-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RLO2NgRJjhwWac9WsPXfGi12U1zv5fM5Hx7Yg05UVcohtkxhBhFp44LdanZMP7ZQ nuWpYguOCsOvI3VKr6aGLg== 0001209028-03-000123.txt : 20031029 0001209028-03-000123.hdr.sgml : 20031029 20031029164814 ACCESSION NUMBER: 0001209028-03-000123 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20031028 ITEM INFORMATION: FILED AS OF DATE: 20031029 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: 320045263 STATE OF INCORPORATION: VA FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-50230 FILM NUMBER: 03964226 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 fbr8k03qtr3.txt THIRD QUARTER 2003 EARNINGS. - -------------------------------------------------------------------------------- FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (date of earliest event reported): October 28, 2003 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 October 28, 2003, Friedman, Billings, Ramsey Group, Inc. issued a press release announcing its earnings for the third quarter 2003. The entire text of that press release is being furnished herewith and attached as Exhibit 99.1. EXHIBIT LIST 99.1 Press release announcing Friedman, Billings, Ramsey Group, Inc.'s third 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. FRIEDMAN, BILLINGS, RAMSEY GROUP, INC. Date: October 29, 2003 By: /s/ Emanuel J. Friedman -------------------------------- Emanuel J. Friedman Co-Chairman & Co-Chief Executive Officer EX-99.1 3 thirdqtr03release.txt 3RD QUARTER 2003 EARNINGS RELEASE. EXHIBIT 99.1 FBR Reports Third Quarter 2003 Net Income of $57 Million, or $0.42 (Basic) and $0.41 (Diluted) per Share ARLINGTON, Va., October 28, 2003 - Friedman, Billings, Ramsey Group, Inc. (NYSE: FBR) today reported net income after tax of $57 million, or $0.42 (basic) and $0.41 (diluted) per share, on gross revenues of $185 million for the quarter ended September 30, 2003, compared to net income of $15.1 million, or $0.33 (basic) and $0.31 (diluted) per share on gross revenues of $81.7 million for the third quarter of 2002. Reflected in these results is the negative impact of purchase accounting adjustments related to FBR's merger with FBR Asset Investment Corporation on March 31, 2003. As a result of the purchase accounting step-up in the basis of the mortgage-backed securities (MBS) owned by FBR Asset at the time of the merger, non-cash premium amortization is greater than it would have been without these adjustments. The impact of the increased amortization (the "Merger Amortization") associated with the step-up reduced net interest income by $0.07 per share during the quarter. In addition, following the merger and the establishment of a quarterly dividend payment by FBR Group, FBR treats as compensation expense the dividends paid on employee-owned shares pledged in connection with stock incentive loans to those employees. The impact of this additional compensation expense was $0.02 per share during the quarter. The company believes this is important because it currently plans to sell these loans, eliminating this expense. Adjusting for the above two items, diluted earnings per share of $0.41 would increase by $0.09 to $0.50 per share for the third quarter. FBR's third quarter results were primarily influenced by a challenging MBS environment, offset by strong continued growth in the investment banking business. During the quarter, extraordinarily high prepayment speeds were experienced in the mortgage-backed securities market. The impact of this increased prepayment activity, from an already high average of 35 CPR (constant prepayment rate) in the second quarter to an average of 41 CPR in the third quarter, reduced the company's net interest margin in its MBS portfolio by approximately $9 million, or 11 basis points quarter over quarter, in addition to the previously mentioned Merger Amortization. FBR's investment banking business experienced its strongest quarter of the year in the third quarter, offsetting the impact of this unique MBS environment and demonstrating the strength of the company's diversified business model. "As anticipated, investment banking revenues for the third quarter exceeded the entire first half of the year," said Co-Chairman and Co-CEO Eric F. Billings. "The performance in the third quarter from our capital markets business demonstrated the progress we have made in building the business through the addition of new people and broadening our industries of focus. Additionally, we are continuing to benefit from and build upon our industry-leading underwriting track record. We believe that this past quarter is one that demonstrated clearly the unique discipline and capability of our origination and distribution franchise. We expect to continue to grow and enhance this business over the next year, just as we have grown and enhanced the company's capital through FBR's recently completed follow-on offering which raised net proceeds of $430 million." The company reported investment banking revenues of $90.2 million in the third quarter, versus $58.9 million in the third quarter 2002, a 53% increase. During the period, FBR completed 11 lead-managed equity offerings totaling $1.9 billion.* For the first nine months of 2003 investment banking revenues were $150.8 million, a 26% increase over the $119.6 million in revenues in the first nine months of 2002. "Since the end of the third quarter, investment banking has completed six lead-managed equity offerings totaling $1.2 billion, while at the same time substantially growing the investment banking pipeline," said J. Rock Tonkel, Head of Investment Banking. Through September 30, 2003, FBR ranks as the number three lead-managed IPO underwriter in the United States (ranked by dollar volume according to CommScan EquiDesk). FBR lead-managed public common equity offerings completed during the first three quarters of this year ranked number one in after-market performance among major underwriters. This continues a record in which FBR ranks number one in aftermarket performance among major underwriters for all public common equity offerings during the last five years.** In the institutional brokerage business, revenues continued to grow despite a continued reduction in spreads throughout the securities industry. Brokerage revenue for the quarter of $19.7 million exceeded revenue during the same quarter last year by 37%. The company believes that in addition to growing market share in both its investment banking and institutional brokerage businesses, in the future institutional brokerage revenues will grow at a faster rate as its market share becomes more comparable with that of investment banking. In its asset management business, FBR recorded fee revenues of $7.2 million, including base management and administration fees of $5.6 million and non-cash incentive income of $1.6 million. Net assets under management totaled $1.8 billion as of September 30, 2003, representing a 28% increase from September 30, 2002. "In addition to the continued growth of each of our operating businesses, FBR completed several strategic initiatives during the third quarter," added Emanuel J. Friedman, Co-Chairman and Co-CEO. "In July we added a team of ABS bankers providing FBR with its first entry into the structured finance fixed-income business. This group will focus on the securitization of non-prime mortgage assets. This is an industry where FBR maintains the leadership position in equity underwriting and has extensive issuer relationships. Also during the quarter, FBR established a $5 billion A1+/P1 rated asset-backed commercial paper vehicle called Georgetown Funding, which has strengthened and diversified our funding sources for our agency-backed MBS portfolio." In the company's mortgage-backed securities portfolio the asset yield was 2.37% for the quarter. This yield was impacted by both the Merger Amortization and the historically high prepayments, which averaged 41 CPR for the quarter. The company's weighted average cost of financing for the portfolio was 1.12%, including the cost of hedging. The resulting net interest spread for the quarter was 1.25%, compared to 1.96% in the previous quarter, and 2.73% in last year's third quarter, for the stand-alone portfolio of FBR Asset. Excluding the Merger Amortization, the net interest spread was 1.69% for the quarter, compared to 2.09% in the second quarter of 2003. A 1.69% net interest spread results in a return on equity approximately equal to 20%, using the third quarter leverage ratio. This demonstrated the resiliency of the company's mortgage-backed security business, given the extreme conditions of the third quarter. FBR's mortgage-backed portfolio averaged $7.9 billion during the third quarter. The premium in the MBS portfolio was 2.28% at the end of the quarter, and the company had approximately no unrealized net gain or loss in the overall portfolio. The company continues to own only adjustable rate mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac, or Ginnie Mae, and with a duration of 0.93 as of September 30, 2003. "We were particularly pleased with the performance of our mortgage-backed portfolio this quarter, given the uniquely challenging environment," said Richard J. Hendrix, Chief Investment Officer. "Specifically, our low duration and low leverage combined to insulate us from the extremes in valuation changes and rapid asset prepayments that characterized the third quarter MBS market. Through this period we did not have to sell assets, allowing us to maintain our target portfolio leverage and provide an acceptable return on equity despite the pressure on yields from rapid amortization. Already in October, CPR's have begun to fall, allowing our net interest spread to begin to widen to more historical levels." In its merchant banking portfolio, FBR generated realized gains and dividends of $15.1 million during the quarter ended September 30, 2003. The company made one significant merchant banking investment during the quarter of $25 million in a specialty lines insurance company. FBR's merchant banking portfolio and other long term investments totaled $254.8 million, or approximately 24% of the company's equity, as of September 30, 2003. Of this total, $178 million was held in the merchant banking portfolio, $57.4 million was held in alternative asset funds, and $19.4 million was held in broker-dealer investments. The company had unrealized gains in the merchant banking portfolio of $50.8 million as of September 30, 2003. FBR had 136.2 million common shares outstanding, shareholders' equity of $1.1 billion, and book value per share of $7.84 as of September 30, 2003, compared with 46.5 million common shares outstanding, shareholders' equity of $ 245.2 million, and book value per share of $5.28 as of December 31, 2002. Subsequent to the end of the quarter, the company completed a follow-on offering of 26.4 million shares (including over-allotment option), at $17.00 per share, raising $430 million. Including the impact of this offering, FBR had 162.6 million shares outstanding, shareholders' equity of $1.5 billion, and book value per share of $9.21. Friedman, Billings, Ramsey Group, Inc. is a leading investment bank that 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 industrial 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, Charlotte, Chicago, Cleveland, Denver, Irvine, London, New York, Portland, San Francisco, Seattle, and Vienna. FBR has elected REIT status for tax purposes. For more information, see http://www.fbr.com. ------------------ * IPO's, public follow-ons, public and unregistered secondaries, and 144A institutional equity offerings. **Source: CommScan EquiDesk, pricing as of October 27, 2003, for transactions completed during the periods 01/01/03 through 09/30/03 and 09/30/98 through 09/30/03. "Major underwriters" is defined as those firms with greater than 10 transactions for the nine months ended September 30, 2003 and greater than 50 transactions for the five year period. *** 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. A live webcast of FBR's conference call will be available at 9:00am on October 29, 2003, 2003 (Eastern Time) via http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=FBR. Replays of the webcast will be available afterward. The company believes that the pro forma information about Merger Amortization set forth in the second paragraph 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 September 30, 2003 % 2002 % REVENUES: Investment banking $90,251 55.7% $58,910 72.6% Institutional brokerage 19,694 12.1% 14,372 17.7% Asset management: Base fees 5,602 3.5% 7,208 8.9% Incentive and investment income 5,002 3.1% 1,545 1.9% Technology sector investment and incentive loss (729) -0.5% (2,202) -2.7% Principal investment: Interest 46,849 28.9% - 0.0% Realized gains 14,358 8.9% - 0.0% Dividends 1,258 0.8% - 0.0% Other 2,675 1.7% 1,879 2.3% ------- ------ ------- ------ Gross revenues 184,960 114.2% 81,712 100.7% Interest expense 22,972 14.2% 608 0.7% ------- ------ ------- ------ Revenues, net of interest expense 161,988 100.0% 81,104 100.0% ------- ------ ------- ------ EXPENSES: Compensation and benefits 67,505 41.7% 45,725 56.4% Business development and professional services 11,328 7.0% 8,650 10.6% Other 11,711 7.2% 8,737 10.8% ------- ------ ------- ------ Total expenses 90,544 55.9% 63,112 77.8% ------- ------ ------- ------ Net income before income taxes and extraordinary gain 71,444 44.1% 17,992 22.2% Income tax provision 14,483 8.9% 2,343 2.9% ------- ------ ------- ------ Net income before extraordinary gain 56,961 35.2% 15,649 19.3% ------- ------ ------- ------ Extraordinary gain - 0.0% - 0.0% Income tax provision on extraordinary gain - 0.0% 536 0.7% ------- ------ ------- ------ Net Income $56,961 35.2% $15,113 18.6% ======= ====== ======= ====== Basic earnings per share before extraordinary gain $0.42 $0.34 Diluted earnings per share before ======= ======= extraordinary gain $0.41 $0.32 ======= ======= Basic earnings per share $0.42 $0.33 ======= ======= Diluted earnings per share $0.41 $0.31 ======= ======= Weighted average shares - basic 135,670 46,370 ======= ======= Weighted average shares - diluted 138,269 49,526 ======= ======= FRIEDMAN, BILLINGS, RAMSEY GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share amounts) (Unaudited) Nine Months ended September 30, 2003 % 2002 % REVENUES: Investment banking $150,781 44.5% $119,555 57.5% Institutional brokerage 50,607 14.9% 48,501 23.3% Asset management: Base fees 18,662 5.5% 20,837 10.0% Incentive and investment income 23,308 6.9% 20,769 10.0% Technology sector investment and incentive loss (1,232) -0.3% (5,733) -2.7% Principal investment: Interest 98,432 29.1% - 0.0% Realized gains 32,187 9.5% - 0.0% Dividends 3,741 1.1% - 0.0% Other 6,452 1.9% 5,407 2.6% -------- ------ -------- ------ Gross revenues 382,938 113.1% 209,336 100.7% Interest expense 44,339 13.1% 1,408 0.7% Revenues, net of interest -------- ------ -------- ------ expense 338,599 100.0% 207,928 100.0% -------- ------ -------- ------ EXPENSES: Compensation and benefits 135,150 39.9% 115,455 55.5% Business development and professional services 27,885 8.2% 23,044 11.1% Other 30,601 9.1% 24,769 11.9% -------- ------ -------- ------ Total expenses 193,636 57.2% 163,268 78.5% -------- ------ -------- ------ Net income before income taxes and extraordinary gain 144,963 42.8% 44,660 21.5% Income tax provision 23,507 6.9% 2,343 1.1% -------- ------ -------- ------ Net income before extraordinary gain 121,456 35.9% 42,317 20.4% -------- ------ -------- ------ Extraordinary gain - 0.0% 1,413 0.7% Income tax provision on extraordinary gain - 0.0% 536 0.3% -------- ------ -------- ------ Net income $121,456 35.9% $43,194 20.8% ======== ====== ======== ====== Basic earnings per share before extraordinary gain $1.14 $0.92 Diluted earnings per share before ===== ===== extraordinary gain $1.11 $0.88 ===== ===== Basic earnings per share $1.14 $0.94 ===== ===== Diluted earnings per share $1.11 $0.90 ===== ===== Weighted average shares - basic 106,279 45,995 ======== ======== Weighted average shares - diluted 109,103 48,218 ======== ======== FRIEDMAN, BILLINGS, RAMSEY GROUP, INC. Financial & Statistical Supplement - Operating Results (unaudited) (Dollars in thousands, except per share data) YTD 2003 Q-3 03 Q-2 03 Q-1 03 Revenues Investment banking: Underwriting $70,281 $37,518 $23,975 $8,788 Corporate finance 70,739 51,637 13,383 5,719 Investment gains 9,761 1,096 5,433 3,232 Institutional brokerage: Principal transactions 16,876 6,549 6,576 3,751 Agency commissions 33,731 13,145 13,049 7,537 Asset management: Base management fees 18,662 5,602 5,369 7,691 Incentive income 8,482 1,770 1,133 5,579 Net investment income (loss) 14,826 3,232 8,968 2,626 Technology sector investment and incentive income (loss) (1,232) (729) (66) (437) Principal investment: Interest 98,432 46,849 49,088 2,495 Realized gains 32,187 14,358 17,770 59 Dividends 3,741 1,258 1,542 941 Other 6,452 2,675 2,219 1,558 -------- -------- -------- ------- Total revenues 382,938 184,960 148,439 49,539 -------- -------- -------- ------- Expenses Compensation and benefits 135,150 67,505 42,841 24,804 Business development & professional services 27,885 11,328 10,678 5,879 Clearing and brokerage fees 5,037 2,057 1,748 1,232 Occupancy & equipment 6,842 2,426 2,217 2,199 Communications 7,406 2,969 2,228 2,209 Interest expense 44,339 22,972 19,721 1,646 Other operating expenses 11,316 4,259 4,053 3,004 ------- ------- ------- ------- Total expenses 237,975 113,516 83,486 40,973 ------- ------- ------- ------- Net income before taxes and extraordinary gain 144,963 71,444 64,953 8,566 Income tax provision 23,507 14,483 6,181 2,843 ------- ------- ------- ------- Net income before extraordinary gain $121,456 $56,961 $58,772 $5,723 Extraordinary gain - - - - Income tax provision on extraordinary gain - - - - -------- ------- ------- ------ Net income $121,456 $56,961 $58,772 $5,723 ======== ======= ======= ====== Net income before taxes and extraordinary gain as a percentage of revenue 37.9% 38.6% 43.8% 17.3% ROE (annualized) 24.7% 20.7% 21.9% 3.6% Total shareholders' equity $1,068,153 $1,068,153 $1,136,093 $1,011,647 Basic earnings per share $1.14 $0.42 $0.43 $0.12 Diluted earnings per share $1.11 $0.41 $0.43 $0.12 Ending shares outstanding (in thousands) 136,180 136,180 136,087 131,576 Book value per share $7.84 $7.84 $8.35 $7.69 Gross assets under management (in millions) Managed accounts $63.8 $63.8 $69.6 $818.8 Hedge & offshore funds 245.9 245.9 234.8 237.5 Mutual funds 1,492.1 1,492.1 1,419.6 1,196.8 Private equity funds 40.6 40.6 32.5 32.7 Technology sector funds 46.1 46.1 44.8 49.7 -------- -------- -------- -------- Total $1,888.5 $1,888.5 $1,801.3 $2,335.5 Net assets under management (in millions) Managed accounts $63.8 $63.8 $69.6 $82.7 Hedge & offshore funds 222.3 222.3 196.8 159.4 Mutual funds 1,480.5 1,480.5 1,410.5 1,191.6 Private equity funds 33.2 33.2 30.9 28.6 Technology sector funds 39.7 39.7 40.4 45.4 -------- -------- -------- -------- Total $1,839.5 $1,839.5 $1,748.2 $1,507.7 Productive assets under management (in millions) Managed accounts $63.8 $63.8 $69.6 $818.8 Hedge & offshore funds 222.3 222.3 196.8 159.4 Mutual funds 1,480.5 1,480.5 1,410.5 1,191.6 Private equity funds 88.6 88.6 88.1 90.9 Technology sector funds 92.2 92.2 89.5 249.2 -------- -------- -------- -------- Total $1,947.4 $1,947.4 $1,854.5 $2,509.9 Employee count 479 479 500 493 FRIEDMAN, BILLINGS, RAMSEY GROUP, INC. Financial & Statistical Supplement - Operating Results (unaudited) (Dollars in thousands, except per share data) YTD 2002 Q-4 02 Q-3 02 Q-2 02 Q-1 02 Revenues Investment banking: Underwriting $76,556 $8,890 $30,108 $25,248 $12,310 Corporate finance 58,595 11,119 26,175 9,827 11,474 Investment gains 8,725 4,312 2,627 1,595 191 Institutional brokerage: Principal transactions 27,512 6,339 5,743 8,372 7,058 Agency commissions 35,672 8,344 8,629 9,954 8,745 Asset management: Base management fees 28,956 8,119 7,208 7,633 5,996 Incentive income 14,258 5,291 4,282 2,902 1,783 Net investment income (loss) 16,276 4,474 (2,737) 8,517 6,022 Technology sector investment and incentive income (loss) (5,622) 111 (2,202) (2,432) (1,099) Principal investment: Interest - - - - - Realized gains - - - - - Dividends - - - - - Other 7,275 1,868 1,879 1,638 1,890 ------- ------ ------ ------ ------ Total revenues 268,203 58,867 81,712 73,254 54,370 ------- ------ ------ ------ ------ Expenses Compensation and benefits 147,072 31,617 45,725 38,411 31,319 Business development & professional services 30,589 7,545 8,650 7,982 6,412 Clearing and brokerage fees 5,353 1,467 1,443 1,817 626 Occupancy & equipment 8,838 2,274 2,309 2,046 2,209 Communications 8,185 1,910 2,009 2,187 2,079 Interest expense 2,073 665 608 430 370 Other operating expenses 10,652 2,608 2,976 2,602 2,466 ------- ------ ------ ------ ------ Total expenses 212,762 48,086 63,720 55,475 45,481 ------- ------ ------ ------ ------ Net income before taxes and extraordinary gain 55,441 10,781 17,992 17,779 8,889 Income tax provision 3,035 692 2,343 - - ------- ------- ------- ------- ------- Net income before extraordinary gain $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 $53,283 $10,089 $15,113 $17,779 $10,302 ======= ======= ======= ======= ======= Net income before taxes and extraordinary gain as a percentage of revenue 20.7% 18.3% 22.0% 24.3% 16.3% ROE (annualized) 24.8% 16.8% 26.7% 34.4% 21.7% Total shareholders' equity $245,165 $245,165 $234,625 $218,368 $194,590 Basic earnings per share $1.16 $0.22 $0.33 $0.39 $0.23 Diluted earnings per share $1.10 $0.21 $0.31 $0.36 $0.22 Ending shares outstanding (in thousands) 46,456 46,456 46,396 46,339 45,751 Book value per share $5.28 $5.28 $5.06 $4.71 $4.25 Gross assets under management (in millions) Managed accounts $6,538.0 $6,538.0 $7,356.0 $4,152.3 $2,757.7 Hedge & offshore funds 247.0 247.0 232.3 216.0 209.2 Mutual funds 1,188.5 1,188.5 1,071.2 1,313.4 1,270.4 Private equity funds 34.7 34.7 41.7 46.1 46.4 Technology sector funds 63.8 63.8 54.0 56.6 60.4 -------- -------- -------- -------- -------- Total $8,072.0 $8,072.0 $8,755.2 $5,784.4 $4,344.1 Net assets under management (in millions) Managed accounts $871.5 $871.5 $849.7 $748.5 $394.5 Hedge & offshore funds 162.4 162.4 162.9 188.5 157.7 Mutual funds 1,173.3 1,173.3 1,064.4 1,297.7 1,214.1 Private equity funds 30.9 30.9 40.1 45.5 45.5 Technology sector funds 48.2 48.2 48.6 52.3 55.8 -------- -------- -------- -------- -------- Total $2,286.3 $2,286.3 $2,165.7 $2,332.5 $1,867.6 Productive assets under management (in millions) Managed accounts $6,538.0 $6,538.0 $7,356.0 $4,152.3 $2,757.7 Hedge & offshore funds 162.4 162.4 162.9 188.5 157.7 Mutual funds 1,173.3 1,173.3 1,064.4 1,297.7 1,214.1 Private equity funds 91.2 91.2 92.5 94.8 95.3 Technology sector funds 249.0 249.0 248.5 248.1 249.3 -------- -------- -------- -------- -------- Total $8,213.9 $8,213.9 $8,924.3 $5,981.4 $4,474.1 Employee count 481 481 464 445 441 FRIEDMAN, BILLINGS, RAMSEY GROUP, INC. CONSOLIDATED BALANCE SHEETS (amounts in thousands) (Unaudited) ASSETS 30-Sep-03 31-Dec-02 Cash and cash equivalents $252,102 $90,007 Receivables 64,100 28,122 Due from clearing broker 84,062 43,146 Investments: Mortgage-backed securities, at fair value 8,408,164 38,505 Trading securities, at market value 6,745 8,298 Long-term investments 254,830 150,447 Bank loans, net - 15,052 MMA acquired management contracts 16,643 17,629 Goodwill 108,013 - Building, furniture, equipment and leasehold improvements, net 5,545 9,156 Other assets 17,607 5,823 ---------- -------- Total assets $9,217,811 $406,185 ========== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Trading account securities sold short, at market value $24,002 $19,932 Repurchase agreements 3,880,788 16,352 Commercial paper 4,046,645 - Interest rate swaps 3,877 - Dividends payable 47,621 - Interest payable 3,404 - Accounts payable and accrued expenses 44,193 16,412 Accrued compensation and benefits 53,512 41,255 Bank deposits - 51,215 Short-term loans payable - 10,588 Long-term debt 45,616 5,266 --------- --------- Total liabilities 8,149,658 161,020 --------- --------- Shareholders' equity: Common stock, 140,061 and 50,456 shares 1,401 505 Additional paid-in capital 1,002,663 211,724 Employee stock loan receivable including accrued interest (3,881 and 4,000 shares) (24,338) (24,182) Deferred compensation (2,216) - Accumulated other comprehensive income 54,652 4,345 Retained earnings 35,991 52,773 ---------- --------- Total shareholders' equity 1,068,153 245,165 ---------- --------- Total liabilities and ---------- --------- shareholders' equity $9,217,811 $406,185 ========== ========= Book Value per Share $7.84 $5.28 Shares Outstanding 136,180 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 and Form 10-K and quarterly reports on Form 10-Q that are available from the company and from the SEC. # # # Investor Contact: Kurt Harrington 703.312.9647 or kharrington@fbr.com Media Contacts: Bob Leahy 703.312.9745 or bleahy@fbr.com or Bill Dixon 703.469.1092 or bdixon@fbr.com -----END PRIVACY-ENHANCED MESSAGE-----