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FBR Announces 2005 Financial ResultsNet Loss of $170.9 Million or $1.01 Per Share for the Year Reflects 4th Quarter Investment Portfolio Write-Downs and Losses of $261.6 Million
ARLINGTON, Va., Feb. 22 /PRNewswire-FirstCall/ -- Friedman, Billings, Ramsey Group, Inc. (NYSE: FBR) today announced a net loss after tax for the year ended December 31, 2005 of $170.9 million, or $1.01 per share (diluted). These results include a previously announced write-down within FBR's spread- based portfolio of mortgage-backed securities, a separate write-down of certain equity investments in the firm's merchant banking portfolio, and a fourth quarter loss in FBR's non-conforming mortgage subsidiaries. The mortgage-backed securities (MBS) and merchant banking portfolio write- downs and losses realized during the fourth quarter of 2005 totaled $261.6 million. Included in that figure were: * $180.1 million in write-downs, net of hedging gains, of mortgage-backed
securities,
* $7.0 million of realized losses on sales of mortgage-backed securities,
and
* $74.5 million recognized in the write-down of nine equity investments to
reflect "other than temporary" impairments in the firm's merchant
banking portfolio.
The company's decision to reposition the MBS portfolio and recognize merchant banking write-downs is discussed in detail below. The full-year 2005 loss of $170.9 million, or $1.01 per share (diluted), compares to net after-tax income of $349.6 million, or $2.07 per share (diluted), in 2004. Total revenue in 2005 was $1.0 billion compared to $1.1 billion in 2004. FBR incurred a fourth quarter net after-tax loss of $271.6 million, or $1.60 per share (diluted), compared to net after-tax income of $86.6 million, or $0.51 per share (diluted), in the final quarter of 2004. The company's book value per share was reduced by $0.55 during the quarter from $8.21 at September 30, 2005 to $7.66 at December 31, 2005. The reduction in book value per share was less than the overall reported loss in the fourth quarter since the majority of the impact from the portfolio write-downs was already reflected in the September 30, 2005 balance sheet. Also contributing to the loss for the quarter, First NLC Financial Services, Inc. (FNLC), FBR's wholly- owned non-conforming residential mortgage origination business, incurred an after-tax loss of $15.5 million. On December 7, 2005, FBR declared a regular quarterly dividend of $0.20 per share for the fourth quarter of 2005, which was paid on January 31, 2006 to shareholders of record on December 30, 2005. For the full year, the company declared a total of $1.22 per share in dividends, down from $1.53 per share in 2004. Information regarding the tax treatment of FBR's 2005 dividends was released on February 16, 2006 and may also be found on the company's web site. Net income for the company during the fourth quarter, excluding the portfolio write-downs, the loss in the non-conforming mortgage subsidiaries and the negative carry of the MBS portfolio, was $35.0 million, or $0.21 per share (diluted).(1) The company believes this is an important measure because it more accurately reflects the core earnings of the business. "There is no question that 2005 was a difficult and disappointing year in many respects," said Eric F. Billings, Chairman and Chief Executive Officer. "However, it is very important to note that FBR's capital markets operations continue to perform at exceptional levels. Finally, the business overall -- excluding the impact of the write-downs and other items -- delivered a return on tangible equity of approximately 12% during the fourth quarter."(1) Capital Markets "In 2005, a year in which FBR continued to broaden its broker/dealer franchise, two accomplishments, in particular, stand out," said J. Rock Tonkel, Jr., President and Head of Investment Banking. "FBR ranked as the #1 book-running manager for U.S. IPOs and 144A equity placements combined -- the best and most comprehensive measure of initial capital-raising performance.(2) Additionally, we were the #2 book running manager in oil and gas - the core of the energy sector -- the newest sector in which we have achieved an industry- leading position." In 134 transactions during 2005, FBR raised $41.2 billion compared to $26.2 billion in 2004, and the size of its average common equity transactions grew from $188.2 million in 2004 to $259.8 million in 2005. Additionally, for the full year, FBR led the U.S. equity capital markets in net revenue per transaction.(3) * Investment banking revenue for the year was $374.5 million, down from
the record $428.3 million generated in 2004. Revenue for the fourth
quarter was $96.3 million compared to $133.6 million in the fourth
quarter of 2004.
* In 2005, FBR was ranked as:
-- #1 book-running manager for U.S. IPOs and 144A equity placements
combined,(2)
-- #1 book-running manager of all common stock offerings for U.S.
companies with a market capitalization of $2 billion or less,(4)
-- #2 book-running manager of all common stock offerings for domestic
oil and gas companies,(4) and
-- #9 book-running manager of all common stock offerings for all U.S.
companies.(4)
In a difficult trading environment characterized by continuing pressure on commission rates, revenue from institutional brokerage (principal transactions and agency commissions) was down 8.5% on a year-to-year basis, falling from $110.1 million in 2004 to $100.7 million in 2005. For the fourth quarter of 2005, brokerage revenue totaled $24.8 million, a decline of 3.5% from the $25.7 million generated in the final quarter of 2004. Principal Investment and Mortgage Banking "While 2005 was clearly the most challenging year the company has experienced from a portfolio perspective, we believe we have taken the necessary steps to position our spread businesses and the merchant bank to achieve higher returns on equity in the coming quarters and years," commented Richard J. Hendrix, President and COO. "Although we believe that many opportunities exist to generate very good returns in each of our portfolio businesses, we are operating in essentially a low return environment for most asset classes. Consequently, we will be patient with the redeployment of capital generated from the MBS portfolio repositioning and any other portfolio liquidations." Mortgage Portfolio During a year when the federal funds rate was increased eight times, almost doubling short-term interest rates, FBR's spread-based businesses were under constant pressure from the impact of a flattening yield curve combined with persistently high mortgage prepayment speeds. Consequently, the company determined to undertake a repositioning of the MBS portfolio to eliminate a negative cash spread on much of the portfolio and to be in a position to take advantage of reinvestment opportunities presented by the changing environment over the coming quarters. The repositioning, a step involving the sale of a significant percentage of the mortgage portfolio in early 2006, was announced on December 21, 2005. This decision marked a change in FBR's intent to hold securities in its MBS portfolio until maturity. Consequently, a determination was made that unrealized MBS portfolio losses as of December 31, 2005 were to be considered "other than temporary" impairments under Statement of Financial Accounting Standards (SFAS) 115, necessitating a recognition through the income statement of the reduced value of those securities at year end. As of February 22, 2006, FBR had sold mortgage-backed securities valued at $6.7 billion, substantially completing the liquidation phase of the portfolio repositioning. The company intends to patiently reinvest the net proceeds from the $6.7 billion liquidation throughout 2006. The non-conforming mortgage portfolio investment was substantially completed in the third quarter of 2005. During the fourth quarter the company completed $3.1 billion in securitization financing for the portfolio, placing permanent financing on the remaining warehouse funded portions of the held for investment portfolio. At year end, FBR held for investment $6.8 billion in non-conforming mortgage loans with an average coupon of 7.25%, an ending premium of 102.10, and a one-month CPR of 25. The yield for the month of December was 6.84% with a corresponding cost of funds of 4.86%. With the construction of the non-conforming portfolio complete for the near term, FBR will patiently invest available capital opportunistically. Merchant Banking FBR made a determination during the year-end evaluation of its merchant banking portfolio to recognize as "other than temporary" impairments the amount by which the fair value of certain of its merchant banking investments was below their respective cost bases. This determination, which was discussed as a possible course of action in the December 21, 2005 press release, is different from the determination for the mortgage portfolio as it relates strictly to current trading values and is not the result of any change in the company's investment intent regarding these securities. During 2005, the merchant banking group continued to make new investments in attractive opportunities presented by the capital markets business, investing a total of $68 million of equity in eight companies over the course of the year. The merchant banking and long-term investments portfolio generated total income of $57.5 million during the year -- comprised of $36.6 million in dividends and $20.9 million in related gains -- prior to the recognition of a $74.5 million write-down in the cost basis of a portion of the assets in the portfolio. At year end, the merchant banking investment portfolio had an estimated cash dividend yield of more than 12%. The total value of FBR's merchant banking portfolio and other long-term investments was $333.1 million as of December 31, 2005. Of this total, $291.6 million was held in the merchant banking and long-term investments portfolio and $41.5 million was held in alternative asset investments. First NLC Financial Services The adverse interest rate climate contributed to the difficult environment for FNLC and other non-conforming mortgage lenders in the fourth quarter. The compression between funding costs and coupons in the non-conforming mortgage business continued until late in the year, leading to deteriorating sale prices for mortgage originators throughout the fourth quarter. During the fourth quarter, FNLC achieved an average sale price of 100.90 on sold production resulting in an after-tax loss of $15.5 million for the quarter. Importantly, FNLC has seen coupon increases of 109 basis points on its first mortgage production since November, resulting in a meaningful increase in sale prices for its mortgage inventory. Nonetheless, the environment remains challenging in the gain-on-sale business. FNLC is taking the necessary steps to quickly return to profitability, including headcount reductions in many areas and other cost reductions throughout its origination business, while continuing to serve its broad base of mortgage brokers and retail customers. For the full year, FNLC originated a record $6.0 billion in mortgages, an increase of 81% over 2004. Total non-interest expenses related to FNLC since the acquisition in February were $87.1 million for the year and are the primary reason for the year-to- year increase in non-interest expenses for the entire firm. Asset Management Base management fees for 2005 were $30.3 million compared to fees of $28.3 million in 2004. Incentive fees, however, fell from $10.9 million in 2004 to $1.9 million in 2005. Base management fees for the fourth quarter of 2005 were $6.1 million, and incentive fees were $.7 million. * Total funds under management were $2.6 billion as of December 31, 2005,
compared to $3.2 billion on December 31, 2004.
* Mutual fund assets totaled $1.9 billion at year end 2005 compared to
$2.3 billion at the close of 2004.
Looking Ahead
"As the 2005 capital markets results demonstrate, our franchise is far broader and more diversified than it was just a few short years ago," Mr. Billings said. "Nothing says more about the strength of our business than our three-year aggregate ranking as the #1 book-running manager for U.S. IPOs and 144A equity placements combined.(5) Given this record of accomplishment and the position it puts us in our marketplace, we have great confidence about our business as we look toward the future." The firm will host an earnings conference call tomorrow morning, Thursday, February 23, 2006 at 9:00 A.M. U.S. EST. Investors wishing to listen to the conference call may do so via the web at: http://phx.corporate-ir.net/phoenix.zhtml?c=71352&p=irol-irhome. Replays of the webcast will be available following 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-related assets and merchant banking opportunities. FBR focuses capital and financial expertise on eight industry sectors: consumer, diversified industrials, energy and natural resources, financial institutions, healthcare, insurance, real estate, and technology, media and telecommunications. FBR is headquartered in the Washington, D.C. metropolitan area with offices in Arlington, Va., Boston, Cleveland, Dallas, Denver, Houston, Irvine, London, New York, Phoenix, San Francisco and Seattle. Friedman, Billings, Ramsey Group, Inc. is the parent company of First NLC Financial Services, Inc., a non-conforming residential mortgage originator headquartered in Deerfield Beach, Florida. For more information, visit http://www.fbr.com/. * Friedman, Billings, Ramsey & Co., Inc.
(1) Return on tangible equity computed as annualized quarterly earnings
per share excluding portfolio write-downs ($1.54 per share (diluted)),
the loss in the non-conforming mortgage subsidiaries ($0.18 per share
(diluted)) and the negative carry of the MBS portfolio ($0.09 per
share (diluted)): $0.84 ($.21 x 4), divided by the average tangible
book value per share: $6.83 ($7.10 at 9/30/05; $6.55 at 12/31/05).
Tangible book value is shareholders' equity less goodwill and
intangible assets. The company believes this is an important measure
because it more accurately reflects the core earnings of the business.
(2) Source: Dealogic. Relates to total deal value of all common stock of
U.S. issuers offered in IPOs or transactions exempt from SEC
registration pursuant to rule 144A; priced between 1/1/05 and
12/31/05, with apportioned credit to all book-runners. Includes only
rank eligible transactions.
(3) Source: Dealogic. Relates to reported net revenue for all U.S. equity
capital markets IPO and follow-on transactions; priced between 1/1/05
and 12/31/05, with net revenue allocated to lead banks on an
apportioned basis. Includes only rank eligible transactions.
(4) Source: Dealogic. Relates to total deal value of all common stock
offered in transactions classified as IPOs or follow-ons, regardless
of SEC registration, for: U.S. issuers valued at $2 billion or less,
U.S. issuers classified in the Oil and Gas general industry group, and
all U.S. issuers, respectively; priced between 1/1/05 and 12/31/05,
with apportioned credit to all book-runners. Includes only rank
eligible transactions.
(5) Source: Dealogic. Relates to total deal value of all common stock of
U.S. issuers offered in IPOs or transactions exempt from SEC
registration pursuant to rule 144A; priced between 1/1/03 and
12/31/05, with apportioned credit to all book-runners. Includes only
rank eligible transactions.
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. FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(Unaudited)
Quarter ended
December 31,
2005 % 2004 %
--------- -------- --------- -------
REVENUES:
Investment banking:
Capital raising $ 88,866 77.9% $ 125,488 51.2%
Advisory 7,415 6.5% $8,088 3.3%
Institutional brokerage:
Principal transactions 3,788 3.3% 4,758 1.9%
Agency commissions 21,006 18.4% 20,948 8.5%
Mortgage trading interest 19,555 17.1% - 0.0%
Mortgage trading net
investment loss (1,419) -1.2% - 0.0%
Asset management:
Base management fees 6,153 5.4% 8,344 3.4%
Incentive allocations and fees 742 0.6% 7,982 3.3%
Principal investment:
Interest 189,811 166.3% 86,550 35.3%
Net investment (loss) income (258,500) -226.5% 27,442 11.2%
Dividends 16,039 14.1% 6,169 2.5%
Mortgage Banking:
Interest 30,965 27.1% - 0.0%
Net investment loss (21,899) -19.2% - 0.0%
Other 3,024 2.7% 2,329 1.0%
--------- -------- --------- -------
Total revenues 105,546 92.5% 298,098 121.6%
Interest expense 211,393 185.3% 52,968 21.6%
Provision for loan losses 8,263 7.2% - 0.0%
--------- -------- --------- -------
Revenues, net of interest
expense and provision for
loan losses (114,110) -100.0% 245,130 100.0%
--------- -------- --------- -------
NON-INTEREST EXPENSES:
Compensation and benefits 87,330 76.5% 95,113 38.8%
Professional services 16,556 14.5% 11,832 4.8%
Business development 10,433 9.2% 11,248 4.6%
Clearing and brokerage fees 2,447 2.1% 2,186 0.9%
Occupancy and equipment 10,151 8.9% 4,330 1.8%
Communications 5,741 5.0% 4,227 1.7%
Other operating expenses 24,984 21.9% 6,570 2.7%
--------- -------- --------- -------
Total non-interest
expenses 157,642 138.1% 135,506 55.3%
--------- -------- --------- -------
Net (loss) income before
income taxes (271,752) -238.1% 109,624 44.7%
Income tax (benefit) provision (142) -0.1% 23,032 9.4%
--------- -------- --------- -------
Net (loss) income $(271,610) -238.0% $ 86,592 35.3%
========= ======== ========= =======
Basic (loss) earnings per share $ (1.60) $ 0.52
========= =========
Diluted (loss) earnings per share $ (1.60) $ 0.51
========= =========
Weighted average shares - basic 169,921 167,753
========= =========
Weighted average shares - diluted 169,921 168,867
========= =========
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(Unaudited)
Twelve Months Ended
December 31,
2005 % 2004 %
--------- -------- --------- -------
REVENUES:
Investment banking:
Capital raising $ 356,753 82.1% $ 398,183 44.8%
Advisory 17,759 4.1% 30,115 3.4%
Institutional brokerage:
Principal transactions 17,950 4.1% 20,444 2.3%
Agency commissions 82,778 19.0% 89,650 10.1%
Mortgage trading interest 30,859 7.1% - 0.0%
Mortgage trading net
investment loss (3,820) -0.9% - 0.0%
Asset management:
Base management fees 30,348 7.0% 28,307 3.2%
Incentive allocations and fees 1,929 0.4% 10,940 1.2%
Principal investment:
Interest 549,832 126.6% 350,691 39.5%
Net investment (loss) income (239,754) -55.2% 101,973 11.5%
Dividends 36,622 8.4% 14,644 1.6%
Mortgage Banking:
Interest 87,958 20.2% - 0.0%
Net investment income 13,741 3.2% - 0.0%
Other 12,351 2.9% 7,155 0.9%
--------- -------- --------- -------
Total revenues 995,306 229.0% 1,052,102 118.5%
Interest expense 546,313 125.7% 164,156 18.5%
Provision for loan losses 14,291 3.3% - 0.0%
--------- -------- --------- -------
Revenues, net of interest
expense and provision
for loan losses 434,702 100.0% 887,946 100.0%
--------- -------- --------- -------
NON-INTEREST EXPENSES:
Compensation and benefits 331,492 76.3% 323,524 36.4%
Professional services 66,550 15.3% 50,467 5.7%
Business development 46,648 10.7% 44,955 5.1%
Clearing and brokerage fees 8,882 2.0% 9,123 1.0%
Occupancy and equipment 34,044 7.8% 14,458 1.6%
Communications 20,634 4.8% 13,959 1.6%
Other operating expenses 70,679 16.3% 22,740 2.6%
--------- -------- --------- -------
Total non-interest
expenses 578,929 133.2% 479,226 54.0%
--------- -------- --------- -------
Net (loss) income before
income taxes (144,227) -33.2% 408,720 46.0%
Income tax provision 26,683 6.1% 59,161 6.7%
--------- -------- --------- -------
Net (loss) income $(170,910) -39.3% $ 349,559 39.3%
========= ======== ========= =======
Basic (loss) earnings per share $ (1.01) $ 2.09
========= =========
Diluted (loss) earnings per share $ (1.01) $ 2.07
========= =========
Weighted average shares - basic 169,333 167,099
========= =========
Weighted average shares - diluted 169,333 168,490
========= =========
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
FINANCIAL & STATISTICAL SUPPLEMENT - OPERATING RESULTS
(Dollars in thousands, except per share data)
(Unaudited)
As of and
for the
year ending
December
31, 2005 Q-4 05 Q-3 05 Q-2 05 Q-1 05
---------- ---------- ---------- ---------- ----------
Revenues
Investment banking:
Capital raising $356,753 88,866 $86,035 $95,039 $86,813
Advisory 17,759 7,415 3,026 6,180 1,138
Institutional
brokerage:
Principal
transactions 17,950 3,788 4,348 4,187 5,627
Agency commissions 82,778 21,006 20,445 19,170 22,157
Mortgage trading
interest 30,859 19,555 11,304 - -
Mortgage trading net
investment loss (3,820) (1,419) (2,401) - -
Asset
management:
Base management
fees 30,348 6,153 7,914 7,813 8,468
Incentive
allocations and
fees 1,929 742 832 730 (375)
Principal investment:
Interest 549,832 189,811 144,401 116,724 98,896
Net investment
(loss) income (239,754) (258,500) 4,866 17,738 (3,858)
Dividends 36,622 16,039 8,772 8,371 3,440
Mortgage
Banking:
Interest 87,958 30,965 29,383 18,118 9,492
Net investment
income (loss) 13,741 (21,899) 17,600 14,559 3,481
Other 12,351 3,024 3,376 3,455 2,496
---------- ---------- ---------- ---------- ----------
Total revenues 995,306 105,546 339,901 312,084 237,775
Interest expense 546,313 211,393 156,373 103,725 74,822
Provision for
loan losses 14,291 8,263 4,890 1,138 -
---------- ---------- ---------- ---------- ----------
Revenues, net of
interest expense
and provision for
loan losses 434,702 (114,110) 178,638 207,221 162,953
---------- ---------- ---------- ---------- ----------
Non-interest
expenses
Compensation and
benefits 331,492 87,330 88,348 80,015 75,799
Professional
services 66,550 16,556 16,158 20,186 13,650
Business
development 46,648 10,433 8,815 11,962 15,438
Clearing and
brokerage fees 8,882 2,447 2,363 2,040 2,032
Occupancy and
equipment 34,044 10,151 9,397 8,772 5,724
Communications 20,634 5,741 5,561 5,300 4,032
Other operating
expenses 70,679 24,984 16,861 12,540 16,294
---------- ---------- ---------- ---------- ----------
Total expenses 578,929 157,642 147,503 140,815 132,969
---------- ---------- ---------- ---------- ----------
Net (loss) income
before income
taxes (144,227) (271,752) 31,135 66,406 29,984
Income tax provision
(benefit) 26,683 (142) 8,090 13,163 5,572
---------- ---------- ---------- ---------- ----------
Net (loss) income $(170,910) $(271,610) $23,045 $53,243 $24,412
========== ========== ========== ========== ==========
Net (loss)
income before
income taxes as
a percentage of
net revenue (33.2%) (238.1%) 17.4% 32.0% 18.4%
ROE (annualized) (11.9%) (80.5%) 6.3% 14.3% 6.4%
ROE (annualized-
excluding
AOCI)(1) (11.7%) (74.7%) 5.9% 13.8% 6.0%
Total shareholders'
equity $1,304,170 $1,304,170 $1,394,137 $1,519,021 $1,458,861
Total shareholders'
equity, net of
AOCI(1) $1,305,147 $1,305,147 $1,603,305 $1,631,955 $1,636,371
Basic earnings per
share $(1.01) $(1.60) $0.14 $0.31 $0.15
Diluted earnings
per share $(1.01) $(1.60) $0.14 $0.31 $0.14
Ending shares
outstanding
(in thousands) 170,264 170,264 169,891 169,617 169,214
Book value per share $7.66 $7.66 $8.21 $8.96 $8.62
Book value per share,
net of AOCI(1) $7.67 $7.67 $9.44 $9.62 $9.67
Gross assets
under management
(in millions)
Managed accounts $463.4 $463.4 $437.2 $510.4 $242.4
Hedge & offshore
funds 154.3 154.3 239.0 463.1 601.1
Mutual funds 1,883.3 1,883.3 2,078.1 2,185.0 2,213.9
Private equity and
venture capital
funds 56.2 56.2 42.7 41.3 69.5
---------- ---------- ---------- ---------- ----------
Total $2,557.2 $2,557.2 $2,797.0 $3,199.8 $3,126.9
========== ========== ========== ========== ==========
Net assets under
management
(in millions)
Managed accounts $329.5 $329.5 $255.5 $257.3 $223.0
Hedge & offshore
funds 150.5 150.5 227.8 401.1 490.3
Mutual funds 1,872.8 1,872.8 2,069.9 2,176.6 2,204.2
Private equity and
venture capital
funds 46.8 46.8 39.9 37.8 66.3
---------- ---------- ---------- ---------- ----------
Total $2,399.6 $2,399.6 $2,593.1 $2,872.8 $2,983.8
========== ========== ========== ========== ==========
Productive
assets under
management
(in millions)
Managed accounts $329.5 $329.5 $255.5 $257.3 $223.0
Hedge & offshore
funds 142.2 142.2 183.3 332.8 425.3
Mutual funds 1,872.8 1,872.8 2,069.9 2,176.6 2,204.2
Private equity and
venture capital
funds 100.3 100.3 51.4 51.2 79.9
---------- ---------- ---------- ---------- ----------
Total $2,444.8 $2,444.8 $2,560.1 $2,817.9 $2,932.4
========== ========== ========== ========== ==========
Employee count 2,449 2,449 2,455 2,226 2,123
========== ========== ========== ========== ==========
As of and
for the year
ending
December 31,
2004 Q-4 04 Q-3 04 Q-2 04 Q-1 04
---------- ---------- ---------- ---------- ----------
Revenues
Investment banking:
Capital raising $398,183 $125,488 $130,019 $52,883 $89,793
Advisory 30,115 8,088 11,602 9,107 1,318
Institutional
brokerage:
Principal
transactions 20,444 4,758 4,241 5,426 6,019
Agency commissions 89,650 20,948 18,505 21,060 29,137
Mortgage trading
interest - - - - -
Mortgage trading net
investment loss - - - - -
Asset management:
Base management fees 28,307 8,344 7,044 6,384 6,535
Incentive
allocations and
fees 10,940 7,982 1,737 (1,444) 2,665
Principal investment:
Interest 350,691 86,550 88,035 87,111 88,995
Net investment
income 101,973 27,442 19,090 28,832 26,609
Dividends 14,644 6,169 5,820 1,683 972
Mortgage Banking:
Interest - - - - -
Net investment
income (loss) - - - - -
Other 7,155 2,329 1,827 1,683 1,316
---------- ---------- ---------- ---------- ----------
Total revenues 1,052,102 298,098 287,920 212,725 253,359
Interest expense 164,156 52,968 44,265 34,276 32,647
Provision for loan
losses - - - - -
---------- ---------- ---------- ---------- ----------
Revenues, net of
interest expense
and provision
for loan losses 887,946 245,130 243,655 178,449 220,712
---------- ---------- ---------- ---------- ----------
Non-interest
expenses
Compensation and
benefits 323,524 95,113 95,824 57,698 74,889
Professional services 50,467 11,832 13,421 15,050 10,164
Business development 44,955 11,248 8,284 8,885 16,538
Clearing and
brokerage fees 9,123 2,186 1,556 2,608 2,773
Occupancy and
equipment 14,458 4,330 3,898 3,326 2,904
Communications 13,959 4,227 3,348 3,442 2,942
Other operating
expenses 22,740 6,570 4,846 5,351 5,973
---------- ---------- ---------- ---------- ----------
Total expenses 479,226 135,506 131,177 96,360 116,183
---------- ---------- ---------- ---------- ----------
Net income before
income taxes 408,720 109,624 112,478 82,089 104,529
Income tax provision 59,161 23,032 20,329 910 14,890
---------- ---------- ---------- ---------- ----------
Net income $349,559 $86,592 $92,149 $81,179 $89,639
========== ========== ========== ========== ==========
Net income before
income taxes as a
percentage of net
revenue 46.0% 44.7% 46.2% 46.0% 47.4%
ROE (annualized) 22.3% 22.2% 24.8% 20.8% 22.1%
ROE (annualized -
excluding AOCI)(1) 45.0% 11.1% 12.0% 10.7% 11.8%
Total shareholders'
equity $1,578,524 $1,578,524 $1,543,361 $1,431,345 $1,685,673
Total shareholders'
equity, net of
AOCI(1) $1,616,686 $1,616,686 $1,588,310 $1,549,918 $1,540,739
Basic earnings per
share $2.09 $0.52 $0.55 $0.49 $0.54
Diluted earnings per
share $2.07 $0.51 $0.55 $0.48 $0.54
Ending shares
outstanding (in
thousands) 166,931 166,931 166,753 166,631 165,623
Book value per share $9.46 $9.46 $9.26 $8.59 $10.18
Book value per share,
net of AOCI(1) $9.68 $9.68 $9.52 $9.30 $9.30
Gross assets under
management
(in millions)
Managed accounts $196.1 $196.1 $168.7 $160.3 $78.8
Hedge & offshore
funds 631.6 631.6 519.3 430.0 435.4
Mutual funds 2,320.4 2,320.4 1,963.7 1,612.2 1,897.4
Private equity and
venture capital
funds 52.5 52.5 49.7 50.7 76.5
---------- ---------- ---------- ---------- ----------
Total $3,200.6 $3,200.6 $2,701.4 $2,253.2 $2,488.1
========== ========== ========== ========== ==========
Net assets under
management
(in millions)
Managed accounts $196.1 $196.1 $168.7 $160.3 $78.8
Hedge & offshore
funds 589.6 589.6 482.8 409.0 350.5
Mutual funds 2,305.5 2,305.5 1,951.7 1,606.9 1,874.0
Private equity and
venture capital
funds 49.7 49.7 46.4 46.5 70.4
---------- ---------- ---------- ---------- ----------
Total $3,140.9 $3,140.9 $2,649.6 $2,222.7 $2,373.7
========== ========== ========== ========== ==========
Productive assets
under management
(in millions)
Managed accounts $196.1 $196.1 $168.7 $160.3 $78.8
Hedge & offshore
funds 488.7 488.7 393.8 329.9 263.8
Mutual funds 2,305.5 2,305.5 1,951.7 1,606.9 1,874.0
Private equity and
venture capital
funds 70.9 70.9 70.9 111.6 131.2
---------- ---------- ---------- ---------- ----------
Total $3,061.2 $3,061.2 $2,585.1 $2,208.7 $2,347.8
========== ========== ========== ========== ==========
Employee count 698 698 665 626 549
========== ========== ========== ========== ==========
(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 31-Dec-05 31-Dec-04
----------- -----------
Cash and cash equivalents $ 238,615 $ 224,381
Restricted cash 6,101 7,146
Receivables 259,519 74,880
Investments:
Mortgage-backed securities,
at fair value 8,002,561 11,726,689
Loans held for investment, net 6,841,266 -
Loans held for sale, net 963,807 -
Long-term investments 333,067 441,499
Reverse repurchase agreements 283,824 183,375
Trading securities, at fair value 1,032,638 7,744
Residual interest in securitization,
at fair value 14,577 -
Due from clearing broker 71,065 95,247
Derivative assets, at fair value 70,636 8,098
Goodwill 162,765 108,013
Intangible assets, net 26,485 14,404
Furniture, equipment, software and
leasehold improvements, net 46,382 18,733
Prepaid expenses and other assets 82,482 18,079
----------- -----------
Total assets $18,435,790 $12,928,288
=========== ===========
LIABILITIES AND SHAREHOLDERS ' EQUITY
Liabilities:
Trading account securities sold short
but not yet purchased, at fair value $ 150,547 $ 17,176
Commercial paper 6,996,950 7,294,949
Repurchase agreements 2,698,619 3,467,569
Securities purchased - 144,430
Derivative liabilities, at fair value 31,952 613
Dividends payable 34,588 65,870
Interest payable 12,039 5,894
Accrued compensation and benefits 82,465 131,218
Accounts payable, accrued expenses
and other liabilities 82,576 93,675
Temporary subordinated loan payable 75,000 -
Securitization financing for loans
held for investment, net 6,642,198 -
Long-term debt 324,686 128,370
----------- -----------
Total liabilities 17,131,620 11,349,764
----------- -----------
Shareholders' equity:
Common stock, 172,854 and 168,897 shares 1,729 1,689
Additional paid-in capital 1,547,128 1,483,640
Employee stock loan receivable
(551 and 711 shares) (4,018) (4,890)
Deferred compensation (15,602) (16,863)
Accumulated other comprehensive loss (977) (38,162)
Retained (deficit) earnings (224,090) 153,110
----------- -----------
Total shareholders' equity 1,304,170 1,578,524
----------- -----------
Total liabilities and
shareholders' equity $18,435,790 $12,928,288
=========== ===========
First Call Analyst: FCMN Contact: lburk@fbr.com Website: http://www.fbr.com/ |
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