FBRC Fbr &

 

 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

August 4, 2015

Date of Report (Date of earliest event reported)

 

 

FBR & CO.

(Exact Name of Registrant as Specified in its Charter)

 

 

Virginia

(State or Other Jurisdiction of Incorporation)

 

001-33518		20-5164223
(Commission File Number)		(IRS Employer Identification No.)

1300 North Seventeenth Street

Arlington, VA 22209

(Address of Principal Executive Office) (Zip Code)

(703) 312-9500

(Registrant’s Telephone Number, Including Area Code)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨	Soliciting material pursuant to Rule 14a12 under the Exchange Act (17 CFR 240.14a-12)

 

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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Item 7.01

Regulation FD Disclosure.

On August 4, 2015, FBR & Co. issued a press release including a statement on its commitment to returning capital to shareholders. A copy of the release is furnished herewith and attached hereto as Exhibit 99.1. In addition, a copy of the Capital Strategy Update Presentation is being furnished herewith as Exhibit 99.2 to this release and is attached hereto.

 

Item 9.01

Financial Statements and Exhibits.

Exhibits.

99.1		FBR & Co. Press Release dated August 4, 2015
99.2		Presentation dated August 4, 2015.

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

 

				FBR & CO.
Date: August 4, 2015				By:		/s/ Bradley J. Wright
						Bradley J. Wright
						Executive Vice President and Chief Financial Officer

Exhibit 99.1

 

Contacts:

Media: Shannon Hawkins at 703.469.1190 or shawkins@fbr.com

Investors: Linda E. Eddy at 703.312.9715 or leddy@fbr.com

FBR & Co. Statement on its Commitment to Returning Capital to Shareholders

ARLINGTON, VA, August 4, 2015 – FBR & Co. (NASDAQ:FBRC) (“FBR” or the “Company”) a leading investment bank serving the middle market, today provided shareholders with an update on its program of consistently returning capital to shareholders.

 

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FBR began communicating its intention to return at least 100 percent of annual earnings to shareholders in 2013. Since that time, total capital returned to shareholders through share buybacks and dividends has been $148 million, exceeding earnings over that time by $38 million.

 

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The Company has returned over $208 million in capital to shareholders through buybacks and dividends since it began buying shares in 2010, including acquiring 4.1 million shares through six self-tender offers.

 

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Total shares outstanding have declined by 50 percent from 16.0 million to 8.1 million shares through accretive share buybacks over the last five years, adding approximately $5.44, or 27 percent, to book value per share.

 

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Since 2010, FBR ranks #2 among the more than 5,000 domestic public companies across all market capitalizations in terms of the percentage of its outstanding shares repurchased.

 

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On June 16, 2015, the Company’s board of directors added another tool to its program of regularly returning capital to shareholders by declaring its first quarterly dividend of $0.20 per share payable to holders of record on July 31, 2015. FBR expects, subject to approval by its board of directors, to continue paying a regular quarterly dividend.

 

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FBR’s board constantly evaluates its capital allocation actions, including its pace of returning capital to shareholders, and will continue to do so going forward with the goal of maximizing long-term value for shareholders.

Supplemental information regarding the firm’s capital strategy is available at www.fbr.com on the Investor Relations page.

About FBR

FBR & Co. (Nasdaq:FBRC) provides investment banking, merger and acquisition advisory, institutional brokerage, and research services through its subsidiary FBR Capital Markets & 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, 2014; and other items throughout the Company’s Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

 

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Capital Strategy Update August 2015

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FBR & CO. (NASDAQ: FBRC) CAUTIONARY STATEMENT

This document is intended solely for the use of the party to whom FBR has provided it, and is not to be reprinted or redistributed without the permission of FBR. All references to “FBR” refer to FBR & Co. and its subsidiaries as appropriate. Investment banking, sales, trading, and research services1 are provided by FBR Capital Markets & Co., Inc. (FBRC). FBRC is a broker-dealer registered with the SEC and is a member of FINRA. Loan Trading services are provided by FBR’s affiliate – FBR Capital Markets LT, Inc.

FBR & Co. was formed as a Virginia corporation in June 2006 to be the holding company for FBRC.

This document is intended for information purposes only, and shall not constitute a solicitation or an offer to buy or sell, any security or services, or an endorsement of any particular investment strategy.

CAUTIONS ABOUT FORWARD-LOOKING INFORMATION

This presentation and the information incorporated by reference in this presentation include forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Some of the forward-looking statements can be identified by the use of forward-looking words such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “plans,” “estimates” or “anticipates” or the negative of those words or other comparable terminology. Statements concerning projections, future performance developments, events, revenues, expenses, earnings, run rates, and any other guidance on present or future periods constitute forward-looking statements. Such statements include, but are not limited to, those relating to the effects of growth, revenues and earnings, our principal investing activities, levels of assets under management and our current equity capital levels. Forward-looking statements involve risks and uncertainties. You should be aware that a number of important factors could cause our actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to, deterioration in the business environment in the specific sectors in which we focus or a decline in the market for securities of companies within these sectors, substantial fluctuations in our financial results, our ability to retain senior professionals, pricing and other competitive pressures, changes in laws and regulations and industry practices that affect our sales and trading business, incurrence of losses in the future, the singular nature of our capital markets and strategic advisory engagements, competition among financial services firms for business and personnel, larger and more frequent capital commitments in our trading and underwriting business, limitations on our access to capital, infrastructure or operational failures, the overall environment for interest rates, changes in our business strategy, and our ability to deploy offering proceeds. We will not necessarily update the information presented or incorporated by reference in this presentation if any of these forward looking statements turn out to be inaccurate. Risks affecting our business are described throughout our annual report on Form 10-K and our quarterly reports on Form 10-Q, especially in the section entitled “Risk Factors”, filed with the Securities and Exchange Commission. Our latest annual report and quarterly reports should be read for a complete understanding of our business and the risks associated with our business.

1. Research is provided by FBRC’s Research department, which is independent from the Investment Banking department of FBRC, and has the sole authority to determine which companies receive research coverage and the recommendation contained in the coverage. In the normal course of its business, FBRC seeks to perform investment banking and other fee generating services for companies that are the subject of FBRC research reports. Research analysts are eligible to receive bonus compensation that is based on FBRC’s overall operating revenues, including revenues generated by FBRC’s investment 1 banking department. Specific information is contained in each research report concerning FBRC’s relationship with the company that is the subject of the report.

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SHARES OUTSTANDING1

FBR has repurchased 50 percent of its outstanding shares since December 2009. A steady approach to repurchases over this time frame has resulted in an accretive impact to book value per share of approximately $5.44.

Shares Outstanding (millions)

1. Reflects common shares outstanding for book value per share purposes and 1 for 4 reverse stock split effected on 2/28/13.

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SHAREHOLDERS’ EQUITY(Pro Forma Adjusted for Deferred Tax Reserves)1

Shareholders’ equity, when adjusted to remove the impact of (since released) deferred tax asset reserves, shows a reduction of $167 million, or 42 percent, which reflects the repurchase of 50 percent of shares outstanding as of December 2009.

Shareholders’ Equity Ending Balance ($ millions)

1. This non-GAAP presentation portrays the changes in shareholders’ equity removing the impact of valuation reserves against deferred tax assets, which existed at varying levels during the entire period, but have now been released.

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GROWTH IN TANGIBLE BOOK VALUE PER SHARE

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The final stage of restructuring was accomplished late in 2011. Resulting business focus and streamlined cost structure ensure profitability in most foreseeable economic environments.

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Tangible book value has grown over $12.50 per share since the end of 2011 – a compound annual growth rate of 18.4 percent, reflecting a combination of earnings and the accretive share repurchases.

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FBR RANKS #2 IN SHARE REPURCHASES AMONG MORE THAN 5,000 DOMESTIC PUBLIC COMPANIES SINCE 2010

Market Cap. Shares Shares Out,

Overall Shares Out, % of Shares

Company Ticker Industry 7/28/15 Repurchased 3/31/15

Rank1 ($ MM) 12/31/09 (1Q10—2Q15) + Repurchases Repurchased

1 Atlanticus Holdings Corporation ATLC Specialty Lender $55 47,717,723 34,693,349 48,680,291 71.3%

2 FBR & Co. FBRC Broker-Dealer 179 16,016,196 10,571,970 18,152,581 58.2%

3 MCG Capital Corporation MCGC Investment Company 162 76,394,000 40,764,725 77,838,842 52.4%

4 World Acceptance Corporation WRLD Specialty Lender 473 16,211,659 9,610,956 18,580,904 51.7%

5 WebMD Health Corp. WBMD New Media 1,662 50,946,766 39,042,397 76,808,359 50.8%

6 Outerwall Inc. OUTR Media & Entertainment 1,515 31,076,784 17,014,955 35,513,933 47.9%

7 Montpelier Re Holdings Ltd. MRH Insurance Underwriter 1,789 79,998,795 39,255,113 83,054,366 47.3%

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8 DIRECTV DTV Communications 467,642 933,187,782 449,992,796 953,973,973 47.2%

9 Anthem, Inc. ANTM Insurance Underwriter 40,848 449,789,672 225,687,546 490,593,144 46.0%

10 Validus Holdings, Ltd. VR Insurance Underwriter 3,732 128,459,478 70,287,964 153,922,879 45.7% |

20 Magellan Health, Inc. MGLN Financial Technology 1,644 34,535,000 17,699,729 45,026,104 39.3% |

50 Arch Capital Group ACGL Insurance Underwriter 8,903 164,285,034 59,048,246 183,809,087 32.1% | 100 W.R. Berkley Corporation WRB Insurance Underwriter 6,961 156,552,355 41,752,938 166,686,213 25.0% | 500 Cogent Communications Holdings, Inc. CCOI Communications 1,469 44,853,974 2,270,205 48,464,831 4.7% | 1,000 Tiptree Financial Inc. TIPT Investment Company 188 20,158,894 75,743 32,068,213 0.2%

Source: SNL Financial. Sectors include: Banking, Insurance, Securities & Investments, Specialty Finance, Financial Technology, Real Estate, Energy and Media & Communications. 5

1. Overall Ranking based on percentage of outstanding shares repurchased. 2. DIRECTV market cap as of 6/30/15 due to AT&T acquisition.

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CAPITAL MANAGEMENT – CLOSE PEER TREND

Within its peer group, FBR has been the most aggressive in managing share count and tangible book value.

December 31, 2009—June 30, 2015 ($ millions)

Financial Metric FBR & Co. Piper Jaffray Cowen Group JMP Group

Total share repurchases $206 $306 $111 $38 Common dividends paid $2 — $20 Change in share count -50% -11% 47% 4% Change in TBV / share 47% 3% 1% 9% Change in share price1 -4.9% -11.4% -4.6% -24.6%

Source: SEC filings and FactSet.

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1. Reflects price change for the period December 31, 2009 through July 31, 2015.

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Metropolitan Washington, D.C. Headquarters

1300 North Seventeenth Street . Arlington, VA 22209 703.312.9500 T . 703.312.9501 F . www.fbr.com

Boston Houston Irvine (Los Angeles) New York San Francisco

100 Federal Street, 29th Floor 9 Greenway Plaza, Suite 2050 18101 Von Karman Ave., Suite 950 299 Park Avenue, 7th Floor New 1 Embarcadero Center, Suite 2140 Boston, MA 02110 Houston, TX 77046 Irvine, CA 92612 York, NY 10171 San Francisco, CA 94111 617.757.2900 713.226.4700 949.477.3100 212.457.3300 415.248.2900

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