FBR Group Announces Second Quarter 2007 Financial Results
Agreement Signed on Sale, Recapitalization of First NLC Financial Services; Company Increases Share Buyback Authorization
PRNewswire - First Call
Arlington, Virginia
NYSE: FBR

ARLINGTON, Va., July 26 /PRNewswire-FirstCall/ -- Friedman, Billings, Ramsey Group, Inc. (FBR Group) (NYSE: FBR) today announced results for the quarter ended June 30, 2007. The company reported net after-tax earnings of $10.7 million, or $0.06 per share (diluted), compared to a net after-tax loss of $30.2 million, or $0.18 per share (diluted), for the second quarter of 2006. FBR Group's net after-tax loss for the first six months of 2007 was $175.2 million, or $1.01 per share (diluted), compared to a net after-tax loss of $3.7 million, or $0.02 per share (diluted) in first six months of 2006. Core book value net of Accumulated Other Comprehensive Income (AOCI) at the close of the second quarter was $5.76 compared to $5.75 at the end of the first quarter of 2007(1).

During the quarter, the company sold in an initial public offering 12.7 million shares of common stock of FBR Capital Markets Corporation (FBR Capital Markets) (Nasdaq: FBCM), FBR Group's investment banking, M&A, institutional brokerage and asset management/private wealth subsidiary. This sale generated net proceeds of $200.1 million, which resulted in an after-tax gain of $61.0 million. Following the initial public offering, which took place on June 8th, FBR continues to maintain just over a 50% beneficial ownership interest in FBR Capital Markets.

The results also reflect a $28.9 million write-down of goodwill associated with FBR Group's ownership of First NLC Financial Services, Inc. (FNLC), the firm's wholly-owned non-prime mortgage loan origination subsidiary. FBR Group's earnings of $10.7 million for the quarter, net of this non-cash write-down, were $39.6 million, or $0.23 per share (diluted).

Share Buyback Authorization

The company additionally announced that on July 25, 2007, FBR Group's board of directors passed a resolution increasing an existing share buyback authorization from 14 million to 50 million shares.

Non-Prime Origination Businesses

On July 25, after the close of the quarter, FBR Group signed a definitive agreement with an affiliate of Sun Capital Partners that will result in a $75 million recapitalization of FNLC and a reduction FBR Group's ownership interest in FNLC to 20%. Upon completion of the transaction, FNLC will cease to be a consolidated operating subsidiary of FBR Group and will be held, instead, as an equity investment.

"Two things are accomplished through this transaction," said J. Rock Tonkel, Jr., President and Chief Operating Officer of FBR Group. "First, as discussed in our earlier press release today, FBR Group has substantially limited its exposure going forward as a result of FNLC's recapitalization. The 20% ownership interest FBR Group retains will permit it to participate in FNLC's upside potential when the mortgage market strengthens. Second, FNLC -- with a $75 million cash infusion -- will have liquidity to navigate through an exceptionally difficult mortgage market environment and to position itself for future growth."

Mortgage Investment Portfolios

The company's portfolio of mortgage-backed securities averaged $5.7 billion with an average coupon of 6.08%, a one-month CPR of 15.7, and an average net premium of $52.6 million. The net yield for the second quarter was 5.85% with a corresponding cost of funds of 5.43% for a net interest spread of .42%.

The company's investments in non-conforming mortgage loans totaled $3.7 billion as of June 30, 2007, reflecting principal paydowns of $468 million during the quarter. As a result of net cash flows received during the quarter, the company's equity risk relating to this portfolio, considering both the mortgage loans and related non-recourse debt, was reduced to approximately $90 million as of June 30, 2007.

Merchant Banking and Other Long-Term Investments

The investment gains and dividends in FBR Group's merchant banking and other long-term investment portfolio totaled $1.3 million during the second quarter. The total value of FBR Group's merchant banking and other long-term investments at the close of the second quarter was $169.6 million compared to $114.5 million at the close of the first quarter. Net unrealized gains in the portfolio totaled $41.3 million at the end of the second quarter.

FBR Capital Markets Corporation

FBR Capital Markets yesterday reported second quarter after-tax earnings of $21.8 million, or $0.34 per share (diluted), compared to after-tax earnings of $1.0 million, or $0.02 per share (diluted) in the second quarter of 2006. FBR Capital Markets contributed $12.2 million to FBR Group's earnings for the second quarter of 2007.

FBR Capital Market's book value at the close of the quarter was $8.20 per share compared to $7.81 at the end of the first quarter of 2007. At the close of the first quarter, FBR Capital Markets had $528.3 million in equity, $471.0 million of cash, and no debt. Complete financial results and tables for FBR Capital Markets can be found at www.fbr.com.

Looking Ahead

"The sale and recapitalization of FNLC is an important step for us," said Eric F. Billings, Chairman and Chief Executive Officer of FBR Group. "This transaction coupled with the successful completion of the FBR Capital Markets IPO and strong second quarter results meaningfully alter the character of the company, putting us once again in a position to generate significant shareholder value."

FBR Group firm will host an earnings conference call on Thursday, July 26, 2007 at 9:00 A.M. U.S. EDT. Investors wishing to listen to the 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 after the call.

Friedman, Billings, Ramsey Group, Inc. (FBR)(NYSE: FBR) provides investment banking*, merger and acquisition advisory services*, institutional brokerage*, asset management and private wealth services through majority ownership of FBR Capital Markets Corporation (FBR Capital Markets) (Nasdaq: FBCM). FBR Capital Markets focuses capital and financial expertise on eight industry sectors: consumer, diversified industrials, energy & natural resources, financial institutions, healthcare, insurance, real estate, and technology, media & telecom. For the benefit of its shareholders, FBR Group also invests in mortgage-related assets and merchant banking opportunities. FBR is headquartered in the Washington, D.C. metropolitan area with offices in Arlington, VA, Boston, Dallas, Houston, Irvine, London, New York, Phoenix and San Francisco. Friedman, Billings, Ramsey Group, Inc. is the parent company of First NLC Financial Services, Inc., a non-conforming residential mortgage originator headquartered in Boca Raton, Florida. For more information, please visit www.fbr.com.

*Friedman, Billings, Ramsey & Co., Inc.

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.

    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.

    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,
                                             2007       %      2006       %
                                           --------  ------   -------  ------
    REVENUES:
    Investment banking:
      Capital raising                      $110,032   62.4%   $45,117   40.8%
      Advisory                                6,152    3.5%     6,281    5.7%
    Institutional brokerage:
      Principal transactions                  4,152    2.4%     1,760    1.6%
      Agency commissions                     28,564   16.2%    28,492   25.8%
      Mortgage trading interest                   -    0.0%    17,143   15.5%
      Mortgage trading net investment loss        -    0.0%      (209)  -0.2%
    Asset management:
      Base management fees                    6,360    3.6%     5,065    4.6%
      Incentive allocations and fees            116               (53)   0.0%
    Principal investment:
      Interest                              152,927   86.7%   113,613  102.7%
      Net investment loss                    (3,441)  -2.0%   (31,290) -28.4%
      Dividends                                 883    0.6%     4,059    3.7%
    Mortgage banking:
      Interest                               13,462    7.6%    21,267   19.2%
      Net investment (loss) income           (4,031)  -2.3%    29,401   26.6%
    Other                                     4,482    2.5%     5,465    4.9%
                                           --------  ------   -------  ------
            Total revenues                  319,658  181.2%   246,111  222.5%
    Interest expense                        143,231   81.2%   128,189  115.9%
    Provision for loan losses                     -    0.0%     7,348    6.6%
                                           --------  ------   -------  ------
            Revenues, net of interest
             expense and provision for
             loan losses                    176,427  100.0%   110,574  100.0%
                                           --------  ------   -------  ------

    NON-INTEREST EXPENSES:
      Compensation and benefits             106,885   60.6%    71,732   64.9%
      Professional services                  14,008    7.9%    12,925   11.7%
      Business development                   11,158    6.3%     8,604    7.8%
      Clearing and brokerage fees             3,063    1.7%     3,082    2.8%
      Occupancy and equipment                12,699    7.2%    12,232   11.1%
      Communications                          7,592    4.3%     6,013    5.4%
      Other operating expenses               18,684   10.6%    24,993   22.5%
      Goodwill impairment                    28,900   16.4%         -    0.0%
      Restructuring charges                   3,862    2.2%         -    0.0%
                                           --------  ------   -------  ------
            Total non-interest expenses     206,851  117.2%   139,581  126.2%
                                           --------  ------   -------  ------

    Operating loss                          (30,424) -17.2%   (29,007) -26.2%

    OTHER INCOME:
      Gain on sale of subsidiary shares     105,677   59.9%         -    0.0%
                                           --------  ------   -------  ------

                     Net income (loss)
                      before income taxes
                      and minority interest  75,253   42.7%   (29,007) -26.2%

    Income tax provision                     55,011   31.2%     1,240    1.1%
    Minority interest in earnings of
     consolidated subsidiary                  9,538    5.4%         -    0.0%
                                           --------  ------   -------  ------

            Net income (loss)               $10,704    6.1%  $(30,247) -27.3%
                                           ========  ======   =======  ======

    Basic earnings (loss) per share           $0.06            $(0.18)
                                           ========           =======
    Diluted earnings (loss) per share         $0.06            $(0.18)
                                           ========           =======

    Weighted average shares  - basic        173,256           171,294
                                           ========           =======
    Weighted average shares  - diluted      173,256           171,294
                                           ========           =======



          FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
          CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
          (Dollars in thousands, except per share amounts)
          (Unaudited)
                                                    Six Months Ended
                                                        June 30,
                                         2007           %      2006       %
                                        --------     ------  --------  ------
    REVENUES:
    Investment banking:
      Capital raising                   $207,279     109.8%  $111,452   38.8%
      Advisory                            12,610       6.7%     9,150    3.2%
    Institutional brokerage:
      Principal transactions               6,188       3.3%     7,480    2.6%
      Agency commissions                  52,382      27.7%    51,901   18.1%
      Mortgage trading interest                -       0.0%    34,793   12.1%
      Mortgage trading net investment
       loss                                    -       0.0%    (1,446)  -0.5%
    Asset management:
      Base management fees                11,888       6.3%    10,162    3.5%
      Incentive allocations and fees         220       0.1%       955    0.3%
    Principal investment:
      Interest                           334,623     177.3%   262,739   91.4%
      Net investment loss                (63,154)    -33.5%    (5,105)  -1.7%
      Dividends                            1,842       1.0%     7,758    2.7%
    Mortgage banking:
      Interest                            39,992      21.2%    44,380   15.4%
      Net investment (loss) income      (110,890)    -58.7%    40,139   14.0%
    Other                                  8,576       4.5%    10,452    3.6%
                                        --------     ------  --------  ------
          Total revenues                 501,556     265.7%   584,810  203.5%
    Interest expense                     312,782     165.7%   281,672   98.0%
    Provision for loan losses                  -       0.0%    15,740    5.5%
                                        --------     ------  --------  ------
          Revenues, net of interest
           expense and provision for
           loan losses                   188,774     100.0%   287,398  100.0%
                                        --------     ------  --------  ------

    NON-INTEREST EXPENSES:
      Compensation and benefits          210,867     111.7%   155,229   54.0%
      Professional services               27,862      14.8%    27,190    9.5%
      Business development                24,927      13.2%    22,689    7.9%
      Clearing and brokerage fees          5,764       3.1%     5,398    1.9%
      Occupancy and equipment             25,816      13.7%    23,474    8.2%
      Communications                      14,643       7.8%    11,620    4.0%
      Other operating expenses            50,400      26.7%    45,970   16.0%
      Impairment of goodwill              54,752      29.0%       -      0.0%
      Restructuring charges               19,347      10.2%       -      0.0%
                                        --------     ------  --------  ------
          Total non-interest expenses    434,378     230.2%   291,570  101.5%
                                        --------     ------  --------  ------
    Operating loss                      (245,604)   -130.2%    (4,172)  -1.5%

    OTHER INCOME:
      Gain on sale of subsidiary shares  106,508      56.5%       -      0.0%
                                        --------     ------  --------  ------

                  Net loss before
                   income taxes and
                   minority interest    (139,096)    -73.7%    (4,172)  -1.5%

    Income tax provision (benefit)        23,461      12.4%      (479)  -0.2%
    Minority interest in earnings of
     consolidated subsidiary              12,617       6.7%              0.0%
                                        --------     ------  --------  ------

          Net loss                     $(175,174)    -92.8%   $(3,693)  -1.3%
                                        ========     ======  ========  ======

    Basic loss per share                  $(1.01)              $(0.02)
                                        ========             ========
    Diluted loss per share                $(1.01)              $(0.02)
                                        ========             ========

     Weighted average shares  - basic    173,054              171,012
                                        ========              =======
     Weighted average shares  - diluted  173,054              171,012
                                        ========              =======



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

                                            For the six
                                            months ended
                                              June 30,
                                                2007       Q-2 07     Q-1 07
                                             -------------------------------
    Revenues
    Investment banking:
      Capital raising                        $207,279    $110,032    $97,247
      Advisory                                 12,610       6,152      6,458
    Institutional brokerage:
      Principal transactions                    6,188       4,152      2,036
      Agency commissions                       52,382      28,564     23,818
    Asset management:
      Base management fees                     11,888       6,360      5,528
      Incentive allocations and fees              220         116        104
    Principal investment:
      Interest                                334,623     152,927    181,696
      Net investment loss                     (63,154)     (3,441)   (59,713)
      Dividends                                 1,842         883        959
    Mortgage banking:
      Interest                                 39,992      13,462     26,530
      Net investment loss                    (110,890)     (4,031)  (106,859)
      Other                                     8,576       4,482      4,094
                                             -------------------------------
                Total revenues                501,556     319,658    181,898
    Interest expense                          312,782     143,231    169,551
                                             -------------------------------
                Revenues, net of interest
                 expense                      188,774     176,427     12,347
                                             -------------------------------

    Non-interest expenses
      Compensation and benefits               210,867     106,885    103,982
      Professional services                    27,862      14,008     13,854
      Business development                     24,927      11,158     13,769
      Clearing and brokerage fees               5,764       3,063      2,701
      Occupancy and equipment                  25,816      12,699     13,117
      Communications                           14,643       7,592      7,051
      Other operating expenses                 50,400      18,684     31,716
      Impairment of goodwill                   54,752      28,900     25,852
      Restructuring charges                    19,347       3,862     15,485
                                             -------------------------------
         Total non-interest expenses          434,378     206,851    227,527
                                             -------------------------------

    Operating loss                           (245,604)    (30,424)  (215,180)

    Other Income
      Gain on sale of subsidiary shares       106,508     105,677        831
                                             -------------------------------

    Net (loss) earnings before income
     taxes and minority interest             (139,096)     75,253   (214,349)

    Income tax provision (benefit)             23,461      55,011    (31,550)
    Minority interest in earnings of
     consolidated subsidiary                   12,617       9,538      3,079
                                             -------------------------------

    Net (loss) earnings                     $(175,174)    $10,704  $(185,878)
                                             ===============================

    Net (loss) earnings before income
     taxes and minority interest as a
     percentage of net revenue                 -73.7%       42.7%   -1736.0%

    ROE (annualized)                           -32.1%        3.9%     -68.8%
    ROE (annualized-excluding AOCI) (1)        -32.1%        3.9%     -68.2%


    Total shareholders' equity             $1,012,635  $1,012,635   $989,213
    Total shareholders' equity, net of
     AOCI (1)                              $1,000,071  $1,000,071   $993,753

    Basic loss (earnings) per share            $(1.01)      $0.06     $(1.08)
    Diluted loss (earnings) per share          $(1.01)      $0.06     $(1.08)

    Ending shares outstanding (in
     thousands)                               173,756     173,756    172,846

    Book value per share                        $5.83       $5.83      $5.72
    Book value per share, net of AOCI (1)       $5.76       $5.76      $5.75

    Gross assets under management (in millions)
    Managed accounts                           $291.3      $291.3     $258.8
    Hedge & offshore funds                       61.7        61.7       67.1
    Mutual funds                              2,482.6     2,482.6    2,412.9
    Private equity and venture capital funds     33.8        33.8       41.2
                                             -------------------------------
         Total                               $2,869.4    $2,869.4   $2,780.0
                                             ===============================

    Net assets under management (in millions)
    Managed accounts                           $291.3      $291.3     $258.8
    Hedge & offshore funds                       58.1        58.1       62.5
    Mutual funds                              2,474.7     2,474.7    2,406.4
    Private equity and venture capital funds     32.0        32.0       38.0
                                             -------------------------------
         Total                               $2,856.1    $2,856.1   $2,765.7
                                             ===============================

    Employee count                              2,151       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.



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

                           For the
                        year ended
                       December 31,
                              2006     Q-4 06     Q-3 06    Q-2 06     Q-1 06
                 -------------------------------------------------------------
    Revenues
    Investment banking:
     Capital raising      $190,187    $71,883     $6,852   $45,117     $66,335
     Advisory               24,148      9,172      5,826     6,281       2,869
    Institutional brokerage:
     Principal transactions  5,814        (8)    (1,658)     1,760       5,720
     Agency commissions    101,009     24,720     24,388    28,492      23,409
     Mortgage trading
      interest              51,147      2,509     13,845    17,143      17,650
     Mortgage trading net
      investment loss      (3,301)      (309)    (1,546)     (209)     (1,237)
    Asset management:
     Base management fees   20,093      5,051      4,880     5,065       5,097
     Incentive allocations
      and fees               1,327        403       (31)      (53)       1,008
    Principal investment:
     Interest              594,879    181,491    150,649   113,613     149,126
     Net investment (loss)
      income             (184,552)    (8,826)  (170,621)  (31,290)      26,185
     Dividends              14,551      2,043      4,750     4,059       3,699
    Mortgage banking:
     Interest               88,662     21,806     22,476    21,267      23,113
     Net investment income  83,786     27,555     16,092    29,401      10,738
    Other                   20,154      3,162      6,540     5,465       4,987
                 -------------------------------------------------------------
      Total revenues     1,007,904    340,652     82,442   246,111     338,699
    Interest expense       611,800    164,891    165,237   128,189     153,483
    Provision for loan
     losses                 15,740          -          -     7,348       8,392
                 -------------------------------------------------------------
      Revenues, net of
       interest expense
       and provision for
       loan losses         380,364    175,761   (82,795)   110,574     176,824
                 -------------------------------------------------------------

    Non-interest expenses
    Compensation and
     benefits              309,065     84,431     69,405    71,732      83,497
    Professional services   59,722     18,224     14,308    12,925      14,265
    Business development    42,150     11,884      7,577     8,604      14,085
    Clearing and
     brokerage fees         11,820      3,505      2,917     3,082       2,316
    Occupancy and
     equipment              50,051     13,668     12,909    12,232      11,242
    Communications          24,398      6,307      6,471     6,013       5,607
    Other operating
     expenses               89,377     20,116     23,291    24,993      20,977
                 -------------------------------------------------------------
      Total non-interest
       expenses            586,583    158,135    136,878   139,581     151,989
                 -------------------------------------------------------------

    Operating (loss)
     income              (206,219)     17,626  (219,673)  (29,007)      24,835

    Other Income
     Gain on sale of
      subsidiary shares    121,511          -    121,511         -           -
                 -------------------------------------------------------------

    Net (loss) income before
     income taxes and
     minority interest    (84,708)     17,626   (98,162)  (29,007)      24,835

    Income tax (benefit)
     provision            (14,682)     11,859   (26,062)     1,240     (1,719)
    Minority interest
     in (loss) earnings
     of consolidated
     subsidiary            (2,751)      1,957    (4,708)         -           -
                 -------------------------------------------------------------
    Net (loss) income    $(67,275)     $3,810  $(67,392)  $(30,247)    $26,554
                 =============================================================


    Net (loss) income
     before income taxes
     and minority interest
     as a percentage of
     net revenue            -22.3%      10.0%     118.6%     -26.2%      14.0%

    ROE (annualized)         -5.4%       1.3%     -22.1%      -9.4%       8.2%
    ROE (annualized-
     excluding AOCI) (1)     -5.4%       1.3%     -22.2%      -9.5%       8.1%


    Total shareholders'
     equity             $1,171,045 $1,171,045 $1,163,681 $1,270,361 $1,301,949
    Total shareholders'
     equity, net of
     AOCI (1)           $1,186,181 $1,186,181 $1,181,372 $1,250,117 $1,306,450

    Basic (loss)
     earnings per share    $(0.39)      $0.02    $(0.39)    $(0.18)      $0.16
    Diluted (loss)
     earnings per share    $(0.39)      $0.02    $(0.39)    $(0.18)      $0.16

    Ending shares
     outstanding
     (in thousands)       172,759     172,759    172,506    171,812    171,236

    Book value per share    $6.78       $6.78      $6.75      $7.39      $7.60
    Book value per share,
     net of AOCI (1)        $6.87       $6.87      $6.85      $7.28      $7.63

    Gross assets under
     management (in millions)
    Managed accounts       $259.9      $259.9     $376.6     $386.8     $383.9
    Hedge & offshore
     funds                   97.5        97.5      102.1      125.8      136.6
    Mutual funds          1,961.9     1,961.9    1,825.1    1,750.6    1,849.5
    Private equity
     and venture
     capital funds           42.2        42.2       48.5       48.2       50.5
                 -------------------------------------------------------------
        Total            $2,361.5    $2,361.5   $2,352.3   $2,311.4   $2,420.5
                 =============================================================

    Net assets under
     management (in millions)
    Managed accounts       $259.9      $259.9     $376.6     $386.8     $380.9
    Hedge & offshore
     funds                   96.4        96.4       98.3      116.1      125.4
    Mutual funds          1,954.7     1,954.7    1,817.8    1,742.6    1,843.4
    Private equity
     and venture
     capital funds           40.5        40.5       46.9       46.7       49.1
                 -------------------------------------------------------------
        Total            $2,351.5    $2,351.5   $2,339.6   $2,292.2   $2,398.8
                 =============================================================
    Employee count          3,019       3,019      2,909      2,651      2,531
                 =============================================================

    (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                                       30-Jun-07         31-Dec-06
                                               -----------       -----------
    Cash and cash equivalents                     $505,940          $189,956
    Restricted cash                                    110               132
    Receivables
      Securities sold                              261,918                 -
      Other                                        168,871           217,249
    Investments:
      Mortgage-backed securities, at fair value  6,047,375         6,870,661
      Loans held for sale, net                   3,681,090         5,367,934
      Long-term investments                        222,086           185,492
      Trading securities, at fair value             43,363            18,180
    Due from clearing broker                        19,621            28,999
    Derivative assets, at fair value                21,728            36,875
    Goodwill                                       108,013           162,765
    Intangible assets, net                          11,274            21,825
    Furniture, equipment, software and
     leasehold improvements, net                    47,963            44,111
    Prepaid expenses and other assets              180,246           208,339
                                               -----------       -----------
         Total assets                          $11,319,598       $13,352,518
                                               ===========       ===========


    LIABILITIES AND SHAREHOLDERS' EQUITY

    Liabilities:
    Trading account securities sold short
     but not yet purchased, at fair value             $601              $202
    Commercial paper                             3,493,212         3,971,389
    Repurchase agreements                        2,336,998         3,059,330
    Securities purchased                            27,025                 -
    Derivative liabilities, at fair value            4,710            44,582
    Dividends payable                                8,770             8,743
    Interest payable                                 9,185            12,239
    Accrued compensation and benefits               96,921            57,227
    Accounts payable, accrued expenses
     and other liabilities                         105,219            81,819
    Securitization financing, net                3,645,874         4,486,046
    Long-term debt                                 323,526           324,453
                                               -----------       -----------
         Total liabilities                      10,052,041        12,046,030
                                               -----------       -----------
    Minority interest                              254,922           135,443

    Shareholders' equity:
    Common stock, 175,327 and 174,712 shares         1,753             1,747
    Additional paid-in capital                   1,569,034         1,562,497
    Employee stock loan receivable, 2 and
     2 shares                                          (12)              (12)
    Accumulated other comprehensive
     income (loss), net of taxes                    12,564           (15,136)
    Accumulated deficit                           (570,704)         (378,051)
                                               -----------       -----------
         Total shareholders' equity              1,012,635         1,171,045
                                               -----------       -----------
         Total liabilities and
          shareholders' equity                 $11,319,598       $13,352,518
                                               ===========       ===========
 

For further information: Media - Lauren Burk +1-703-469-1004 lburk@fbr.com Investors - Paul Beattie +1-703-312-9673 pbeattie@fbr.com