FBR Asset Investment — Conference Presentation (May 2002)
15 slides from FBR Asset Investment's conference presentation, May 3, 2002
Slide 1: FBR Asset Investment Corporation
FBR Asset Investment Corporation oF
Slide 2: The Company Overview
rhe Company Overview Externally Managed Mortgage REIT which Seeks to Maximize Shareholder Value by Making Risk-Adjusted Returns through Investments in Residential Mortgage-Backed Securities, Mezzanine Loans and Equity Securities Shares Outstanding: 19,038,332 First Quarter 2002 Dividend: $1.25 Recen
Slide 3: The Management Team
rhe Management Team ¢ Eric F. Billings - Chairman & CEO 20 years of capital markets experience; Vice-Chairman & Co-CEO of FBR Group; Responsible for the strategic direction, management and leadership of the Capital Markets Group at FBR ¢ Richard J. Hendrix - President & COO 15 years of capital marke
Slide 4: Manager Profile - FBR & Affiliates
Manager Profile - FBR & Affiliates + Over $1.8 billion in capital raised in 2002 YTD + 10 lead-managed + 6 co-managed + Over $2.2 billion in capital raised in 2001 + 20 lead-managed +9 co-managed « Ranked #1 in after-market performance for underwritten transactions across all industries from 1/1/01
Slide 5: Investment Highlights
& Investment Highlights + Growth in book value through difficult market environments + Annualized total return of 26.7% since initial offering @ $20.00 took Price —Book Value TARETT Mortgage RETT 2000 on = 1000 | Public Registration Date [-» FRIEDMAN BILLINGS RA MSeyY Dividend
Slide 6: Investment Strategy
Investment Strategy + Deploying capital in the form of: + Residential mortgage-backed securities + Direct lending to companies in need of short-term to medium- term financing commitments + Equity investments, frequently in companies that have an investment banking relationship with FBR + Current Ini
Slide 7: The Fee Sharing Description
rhe Fee Sharing Description + FBR Asset earns a fee on investments where it has helped to facilitate an investment banking transaction for FBR. «+ Fees for financial advisory services are paid to Pegasus Capital, a broker dealer held in our taxable REIT subsidiary (“TRS”) + The fee is equal to 10.0%
Slide 8: The 2001 to 2002 Fee Sharing Results
rhe 2001 to 2002 Fee Sharing Results Tucome from ROL from Iwestment Underwriters Fee & Quarter Company Amount Fee Farned Discount ___Discowt(2) __Farned Saxon Capital Acquisition 99,300,000 $1,692,272 $700,000 257% 20 2001 Quaker Coal Company (1) $0 995,000 $0 NA 4Q 2001 MCC Capital Corporation 99.9
Slide 9: Residential Mortgage-Backed Portfolio
Residential Mortgage-Backed Portfolio Portfolio Example Unlevered Asset Yield: 5.00% Cost of funds: 1.90% Spread: 3.1% ROE, Gross (Assumed Leverage @ 9.0x) 32.90% +¢ Portfolio provides earnings, liquidity backstop, and qualifies as good collateral for the REIT tests + Leverage typically ranges from
Slide 10: Year Fixed vs. Effective Fed Funds
30 Year Fixed vs. Effective Fed Funds wa fe Oo to oe Ae Pee SE SY os i : : : POPP OPEP PILE LO EE EEE EP EE EP EL ERED PE SEE EES Some: Federal Resave Boa, onmy.com and Bloomberg ag
Slide 11: The Direct Lending Overview
rhe Direct Lending Overview ¢ Stricter credit standards of traditional lenders have created greater demand for alternate debt capital + To date, FBR Asset’s direct loans have all been senior secured. debt while earning returns comparable to mezzanine capital + Target companies with short-term capita
Slide 12: Recent Equity Investment with Fee Sharing
Recent Equity Investment with Fee Sharing On November 29, 2001, FBR raised common equity for MCG Capital with proceeds equal to approximately $237.0 million Equity Raise: Placement Fee: FER Asset Investment: Purchase Price: Recent Price: Dividend Yield: FER Asset Fee: FRIEDMAN BILLINGS RAMSEY FBR As
Slide 13: The Equity Investments & Direct Lending
me Equity Investments & Direct Lending Company Cost Per Share ae} ta Banking ree Banking Fee ‘Annaly Mortgage $8.93 $18.20 26.9% 131% NA RAIT Investment Trust $15.36 $20.67 14.6% 49% NA Saxon Capital $9.30 $15.61 NA 62% 86% MCG Capital Corp $15.90 $19.07 10.3% 32% 42% Anworth Mortgage $7.78 $11.80 2
Slide 14: Non-MBS Returns
fa Non-MBS Returns + Annualized Weighted Returns on all Non-MBS investments were 66.9% from 1/1/01 to 3/31/02 + Annualized Returns before Fee Sharing and Discounts were 530.6% imrcimes? HAG Se AGN ae Amid Teint ASS Coeierers ireage hum, remarry ST) 3s oon cae & ssup]s —rasaam| row | amass | am tas a
Slide 15: Summary
Summary Incremental ROI on non-MBS investments has been 20.0% as a result of FBR relationship Affiliation with FBR provides FBR Asset with access to a proprietary high-quality pipeline of opportunities Outstanding opportunity to invest capital in the current mortgage-backed portfolio Strong track re
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