Declares $0.20 per Share Quarterly Cash Dividend

Financial Highlights for the three months ended June 30, 2016:

  • Net revenues of $20.9 million
  • Net loss of $8.2 million, or $1.08 per share
  • Repurchased 720 thousand shares of common stock, through a combination of open market purchases and netting of shares for tax withholding purposes on employee share vestings, at a total cost of $12.8 million
  • Shareholders’ equity of $173 million and tangible book value per share of $22.89 on June 30, 2016

ARLINGTON, Va., July 14, 2016 (GLOBE NEWSWIRE) -- FBR & Co. (NASDAQ:FBRC) ("FBR" or the “Company"), a leading investment bank serving the middle market, today reported a net loss of $8.2 million, or $1.08 per share, on revenues of $20.9 million for the second quarter of 2016, compared to net income of $2.9 million, or $0.32 per diluted share, on revenues of $44.3 million for the second quarter of 2015, and a net loss of $5.5 million, or $0.72 per share, on revenues of $17.9 million for the first quarter of 2016. For the first half of 2016, FBR reported a net loss of $13.7 million, or $1.80 per share, compared to net income of $0.4 million, or $0.04 per diluted share, for the first half of 2015.

Composition of Revenues

Investment Banking

Investment banking revenue was $8.6 million for the second quarter of 2016, compared to $29.7 million for the second quarter of 2015 and $4.2 million for the first quarter of 2016.  During the quarter, FBR completed 18 client engagements representing $1.7 billion in transaction value, compared to 13 transactions representing $3.8 billion in transaction value for the same period in 2015, and 11 transactions representing $975 million in transaction value in the first quarter of 2016.  Transactions were completed across all industry groups with healthcare, real estate and energy being the largest contributors.   

For the first half of 2016, investment banking revenue was $12.8 million compared to $42.4 million for the first half of 2015.  The decline in first half 2016 revenue versus the prior year primarily reflects continued challenges for the small cap IPO market as year-over-year activity declined by approximately 60 percent. 

Institutional Brokerage

Net revenue generated in institutional brokerage was $11.6 million for the second quarter of 2016, compared to $14.3 million for the second quarter of 2015, and $14.4 million for the first quarter of 2016.  Lower industry-wide cash equities volume during the second quarter of 2016 led to the quarter-over-quarter decline in revenue.  For the first half of 2016, institutional brokerage revenue was $26.0 million compared to $28.0 million for the first half of 2015.

Expenses

Non-compensation fixed expenses for the second quarter of 2016 totaled $10.4 million, including expenses of approximately $1.0 million related to higher Annual Meeting costs as a result of a contested proxy vote, compared to $9.6 million for the second quarter of 2015 and $9.7 million for the first quarter of 2016. Compensation and benefits expense for the second quarter of 2016 was $16.7 million, compared to $24.3 million for the second quarter of 2015 and $18.0 million for the first quarter of 2016. 

Employees

At June 30, 2016, the Company had 290 full-time employees, compared to 287 at March 31, 2016, and 293 at June 30, 2015.

Share Repurchase Activity

During the quarter ended June 30, 2016, the Company repurchased approximately 575 thousand shares of its common stock in the open market at an aggregate price of $10.1 million, or an average price of $17.49 per share.  Also, FBR acquired an additional 145 thousand shares outside of the share repurchase program as a result of netting of shares for tax withholding purposes on employee share vestings for $2.7 million.  

Today the Board approved an increase in the Company’s available repurchase authorization to 750 thousand shares. Since 2010, FBR has repurchased 12.2 million shares in the open market, thereby returning over $237 million to shareholders.

Quarterly Dividend

The Board of Directors declared a quarterly cash dividend of $0.20 per common share to be paid August 26, 2016 to all shareholders of record as of the close of business on July 29, 2016.

Balance Sheet

As of June 30, 2016, FBR continues to maintain an unlevered and highly-liquid balance sheet, with cash and cash equivalents of $51.3 million, compared to $52.8 million as of March 31, 2016.  Over the last twelve months, FBR has significantly reduced its investment and trading desk positions in order to fund repurchase activity.  The Company ended the second quarter of 2016 with net investment positions of approximately $47 million, down from $65 million at the end of first quarter 2016 and $87 million at the end of 2015.

Shareholders’ equity as of June 30, 2016 was $173 million, and tangible book value per share was $22.89, based on 7.28 million shares outstanding, compared to shareholders’ equity of $195 million and tangible book value per share of $24.60 as of March 31, 2016.

Conference Call

Investors wishing to listen to the earnings call at 9:00 A.M. U.S. EDT, Friday, July 15, 2016, may do so via the Web or conference call at:

Webcast link:  http://edge.media-server.com/m/p/hf5e4tuq

Conference call dial-in number (domestic, toll-free):  855.425.4204

Conference call dial-in number (international):  484.756.4245

Access code:  39768169

About FBR

FBR & Co. (Nasdaq:FBRC) provides investment banking, merger and acquisition advisory, institutional brokerage, and research services through its subsidiaries FBR Capital Markets & Co. and MLV & Co. FBR focuses capital and financial expertise on the following industry sectors: consumer; energy & natural resources; financial institutions; healthcare; industrials;  insurance; real estate; and technology, media & telecom. FBR is headquartered in the Washington, D.C. metropolitan area with offices throughout the United States. For more information, please visit www.fbr.com.

Statements in this release 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. These forward-looking statements 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 and private securities offerings, activity in the secondary securities markets, interest rates, the 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. Financial results may fluctuate substantially from quarter-to-quarter depending on the number, size and timing of completed transactions. We have experienced, and expect to experience in the future, significant variations in our revenues and results of operations and, as a result, are unlikely to achieve steady and predictable earnings on a quarterly basis. For a discussion of these and other risks and important factors that could affect FBR's future results and financial condition, see "Risk Factors" in Part I, Item 1A and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2015; and other items throughout the Company's Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

Financial data follows.

            
FBR & CO.  
CONSOLIDATED STATEMENTS OF OPERATIONS
 
(Dollars in thousands, except per share amounts)  
(Unaudited)  
            
   Quarter Ended  Six Months Ended
 
   June 30,  June 30, 
    2016   2015    2016   2015  
REVENUES:          
Investment banking:          
Capital raising $  6,796  $  27,827       $  9,326  $  37,111  
Advisory    1,838     1,901      3,458     5,292  
Institutional brokerage    9,550     12,441      21,734     24,684  
Interest     7,382     8,008      15,746     14,993  
Net investment income (loss)     479     3,679      (439)    7,029  
Dividends & other    189     192      312     463  
Total revenues    26,234     54,048      50,137     89,572  
Interest expense    5,347     9,792      11,350     18,221  
Revenues, net of interest expense    20,887     44,256    38,787   71,351  
            
NON-INTEREST EXPENSES:          
Compensation and benefits    16,692     24,275      34,687     42,230  
Occupancy and equipment    3,178     3,103      6,511     6,161  
Communications    2,214     2,576      4,768     5,587  
Professional services    2,678     4,439      4,298     6,812  
Business development     2,326     2,642      3,940     4,530  
Clearing and brokerage fees    1,271     1,336      2,555     2,559  
Other operating expenses    1,718     1,487      3,303     2,917  
Total non-interest expenses    30,077     39,858    60,062   70,796  
            
(Loss) income before income taxes    (9,190)    4,398    (21,275)  555  
            
Income tax (benefit) provision    (982)    1,499      (7,613)    178  
            
Net (loss) income $  (8,208) $  2,899   $  (13,662) $  377  
            
Basic (loss) income per share $  (1.08) $  0.36   $  (1.80) $  0.04  
Diluted (loss) income per share $  (1.08) $  0.32   $  (1.80) $  0.04  
            
Weighted average shares  - basic  7,600   8,084    7,584   8,453  
Weighted average shares  - diluted  7,600   9,159    7,584   9,634  
Cash dividends per common share $  0.20  $  0.20   $  0.40  $  0.20  
            

 

       
FBR & CO.
 
CONSOLIDATED BALANCE SHEETS
 
(Dollars in thousands, except per share amounts)  
(Unaudited)  
       
   June 30, December 31, 
ASSETS   2016   2015  
       
Cash and cash equivalents $  51,347  $  70,067  
Receivables:     
Securities borrowed    969,006     685,037  
Due from brokers, dealers and clearing organizations   5,922     5,513  
Customers    4,422     1,429  
Other     3,188     5,895  
Financial instruments owned, at fair value   47,571     94,923  
Other investments, at cost    6,539     6,539  
Goodwill and intangibles    6,011     6,273  
Furniture, equipment, software and leasehold improvements, net     13,865     15,071  
Deferred tax assets, net of valuation allowance   45,642     37,497  
Prepaid expenses and other assets   6,027     5,172  
Total assets $   1,159,540   $   933,416   
       
       
LIABILITIES AND SHAREHOLDERS’ EQUITY    
       
Liabilities:     
Securities loaned $  968,681  $  687,443  
Financial instruments sold, not yet purchased, at fair value   -     1,934  
Accrued compensation and benefits   2,838     13,325  
Accounts payable, accrued expenses and other liabilities   15,304     19,947  
Total liabilities    986,823     722,649  
       
       
       
Shareholders' equity:     
Common stock    7     7  
Additional paid-in capital    254,963     259,011  
Restricted stock units    15,076     35,929  
Accumulated deficit    (97,329)    (84,180) 
Total shareholders' equity    172,717     210,767  
       
Total liabilities and shareholders' equity$   1,159,540   $   933,416   
       
       
Book Value per Share $23.72   $28.69   
       
Tangible Book Value per Share$22.89   $27.83   
       
Shares Outstanding (in thousands) 7,282    7,347   
         

 

           
FBR & CO.  
Financial & Statistical Supplement - Operating Results 
 
(Dollars in thousands)  
(Unaudited)  
           
           
           
 Q-2 16 Q-1 16 Q-4 15 Q-3 15 Q-2 15 
Revenues, net of interest expense$  20,887  $  17,900  $  23,464  $  25,580  $  44,256  
           
Expenses:          
Variable   6,728     6,436     7,467     5,712     17,094  
Fixed   23,349     23,549     26,001     26,178     22,764  
           
Income (loss) before income taxes   (9,190)    (12,085)    (10,004)    (6,309)    4,398  
Income tax (benefit) provision   (982)    (6,631)    (5,594)    (2,881)    1,499  
           
Net (loss) income$  (8,208) $  (5,454) $  (4,410) $  (3,428) $  2,899  
           
Return on equity (trailing twelve months) -10.6%  -4.8%  -3.2%  -0.9%  1.8% 
           
 Fixed expenses $  23,349  $  23,549  $  26,001  $  26,178  $  22,764  
Less:  Non-cash expenses1   582     -      1,701     2,373     1,134  
  Corporate transaction costs2   -      -      -      691     -   
Core fixed costs3$  22,767  $  23,549  $  24,300  $  23,114  $  21,630  
           
           
Statistical Data          
Revenues per employee (annualized)$  288  $  249  $  310  $  337  $  604  
           
Employee count   290     287     303     304     293  
           


1 Non-cash expenses include compensation costs associated with stock-based awards and amortization of intangibles.
  
2Corporate transaction costs in Q3 2015 include non-recurring costs related to a business combination. 
  
3Core fixed costs is a non-GAAP measurement used by management to analyze and assess the Company’s fixed operating costs. Management believes that this non-GAAP measurement assists investors in understanding the impact of the items noted in footnotes 1 and 2 on the performance of the Company.
  
 A limitation of utilizing this non-GAAP measure is that the GAAP accounting effects of these items do in fact reflect the underlying financial results of the Company and these effects should not be ignored in evaluating and analyzing the Company's financial results. Therefore, management believes fixed expenses on a GAAP basis and core fixed costs on a non-GAAP basis should be considered together. 
  

 

Media: Shannon Hawkins at 703.469.1190 or shawkins@fbr.com
Investors: Linda E. Eddy at 703.312.9715 or leddy@fbr.com

Primary Logo