8-K

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

Date of Report (date of earliest event reported): February 4, 2004

Friedman, Billings, Ramsey Group, Inc.

(Exact name of Registrant as specified in its charter)

Virginia	54-1873198	000-50230
(State or other	(I.R.S. Employer incorporation or	(Commission File Number)
jurisdiction of	organization)
Identification No.)

1001 Nineteenth Street North Arlington, VA	22209
(Address of principal executive offices)	(Zip code)

(703) 312-9500

(Registrant’s telephone number including area code)

Item 12. Results of Operations and Financial Condition

1.        On February 4, 2004, Friedman, Billings, Ramsey Group, Inc. issued a press release announcing its earnings for the full year 2003 and for the fourth quarter. The entire text of that press release is being furnished herewith and attached as Exhibit 99.1.

EXHIBITS

99.1 Press Release dated February 4, 2004 announcing Friedman, Billings, Ramsey Group, Inc.’s full year 2003 and fourth quarter 2003 earnings.

SIGNATURE

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

DATE:    February 5, 2004	FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
	By:	/s/  Emanuel J. Friedman
		Emanuel J. Friedman Co-Chairman and Co-Chief Executive Officer

EX-99.1

Exhibit 99.1

For Immediate Release

Investor Contact: Kurt R. Harrington 703-312-9647 or kharrington@fbr.com

Media Contact: Bill Dixon 703-469-1092 or bdixon@fbr.com

FBR Reports Record Earnings per Share of $0.49 (Diluted)

for the Fourth Quarter 2003

Record Net Income for Fourth Quarter and Full Year

Earnings per share increased 48% year over year

and 133% in the fourth quarter versus same period last year

ARLINGTON, Va., February 4, 2004 – Friedman, Billings, Ramsey Group, Inc. (NYSE: FBR) today announced record earnings for full year 2003 and for the quarter ended December 31, 2003. Net income was $201.4 million, or $1.68 (basic) and $1.63 (diluted) per share, for the year ended December 31, 2003 compared to $53.3 million, or $1.16 (basic) and $1.10 (diluted) per share, for the year ended December 31, 2002. For the quarter ended December 31, 2003, net income was $80 million, or $0.50 (basic) and $0.49 (diluted) per share, compared to $10.1 million, or $0.22 (basic) and $0.21 (diluted) per share, for the prior year’s comparable period.

Reflected in these results is the negative impact of purchase accounting adjustments related to FBR’s merger with FBR Asset Investment Corporation (FBR Asset) on March 31, 2003. Adjusting for the impact of these purchase accounting adjustments on asset yields and cost of funds would increase the full year diluted earnings per share of $1.63 by $0.10 to $1.73 and the fourth quarter diluted earnings per share of $0.49 by $0.01 to $0.50.

The company had 165.2 million shares outstanding at December 31, 2003 and weighted average diluted shares outstanding during the year were 123.3 million. FBR declared a quarterly dividend of $0.34 per share on December 11, 2003, to shareholders of record as of December 31, 2003. For the full year, the company declared a total of $1.36 per share in dividends and increased its book value per share by 78% from $5.28 at December 31, 2002 to $9.41 at December 31, 2003. The dividends and increase in book value per share provided a 104% total return on equity to shareholders in 2003.

FBR’s record performance in 2003 is attributable to a number of factors, including the company’s merger with FBR Asset at the end of the first quarter, the continued growth and success of each of the company’s operating businesses, particularly its investment and merchant banking businesses, and the strong performance of the company’s mortgage-backed securities (MBS) business despite a challenging third quarter environment.

The company’s fourth quarter reflected continued strong performance in its investment banking business and a normalization of the net interest margin in its mortgage-backed securities business as the extremely high prepayment speeds in the third quarter moderated significantly in the last three months of 2003. In addition, the company achieved record earnings during the quarter despite running lower than its targeted leverage in the MBS portfolio as it invested proceeds from its $450 million follow-on offering in October. Additionally, the

company realized no gains in its merchant banking business during the quarter. Unrealized gains, however, did increase from $50.7 million at September 30, 2003 to $96 million at December 31, 2003.

“The last three months of 2003 represented a record quarter for the company and the culmination of a record year. In reflecting on 2003, several things clearly contributed to our success. First and foremost, our merger with FBR Asset represented a historic event for our company. In addition, our unwavering discipline has allowed us to continue our industry-leading after-market performance*, and is further evidenced by the returns and performance in all aspects of our business. Finally, this discipline and performance has allowed us to create a company that possesses what we believe is the broadest, deepest institutional distribution for equity securities in the United States today. These factors, together, have allowed us to become one of the leading investment banking firms in the United States,” said Eric F. Billings, Co-Chairman and Co-CEO. “With regard to our balance sheet businesses, as we predicted in the third quarter call, prepayment speeds slowed considerably in the fourth quarter allowing the net interest spread in our MBS portfolio to trend back closer to historical averages. As of the end of December we have fully deployed the capital we raised in October in our merchant banking and MBS portfolios. Consequently, we expect higher earnings in the first quarter of 2004 from both our MBS portfolio, as we anticipate operating with full leverage, and our merchant banking business, assuming normalized realized income from this portfolio.”

For the full year in investment banking, FBR ranked as the #3 lead manager of IPOs** and the #10 lead manager for all public equity offerings*** (ranked by dollar volume according to Dealogic/CommScan EquiDesk). In addition, the company raised approximately $2.5 billion in equity for issuers in private placements during the year. For the quarter, the company completed six IPOs, seven follow-on offerings, and three private equity placements, representing over $3 billion in total dollars raised. For the full year, investment banking revenues totaled $278.6 million versus $143.9 million in 2002 and for the fourth quarter $127.8 million versus $24.3 million in the same quarter last year. Following this strong performance in the latest quarter and for the full year 2003, the company continued to have a pipeline of over $5 billion for lead managed equity and merger and acquisition transactions leading into 2004.

The company’s institutional brokerage revenues totaled $74.1 million during 2003, an increase of 17% over the 2002 total of $63.2 million. For the fourth quarter of 2003 institutional brokerage revenue totaled $23.5 million versus $14.7 million during the fourth quarter of 2002, an increase of 60%. These results were achieved despite the continuation of industry-wide pricing pressure in this part of the business. Illustrating this market condition is the fact that the company’s customer share trading volume increased 32% year over year.

The company’s asset management business also performed well during the year. Assets under management increased in both the company’s mutual fund and hedge fund businesses. Net assets under management (excluding FBR Asset prior to the merger) increased 34.3% year over year. Total revenues from this line of business increased by 48.6% to $30.4 million in 2003 from $20.4 million in 2002 (excluding revenues from FBR Asset).

“During 2003 the company’s private investment partnerships provided exceptional returns to investors, building on what is a very strong track record of performance in our managed fund products,” said Emanuel J. Friedman, Co-Chairman and Co-CEO. “This performance and the performance of our underwritten transactions are the result of our commitment to recognizing and delivering value for investors and issuers.”

At December 31, 2003, the fair value of the company’s mortgage-backed securities portfolio totaled $10.6 billion and the company’s corresponding repurchase agreement and commercial paper liabilities (including those with Georgetown Funding) were $9.5 billion, resulting in leverage (debt to equity) in the mortgage backed portfolio of 9.3 to 1 at the end of the year and 8 to 1 on average for the fourth quarter. The company’s overall leverage was 6.1 to 1 at December 31, 2003.

The weighted average annual yield of the MBS portfolio was 3.23% for the fourth quarter and the company’s weighted average financing rate was 1.21% (including the cost of hedging), resulting in a net interest spread of 2.02%. Adjusting the net interest spread for merger related purchase accounting adjustments would increase the net interest spread to approximately 2.14% for the fourth quarter. The spread in the fourth quarter was higher by 77 basis points than the third quarter spread of 1.25% due to higher asset yields as a result of a significantly lower constant prepayment rate (CPR) during the quarter. For the final three months of the year, the company experienced an average one-month CPR of 27, down from the 41 CPR experienced in the third quarter. The weighted average net interest spread for the full year was 1.69%, compared to an average net interest spread of 2.76% for FBR Asset’s predecessor portfolio in 2002. The weighted average net interest spread without purchase accounting adjustments for the year would have been approximately 1.91%. The average unamortized cost of the company’s portfolio was 101.99 at December 31, 2003.

The company continues to own only adjustable rate mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac, or Ginnie Mae. At year-end, the company had $4.1 billion of pay-fixed, receive-floating interest rate swaps outstanding with a 1.43% funding rate and a weighted average maturity of 314 days. Also at year-end, the company continued to maintain a low effective duration of 0.94. In addition, at the date of this release, the company has increased its total fixed rate swaps to $5.1 billion with an average maturity of 330 days and an average funding rate of 1.48%.

In its merchant banking portfolio, FBR generated dividends of $1.3 million during the quarter ended December 31, 2003 and realized no gains despite a $45.3 million increase in unrealized gains during the quarter. The company did, however, recognize $7.4 million in income from its alternative asset investments. FBR’s merchant banking portfolio and other long term investments totaled $379 million at December 31, 2003, or 24% of the company’s equity, approximately the same percentage level as September 30, 2003, prior to the equity capital raise. Of this total, $261.2 million was held in the merchant banking portfolio, $69.8 million was held in alternative asset funds, and $48.0 million was held in broker-dealer investments.

Looking forward, the company anticipates that full deployment of allocated capital in the MBS strategy, combined with historical returns from merchant banking, should provide the opportunity for REIT level income in 2004 to exceed its current annual dividend of $1.36 per share. REIT level earnings exceeding the current dividend would typically be paid out to shareholders in the form of a special dividend. The company’s capital markets businesses have continued their momentum into the first quarter as institutional brokerage realized record revenues in January and in investment banking the company has completed seven transactions, including its first two IPOs of the year. Additionally, the company believes that based upon its current backlog, new marketing and branding initiatives, including the recently completed FBR Open, a PGA TOUR event, and the continuation of its industry-leading after-market underwriting performance,* it will continue to have success in growing its capital markets businesses throughout 2004.

Investors wishing to listen to the joint conference call at 9:00 a.m. U.S. EST tomorrow may do so via the web at: http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=FBR

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

Friedman, Billings, Ramsey Group, Inc. provides investment banking^****, institutional brokerage^****, asset management, and private client services through its operating subsidiaries and invests in mortgage-backed securities and merchant banking opportunities. FBR focuses capital and financial expertise on six industry sectors: financial services, real estate, technology, healthcare, energy and diversified industries. FBR, headquartered in the Washington, D.C. metropolitan area, with offices in Arlington, Va. and Bethesda, Md., also has offices in Atlanta, Boston, Chicago, Cleveland, Denver, Houston, Irvine, London, New York, Portland, San Francisco, Seattle, and Vienna. For more information, see http://www.fbr.com.

* Source is Dealogic/CommScan EquiDesk. Relates to all public U.S. equity transactions (IPOs and secondaries/follow-ons, excluding closed-end funds) and all industries. Transactions and performance priced through December 31, 2003. Non-weighted average aftermarket performance. Ranked #1 among lead managing underwriters of more than 10 transactions for the one year period and more than 30 transactions for the three and five year periods ended December 31, 2003.

** Source is Dealogic/CommScan EquiDesk. Relates to total dollar amount, with over-allotment, of U.S. IPOs priced between January 1, 2003 and December 31, 2003, with apportioned amount to all bookrunners, excluding American Depository Receipts and closed-end funds.

*** Source is Dealogic/CommScan EquiDesk. Relates to total dollar amount, with over-allotment, of U.S. IPOs and secondaries/follow-ons priced between January 1, 2003 and December 31, 2003, with apportioned amount to all bookrunners, excluding American Depository Receipts and closed-end funds.

^**** Investment banking and institutional brokerage provided in the United States by Friedman, Billings, Ramsey & Co., Inc. and FBR Investment Services Inc., and in Europe, the Middle East and Asia by Friedman, Billings, Ramsey International, Ltd.

The company believes that the pro forma information about purchase accounting adjustments related to the merger with FBR Asset Investment Corporation, when read in conjunction with the company’s GAAP financial information, can provide useful supplemental information for investors analyzing period to period comparisons of the company’s financial statements because it is the result of the company’s merger on March 31, 2003.

Financial data follows.

FRIEDMAN, BILLINGS, RAMSEY GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share amounts) (Unaudited)

	Quarter ended December 31,
	2003			%		2002		%
REVENUES:
Investment banking:
Underwriting	$	47,015		21.3	%	$	8,890	15.3	%
Corporate finance		73,347		33.2	%		11,119	19.1	%
Investment gains		7,443		3.4	%		4,312	7.4	%
Institutional brokerage:
Principal transactions		7,089		3.2	%		6,339	10.9	%
Agency commissions		16,447		7.4	%		8,344	14.3	%
Asset management:
Base management fees		6,120		2.8	%		8,119	13.9	%
Incentive allocations and fees		5,723		2.6	%		5,291	9.1	%
Net investment income		7,563		3.4	%		4,474	7.7	%
Technology sector investment and incentive (loss)/income		(264	)	-0.1	%		111	0.2	%
Principal investment:
Interest		69,961		31.7	%		—	0.0	%
Realized gains		89		0.0	%		—	0.0	%
Dividends		1,278		0.6	%		—	0.0	%
Other		3,776		1.7	%		1,868	3.2	%
Total revenues		245,587		111.2	%		58,867	101.1	%
Interest expense		24,656		11.2	%		665	1.1	%
Revenues, net of interest expense		220,931		100.0	%		58,202	100.0	%
EXPENSES:
Compensation and benefits		91,239		41.3	%		31,617	54.3	%
Business development and professional services		15,159		6.9	%		7,545	13.0	%
Clearing and brokerage fees		1,977		0.9	%		1,467	2.5	%
Occupancy and equipment		2,743		1.3	%		2,274	3.9	%
Communications		3,168		1.4	%		1,910	3.3	%
Other operating expenses		5,603		2.5	%		2,608	4.5	%
Total expenses		119,889		54.3	%		47,421	81.5	%
Net income before income taxes		101,042		45.7	%		10,781	18.5	%
Income tax provision		21,084		9.5	%		692	1.2	%
Net Income	$	79,958		36.2	%	$	10,089	17.3	%
Basic earnings per share	$	0.50				$	0.22
Diluted earnings per share	$	0.49				$	0.21
Weighted average shares—basic		159,984					46,403
Weighted average shares—diluted		163,470					49,089

FRIEDMAN, BILLINGS, RAMSEY GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share amounts)

	Year ended December 31,
	2003			%		2002			%
REVENUES:
Investment banking:
Underwriting	$	117,296		21.0	%	$	76,556		28.8	%
Corporate finance		144,086		25.7	%		58,595		22.0	%
Investment gains		17,204		3.1	%		8,725		3.3	%
Institutional brokerage:
Principal transactions		23,965		4.3	%		27,512		10.3	%
Agency commissions		50,178		9.0	%		35,672		13.4	%
Asset management:
Base management fees		24,782		4.4	%		28,956		10.9	%
Incentive allocations and fees		14,205		2.5	%		14,258		5.4	%
Net investment income		22,484		4.0	%		16,276		6.1	%
Technology sector investment and incentive (loss)		(1,591	)	-0.3	%		(5,622	)	-2.1	%
Principal investment:
Interest		168,393		30.1	%		—		0.0	%
Realized gains		32,276		5.8	%		—		0.0	%
Dividends		5,019		0.9	%		—		0.0	%
Other		10,228		1.8	%		7,275		2.7	%
Total revenues		628,525		112.3	%		268,203		100.8	%
Interest expense		68,995		12.3	%		2,073		0.8	%
Revenues, net of interest expense		559,530		100.0	%		266,130		100.0	%
EXPENSES:
Compensation and benefits		226,389		40.5	%		147,072		55.3	%
Business development and professional services		43,044		7.7	%		30,589		11.5	%
Clearing and brokerage fees		7,014		1.2	%		5,353		2.0	%
Occupancy and equipment		9,585		1.7	%		8,838		3.3	%
Communications		10,574		1.9	%		8,185		3.1	%
Other operating expenses		16,919		3.0	%		10,652		4.0	%
Total expenses		313,525		56.0	%		210,689		79.2	%
Net income before income taxes and extraordinary gain		246,005		44.0	%		55,441		20.8	%
Income tax provision		44,591		8.0	%		3,035		1.1	%
Net income before extraordinary gain		201,414		36.0	%		52,406		19.7	%
Extraordinary gain		—		0.0	%		1,413		0.5	%
Income tax provision on extraordinary gain		—		0.0	%		536		0.2	%
Net income	$	201,414		36.0	%	$	53,283		20.0	%
Basic earnings per share before extraordinary gain	$	1.68				$	1.14
Diluted earnings per share before extraordinary gain	$	1.63				$	1.08
Basic earnings per share	$	1.68				$	1.16
Diluted earnings per share	$	1.63				$	1.10
Weighted average shares—basic		119,801					46,098
Weighted average shares—diluted		123,307					48,442

FRIEDMAN, BILLINGS, RAMSEY GROUP, INC. Financial & Statistical Supplement – Operating Results (unaudited) (Dollars in thousands, except per share data)

	YTD 2003			Q-4 03			Q-3 03			Q-2 03			Q-1 03			YTD 2002			Q-4 02			Q-3 02			Q-2 02			Q-1 02
Revenues
Investment banking:
Underwriting	$	117,296		$	47,015		$	37,518		$	23,975		$	8,788		$	76,556		$	8,890		$	30,108		$	25,248		$	12,310
Corporate finance		144,086			73,347			51,637			13,383			5,719			58,595			11,119			26,175			9,827			11,474
Investment gains		17,204			7,443			1,096			5,433			3,232			8,725			4,312			2,627			1,595			191
Institutional brokerage:
Principal transactions		23,965			7,089			6,549			6,576			3,751			27,512			6,339			5,743			8,372			7,058
Agency commissions		50,178			16,447			13,145			13,049			7,537			35,672			8,344			8,629			9,954			8,745
Asset management:
Base management fees		24,782			6,120			5,602			5,369			7,691			28,956			8,119			7,208			7,633			5,996
Incentive income		14,205			5,723			1,770			1,133			5,579			14,258			5,291			4,282			2,902			1,783
Net investment income (loss)		22,484			7,563			3,327			8,968			2,626			16,276			4,474			(2,737	)		8,517			6,022
Technology sector investment and incentive income (loss)		(1,591	)		(264	)		(824	)		(66	)		(437	)		(5,622	)		111			(2,202	)		(2,432	)		(1,099	)
Principal investment:
Interest		168,393			69,961			46,849			49,088			2,495			—			—			—			—			—
Realized gains		32,276			89			14,358			17,770			59			—			—			—			—			—
Dividends		5,019			1,278			1,258			1,542			941			—			—			—			—			—
Other		10,228			3,776			2,675			2,219			1,558			7,275			1,868			1,879			1,638			1,890
Total revenues		628,525			245,587			184,960			148,439			49,539			268,203			58,867			81,712			73,254			54,370
Expenses
Compensation and benefits		226,389			91,239			67,505			42,841			24,804			147,072			31,617			45,725			38,411			31,319
Business development & professional services		43,044			15,159			11,328			10,678			5,879			30,589			7,545			8,650			7,982			6,412
Clearing and brokerage fees		7,014			1,977			2,057			1,748			1,232			5,353			1,467			1,443			1,817			626
Occupancy & equipment		9,585			2,743			2,426			2,217			2,199			8,838			2,274			2,309			2,046			2,209
Communications		10,574			3,168			2,969			2,228			2,209			8,185			1,910			2,009			2,187			2,079
Interest expense		68,995			24,656			22,972			19,721			1,646			2,073			665			608			430			370
Other operating expenses		16,919			5,603			4,259			4,053			3,004			10,652			2,608			2,976			2,602			2,466
Total expenses		382,520			144,545			113,516			83,486			40,973			212,762			48,086			63,720			55,475			45,481
Net income before taxes and extraordinary gain		246,005			101,042			71,444			64,953			8,566			55,441			10,781			17,992			17,779			8,889
Income tax provision		44,591			21,084			14,483			6,181			2,843			3,035			692			2,343			—			—
Net income before extraordinary gain	$	201,414		$	79,958		$	56,961		$	58,772		$	5,723		$	52,406		$	10,089		$	15,649		$	17,779		$	8,889
Extraordinary gain		—			—			—			—			—			1,413			—			—			—			1,413
Income tax provision on extraordinary gain		—			—			—			—			—			536			—			536			—			—
Net income	$	201,414		$	79,958		$	56,961		$	58,772		$	5,723		$	53,283		$	10,089		$	15,113		$	17,779		$	10,302
Net income before taxes and extraordinary gain as a percentage of revenue		39.1	%		41.1	%		38.6	%		43.8	%		17.3	%		20.7	%		18.3	%		22.0	%		24.3	%		16.3	%
ROE (annualized)		22.4	%		24.4	%		20.7	%		21.9	%		3.6	%		24.8	%		16.8	%		26.7	%		34.4	%		21.7	%
Total shareholders' equity	$	1,554,339		$	1,554,339		$	1,068,153		$	1,136,093		$	1,011,647		$	245,165		$	245,165		$	234,625		$	218,368		$	194,590
Basic earnings per share	$	1.68		$	0.50		$	0.42		$	0.43		$	0.12		$	1.16		$	0.22		$	0.33		$	0.39		$	0.23
Diluted earnings per share	$	1.63		$	0.49		$	0.41		$	0.43		$	0.12		$	1.10		$	0.21		$	0.31		$	0.36		$	0.22
Ending shares outstanding (in thousands)		165,189			165,189			136,180			136,087			131,576			46,456			46,456			46,396			46,339			45,751
Book value per share	$	9.41		$	9.41		$	7.84		$	8.35		$	7.69		$	5.28		$	5.28		$	5.06		$	4.71		$	4.25

	YTD 2003		Q-4 03		Q-3 03		Q-2 03		Q-1 03		YTD 2002		Q-4 02		Q-3 02		Q-2 02		Q-1 02
Gross assets under management (in millions)
Managed accounts	$	60.6	$	60.6	$	63.8	$	69.6	$	818.8	$	6,538.0	$	6,538.0	$	7,356.0	$	4,152.3	$	2,757.7
Hedge & offshore funds		330.2		330.2		245.9		234.8		237.5		247.0		247.0		232.3		216.0		209.2
Mutual funds		1,654.5		1,654.5		1,492.1		1,419.6		1,196.8		1,188.5		1,188.5		1,071.2		1,313.4		1,270.4
Private equity funds		42.9		42.9		40.6		32.5		32.7		34.7		34.7		41.7		46.1		46.4
Technology sector funds		50.3		50.3		46.1		44.8		49.7		63.8		63.8		54.0		56.6		60.4
Total	$	2,138.5	$	2,138.5	$	1,888.5	$	1,801.3	$	2,335.5	$	8,072.0	$	8,072.0	$	8,755.2	$	5,784.4	$	4,344.1
Net assets under management (in millions)
Managed accounts	$	60.6	$	60.6	$	63.8	$	69.6	$	82.7	$	871.5	$	871.5	$	849.7	$	748.5	$	394.5
Hedge & offshore funds		277.2		277.2		222.3		196.8		159.4		162.4		162.4		162.9		188.5		157.7
Mutual funds		1,642.6		1,642.6		1,480.5		1,410.5		1,191.6		1,173.3		1,173.3		1,064.4		1,297.7		1,214.1
Private equity funds		37.5		37.5		33.2		30.9		28.6		30.9		30.9		40.1		45.5		45.5
Technology sector funds		43.3		43.3		39.7		40.4		45.4		48.2		48.2		48.6		52.3		55.8
Total	$	2,061.2	$	2,061.2	$	1,839.5	$	1,748.2	$	1,507.7	$	2,286.3	$	2,286.3	$	2,165.7	$	2,332.5	$	1,867.6
Productive assets under management (in millions)
Managed accounts	$	60.6	$	60.6	$	63.8	$	69.6	$	818.8	$	6,538.0	$	6,538.0	$	7,356.0	$	4,152.3	$	2,757.7
Hedge & offshore funds		277.2		277.2		222.3		196.8		159.4		162.4		162.4		162.9		188.5		157.7
Mutual funds		1,642.6		1,642.6		1,480.5		1,410.5		1,191.6		1,173.3		1,173.3		1,064.4		1,297.7		1,214.1
Private equity funds		91.9		91.9		88.6		88.1		90.9		91.2		91.2		92.5		94.8		95.3
Technology sector funds		91.6		91.6		92.2		89.5		249.2		249.0		249.0		248.5		248.1		249.3
Total	$	2,163.9	$	2,163.9	$	1,947.4	$	1,854.5	$	2,509.9	$	8,213.9	$	8,213.9	$	8,924.3	$	5,981.4	$	4,474.1
Employee count		494		494		479		500		493		481		481		464		445		441

FRIEDMAN, BILLINGS, RAMSEY GROUP, INC. CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except per share amounts)

	31-Dec-03			31-Dec-02
ASSETS
Cash and cash equivalents	$	92,688		$	90,007
Receivables:
Interest		44,674			—
Asset management fees		5,517			13,494
Investment banking		8,464			1,725
Affiliates		4,861			7,117
Other		3,779			5,786
Investments:
Mortgage-backed securities, at fair value		10,551,570			38,505
Trading securities, at market value		4,932			8,298
Long-term investments		379,002			150,447
Due from clearing broker		89,940			43,146
Bank loans, net		—			15,052
MMA acquired management contracts		16,090			17,629
Goodwill		108,013			—
Building, furniture, equipment and leasehold improvements, net		6,969			9,156
Other assets		17,114			5,823
Total assets	$	11,333,613		$	406,185
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Trading account securities sold short, at market value	$	9,525		$	19,932
Repurchase agreements		5,095,676			16,352
Commercial paper		4,397,993			—
Interest rate swaps		5,366			—
Dividends payable		56,744			—
Interest payable		6,188			—
Accounts payable and accrued expenses		52,692			16,412
Accrued compensation and benefits		100,901			41,255
Bank deposits		—			51,215
Short-term loans payable		—			10,588
Long-term debt		54,189			5,266
Total liabilities		9,779,274			161,020
Shareholders’ equity:
Common stock, 166,893 and 50,456 shares		1,669			505
Additional paid-in capital		1,443,228			211,724
Employee stock loan receivable including accrued interest (1,289 and 4,000 shares)		(8,277	)		(24,182	)
Deferred compensation		(2,203	)		—
Accumulated other comprehensive income		60,505			4,345
Retained earnings		59,417			52,773
Total shareholders’ equity		1,554,339			245,165
Total liabilities and shareholders’ equity	$	11,333,613		$	406,185
Book Value per Share	$	9.41		$	5.28
Shares Outstanding		165,189			46,456

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 on Form 10-K and Quarterly Reports on Form 10-Q that is available from the company (by calling Investor Relations 703.469.1080, or from the company’s website www.fbr.com) and from the SEC’s website at www.sec.gov.

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