First Albany Reports First Quarter 2006 Results

First Albany's 2006 first quarter net revenues from continuingoperations were $28.2 million, compared to $28.6 million for the firstquarter of 2005. Excluding investment gains and losses, net revenuesfrom continuing operations were $34.3 million, up six percent comparedto the first quarter of 2005. For the first quarter of 2006, theCompany reported a loss from continuing operations before income taxesof $12.5 million compared to a loss of $11.8 million for the firstquarter of 2005. The Company reported a net loss of $12.2 million, or$0.79 per diluted share, for the first quarter of 2006, compared to anet loss of $6.9 million, or $0.52 per diluted share, for the firstquarter of 2005.

Business Highlights

-- Our Equities division reported net revenue of $19.3 million, up 38 percent compared to the first quarter of 2005, led by Equity Investment Banking, which completed 11 transactions during the first quarter of 2006 and reported $8.2 million in net revenue which was an increase of 161 percent compared to the first quarter of 2005.

-- The Municipal Capital Markets division reported net revenue of $8.2 million, an increase of eight percent compared to the same period a year ago, led by Municipal Sales & Trading, which reported net revenue of $5.1 million for the first quarter of 2006 which was an increase of 102 percent compared to the first quarter of 2005.

-- FA Technology Ventures invested $6.8 million in three new portfolio companies for the first quarter of 2006.

-- The Company announced on May 2, 2006 that it will exit the Taxable Fixed Income corporate bond business during the second quarter of 2006.

"First quarter results reflect a strong performance from EquitiesInvestment Banking, with its second best quarter relative to netrevenue since the end of 2002," said Alan Goldberg, Chief ExecutiveOfficer of First Albany Companies. "Our combined Equities businessreported a 38 percent increase in net revenue and an 11 percentoperating margin, its best since the first quarter of 2004. As of May8, 2006, the Equity Investment Banking group has closed more businessthan it did in the first nine months of 2005. We made a significantcommitment to this group in 2006, and we are very pleased with theearly returns from this investment and the current outlook for thisbusiness."

"In contrast, continued and substantial declines in Taxable FixedIncome corporate bond revenue have led us to make the difficultdecision to close that department," said Goldberg. "After carefulconsideration, we have concluded that even with additional investmentsof capital and personnel it would be difficult to develop asustainable competitive business in this area. We believe that theinterests of our clients, our company and our shareholders would bebetter served by devoting our resources to our Equities and otherFixed Income businesses including Municipal Capital Markets, FixedIncome Middle Markets and Descap Securities."

"The Company had a six percent increase in net revenues for thequarter, excluding investment gains and losses, and we continue tofocus our efforts on returning to profitability, monetizing ourinvestment portfolio, reducing debt, and improving our financialposition," Goldberg continued. "These efforts result in costs beingincurred which impact the results of our operations. Changes in thevalue of the investment portfolio will also impact our results untilsuch time as the positions are liquidated. The following tablepresents the impact of the more significant efforts recently taken onour loss from continuing operations."

Three Months Ended
March 31,
(Dollars in Thousands) 2006 2005
----------- -----------
Loss from continuing operations before taxes $ (12,480) $ (11,845)
Employee severance and retention costs 1,885 836
Investment losses 6,143 3,798
Taxable Fixed Income operating loss 317 749
Office consolidation costs 677 -
Debt refinancing costs 935 -
----------- -----------
$ (2,523) $ (6,462)
=========== ===========

Net Revenues

Investment Banking

Investment Banking net revenue was $11.7 million for the firstquarter of 2006, compared to $8.6 million for the first quarter of2005.

-- Equity Investment Banking with net revenue of $8.2 million drove the increase in Investment Banking net revenue. During the quarter the Company acted as a co-manager on seven public offerings, a placement agent on two private transactions, and an advisor on two transactions.

-- Fixed Income Investment Banking net revenue was $3.5 million for the first quarter of 2006 compared to $5.4 million for the first quarter of 2005. Public Finance experienced a decrease in underwriting revenue of 31 percent and a decrease in advisory fee revenue of 33 percent.

Institutional Sales & Trading

Institutional Sales & Trading net revenue was $23.0 million forthe first quarter of 2006, compared to $21.8 million for the firstquarter of 2005.

-- Equity Sales & Trading net revenue for the first quarter of 2006 was $11.1 million compared to $10.9 million for the first quarter of 2005, an increase of two percent. A 14 percent gain in Nasdaq net revenue for the first quarter of 2006 was offset by an 18 percent drop in Listed net revenue.

-- Municipal Sales & Trading net revenue of $5.1 million for the first quarter of 2006 represented a 102 percent improvement compared to first quarter 2005 primarily as a result of an increase in customer activity.

-- Mortgage-backed net revenue was $3.6 million for the first quarter of 2006 compared to $4.7 million for the first quarter of 2005, a decrease of 24 percent.

-- Taxable Fixed Income corporate bond net revenue for the first quarter of 2006 was down 43 percent compared to the first quarter of 2005 with net revenue of $2.2 million.

Other

-- Other net revenue decreased $3.4 million for the first quarter of 2006 compared to the same period in 2005, primarily as a result of a $2.3 million increase in investment losses related to the decline in the market value of the Company's investment portfolio and a $0.9 million charge relating to the refinancing of the Company's senior debt.

Expenses

-- Non-interest operating expenses of $40.6 million were relatively unchanged compared to the first quarter of 2005.

-- Compensation and benefits expenses in the 2006 first quarter were $29.0 million, which approximated the first quarter of 2005. Total headcount was down 16 percent compared to the first quarter of 2005.

-- Non-compensation expenses in the first quarter of 2006 were $11.6 million, compared to $11.5 million in the first quarter of 2005. Included in the 2006 expenses were $0.7 million in expenses related to ongoing office consolidation efforts.

-- The Company did not recognize any income tax benefit in the first quarter of 2006 due to the valuation allowance related to the Company's deferred tax asset. The valuation allowance was recorded as a result of uncertainties as to the realization of the deferred tax asset and after weighing all positive and negative evidence, including the Company's history of cumulative losses over at least the past two years and the difficulty of forecasting future taxable income. Income tax benefit for the 2005 first quarter was $5.1 million.

First Albany Companies
Operational Highlights
(Unaudited)
Three Months Ended
March 31,
2006 V
2006 2005 2005
-------- -------- -------
(Dollars in Thousands)
Net Revenues:

Equities $ 19,284 $ 14,010 38%
Fixed Income 14,878 17,185 -13%
Other (6,010) (2,583) -133%
-------- -------- -------

Total $ 28,152 $ 28,612 -2%
-------- -------- -------

Pre-Tax Operating Income (Loss):

Equities $ 2,079 $ (1,923) 208%
Fixed Income (1) 477 -100%
Other (14,558) (10,399) -40%
-------- -------- -------

Total $(12,480) $(11,845) -5%
======== ======== =======


Capital Markets (Equities & Fixed Income)
(Unaudited) Three Months Ended
March 31,
2006 V
2006 2005 2005
-------- -------- -------
(Dollars in Thousands)
Net Revenues:

Institutional Sales & Trading
Equities $ 11,119 $ 10,853 2%
Fixed Income 11,859 10,989 8%
-------- -------- -------

Total Institutional Sales & Trading 22,978 21,842 5%
-------- -------- -------

Investment Banking
Equities 8,173 3,130 161%
Fixed Income 3,508 5,424 -35%
-------- -------- -------

Total Investment Banking 11,681 8,554 37%
-------- -------- -------

Net Interest Income (Expense)/Other (497) 799 -162%
-------- -------- -------

Total Net Revenues $ 34,162 $ 31,195 10%
======== ======== =======

Note: Does not include Discontinued Operations

Other

The Company has announced it will discontinue its Taxable FixedIncome corporate bond department. The Company anticipates taking acharge of approximately $1.7 million to exit the business and willreflect the operations of this department as discontinued operationsin the second quarter of 2006.

In April 2006, the Company entered into an agreement to be boughtout of its lease for new office space in New York City. The Companywill use the proceeds from this transaction to repay $5.0 million ofNotes Payable due June 15, 2006 and estimates it will take a charge of$0.2 million in the second quarter of 2006.

The Company adopted Financial Accounting Standards Board 123(R),Share-Based Payment effective January 1, 2006. The effect was torecognize $0.4 million of income from the cumulative effect of achange in accounting principle and an additional $0.1 million expensein the first quarter of 2006.

Shareholders' Equity

Shareholders' equity as of March 31, 2006 was $77.3 million,compared to $87.7 million on December 31, 2005. Book value per shareas of March 31, 2006 was $5.27, as compared to $6.28 on December 31,2005.

Conference Call Information

First Albany Companies will hold a conference call today, May 9,2006, at 10:00 A.M. (EDT). This call will be webcast and can beaccessed on the Investor Relations portion of the First AlbanyCompanies website at www.firstalbany.com, as well as being distributedthrough the Thomson StreetEvents Network. Individual investors canlisten to the call at www.earnings.com, Thomson's individual investorportal, powered by StreetEvents. Institutional investors can accessthe call via Thomson StreetEvents (www.streetevents.com), apassword-protected event management site. To participate on the call,please dial 800.362.0571 and request the First Albany earnings call. Arecording of the call will be available for seven days by dialing888.269.5322.

About First Albany

First Albany is a leading institutionally focused independentinvestment bank that serves the institutional market, the growingcorporate middle market and public institutions by providing clientswith strategic, research-based, innovative investment opportunities.First Albany offers a diverse range of products through its Equitiesdivision, Fixed Income division and Venture Capital division, FATechnology Ventures Inc. First Albany is traded on NASDAQ under thesymbol FACT with offices in major business and commercial markets.

This press release contains "forward-looking statements," whichare subject to various risks and uncertainties, including theconditions of the securities markets, generally, and acceptance of theCompany's services within those markets and other risks and factorsidentified from time to time in the Company's filings with theSecurities and Exchange Commission. These statements are nothistorical facts but instead represent only the Company's beliefregarding future events, many of which, by their nature, areinherently uncertain and outside of the Company's control. It ispossible that the Company's actual results and financial condition maydiffer, possibly materially, from the anticipated results andfinancial condition indicated in these forward-looking statements.

Three Months Ended
March 31
--------------------------------------------------------------------
(In thousands of dollars except for
per share amounts and shares
outstanding) 2006 2005
--------------------------------------------------------------------
Revenues:
Commissions $ 3,598 $ 4,587
Principal transactions 19,770 17,625
Investment banking 11,513 8,462
Investment gains (losses) (6,143) (3,798)
Interest 3,100 3,385
Fees and other 619 736
--------------------------------------------------------------------
Total revenues 32,457 30,997
Interest expense 4,305 2,385
--------------------------------------------------------------------
Net revenues 28,152 28,612
--------------------------------------------------------------------
Expenses (excluding interest):
Compensation and benefits 29,036 28,945
Clearing, settlement and brokerage costs 1,748 1,734
Communications and data processing 3,348 3,659
Occupancy and depreciation 3,100 2,732
Selling 1,539 1,733
Other 1,861 1,654
--------------------------------------------------------------------
Total expenses (excluding interest) 40,632 40,457
--------------------------------------------------------------------
Income (loss) before income taxes (12,480) (11,845)
--------------------------------------------------------------------
Income tax (benefit) expense - (5,106)
--------------------------------------------------------------------
Income (loss) from continuing operations (12,480) (6,739)
Income (loss) from discontinued
operations, (net of taxes $0 in
2006, $(113) in 2005) (165) (156)
--------------------------------------------------------------------
Income (loss) before cumulative
effect of change in accounting
principles (12,645) (6,895)
Cumulative effect of accounting
change, (net of taxes $0 in 2006) 427 -
--------------------------------------------------------------------
Net income (loss) $ (12,218) $ (6,895)
====================================================================

Per share data:
Basic earnings:
Continued operations $ (0.81) $ (0.51)
Discontinued operations (0.01) (0.01)
Cumulative effect of accounting change 0.03 -
--------------------------------------------------------------------
Net income (loss) $ (0.79) $ (0.52)
====================================================================
Diluted earnings:
Continued operations $ (0.81) $ (0.51)
Discontinued operations (0.01) (0.01)
Cumulative effect of accounting change 0.03 -
--------------------------------------------------------------------
Net income (loss) $ (0.79) $ (0.52)
====================================================================

Weighted average common and common
equivalent shares outstanding:
Basic 15,377,662 13,256,692
Dilutive (a) 15,539,164 14,186,159
====================================================================

(a) Amount includes, for the three months of 2006, 0.2 million,
and for the three months of 2005, 0.9 million, common equivalent
shares that were excluded from the computation of dilutive earnings
per share because they were anti-dilutive.