FBR Announces Third Quarter 2006 Financial Results
PRNewswire - First Call
Arlington, Virginia
NYSE: FBR

 ARLINGTON, Va., Nov. 2 /PRNewswire-FirstCall/ -- Friedman, Billings, Ramsey Group, Inc. (NYSE: FBR) today announced its results for the quarter ended September 30, 2006. The company reported a net after-tax loss for the quarter of $67.4 million, or $0.39 per share (diluted), compared to after-tax earnings of $23.0 million, or $0.14 per share (diluted), for the third quarter of 2005. FBR's net after-tax loss for the first nine months of 2006 was $71.1 million, or $0.41 per share (diluted), compared to earnings of $100.7 million, or $0.59 per share (diluted), for the first nine months of 2005. The company's consolidated equity was $1.2 billion at the end of the third quarter, resulting in core book value net of Accumulated Other Comprehensive Income (AOCI) of $6.851.

Principal Investments

As of September 30, 2006, FBR made a determination in evaluating its mortgage investments and strategy to reclassify the mortgage loan portfolio held at the real estate investment trust (REIT). As a result of this change, FBR has recorded its investment in this portfolio at the lower of cost or market, and consequently the company recognized a $146.8 million non-cash mark-to-market write-down in the value of this mortgage loan portfolio. The write-down of the mortgage portfolio signals the company's decision not to hold that portfolio to maturity and an intention to redeploy the capital invested in that portfolio more rapidly than if the portfolio were held to maturity.

In addition, FBR made a determination in evaluating its merchant banking portfolio to recognize as "other than temporary impairments" the amounts by which the fair value of certain of its merchant banking investments were below their respective cost bases. At the close of the quarter, FBR recognized a $20 million non-cash write-down of equity positions in its merchant banking portfolio, the majority of which involve companies doing business in the non- prime mortgage sector.

FBR Capital Markets

FBR Capital Markets Corporation, a consolidated taxable subsidiary formed in the second quarter of 2006, acts as a holding company for FBR's capital markets operations - investment banking, institutional brokerage, research, and its asset management businesses, including FBR-sponsored mutual funds and private wealth management.

In July, FBR Capital Markets Corporation sold shares of its common stock to institutional investors in a private transaction valued at $270 million, giving the newly formed subsidiary an initial market value of approximately $960 million. FBR Group, which retains a beneficial ownership interest of 71.9% in FBR Capital Markets, recorded a net gain of $121.5 million as a result of the cash received in the transaction.

Equity capital markets revenues for the third quarter totaled $36.7 million, down from $113.0 million in the third quarter of 2005, and FBR Capital Markets had an overall net after-tax loss of $19.2 million during the quarter. The net loss for FBR Capital Markets, exclusive of expenses associated with the July capital raise and other nonrecurring items, was $12 million. FBR's banking revenues for the quarter were unusually low, consistent with the industry's relatively slow third quarter for new equity issues. The firm believes this to be an anomaly and, in support of that view, the company has already generated more banking revenue during October than in the entire third quarter. Further, the company's current investment banking pipeline, including transactions expected to close in the fourth quarter, is strong. The pipeline includes transactions across all of our eight vertical industry groups.

FBR Capital Markets finished the quarter with approximately $475 million in equity and over $300 million of cash on its balance sheet. This capital will help to facilitate the continued execution of the company's strategic plan, involving the build-out of its mergers and acquisitions capability, the continued strengthening of its industry groups, and growth in its asset management business.

First NLC

FNLC generated a net after-tax loss of $7.4 million during the quarter, the result of a $23 million loss provision. The total provision includes $17.5 million of additional reserves related to the impact of an industry-wide increase in requests for buy-backs of loans related to early pay defaults. Without this additional reserve, FNLC would have realized net after-tax earnings of about $3.0 million. FNLC originated over $2 billion in loans in the third quarter, as compared to $1.6 billion in loan originations for the third quarter of 2005, and maintained its cost to originate below 2%.

"Clearly the last year has been both challenging and disappointing for the company and its shareholders," said Eric F. Billings, FBR Chairman and Chief Executive Officer. "However, the non-cash write-down of our mortgage loan and merchant banking portfolios should position our balance sheet to now generate higher and more consistent returns. We further believe that First NLC is poised to generate meaningful returns for the company. Additionally, despite an unusually slow third quarter in our capital markets business, we are optimistic about the near term and longer term prospects for this franchise. We are continuing to execute against our strategic plan and look forward to working with Crestview Partners in their role as board members and investors in FBR Capital Markets. These actions, we believe, position all three of our core businesses to provide sustainable profitability for the company."

The firm will host an earnings conference call this morning, Thursday, November 2, 2006 at 9:00 A.M. U.S. EST. Investors wishing to listen to the earnings conference call at 9:00 A.M. U.S. EST 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 wealth 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, 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 Deerfield Beach, Florida. For more information, see http://www.fbr.com.

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

(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 follows.



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

                                                     Quarter ended
                                                     September 30,

                                             2006        %     2005       %
                                           --------   ------ --------  ------
    REVENUES:
    Investment banking:
      Capital raising                        $6,852    -8.3%  $86,035   48.2%
      Advisory                                5,826    -7.0%    3,026    1.7%
    Institutional brokerage:
      Agency commissions and principal
       transactions                          22,730   -27.5%   24,793   13.9%
      Mortgage trading interest              13,845   -16.7%   11,304    6.3%
      Mortgage trading net investment loss   (1,546)    1.9%   (2,401)  -1.3%
    Asset management:
      Base management fees                    4,880    -5.9%    7,914    4.4%
      Incentive allocations and fees            (31)    0.0%      832    0.5%
    Principal investment:
      Interest                              150,649  -182.0%  144,401   80.8%
      Net investment (loss) income         (170,621)  206.1%    4,866    2.7%
      Dividends                               4,750    -5.7%    8,772    4.9%
    Mortgage Banking:
      Interest                               22,476   -27.1%   27,280   15.3%
      Net investment income                  16,092   -19.5%   17,600    9.9%
    Other                                     6,540    -8.0%    5,479    3.0%
                                           --------   ------ --------  ------
           Total revenues                    82,442   -99.7%  339,901  190.3%
    Interest expense                        165,237  -199.7%  156,373   87.6%
    Provision for loan losses                     -     0.0%    4,890    2.7%
                                           --------   ------ --------  ------
           Revenues, net of interest
            expense and provision for
            loan losses                     (82,795)  100.0%  178,638  100.0%
                                           --------   ------ --------  ------

    NON-INTEREST EXPENSES:
    Compensation and benefits                69,405   -83.8%   88,348   49.5%
    Professional services                    14,308   -17.3%   16,158    9.0%
    Business development                      7,577    -9.2%    8,815    4.9%
    Clearing and brokerage fees               2,917    -3.5%    2,363    1.3%
    Occupancy and equipment                  12,909   -15.5%    9,397    5.4%
    Communications                            6,471    -7.8%    5,561    3.1%
    Other operating expenses                 23,291   -28.1%   16,861    9.4%
                                           --------   ------ --------  ------
           Total non-interest expenses      136,878  -165.2%  147,503   82.6%
                                           --------   ------ --------  ------

    Operating (loss) income                (219,673)  265.2%   31,135   17.4%

    OTHER INCOME:
      Gain on sale of subsidiary shares     121,511  -146.8%        -    0.0%
                                           --------   ------ --------  ------

           Net (loss) income before
            income taxes and
            minority interest               (98,162)  118.6%   31,135   17.4%

    Income tax (benefit) provision          (26,062)   31.5%    8,090    4.5%
    Minority interest in loss of
     consolidated subsidiary                 (4,708)    5.7%        -    0.0%
                                           --------   ------ --------  ------

           Net (loss) income               $(67,392)   81.4%  $23,045   12.9%
                                           ========   ====== ========  ======

    Basic loss earnings per share            $(0.39)            $0.14
                                           ========          ========
    Diluted loss earnings per share          $(0.39)            $0.14
                                           ========          ========

    Weighted average shares - basic         172,091           169,745
                                           ========          ========
    Weighted average shares - diluted       172,091           170,490
                                           ========          ========



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

                                                  Nine Months Ended
                                                    September 30,

                                          2006          %      2005       %
                                        --------     ------  --------  ------
    REVENUES:
    Investment banking:
      Capital raising                   $118,304      57.8%  $267,887   48.8%
      Advisory                            14,976       7.3%    10,344    1.9%
    Institutional brokerage:
      Agency commissions and principal
       transactions                       82,111      40.1%    75,934   13.7%
      Mortgage trading interest           48,638      23.8%    11,304    2.1%
      Mortgage trading net investment
       loss                               (2,992)     -1.5%    (2,401)  -0.4%
    Asset management:
      Base management fees                15,042       7.4%    24,195    4.4%
      Incentive allocations and fees         924       0.5%     1,187    0.2%
    Principal investment:
      Interest                           413,388     202.1%   360,021   65.6%
      Net investment (loss) income      (175,726)    -85.9%    18,746    3.4%
      Dividends                           12,508       6.1%    20,583    3.7%
    Mortgage Banking:
      Interest                            66,856      32.7%    49,182    9.0%
      Net investment income               56,231      27.5%    35,640    6.5%
    Other                                 16,992       8.2%    17,138    3.1%
                                        --------     ------  --------  ------
           Total revenues                667,252     326.1%   889,760  162.0%
    Interest expense                     446,909     218.4%   334,920   60.9%
    Provision for loan losses             15,740       7.7%     6,028    1.1%
                                        --------     ------  --------  ------
           Revenues, net of interest
            expense and provision for
            loan losses                  204,603     100.0%   548,812  100.0%
                                        --------     ------  --------  ------

    NON-INTEREST EXPENSES:
    Compensation and benefits            224,634     109.8%   244,162   44.5%
    Professional services                 41,498      20.3%    49,994    9.1%
    Business development                  30,266      14.8%    36,215    6.6%
    Clearing and brokerage fees            8,315       4.1%     6,435    1.2%
    Occupancy and equipment               36,383      17.8%    23,893    4.4%
    Communications                        18,091       8.8%    14,893    2.7%
    Other operating expenses              69,261      33.9%    45,695    8.3%
                                        --------     ------  --------  ------
           Total non-interest expenses   428,448     209.5%   421,287   76.8%
                                        --------     ------  --------  ------

    Operating (loss) income             (223,845)   -109.5%   127,525   23.2%

    OTHER INCOME:
      Gain on sale of subsidiary shares  121,511      59.4%         -    0.0%
                                        --------     ------  --------  ------

           Net (loss) income before
            income taxes and
            minority interest           (102,334)    -50.0%   127,525   23.2%

    Income tax (benefit) provision       (26,541)    -13.0%    26,825    4.9%
    Minority interest in loss of
     consolidated subsidiary              (4,708)     -2.3%         -    0.0%
                                        --------     ------  --------  ------

           Net (loss) income            $(71,085)    -34.7%  $100,700   18.3%
                                        ========     ======  ========  ======

    Basic (loss) earnings per share       $(0.41)               $0.60
                                        ========             ========
    Diluted (loss) earnings per share     $(0.41)               $0.59
                                        ========             ========

    Weighted average shares - basic      171,376              169,166
                                        ========             ========
    Weighted average shares - diluted    171,376              170,122
                                        ========             ========



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

                                For the
                              nine months
                                ending
                               September
                                30, 2006     Q-3 06      Q-2 06      Q-1 06
                               ---------   ---------   ---------   ---------
    Revenues
    --------
    Investment banking:
      Capital raising           $118,304      $6,852     $45,117     $66,335
      Advisory                    14,976       5,826       6,281       2,869
    Institutional brokerage:
      Agency commissions and
       principal transactions     82,111      22,730      30,252      29,129
      Mortgage trading interest   48,638      13,845      17,143      17,650
      Mortgage trading net
       investment loss            (2,992)     (1,546)       (209)    (1,237)
    Asset management:
      Base management fees        15,042       4,880       5,065       5,097
      Incentive allocations and
       fees                          924         (31)        (53)      1,008
    Principal investment:
      Interest                   413,388     150,649     113,613     149,126
      Net investment loss
       income                   (175,726)   (170,621)    (31,290)     26,185
      Dividends                   12,508       4,750       4,059       3,699
    Mortgage Banking:
      Interest                    66,856      22,476      21,267      23,113
      Net Investment income       56,231      16,092      29,401      10,738
    Other                         16,992       6,540       5,465       4,987
                               ---------   ---------   ---------   ---------
            Total revenues       667,252      82,442     246,111     338,699
    Interest expense             446,909     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         204,603     (82,795)    110,574     176,824
                               ---------   ---------   ---------   ---------

    Non-interest expenses
    ---------------------
    Compensation and benefits    224,634      69,405      71,732      83,497
    Professional services         41,498      14,308      12,925      14,265
    Business development          30,266       7,577       8,604      14,085
    Clearing and brokerage
     fees                          8,315       2,917       3,082       2,316
    Occupancy and equipment       36,383      12,909      12,232      11,242
    Communications                18,091       6,471       6,013       5,607
    Other operating expenses      69,261      23,291      24,993      20,977
                               ---------   ---------   ---------   ---------
        Total expenses           428,448     136,878     139,581     151,989
                               ---------   ---------   ---------   ---------

    Operating (loss) income     (223,845)   (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          (102,334)    (98,162)    (29,007)     24,835

    Income tax benefit
     provision                   (26,541)    (26,062)      1,240      (1,719)
    Minority interest in
     losses of consolidated
     subsidiary                   (4,708)     (4,708)          -           -
                               ---------   ---------   ---------   ---------

    Net (loss) income           $(71,085)   $(67,392)   $(30,247)    $26,554
                               =========   =========   =========   =========

    Net (loss) income before
     income taxes as a
     percentage of
     net revenue                  -50.0%      118.6%      -26.2%       14.0%

    ROE (annualized)               -7.7%      -22.1%       -9.4%        8.2%
    ROE (annualized-excluding
     AOCI) (1)                     -7.6%      -22.2%       -9.5%        8.1%

    Total shareholders'
     equity                   $1,163,681  $1,163,681  $1,270,361  $1,301,949
    Total shareholders'
     equity, net of AOCI (1)  $1,181,373  $1,181,373  $1,250,117  $1,306,450

    Basic (loss) earnings per
     share                        $(0.41)     $(0.39)     $(0.18)      $0.16
    Diluted (loss) earnings
     per share                    $(0.41)     $(0.39)     $(0.18)      $0.16

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

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

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

    Net assets under
     management (in millions)
    -------------------------
    Managed accounts              $376.6      $376.6      $386.8      $380.9
    Hedge & offshore funds          98.3        98.3       116.1       125.4
    Mutual funds                 1,817.8     1,817.8     1,742.6     1,843.4
    Private equity and
     venture capital funds          46.9        46.9        46.7        49.1
                               ---------   ---------   ---------   ---------
        Total                   $2,339.6    $2,339.6    $2,292.2    $2,398.8
                               =========   =========   =========   =========

    Employee count                 2,909       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.
    Financial & Statistical Supplement - Operating Results
    (Dollars in thousands, except per share data)
    (Unaudited)

                          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:
      Agency commissions
       and principal
       transactions       100,728     24,794     24,793     23,357     27,784
      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             78,007     28,825     27,280     15,543      6,359
      Net investment
       (loss) income       13,741    (21,899)    17,600     14,559      3,481
    Other                  22,302      5,164      5,479      6,030      5,629
                        ---------  ---------  ---------  ---------  ---------
      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
         non-interest
         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 $1,629,293

    Basic (loss) earnings
     per share             $(1.01)    $(1.60)     $0.14      $0.31      $0.15
    Diluted (loss)
     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      $9.63

    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
                        =========  =========  =========  =========  =========

    Employee count          2,449      2,449      2,455      2,226      2,123
                        =========  =========  =========  =========  =========


    (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-Sep-06         31-Dec-05
                                               -----------       -----------

    Cash and cash equivalents                     $365,121          $238,615
    Restricted cash                                  4,081             6,101
    Receivables
      Securities sold                              946,063                 -
      Other                                        231,516           259,519
    Investments:
      Mortgage-backed securities, at fair
       value                                     5,971,276         8,002,561
      Loans held for investment, net                     -         6,841,266
      Loans held for sale, net                   5,668,669           963,807
      Long-term investments                        242,111           347,644
      Reverse repurchase agreements                120,103           283,824
      Trading securities, at fair value            488,084         1,032,638
    Due from clearing broker                       154,570            71,065
    Derivative assets, at fair value                55,229            70,636
    Goodwill                                       162,765           162,765
    Intangible assets, net                          22,807            26,485
    Furniture, equipment and leasehold
     improvements, net                              44,614            46,382
    Prepaid expenses and other assets              181,046            82,482
                                               -----------       -----------
         Total assets                          $14,658,055       $18,435,790
                                               ===========       ===========

    LIABILITIES AND SHAREHOLDERS ' EQUITY

    Liabilities:
    Trading account securities sold short
     but not yet purchased, at fair value          $81,484          $150,547
    Commercial paper                             3,720,804         6,996,950
    Repurchase agreements                        2,687,363         2,698,619
    Securities purchased                         1,358,462                 -
    Derivative liabilities, at fair value           60,354            31,952
    Dividends payable                                8,751            34,588
    Interest payable                                12,939            12,039
    Accrued compensation and benefits               34,537            82,465
    Accounts payable, accrued expenses
     and other liabilities                         129,451            82,576
    Temporary subordinated loan payable                  -            75,000
    Securitization financing                     4,942,263         6,642,198
    Long-term debt                                 324,447           324,686
                                               -----------       -----------
         Total liabilities                      13,360,855        17,131,620
                                               -----------       -----------

    Minority Interest                              133,519                 -

    Shareholders' equity:
    Common stock, 174,392 and 172,854
     shares                                          1,744             1,729
    Additional paid-in capital                   1,551,248         1,547,128
    Employee stock loan receivable
     including accrued interest
     (9 and 551 shares)                                (72)           (4,018)
    Deferred Compensation, net                           -           (15,602)
    Accumulated other comprehensive loss,
     net of taxes                                  (17,691)             (977)
    Accumulated deficit                           (371,548)         (224,090)
                                               -----------       -----------
         Total shareholders' equity              1,163,681         1,304,170
                                               -----------       -----------

         Total liabilities and
          shareholders' equity                 $14,658,055       $18,435,790
                                               ===========       ===========

SOURCE  Friedman, Billings, Ramsey Group, Inc.
    -0-                             11/02/2006

For further information: Media: Lauren Burk, +1-703-469-1004, lburk@fbr.com or Investors: Paul Beattie, +1-703-312-9673, pbeattie@fbr.com, both of Friedman, Billings, Ramsey Group, Inc./ /Web site: http://www.fbr.com/ (FBR) CO: Friedman, Billings, Ramsey Group, Inc. ST: Virginia IN: FIN SU: ERN CCA PM-MB -- DCTH001 -- 4502 11/02/2006 07:30 EST http://www.prnewswire.com