FBR Group Reports Second Quarter Earnings
PRNewswire - First Call
Arlington, Virginia
NYSE: FBR

ARLINGTON, Va., July 23 /PRNewswire-FirstCall/ -- Friedman, Billings, Ramsey Group, Inc. (FBR Group) (NYSE: FBR) today reported a net after-tax loss of $25.1 million for the quarter ended June 30, 2008, or $0.17 per share (diluted), compared to net after-tax earnings of $10.2 million, or $0.06 per share (diluted), for the second quarter of 2007. FBR Group's net after-tax earnings for the first six months of 2008 were $20.1 million, or $0.13 per share (diluted), compared to a net after-tax loss of $177.5 million, or $1.03 per share (diluted) in first six months of 2007.

The second quarter 2008 results reflect:

-- a $0.9 million cash operating loss for FBR Group's core mortgage investment business during the quarter,

-- a $5.8 million loss relating primarily to write-downs and losses in non-prime mortgage investments, and

-- a $13.0 million loss, representing FBR Group's proportionate share of 51%-owned FBR Capital Markets Corporation's (FBR Capital Markets) (NASDAQ: FBCM) second quarter loss.

Book value net of Accumulated Other Comprehensive Income (AOCI) (1) as of June 30, 2008 was $2.89 per share compared to book value net of AOCI of $3.02 as of March 31, 2008. Excluding FBR Group's 51% ownership interest in FBR Capital Markets, FBR Group had total tangible capital at the end of the second quarter of $414 million, including $318 million of trust preferred securities.

As of June 30, 2008, approximately $270 million of tangible capital, or $1.79 per share, was invested in cash and readily marketable agency securities. The company expects that the remaining $144 million of tangible capital, including a $28 million IRS tax refund expected in the third quarter of 2008, will be redeployed over time to agency mortgage-backed securities. During the second quarter, $18 million of liquidations and pay-downs of capital invested in non-agency AAA securities and other investments was recovered and will be redeployed to the agency portfolio. Remaining non-prime investments totaled approximately $11 million at the end of the quarter.

"Increased liquidity during the quarter afforded us the opportunity to patiently expand the agency portfolio and, correspondingly, net interest income while maintaining leverage of approximately five times," said J. Rock Tonkel, Jr., President and Chief Operating Officer of FBR Group. "As a consequence, operating results on a cash basis for the company's core mortgage investing business are now at breakeven."

Looking forward, the company intends to focus on maximizing return on equity on a number of fronts:

-- continuing to examine strategic alternatives to maximize the potential economic benefit from operating and capital-loss tax carry-forwards totaling approximately $670 million,

-- redeploying capital realized from repayments and the revaluation of non-agency AAA mortgage and merchant banking portfolio assets, and

-- continuing to reduce all general and administrative expenses.

Mortgage Investment Portfolio

Excluding FBR Capital Markets, FBR Group's investments in mortgage-backed securities (MBS), primarily government agency securities, averaged $2.3 billion with a one-month CPR of 12.9, and an ending net premium of $5.8 million. The net yield on MBS for the second quarter was 3.96% with a corresponding cost of funds of 2.82% for a net spread of 1.14%. At the end of the quarter, total MBS was $2.5 billion with a yield of 3.68% and a cost of funds of 2.55% for a net spread of 1.13%.

Merchant Banking

Excluding FBR Capital Markets, the total value of the merchant banking investments held by FBR Group at the close of the second quarter was $38.9 million. During the quarter, $4.7 million in merchant banking investments were sold at a gain. No additional investments were made in the portfolio during the quarter.

FBR Capital Markets Corporation

FBR Capital Markets Corporation reported a net after-tax loss of $25.2 million, or $0.39 per share (diluted), for the quarter ended June 30, 2008 compared to net after-tax earnings of $21.8 million, or $0.34 per share (diluted) in the second quarter of 2007. For the six months ending June 30, 2008, FBR Capital Markets lost $35.4 million after tax, or $0.55 per share (diluted), compared to after-tax earnings of $32.8 million, or $0.51 per share (diluted), for the first half of 2007.

Net revenues for the second quarter were $50.5 million compared to net revenues of $104.0 million in the first quarter of 2008 and $169.5 million in the second quarter of 2007. Net revenues for the first six months of 2008 were $154.5 million compared to net revenues of $312.6 million for the first six months of 2007.

During the quarter, FBR Capital Markets broadened its corporate finance capabilities through the establishment of a new convertible securities origination and trading operation and strengthened its investment banking and sales/trading teams through a series of senior-level hires. At the same time, in light of what it believes will be a prolonged difficult economic environment for the securities industry, the firm also is taking steps to further reduce expenses across its entire organization.

Complete financial results and tables for FBR Capital Markets can be found at www.fbrcapitalmarkets.com.

Looking Ahead

"It is our intent -- as market conditions permit -- to continue to execute our core strategy of deploying capital in a conservative, substantially hedged portfolio of agency mortgage-backed securities" said Eric F. Billings, Chairman and Chief Executive Officer of FBR Group. "This strategy, we believe, will produce attractive returns for this asset class as markets stabilize and begin to recover. As for FBR Capital Markets, the firm has historically performed well in challenging environments. The franchise is strong, and has substantial balance sheet strength with $482 million of capital -- all equity -- and more than $300 million in cash and cash equivalents. In line with its strategic plan, FBR Capital Markets is taking steps that, along with the flexibility and adaptability of the firm, should lead to reduced revenue volatility and greater profitability as it takes advantage of the adverse economic environment and the inevitable recovery."

Investors wishing to listen to the earnings conference call at 9:00 A.M. U.S. EDT, Thursday, July 24, 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, the effect of demand for public offerings, activity in the secondary securities markets, interest rates, costs of borrowing, interest spreads, mortgage pre-payment speeds, risks associated with merchant banking investments, the realization of gains and losses on principal investments, available technologies, competition for business and personnel, and general economic, political and market conditions. These and other risks are described in the Company's Annual Report and Form 10-K and quarterly reports on Form 10-Q that are available from the company and from the SEC.

    Financial data follow.



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

                                                     Quarter Ended
                                                       June 30,

                                            2008      %       2007       %
                                          -------  ------   -------   ------
    REVENUES:
    Investment banking:
      Capital raising                      $3,962    8.0%  $110,032    62.5%
      Advisory                              4,192    8.5%     6,152     3.5%
    Institutional brokerage:
      Principal transactions                4,888    9.9%     4,152     2.4%
      Agency commissions                   29,918   60.5%    28,564    16.2%
    Asset management:
      Base management fees                  4,153    8.4%     6,360     3.6%
      Incentive allocations and fees            -    0.0%       116     0.1%
    Principal investment:
      Interest                             26,827   54.2%   152,368    86.6%
      Net investment loss                  (4,797)  -9.7%    (3,377)   -1.9%
      Dividends                               258    0.5%       883     0.5%
    Mortgage banking:
      Interest                                  -    0.0%    13,462     7.7%
      Net investment loss                      (5)   0.0%    (4,031)   -2.3%
    Other                                   1,932    3.9%     4,482     2.5%
                                          -------  ------   -------   ------
        Total revenues                     71,328  144.2%   319,163   181.4%
    Interest expense                       21,858   44.2%   143,231    81.4%
                                          -------  ------   -------   ------
        Revenues, net of interest expense  49,470  100.0%   175,932   100.0%
                                          -------  ------   -------   ------

    NON-INTEREST EXPENSES:
    Compensation and benefits              53,970  109.1%   106,885    60.8%
    Professional services                  10,492   21.2%    14,008     8.0%
    Business development                    6,812   13.8%    11,158     6.3%
    Clearing and brokerage fees             3,393    6.9%     3,063     1.7%
    Occupancy and equipment                 8,580   17.3%    12,699     7.2%
    Communications                          6,255   12.6%     7,592     4.3%
    Other operating expenses                7,055   14.3%    18,684    10.6%
    Goodwill impairment                         -    0.0%    28,900    16.4%
    Restructuring charges                       -    0.0%     3,862     2.2%
                                          -------  ------   -------   ------
        Total non-interest expenses        96,557  195.2%   206,851   117.5%
                                          -------  ------   -------   ------

    Operating loss                        (47,087) -95.2%   (30,919)  -17.5%
                                          -------  ------   -------   ------

    OTHER INCOME:
      (Loss) gain on issuance and sale
       of subsidiary shares and other
       income (loss)                         (192)  -0.4%   105,677    60.1%
                                          -------  ------   -------   ------

      (Loss) gain before income taxes
       and minority interest              (47,279) -95.6%    74,758    42.6%

    Income tax (benefit) provision         (9,974) -20.2%    55,011    31.3%
    Minority interest in (losses)
     earnings of consolidated subsidiary  (12,254) -24.8%     9,538     5.4%
                                          -------  ------   -------   ------

      Net (loss) income                  $(25,051) -50.6%   $10,209     5.9%
                                          =======  ======   =======   ======

    Basic (loss) earnings per share        $(0.17)            $0.06
                                          =======           =======
    Diluted (loss) earnings per share      $(0.17)            $0.06
                                          =======           =======

    Weighted average shares  - basic      150,948           173,256
                                          =======           =======
    Weighted average shares  - diluted    150,948           173,256
                                          =======           =======



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

                                                   Six Months Ended
                                                      June 30,

                                            2008      %       2007        %
                                          -------  ------   --------   ------
    REVENUES:
    Investment banking:
      Capital raising                     $68,872   48.6%   $207,279   111.2%
      Advisory                              9,268    6.5%     12,610     6.8%
    Institutional brokerage:
      Principal transactions               10,845    7.7%      6,188     3.3%
      Agency commissions                   55,768   39.3%     52,382    28.1%
    Asset management:
      Base management fees                  8,797    6.2%     11,888     6.4%
      Incentive allocations and fees            -    0.0%        220     0.1%
    Principal investment:
      Interest                             52,741   37.2%    331,251   177.7%
      Net investment loss                 (24,484) -17.3%    (62,142)  -33.3%
      Dividends                               687    0.5%      1,842     1.0%
    Mortgage banking:
      Interest                                 36    0.0%     39,992    21.5%
      Net investment income (loss)            463    0.3%   (110,890)  -59.5%
    Other                                   4,267    3.1%      8,576     4.5%
                                          -------  ------   --------   ------
        Total revenues                    187,260  132.1%    499,196   267.8%
    Interest expense                       45,508   32.1%    312,782   167.8%
                                          -------  ------   --------   ------
        Revenues, net of interest
         expense                          141,752  100.0%    186,414   100.0%
                                          -------  ------   --------   ------

    NON-INTEREST EXPENSES:
    Compensation and benefits             130,924   92.4%    210,867   113.1%
    Professional services                  22,959   16.2%     27,862    14.9%
    Business development                   19,106   13.5%     24,927    13.4%
    Clearing and brokerage fees             7,023    5.0%      5,764     3.1%
    Occupancy and equipment                17,769   12.5%     25,816    13.8%
    Communications                         12,273    8.7%     14,643     7.9%
    Other operating expenses               12,439    8.8%     50,400    27.0%
    Goodwill impairment                         -    0.0%     54,752    29.4%
    Restructuring charges                       -    0.0%     19,347    10.4%
                                          -------  ------   --------   ------
        Total non-interest expenses       222,493  157.1%    434,378   233.0%
                                          -------  ------   --------   ------

    Operating loss                        (80,741) -57.1%   (247,964) -133.0%

    OTHER INCOME:
      (Loss) gain on issuance and
       sale of subsidiary shares             (189)  -0.1%    106,508    57.1%
      Gain on disposition of
       subsidiary and other income         73,034   51.5%          -     0.0%
                                          -------  ------   --------   ------

      Loss before income taxes and
       minority interest                   (7,896)  -5.7%   (141,456)  -75.9%

    Income tax (benefit) provision        (10,780)  -7.6%     23,461    12.6%
    Minority interest in (losses)
     earnings of consolidated subsidiary  (17,167) -12.1%     12,617     6.8%
                                          -------  ------   --------   ------

      Net income (loss)                   $20,051   14.0%  $(177,534)  -95.3%
                                          =======  ======   ========   ======

    Basic earnings (loss) per share         $0.13             $(1.03)
                                          =======            =======
    Diluted earnings (loss) per share       $0.13             $(1.03)
                                          =======            =======

    Weighted average shares - basic       150,869            173,054
                                          =======            =======
    Weighted average shares - diluted     151,345            173,054
                                          =======            =======



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

                                         Six Months Ended
                                             June 30,
                                               2008       Q-2 08      Q-1 08
                                            ---------------------------------
    Revenues
    Investment banking:
      Capital raising                        $68,872      $3,962     $64,910
      Advisory                                 9,268       4,192       5,076
    Institutional brokerage:
      Principal transactions                  10,845       4,888       5,957
      Agency commissions                      55,768      29,918      25,850
    Asset management:
      Base management fees                     8,797       4,153       4,644
    Principal investment:
      Interest                                52,741      26,827      25,914
      Net investment loss                    (24,484)     (4,797)    (19,687)
      Dividends                                  687         258         429
    Mortgage banking:
      Interest                                    36           -          36
      Net investment income (loss)               463          (5)        468
    Other                                      4,267       1,932       2,335
                                            ---------------------------------
        Total revenues                       187,260      71,328     115,932
    Interest expense                          45,508      21,858      23,650
                                            ---------------------------------
        Revenues, net of interest expense    141,752      49,470      92,282
                                            ---------------------------------
    Non-interest expenses
    Compensation and benefits                130,924      53,970      76,954
    Professional services                     22,959      10,492      12,467
    Business development                      19,106       6,812      12,294
    Clearing and brokerage fees                7,023       3,393       3,630
    Occupancy and equipment                   17,769       8,580       9,189
    Communications                            12,273       6,255       6,018
    Other operating expenses                  12,439       7,055       5,384
                                            ---------------------------------
        Total non-interest expenses          222,493      96,557     125,936
                                            ---------------------------------

    Operating loss                           (80,741)    (47,087)    (33,654)

    Other income
      Gain on disposition of subsidiary
       and other income (loss)                72,845        (192)     73,037
                                            ---------------------------------

    Net (loss) income before income taxes
     and minority interest                    (7,896)    (47,279)     39,383

    Income tax benefit                       (10,780)     (9,974)       (806)
    Minority interest in losses of
     consolidated subsidiary                 (17,167)    (12,254)     (4,913)
                                            ---------------------------------

    Net income (loss)                        $20,051    $(25,051)    $45,102
                                            =================================


    ROE (annualized)                           10.9%      -27.2%       48.9%
    ROE (annualized-excluding AOCI) (1)         9.5%      -23.8%       41.8%

    Total shareholders' equity              $343,686    $343,686    $344,408
    Total shareholders' equity, net of
     AOCI (1)                               $436,093    $436,093    $455,761


    Basic earnings (loss) per share            $0.13      $(0.17)      $0.30
    Diluted earnings (loss) per share          $0.13      $(0.17)      $0.30

    Ending shares outstanding
     (in thousands)                          150,989     150,989     150,915

    Book value per share                       $2.28       $2.28       $2.28
    Book value per share, net of AOCI (1)      $2.89       $2.89       $3.02

    Gross assets under management
     (in millions)
    Managed accounts                          $275.7      $275.7      $333.9
    Hedge & offshore funds                      35.5        35.5        45.1
    Mutual funds                             1,553.4     1,553.4     1,702.9
    Private equity and venture capital
     funds                                      21.1        21.1        21.4
                                            ---------------------------------
        Total                               $1,885.7    $1,885.7    $2,103.3
                                            =================================

    Net assets under management (in millions)
    Managed accounts                          $275.7      $275.7      $333.9
    Hedge & offshore funds                      33.4        33.4        40.4
    Mutual funds                             1,533.8     1,533.8     1,698.0
    Private equity and venture capital
     funds                                      20.2        20.2        20.2
                                            ---------------------------------
        Total                               $1,863.1    $1,863.1    $2,092.5
                                            =================================

    Employee count                               719         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)
      Gain (loss) on
       issuance and sale
       of subsidiary
       shares            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 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-Jun-08         31-Dec-07
                                                -----------       -----------

    Cash and cash equivalents                     $417,940          $692,360
    Restricted cash                                    162            14,166
    Receivables                                     72,923            75,357
    Investments:
      Mortgage-backed securities, at fair
       value                                     3,431,550         1,791,480
      Long-term investments                        133,808           169,274
      Trading securities, at fair value             16,978            19,057
    Due from clearing broker                        12,521                 -
    Derivative assets, at fair value                 9,481             3,514
    Intangible assets, net                           9,817             9,837
    Furniture, equipment, software and
     leasehold improvements, net                    26,731            30,451
    Prepaid expenses and other assets               68,319           139,459
                                                -----------       -----------
      Total assets                              $4,200,230        $2,944,955
                                                ===========       ===========


    LIABILITIES AND SHAREHOLDERS ' EQUITY

    Liabilities:
    Trading account securities sold but               $259              $206
     not yet purchased, at fair value
    Repurchase agreements                        2,813,768         1,744,377
    Securities purchased                           375,361
    Derivative liabilities, at fair value            4,215             3,558
    Interest payable                                 5,684             5,746
    Accrued compensation and benefits               45,563            57,000
    Due to clearing broker                             -               7,059
    Accounts payable, accrued expenses
     and other liabilities                          57,398           105,456
    Short-term loan financing                          -              63,981
    Long-term debt                                 320,051           320,820
                                                -----------       -----------
      Total liabilities                          3,622,299         2,308,203
                                                -----------       -----------

    Minority interest                              234,245           243,061

    Shareholders' equity:
    Common stock, 159,411 and 151,883 shares         1,594             1,519
    Additional paid-in capital                   1,478,006         1,468,801
    Accumulated other comprehensive loss,
     net of taxes                                  (92,407)          (13,071)
    Accumulated deficit                         (1,043,507)       (1,063,558)
                                                -----------       -----------
      Total shareholders' equity                   343,686           393,691
                                                -----------       -----------

      Total liabilities and
       shareholders' equity                     $4,200,230        $2,944,955
                                                ===========       ===========

SOURCE: Friedman, Billings, Ramsey Group, Inc.

For further information: Media, +1-703-469-1004, media@fbr.com; Investors, Paul Beattie, +1-703-312-9673, pbeattie@fbr.com Web site: http://www.fbr.com