EARNINGS

FBR Third-Quarter Profit Falls 75 Percent

Friedman, Billings, Ramsey Group reported a 75 percent drop in its third-quarter profit, as rising short-term interest rates and accelerated mortgage prepayments cut into the profitability of its $17.8 billion portfolio of mortgage-backed securities.

The Arlington investment banking, brokerage and asset management company earned $23 million (14 cents a share), down from $92.1 million (55 cents) in the comparable quarter a year earlier. FBR said revenue rose 18 percent, to $339.9 million, but interest expenses more than tripled.

The company also said it expects to reduce its fourth-quarter dividend to 20 cents a share from 34 cents a share. FBR released the results last night after the close of financial markets.

Legg Mason Profit Up on Asset Management

Legg Mason, the Baltimore-based money management company, said its second-quarter profit rose 32 percent because of continued increases in assets under management, its primary revenue source. Legg earned $121 million (99 cents a share), up from $91.7 million (81 cents).

Assets under management as of Sept. 30 were 34 percent higher than a year earlier, at $416.6 billion. Revenue from Legg's asset management business was $466.4 million, up 25 percent. Legg is in the process of buying Citigroup's asset-management unit in a deal that would nearly double its assets under management.

Revenue from Legg's stock brokerage was up 11 percent, to $189.9 million, while revenue from its investment banking business was down 11 percent, to $63.5 million. Both of those businesses will be sold to Citigroup as part of their deal. Legg chief executive Raymond A. Mason said both businesses have been "negatively affected by the distractions of their pending sale." Legg Mason shares closed at $103.48, down 5.7 percent.

Cuisine Solutions of Alexandria, which produces flash-frozen food in the United States and France, said first-quarter profit jumped to $1.52 million (9 cents a share) from $280,000 (2 cents). Sales for the quarter ended Sept. 17 were $14.8 million, up from $8.7 million. The company said its results did not include discontinued operations. Its shares closed at $8.67, up 19.6 percent.

HealthExtras, a Rockville pharmacy-benefit-management company, said its third-quarter profit climbed 46 percent, to $6.3 million (15 cents a share) from $4.3 million (12 cents). Revenue rose 16 percent, to $166.8 million from $143.2 million.

Corporate Executive Board, a District company that helps senior executives share information on corporate strategy, said its third-quarter profit rose 64 percent, to $19.6 million (47 cents a share) from $12 million (30 cents). Revenue was up 29 percent, to $93.4 million.

Mercantile Bankshares said its third-quarter profit rose 25 percent, to $71 million (86 cents a share) from $56.8 million (71 cents), because of strong loan growth. Total assets were $16.4 billion on Sept. 30, compared with $14.3 billion a year earlier. Total loans grew 14.3 percent, to $11.45 billion.

AvalonBay Communities, an Alexandria real estate investment trust that owns apartment communities, reported funds from operations for the third quarter of $68.1 million (91 cents a share), up from $63.6 million (86 cents). Revenue increased 5.2 percent, to $177 million. Profit more than doubled, to $97 million ($1.30).

Compiled from staff and news service reports.