted average shares - basic
    
151,134
         
171,308
       
Weighted average shares - diluted
    
151,134
         
171,308
       
 
 

 
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
Financial & Statistical Supplement - Operating Results
(Dollars in thousands, except per share data)
(Unaudited)
 
                   
   
Nine Months Ended
             
   
September 30, 2008
  
Q-3 08
  
Q-2 08
  
Q-1 08
  
Revenues
                  
Investment banking:
                          
Capital raising
  
$
75,635
  
$
6,763
  
$
3,962
  
$
64,910
  
Advisory
    
15,267
   
5,999
   
4,192
   
5,076
 
Institutional brokerage:
                          
Principal transactions
   
13,455
   
2,610
   
4,888
   
5,957
 
Agency commissions
   
89,581
   
33,813
   
29,918
   
25,850
 
Asset management:
                          
Base management fees
    
12,507
   
3,710
   
4,153
   
4,644
 
Principal investment:
                          
Interest
    
83,798
   
31,057
   
26,827
   
25,914
 
Net investment loss
    
(188,637
)
  
(164,153
)
  
(4,797
)
  
(19,687
)
Dividends
    
994
   
307
   
258
   
429
 
Mortgage banking:
                          
Interest
    
36
   
-
   
-
   
36
 
Net investment income (loss)
    
463
   
-
   
(5
)
  
468
 
Other
    
5,815
   
1,548
   
1,932
   
2,335
 
Total revenues
    
108,914
   
(78,346
)
  
71,328
   
115,932
 
Interest expense
    
70,895
   
25,387
   
21,858
   
23,650
 
Revenues, net of interest expense
   
38,019
   
(103,733
)
  
49,470
   
92,282
 
                           
Non-interest expenses
                          
Compensation and benefits
    
192,035
   
61,111
   
53,970
   
76,954
 
Professional services
    
33,401
   
10,442
   
10,492
   
12,467
 
Business development
   
24,368
   
5,262
   
6,812
   
12,294
 
Clearing and brokerage fees
    
10,857
   
3,834
   
3,393
   
3,630
 
Occupancy and equipment
    
26,051
   
8,282
   
8,580
   
9,189
 
Communications
    
18,046
   
5,773
   
6,255
   
6,018
 
Other operating expenses
    
19,107
   
6,668
   
7,055
   
5,384
 
Total non-interest expenses
    
323,865
   
101,372
   
96,557
   
125,936
 
                           
Operating loss
    
(285,846
)
  
(205,105
)
  
(47,087
)
  
(33,654
)
                           
Other income (loss)
    
76,919
   
4,074
   
(192
)
  
73,037
 
                           
(Loss) income before income taxes and minority interest
    
(208,927
)
  
(201,031
)
  
(47,279
)
  
39,383
 
                           
Income tax benefit
    
(28,903
)
  
(18,123
)
  
(9,974
)
  
(806
)
Minority interest in losses of consolidated subsidiary
    
(31,053
)
  
(13,886
)
  
(12,254
)
  
(4,913
)
                           
Net (loss) income
 
$
(148,971
)
$
(169,022
)
$
(25,051
)
$
45,102
  
                           
                           
ROE (annualized)
    
-60.0
%
  
-204.3
%
  
-27.2
%
  
48.9
%
ROE (annualized-excluding AOCI) (1)
    
-58.3
%
  
-198.5
%
  
-23.8
%
  
41.8
%
                           
Total shareholders' equity
  
$
268,097
  
$
268,097
  
$
343,686
  
$
344,408
  
Total shareholders' equity, net of AOCI (1)
  
$
274,547
  
$
274,547
  
$
436,093
  
$
455,761
  
                           
                           
Basic (loss) earnings per share
  
$
(0.99
)
$
(1.12
)
$
(0.17
)
$
0.30
  
Diluted (loss) earnings per share
  
$
(0.99
)
$
(1.12
)
$
(0.17
)
$
0.30
  
                           
Ending shares outstanding (in thousands)
    
151,352
    
151,352
   
150,989
   
150,915
 
                           
Book value per share
  
$
1.77
  
$
1.77
  
$
2.28
  
$
2.28
  
Book value per share, net of AOCI (1)
  
$
1.81
  
$
1.81
  
$
2.89
  
$
3.02
  
                           
Gross assets under management (in millions)
                          
Managed accounts
  
$
276.8
  
$
276.8
  
$
275.7
  
$
333.9
  
Hedge & offshore funds
    
29.6
   
29.6
   
35.5
   
45.1
 
Mutual funds
    
1,433.2
   
1,433.2
   
1,553.4
   
1,702.9
 
Private equity and venture capital funds
    
17.2
   
17.2
   
21.1
   
21.4
 
Total
  
$
1,756.8
  
$
1,756.8
  
$
1,885.7
  
$
2,103.3
  
                           
Net assets under management (in millions)
                          
Managed accounts
  
$
276.8
  
$
276.8
  
$
275.7
  
$
333.9
  
Hedge & offshore funds
    
27.5
   
27.5
   
33.4
   
40.4
 
Mutual funds
    
1,427.1
   
1,427.1
   
1,533.8
   
1,698.0
 
Private equity and venture capital funds
    
16.2
   
16.2
   
20.2
   
20.2
 
Total
  
$
1,747.6
  
$
1,747.6
  
$
1,863.1
  
$
2,092.5
  
                           
Employee count
    
666
    
666
   
719
   
726
 

(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)
 
   
Year Ended
 
 
  
 
  
 
  
 
  
 
  
December 31, 2007
  
Q-4 07
  
Q-3 07
  
Q-2 07
  
Q-1 07
  
Revenues
                      
Investment banking:
                                
Capital raising
  
$
282,619
  
$
25,648
  
$
49,692
  
$
110,032
  
$
97,247
  
Advisory
    
34,063
   
4,973
   
16,480
   
6,152
   
6,458
 
Institutional brokerage:
                                
Principal transactions
   
10,152
   
2,996
   
968
   
4,152
   
2,036
 
Agency commissions
   
104,792
   
26,153
   
26,257
   
28,564
   
23,818
 
Asset management:
                                
Base management fees
    
23,549
   
5,542
   
6,119
   
6,360
   
5,528
 
Incentive allocations and fees
    
401
   
99
   
82
   
116
   
104
 
Principal investment:
                                
Interest
    
497,256
   
50,998
   
115,007
   
152,368
   
178,883
 
Net investment loss
    
(216,429
)
  
(22,327
)
  
(131,960
)
  
(3,377
)
  
(58,765
)
Dividends
    
3,173
   
805
   
526
   
883
   
959
 
Mortgage banking:
                                
Interest
    
51,245
   
4,059
   
7,194
   
13,462
   
26,530
 
Net investment loss
    
(222,032
)
  
(83,174
)
  
(27,968
)
  
(4,031
)
  
(106,859
)
Other
    
15,808
   
3,242
   
3,990
   
4,482
   
4,094
 
Total revenues
    
584,597
   
19,014
   
66,387
   
319,163
   
180,033
 
Interest expense
    
477,437
   
52,583
   
112,072
   
143,231
   
169,551
 
Revenues, net of interest expense
   
107,160
   
(33,569
)
  
(45,685
)
  
175,932
   
10,482
 
                                 
Non-interest expenses
                                
Compensation and benefits
    
361,355
   
69,533
   
80,955
   
106,885
   
103,982
 
Professional services
    
55,741
   
15,598
   
12,281
   
14,008
   
13,854
 
Business development
   
43,518
   
10,878
   
7,713
   
11,158
   
13,769
 
Clearing and brokerage fees
    
12,514
   
2,797
   
3,953
   
3,063
   
2,701
 
Occupancy and equipment
    
52,302
   
13,791
   
12,695
   
12,699
   
13,117
 
Communications
    
28,690
   
6,899
   
7,148
   
7,592
   
7,051
 
Other operating expenses
    
82,246
   
15,706
   
16,140
   
18,684
   
31,716
 
Impairment of goodwill
    
162,765
   
108,013
   
-
   
28,900
   
25,852
 
Restructuring charges
    
46,985
   
21,466
   
6,172
   
3,862
   
15,485
 
Total non-interest expenses
    
846,116
   
264,681
   
147,057
   
206,851
   
227,527
 
                                 
Operating loss
    
(738,956
)
  
(298,250
)
  
(192,742
)
  
(30,919
)
  
(217,045
)
                                 
Other income (loss)
    
104,062
   
4
   
(2,450
)
  
105,677
   
831
 
                                 
(Loss) income before income taxes
                               
and minority interest
    
(634,894
)
  
(298,246
)
  
(195,192
)
  
74,758
   
(216,214
)
                                 
Income tax provision (benefit)
    
22,932
   
(15,817
)
  
15,288
   
55,011
   
(31,550
)
Minority interest in earnings (losses) of consolidated subsidiary
    
774
   
(12,008
)
  
165
   
9,538
   
3,079
 
                                 
Net (loss) income
  
$
(658,600
)
$
(270,421
)
$
(210,645
)
$
10,209
  
$
(187,743
)
                                 
                                 
ROE (annualized)
    
-84.2
%
  
-138.3
%
  
-90.2
%
  
3.7
%
  
-69.5
%
ROE (annualized-excluding AOCI) (1)
    
-82.7
%
  
-135.8
%
  
-88.7
%
  
3.7
%
  
-69.0
%
                                 
                                 
Total shareholders' equity
  
$
393,691
  
$
393,691
  
$
698,214
  
$
1,012,635
  
$
989,213
  
Total shareholders' equity, net of AOCI (1)
  
$
406,762
  
$
406,762
  
$
714,566
  
$
996,283
  
$
990,460
  
                                 
Basic (loss) earnings per share
  
$
(3.94
)
$
(1.77
)
$
(1.25
)
$
0.06
  
$
(1.09
)
Diluted (loss) earnings per share
  
$
(3.94
)
$
(1.77
)
$
(1.25
)
$
0.06
  
$
(1.09
)
                                 
Ending shares outstanding (in thousands)
    
150,674
   
150,674
   
158,671
   
173,756
   
172,846
 
                                 
Book value per share
  
$
2.61
  
$
2.61
  
$
4.40
  
$
5.83
  
$
5.72
  
Book value per share, net of AOCI (1)
  
$
2.70
  
$
2.70
  
$
4.50
  
$
5.73
  
$
5.73
  
                                 
Gross assets under management (in millions)
                        
Managed accounts
  
$
347.1
  
$
347.1
  
$
345.6
  
$
291.3
  
$
258.8
  
Hedge & offshore funds
    
52.1
   
52.1
   
61.7
   
61.7
   
67.1
 
Mutual funds
    
2,046.5
   
2,046.5
   
2,292.3
   
2,482.6
   
2,412.9
 
Private equity and venture capital funds
    
23.8
   
23.8
   
31.3
   
33.8
   
41.2
 
Total
  
$
2,469.5
  
$
2,469.5
  
$
2,730.9
  
$
2,869.4
  
$
2,780.0
  
                                 
Net assets under management (in millions)
                                
Managed accounts
  
$
347.1
  
$
347.1
  
$
345.6
  
$
291.3
  
$
258.8
  
Hedge & offshore funds
    
50.7
   
50.7
   
58.1
   
58.1
   
62.5
 
Mutual funds
    
2,034.6
   
2,034.6
   
2,285.1
   
2,474.7
   
2,406.4
 
Private equity and venture capital funds
    
22.6
   
22.6
   
29.8
   
32.0
   
38.0
 
Total
  
$
2,455.0
  
$
2,455.0
  
$
2,718.6
  
$
2,856.1
  
$
2,765.7
  
                                 
Employee count
    
1,025
   
1,025
   
1,290
   
2,151
   
2,592
 
 
(1)
Accumulated Other Comprehensive Income (AOCI) includes changes in value of available-for-sale securities and cash flow hedges. We believe that such changes represent temporary market fluctuations, are not reflective of our market strategy, and therefore, exclusion of AOCI provides a reasonable basis for calculating returns.
   
(2)
Effective January 1, 2008, the Company elected to change its method of amortizing and accreting premiums, discounts and other deferred costs on its mortgage-backed securities portfolio to the "Contractual Method", in accordance with SFAS 91. See the Company's quarterly filing filed with with the Securities and Exchange Commission for the period ending March 31, 2008 for further discussion.
 
 
 

FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars and shares in thousands, except per share amounts)
(Unaudited)
 
           
           
           
ASSETS
  
30-Sep-08
 
31-Dec-07
  
           
Cash and cash equivalents
  
$
227,162
  
$
692,360
  
Restricted cash
    
172
   
14,166
 
Receivables
    
429,253
   
75,357
 
Investments:
              
Mortgage-backed securities, at fair value
    
2,592,379
   
1,791,480
 
Loans held for sale, net
    
-
   
65,074
 
Long-term investments
    
106,795
   
169,274
 
Trading securities, at fair value
    
25,092
   
19,057
 
Due from clearing broker
    
17,168
   
-
 
Derivative assets, at fair value
    
6,767
   
3,514
 
Intangible assets, net
    
9,372
   
9,837
 
Furniture, equipment, software and leasehold improvements, net
    
25,998
   
30,451
 
Prepaid expenses and other assets
    
65,790
   
74,385
 
Total assets
  
$
3,505,948
  
$
2,944,955
  
               
               
LIABILITIES AND SHAREHOLDERS’ EQUITY
              
               
Liabilities:
              
Trading account securities sold but
 
$
4,601
  
$
206
  
not yet purchased, at fair value
              
Repurchase agreements
    
2,374,715
   
1,744,377
 
Securities purchased
    
227,191
   
-
 
Derivative liabilities, at fair value
    
3,788
   
3,558
 
Interest payable
    
4,438
   
5,746
 
Accrued compensation and benefits
    
39,237
   
57,000
 
Due to clearing broker
    
-
   
7,059
 
Accounts payable, accrued expenses and other liabilities
    
50,616
   
105,456
 
Short-term loan financing
    
-
   
63,981
 
Long-term debt
    
313,358
   
320,820
 
Total liabilities
    
3,017,944
   
2,308,203
 
               
Minority interest
    
219,907
   
243,061
 
               
Shareholders' equity:
              
Common stock, 159,360 and 151,883 shares
    
1,594
   
1,519
 
Additional paid-in capital
    
1,485,482
   
1,468,801
 
Accumulated other comprehensive loss, net of taxes
    
(6,450
)
  
(13,071
)
Accumulated deficit
    
(1,212,529
)
  
(1,063,558
)
Total shareholders' equity
   
268,097
   
393,691
 
               
Total liabilities and shareholders' equity
  
$
3,505,948
  
$
2,944,955