Fibria Celulose (NYSE:FBR)
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ARLINGTON, Va., Feb. 21 /PRNewswire-FirstCall/ -- Friedman, Billings, Ramsey Group, Inc. (FBR Group; NYSE: FBR) today reported a net after-tax loss of $270.4 million, or $1.77 per share (diluted), for the quarter ended December 31, 2007 compared to net after-tax earnings of $3.8 million, or $0.02 per share (diluted) in the fourth quarter of 2006. Of the quarterly loss, $108 million is the result of a non-cash write-down of goodwill. In addition, under Generally Accepted Accounting Principles (GAAP), upon the discharge of the First NLC Financial Services (FNLC) bankruptcy - expected to occur in the first six months of 2008 - the Company estimates $70 million of fourth quarter losses will be recovered. Net of these two non-cash items, the quarterly loss was $92.4 million.
For the year, FBR Group had a net after-tax loss of $660.3 million, or $3.95 per share (diluted), compared to a net after-tax loss of $67.3 million, or $0.39 per share (diluted), in 2006. Net of intangible asset write-downs of $173 million and the expected $70 million FNLC loss recovery, the loss for 2007 was $417.3 million. Inclusive of the expected FNLC loss recovery, tangible book value net of Accumulated Other Comprehensive Income (AOCI) as of December 31, 2007 was $3.10(1) per share.
Adjusted for GAAP recovery of $70 million associated with FNLC losses, FBR Group ended the quarter with $777 million of consolidated tangible capital, including $320 million of trust preferred securities. Of this tangible capital, $254 million was attributable to FBR Group's 52% ownership interest in FBR Capital Markets. Of the remaining $523 million of tangible capital, FBR Group had approximately $370 million invested in cash and agency-backed securities.
Importantly, at December 31, 2007, FBR Group also had $372 million of net operating loss carry-forwards and $268 million of capital loss carry-forwards.
The principal economic components of the fourth quarter loss were:
-- previously announced (Dec. 21, 2007) $40 million of write-downs and
losses relating to the sale of approximately $200 million of non-
securitized non-prime mortgage loans (net of reserves) originated by
First NLC Financial Services,
-- $15.8 million, representing FBR Group's proportionate share of 52%-
owned FBR Capital Markets Corporation's (NASDAQ:FBCM) fourth quarter
loss, and
-- $16.2 million in valuation adjustments to securities in FBR Group's
merchant banking and non-prime securities portfolios.
"Whole loan mortgages and on-balance sheet residuals have been eliminated. Our remaining non-prime securities exposure is below $30 million - about 1.5% of total assets - and is self-liquidating," said J. Rock Tonkel, Jr., President and Chief Operating Officer of FBR Group. "In the fourth quarter, we deployed cash into the company's core business of investing in agency mortgage-backed securities (MBS). With current spreads exceeding 175 basis points on a substantially hedged basis for certain segments of the agency MBS market, we intend to continue to deploy cash and re-deploy additional liquidity created from the disposition of our remaining non-agency assets into the core business."
Mortgage Investment Portfolio
FBR Group's investments in mortgage-backed securities, primarily government agency securities, averaged $1.1 billion with a one-month CPR of 3.9, and an ending net premium of $1.0 million. The net yield on mortgage-backed securities for the fourth quarter was 5.83% with a corresponding cost of funds of 4.88%.
Merchant Banking
Excluding merchant banking investments of $58.3 million at FBR Capital Markets, the total value of the merchant banking investments held by FBR Group at the close of the fourth quarter was $53.0 million.
Looking Ahead
"With non-prime and credit exposure substantially eliminated, our balance sheet includes $523 million of long-term capital, approximately $370 million of which is in cash and highly liquid agency securities," said Eric F. Billings, Chairman and Chief Executive Officer of FBR Group. "That foundation is permitting us to take advantage of a significantly steepening yield curve by deploying our capital in a conservative, substantially hedged agency strategy that, we believe, will provide very acceptable returns. In addition, we are examining strategies to maximize the economic benefit that can be derived from the $372 million of net operating loss carry-forwards and $268 million of capital loss carry-forwards. All of this repositions the company to focus once again on building the core agency business, growing capital, increasing earnings and delivering growth in shareholder value."
FBR Capital Markets Corporation
FBR Capital Markets (NASDAQ:FBCM), a majority-owned subsidiary of FBR Group, yesterday reported a net after-tax loss of $27.8 million, or $0.43 per share (diluted), for the quarter ended December 31, 2007 compared to net after-tax income of $7.0 million, or $0.11 per share (diluted) in the fourth quarter of 2006.
For the year ending December 31, 2007, FBR Capital Markets had pre-tax earnings of $25.3 million, income tax expense of $20.1 million (including $8 million of non-cash items), resulting in after-tax earnings of $5.2 million or $0.08 per share (diluted), compared to a net after-tax loss of $9.8 million, or $0.18 per share (diluted), in 2006. Net revenues for the full year were $479.6 million compared to net revenues of $364.1 million in 2006.
At the close of the fourth quarter, FBR Capital Markets had $506.7 million in equity, $383.6 million of cash, no debt, and its book value was $7.91 per share compared to $8.25 per share at the end of the third quarter of 2007. Complete financial results and tables for FBR Capital Markets can be found at http://www.fbrcapitalmarkets.com/.
The firm will host an earnings conference call this morning, Thursday, February 21, 2008 at 9:00 A.M. U.S. EST. 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 following 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 http://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.
Tangible book value net of AOCI and excluding the $70 million FNLC
loss recovery is $2.63.
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
December 31,
2007 % 2006 %
REVENUES:
Investment banking:
Capital raising $25,648 -76.5% $71,883 40.9%
Advisory 4,973 -14.8% 9,172 5.2%
Institutional brokerage:
Principal transactions 2,996 -8.9% (8) 0.0%
Agency commissions 26,153 -78.0% 24,720 14.1%
Mortgage trading interest - 0.0% 2,509 1.4%
Mortgage trading net investment loss - 0.0% (309) -0.2%
Asset management:
Base management fees 5,542 -16.5% 5,051 2.9%
Incentive allocations and fees 99 -0.3% 403 0.2%
Principal investment:
Interest 51,057 -152.4% 181,491 103.3%
Net investment loss (22,327) 66.6% (8,826) -5.0%
Dividends 805 -2.4% 2,043 1.2%
Mortgage banking:
Interest 4,059 -12.1% 21,806 12.4%
Net investment (loss) income (83,174) 248.2% 27,555 15.7%
Other 3,242 -9.8% 3,162 1.7%
Total revenues 19,073 -56.9% 340,652 193.8%
Interest expense 52,583 -156.9% 164,891 93.8%
Revenues, net of interest
expense (33,510) 100.0% 175,761 100.0%
NON-INTEREST EXPENSES:
Compensation and benefits 69,533 -207.5% 84,431 48.0%
Professional services 15,598 -46.5% 18,224 10.4%
Business development 10,878 -32.5% 11,884 6.8%
Clearing and brokerage fees 2,797 -8.3% 3,505 2.0%
Occupancy and equipment 13,791 -41.2% 13,668 7.8%
Communications 6,899 -20.6% 6,307 3.6%
Other operating expenses 15,706 -46.9% 20,116 11.3%
Goodwill impairment 108,013 -322.3% - 0.0%
Restructuring charges 21,466 -64.1% - 0.0%
Total non-interest expenses 264,681 -789.9% 158,135 89.9%
Operating (loss) income (298,191) 889.9% 17,626 10.1%
OTHER INCOME:
Gain on sale of subsidiary shares 4 0.0% - 0.0%
Net (loss) income before income
taxes and minority interest (298,187) 889.8% 17,626 10.1%
Income tax (benefit) provision (15,817) 47.2% 11,859 6.7%
Minority interest in (losses)
earnings of consolidated subsidiary (12,008) 35.8% 1,957 1.1%
Net (loss) income $(270,362) 806.8% $3,810 2.3%
Basic (loss) earnings per share $(1.77) $0.02
Diluted (loss) earnings per share $(1.77) $0.02
Weighted average shares - basic 152,375 172,531
Weighted average shares - diluted 152,375 172,600
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(Unaudited)
Twelve Months Ended
December 31,
2007 % 2006 %
REVENUES:
Investment banking:
Capital raising $282,619 267.9% $190,187 50.0%
Advisory 34,063 32.3% 24,148 6.3%
Institutional brokerage:
Principal transactions 10,152 9.6% 5,814 1.5%
Agency commissions 104,792 99.3% 101,009 26.6%
Mortgage trading interest - 0.0% 51,147 13.4%
Mortgage trading net investment loss - 0.0% (3,301) -0.9%
Asset management:
Base management fees 23,549 22.3% 20,093 5.3%
Incentive allocations and fees 401 0.4% 1,327 0.3%
Principal investment:
Interest 501,130 475.0% 594,879 156.4%
Net investment loss (221,956) -210.4% (184,552) -48.5%
Dividends 3,173 3.0% 14,551 3.8%
Mortgage banking:
Interest 51,245 48.6% 88,662 23.3%
Net investment (loss) income (222,032) -210.4% 83,786 22.0%
Other 15,808 14.9% 20,154 5.4%
Total revenues 582,944 552.5% 1,007,904 264.9%
Interest expense 477,437 452.5% 611,800 160.8%
Provision for loan losses - 0.0% 15,740 4.1%
Revenues, net of interest
expense and provision for
loan losses 105,507 100.0% 380,364 100.0%
NON-INTEREST EXPENSES:
Compensation and benefits 361,355 342.5% 309,065 81.3%
Professional services 55,741 52.8% 59,722 15.7%
Business development 43,518 41.2% 42,150 11.1%
Clearing and brokerage fees 12,514 11.9% 11,820 3.1%
Occupancy and equipment 52,302 49.6% 50,051 13.2%
Communications 28,690 27.2% 24,398 6.4%
Other operating expenses 82,246 78.0% 89,377 23.5%
Goodwill impairment 162,765 154.3% - 0.0%
Restructuring charges 46,985 44.5% - 0.0%
Total non-interest expenses 846,116 802.0% 586,583 154.3%
Operating loss (740,609) -702.0% (206,219) -54.2%
OTHER INCOME:
Gain on sale of subsidiary shares 104,062 98.6% 121,511 31.9%
Net loss before income taxes
and minority interest (636,547) -603.3% (84,708) -22.3%
Income tax provision (benefit) 22,932 21.7% (14,682) -3.9%
Minority interest in earnings
(losses) of consolidated subsidiary 774 0.7% (2,751) -0.7%
Net loss $(660,253) -625.7% $(67,275) -17.7%
Basic loss per share $(3.95) $(0.39)
Diluted loss per share $(3.95) $(0.39)
Weighted average shares - basic 166,975 171,667
Weighted average shares - diluted 166,975 171,667
FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.
Financial & Statistical Supplement - Operating Results
(Dollars in thousands, except per share data)
(Unaudited)
For the
twelve months
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 501,130 51,057 115,450 152,927 181,696
Net investment loss (221,956) (22,327) (136,475) (3,441) (59,713)
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 582,944 19,073 62,315 319,658 181,898
Interest expense 477,437 52,583 112,072 143,231 169,551
Revenues, net of
interest expense 105,507 (33,510) (49,757) 176,427 12,347
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 (740,609) (298,191) (196,814) (30,424) (215,180)
Other income (loss)
Gain (loss) on sale of
subsidiary shares 104,062 4 (2,450) 105,677 831
(Loss) income before
income taxes and
minority interest (636,547) (298,187) (199,264) 75,253 (214,349)
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 $(660,253) $(270,362) $(214,717) $10,704 $(185,878)
ROE (annualized) -84.4% -138.2% -91.9% 3.9% -68.8%
ROE (annualized-excluding
AOCI) (1) -82.9% -135.8% -90.5% 3.9% -68.2%
Total shareholders'
equity $393,691 $393,691 $698,214 $1,012,635 $989,213
Total shareholders'
equity, net of
AOCI (1) $406,537 $406,537 $711,693 $1,000,071 $993,753
Basic (loss) earnings
per share $(3.95) $(1.77) $(1.28) $0.06 $(1.08)
Diluted (loss) earnings
per share $(3.95) $(1.77) $(1.28) $0.06 $(1.08)
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 $4.49 $5.76 $5.75
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.
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 - -
(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
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 and shares in thousands, except per share amounts)
(Unaudited)
ASSETS 31-Dec-07 31-Dec-06
Cash and cash equivalents $692,360 $189,956
Restricted cash 14,166 132
Receivables 75,357 217,249
Investments:
Mortgage-backed securities, at fair value 1,791,480 6,870,661
Loans held for sale, net 65,074 5,367,934
Long-term investments 169,274 185,492
Trading securities, at fair value 19,057 18,180
Due from clearing broker - 28,999
Derivative assets, at fair value 3,514 36,875
Goodwill - 162,765
Intangible assets, net 9,837 21,825
Furniture, equipment, software and
leasehold improvements, net 30,451 44,111
Prepaid expenses and other assets 74,385 208,339
Total assets $2,944,955 $13,352,518
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Trading account securities sold short
but not yet purchased, at fair value $206 $202
Commercial paper - 3,971,389
Repurchase agreements 1,744,377 3,059,330
Derivative liabilities, at fair value 3,558 44,582
Dividends payable - 8,743
Interest payable 2,991 12,239
Accrued compensation and benefits 57,000 57,227
Due to clearing broker 7,059 -
Accounts payable, accrued expenses
and other liabilities 105,456 81,819
Short-term loan financing 63,981 -
Securitization financing, net - 4,486,046
Long-term debt 323,575 324,453
Total liabilities 2,308,203 12,046,030
Minority interest 243,061 135,443
Shareholders' equity:
Common stock, 151,887 and 174,712 shares 1,519 1,747
Additional paid-in capital 1,468,801 1,562,485
Accumulated other comprehensive loss,
net of taxes (12,846) (15,136)
Accumulated deficit (1,063,783) (378,051)
Total shareholders' equity 393,691 1,171,045
Total liabilities and shareholders'
equity $2,944,955 $13,352,518
DATASOURCE: Friedman, Billings, Ramsey Group, Inc.
CONTACT: Media, Lauren Burk, +1-703-469-1004, , Investors,
Paul Beattie, +1-703-312-9673, , both of Friedman, Billings,
Ramsey Group, Inc.
Web site: http://www.fbr.com/