EX-99.1 2 a10-20823_1ex99d1.htm EX-99.1

Exhibit 99.1

 

NEWS RELEASE

 

Contact: Suzy W. Taylor

866-652-1810

 

 

FirstCity Financial Corporation Reports Third Quarter 2010 Results

 

Waco, Texas   November 9, 2010……….

 

Highlights:

 

·                  FirstCity reported third quarter 2010 earnings of $2.6 million or $0.25 per diluted share.

 

·                  FirstCity invested $15.6 million during the quarter, consisting of $10.5 million of portfolio assets and $5.1 million in non-portfolio debt and equity investments.

 

Overview of Third Quarter 2010

 

FirstCity reported net earnings of $2.6 million for the third quarter of 2010 (“Q3 2010”), compared to $2.0 million reported for the third quarter of 2009 (“Q3 2009”). The Company recorded diluted net earnings per common share of $0.25 in Q3 2010, compared to $0.19 of diluted net earnings per common share for the same period last year.

 

During Q3 2010, FirstCity and its investment partners jointly acquired $15.0 million of domestic portfolio assets with a face value of $27.0 million — of which FirstCity’s investment acquisition share was $10.5 million. FirstCity’s non-portfolio investments in Q3 2010 included $3.4 million of SBA loan advances and originations; $0.1 million of equity investments in privately-held middle-market companies; and $1.6 million of equity investments in foreign partnerships.

 

The Company’s unrealized future gross profit associated with its core portfolio asset business assets totaled $145.6 million at September 30, 2010. Unrealized future gross profit is a non-GAAP measure. Refer to the Schedule of Estimated Unrealized Gross Profit from Portfolio Assets on page 10 of this release for a reconciliation of this measure with the most directly comparable financial measure calculated and presented in accordance with U.S. generally accepted accounting principles.

 

Items impacting comparability of results for Q3 2010 with previous results are as follows:

 

Total assets of FirstCity at the end of Q3 2010 totaled $445.2 million compared to $466.0 million at the end of June 2010. The Company’s earning assets also experienced a decrease to $386.2 million at the end of September 2010 from $387.7 million at the end of June 2010.

 

Revenues in Q3 2010 increased to $30.2 million compared to $18.7 million in Q3 2009. The Company’s revenues in Q3 2010 included $8.2 million of income and gains from Portfolio Assets, $2.3 million of fee income attributable to our loan servicing platform; $1.6 million of interest income and gains from loans receivable; and $16.3 million of consolidated revenues from our railroad and coal mine subsidiaries.

 

(more)

 



 

Revenues in Q3 2010 increased as a result of $15.3 million of revenue from our newly-consolidated coal mine operation (we increased our stake in the coal mine subsidiary to a controlling interest from a noncontrolling interest in the second quarter of 2010). The coal mine revenue increase was off-set partially by a $3.9 million decrease in income and gains from Portfolio Assets in Q3 2010 compared to Q3 2009. This revenue decrease corresponds to a shift in the income-recognition methods used by the Company for certain of its existing and newly-acquired Portfolio Assets to non-accrual income methods (cost-recovery or cash basis) from the interest-accrual income method over the past 12-18 months. We apply non-accrual income-recognition methods to Portfolio Assets, as applicable, due to uncertainties related to estimating the timing and/or amount of collections as a result of the current economic environment. A decline in consolidated collections also contributed to the Portfolio Assets revenue decline in Q3 2010 compared to Q3 2009.

 

The Company incurred $5.8 million of combined net impairment provisions in Q3 2010 from its consolidated and unconsolidated Portfolio Assets and loans compared to $1.5 million of combined net impairment provisions in Q3 2009. The provisions in Q3 2010 were recorded primarily to reflect changes in management’s estimates as to the timing and amount of projected future collections and declines in domestic real estate values. The global distribution of our Q3 2010 net impairment provisions included $4.7 million for domestic assets and $1.1 million related to European assets. Net provisions in Q3 2010 were split between consolidated assets ($4.1 million) and FirstCity’s share of net provisions from unconsolidated subsidiaries ($1.7 million).

 

The Company’s share of foreign currency transaction gains from its consolidated and unconsolidated foreign operations was $0.7 million for Q3 2010, compared to $0.1 million of foreign currency transaction gains for the same period in 2009. Our combined foreign currency exchange gain in Q3 2010 related primarily to our European operations (the Euro currency strengthened against the U.S. dollar more in Q3 2010 compared to Q3 2009).

 

Equity in earnings of unconsolidated subsidiaries was $10.0 million in Q3 2010 compared to $0.4 million for Q3 2009. This significant increase was due to additional equity earnings of $9.9 million and $0.6 million from our special situations platform subsidiaries and foreign servicing entities, respectively, recorded in Q3 2010 compared to Q3 2009. This increase was off-set partially by $1.0 million of lower equity earnings from our domestic and foreign acquisition partnerships recorded in Q3 2010 compared to Q3 2009. In Q3 2010, we recorded $12.4 million in equity earnings from our equity-method investment related to a prefabricated building manufacturer (an unconsolidated subsidiary of our special situations platform). This entity reported significantly-higher net earnings in Q3 2010 related to a short-term lease agreement with a single customer. This lease agreement does not extend beyond September 2010.

 

Selected financial data for Q3 2010:

 

The Company’s total operating costs and expenses (excluding provision, interest and income tax expenses) increased to $25.7 million for Q3 2010 from $10.4 million in Q3 2009, primarily due to $15.6 million of costs and expenses from our newly-consolidated coal mine subsidiary (refer to discussion above), which was off-set partially by $0.7 million of consolidated foreign currency exchange gains recorded in Q3 2010 compared to $0.1 million of such gains in the same period a year ago — which is a $0.6 million favorable swing.

 

2



 

Total interest expense was $4.7 million in Q3 2010 and $3.5 million in Q3 2009. FirstCity’s average debt holdings were $302.8 million at an average cost of funds of 6.2% for Q3 2010, compared to its average debt holdings of $303.3 million at an average cost of funds of 4.6% for Q3 2009. Our increased cost of funds primarily relates to the higher interest and fees charged on our Reducing Note Facility with Bank of Scotland (closed in June 2010) compared to the loan facilities we had in place with Bank of Scotland last year.

 

The Company recorded $0.5 million of income tax expense in Q3 2010 compared to $1.3 million of income tax expense in Q3 2009. Income tax expense in both periods was composed primarily of foreign taxes, and fluctuates regularly depending on the timing and amount of taxable revenues generated from our foreign acquisition partnerships and servicing entities.

 

Conference Call

 

A conference call will be held on Tuesday, November 9, 2010 at 9:00 a.m. Central Time to discuss Q3 2010 results. A question and answer session will follow the prepared remarks. Details to access the call and webcast are as follows:

 

Event:

FirstCity Financial Corporation Third Quarter 2010 Conference Call

Date:

Tuesday, November 9, 2010

Time:

9:00 a.m. Central Time

Host:

James T. Sartain, FirstCity’s President and Chief Executive Officer

 

 

Web Access:

FirstCity’s web page -

www.fcfc.com/invest.htm or,

 

CCBN’s Investor websites -

www.streetevents.com and,

 

 

www.earnings.com

 

 

Dial In Access:

Domestic

800-510-0219

 

International

617-614-3451

 

 

 

 

Pass code

29177691

 

Replay available on FirstCity’s web page (www.fcfc.com/invest.htm)

 

FirstCity Financial Corporation is a diversified financial services company with operations dedicated primarily to distressed asset acquisitions and special situations investments. FirstCity has offices in the U.S. and affiliate organizations in Europe and Latin America. FirstCity common stock is listed on the NASDAQ Global Select Market (NASDAQ: FCFC).

 

3



 

Cautionary Statement Regarding Forward-Looking Statements

 

FirstCity may from time to time make written or oral forward-looking statements, including statements contained in this press release, FirstCity’s filings with the Securities and Exchange Commission (“SEC”), in its reports to stockholders and in other FirstCity communications. These statements relate to FirstCity’s or management’s intentions, hopes, beliefs, expectations, representations, projections, plans or predictions of the future and may be deemed to be forward-looking statements under the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934. The forward-looking statements in this press release are based upon management’s beliefs, assumptions and expectations of the Company’s future operations and economic performance, taking into account currently available information. These statements are not statements of historical fact. Forward-looking statements involve risks and uncertainties, some of which are not currently known to us. Actual events or results may differ from those expressed or implied in any such forward-looking statements as a result of various factors and risks, including unfavorable conditions and negative trends in U.S. and global economies, financial markets and real estate markets; adverse fluctuations in the underlying values of real estate and other assets securing our loan portfolios; sufficiency of funds generated from our operations, existing cash and available liquidity sources, combined with our ability to access the credit and capital markets, to finance our operations and investment activities; our ability to project future cash collections and develop critical assumptions and estimates surrounding the liquidation of our portfolio assets; and other factors and risks that are described from time to time in the Company’s filings with the SEC including but not limited to its annual reports on Form 10-K, its quarterly reports on Form 10-Q, and its current reports on Form 8-K, filed with the SEC and available through the Company’s website, which contain a more detailed discussion of the Company’s business, including risks and uncertainties that may affect future results. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof. Information in this press release may be superseded by more recent information or statements, which may be disclosed in later press releases, subsequent filings with the SEC or otherwise. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company’s expectations with regard thereto or to reflect any change in events, conditions or circumstances on which any such forward-looking statements are based, in whole or in part.

 

4


 


 

FirstCity Financial Corporation

Summary of Operations

(Dollars in thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

 

 

2010

 

2009

 

2010

 

2009

 

Revenues:

 

 

 

 

 

 

 

 

 

Finance and Servicing:

 

 

 

 

 

 

 

 

 

Servicing fees

 

$

2,252

 

$

2,222

 

$

5,998

 

$

7,017

 

Income from Portfolio Assets

 

8,195

 

12,134

 

34,280

 

35,254

 

Gain on sale of SBA loans held for sale, net

 

197

 

301

 

360

 

911

 

Gain on sale of investment security

 

 

 

3,250

 

 

Interest income from SBA loans

 

314

 

299

 

895

 

940

 

Interest income from loans receivable - affiliates

 

864

 

1,078

 

2,591

 

2,940

 

Interest income from loans receivable - other

 

233

 

99

 

594

 

892

 

Other income

 

1,856

 

1,701

 

4,552

 

3,699

 

 

 

13,911

 

17,834

 

52,520

 

51,653

 

Manufacturing, Railroad and Coal Mine:

 

 

 

 

 

 

 

 

 

Operating revenues - manufacturing

 

 

 

10,466

 

 

Operating revenues - railroad

 

998

 

776

 

3,455

 

2,228

 

Operating revenues - coal mine

 

15,329

 

 

28,429

 

 

Other

 

 

121

 

4

 

1,192

 

 

 

16,327

 

897

 

42,354

 

3,420

 

Total revenues

 

30,238

 

18,731

 

94,874

 

55,073

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

Finance and Servicing:

 

 

 

 

 

 

 

 

 

Interest and fees on notes payable to banks and other

 

4,211

 

3,043

 

10,587

 

9,177

 

Interest and fees on note payable to affiliate

 

393

 

428

 

1,185

 

1,305

 

Salaries and benefits

 

4,995

 

5,048

 

16,067

 

15,654

 

Provision for loan and impairment losses

 

4,090

 

425

 

8,417

 

2,208

 

Asset-level expenses

 

2,257

 

1,992

 

5,981

 

4,646

 

Other

 

2,158

 

2,868

 

8,660

 

7,819

 

 

 

18,104

 

13,804

 

50,897

 

40,809

 

Manufacturing, Railroad and Coal Mine:

 

 

 

 

 

 

 

 

 

Cost of revenues and operating costs - manufacturing

 

 

 

10,788

 

 

Cost of revenues and operating costs - railroad

 

635

 

506

 

1,868

 

1,532

 

Cost of revenues and operating costs - coal mine

 

15,662

 

 

28,957

 

 

 

 

16,297

 

506

 

41,613

 

1,532

 

Total costs and expenses

 

34,401

 

14,310

 

92,510

 

42,341

 

Earnings (losses) before other revenue and income taxes

 

(4,163

)

4,421

 

2,364

 

12,732

 

Equity in earnings of unconsolidated subsidiaries

 

9,962

 

421

 

14,007

 

1,473

 

Gain on business combinations

 

 

 

5,729

 

1,455

 

Earnings before income taxes

 

5,799

 

4,842

 

22,100

 

15,660

 

Income tax expense

 

473

 

1,254

 

1,192

 

2,103

 

Net earnings

 

5,326

 

3,588

 

20,908

 

13,557

 

Less: net income attributable to noncontrolling interests

 

2,767

 

1,588

 

10,183

 

3,167

 

Net earnings attributable to FirstCity

 

$

2,559

 

$

2,000

 

$

10,725

 

$

10,390

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share are as follows:

 

 

 

 

 

 

 

 

 

Net earnings attributable to FirstCity stockholders

 

$

0.25

 

$

0.20

 

$

1.07

 

$

1.06

 

Weighted average common shares outstanding

 

10,160

 

9,838

 

10,054

 

9,834

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per common share are as follows:

 

 

 

 

 

 

 

 

 

Net earnings attributable to FirstCity stockholders

 

$

0.25

 

$

0.19

 

$

1.06

 

$

1.02

 

Weighted average common shares outstanding

 

10,280

 

10,325

 

10,162

 

10,160

 

 

 

 

 

 

 

 

 

 

 

Selected Balance Sheet Data

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

December 31,

 

 

 

 

 

 

 

2010

 

2009

 

 

 

 

 

 

 

(Unaudited)

 

 

 

Cash and cash equivalents

 

 

 

 

 

$

35,549

 

$

80,368

 

Restricted cash

 

 

 

 

 

1,356

 

1,364

 

Earning assets:

 

 

 

 

 

 

 

 

 

Portfolio Asset Acquisition and Resolution assets:

 

 

 

 

 

 

 

 

 

Domestic

 

 

 

 

 

246,732

 

225,406

 

Latin America

 

 

 

 

 

39,077

 

41,248

 

Europe

 

 

 

 

 

50,060

 

57,888

 

Special Situations Platform assets

 

 

 

 

 

50,337

 

41,688

 

Service fees receivable and other assets

 

 

 

 

 

22,052

 

17,112

 

Total assets

 

 

 

 

 

$

445,163

 

$

465,074

 

 

 

 

 

 

 

 

 

 

 

Notes payable to banks and other

 

 

 

 

 

$

285,975

 

$

305,888

 

Note payable to affiliate

 

 

 

 

 

7,686

 

7,838

 

Other liabilities

 

 

 

 

 

29,839

 

26,077

 

Total liabilities

 

 

 

 

 

323,500

 

339,803

 

Total equity

 

 

 

 

 

121,663

 

125,271

 

Total liabilities and equity

 

 

 

 

 

$

445,163

 

$

465,074

 

 

5


 


 

FirstCity Financial Corporation

Supplemental Information

(Dollars in thousands)

(Unaudited)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

 

 

2010

 

2009

 

2010

 

2009

 

Summary Operating Statement Data for Each Segment

 

 

 

 

 

 

 

 

 

Portfolio Asset Acquisition and Resolution segment:

 

 

 

 

 

 

 

 

 

Revenues

 

$

12,823

 

$

16,817

 

$

49,358

 

$

49,083

 

Equity in net losses of unconsolidated subsidiaries

 

(1,446

)

(1,043

)

(253

)

(188

)

Gain on business combinations

 

 

 

891

 

1,455

 

Costs and expenses

 

(11,268

)

(11,995

)

(34,517

)

(32,173

)

Operating contribution before provision for loan and impairment losses

 

109

 

3,779

 

15,479

 

18,177

 

Provision for loan and impairment losses, net

 

2,236

 

425

 

5,394

 

1,241

 

Net income attributable to noncontrolling interests

 

(1,219

)

(1,326

)

(7,290

)

(2,854

)

Operating contribution (loss), net of direct taxes

 

$

(3,346

)

$

2,028

 

$

2,795

 

$

14,082

 

 

 

 

 

 

 

 

 

 

 

Special Situations Platform segment:

 

 

 

 

 

 

 

 

 

Revenues

 

$

17,410

 

$

1,820

 

$

45,422

 

$

5,733

 

Equity in earnings of unconsolidated subsidiaries

 

11,408

 

1,464

 

14,260

 

1,661

 

Gain on business combinations

 

 

 

4,838

 

 

Costs and expenses

 

(17,403

)

(1,407

)

(44,613

)

(4,294

)

Operating contribution before provision for loan and impairment losses

 

11,415

 

1,877

 

19,907

 

3,100

 

Provision for loan and impairment losses

 

1,854

 

 

3,023

 

967

 

Net income attributable to noncontrolling interests

 

(1,548

)

(262

)

(2,893

)

(313

)

Operating contribution, net of direct taxes

 

$

8,013

 

$

1,615

 

$

13,991

 

$

1,820

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

 

 

2010

 

2009

 

2010

 

2009

 

Portfolio Asset Acquisition and Resolution segment:

 

 

 

 

 

 

 

 

 

Revenues and equity in earnings of investments by region:

 

 

 

 

 

 

 

 

 

Domestic

 

$

7,543

 

$

12,506

 

$

31,752

 

$

38,024

 

Latin America

 

2,466

 

2,811

 

7,159

 

8,085

 

Europe

 

1,368

 

457

 

10,194

 

2,770

 

Canada

 

 

 

 

16

 

Total

 

$

11,377

 

$

15,774

 

$

49,105

 

$

48,895

 

 

 

 

 

 

 

 

 

 

 

Revenues and equity in earnings (loss) of investments by source:

 

 

 

 

 

 

 

 

 

Equity in losses of unconsolidated subsidiaries

 

$

(1,446

)

$

(1,043

)

$

(253

)

$

(188

)

Income from Portfolio Assets

 

8,195

 

12,134

 

34,280

 

35,254

 

Servicing fees

 

2,252

 

2,222

 

5,998

 

7,017

 

Gain on Sale of Investment Securities

 

 

 

3,250

 

 

Gain on sale of SBA loans held for sale, net

 

197

 

301

 

360

 

911

 

Interest income from SBA loans

 

314

 

299

 

895

 

940

 

Interest income from loans receivable - affiliates

 

435

 

471

 

1,371

 

1,560

 

Interest income from loans receivable - other

 

 

 

 

414

 

Other

 

1,430

 

1,390

 

3,204

 

2,987

 

Total

 

$

11,377

 

$

15,774

 

$

49,105

 

$

48,895

 

 

 

 

 

 

 

 

 

 

 

Special Situations Platform segment:

 

 

 

 

 

 

 

 

 

Revenues and equity in earnings of investments by source:

 

 

 

 

 

 

 

 

 

Equity in earnings of unconsolidated subsidiaries

 

$

11,408

 

$

1,464

 

$

14,260

 

$

1,661

 

Interest income from loans receivable

 

662

 

706

 

1,814

 

1,858

 

Operating revenue - railroad

 

998

 

776

 

3,455

 

2,228

 

Operating revenue - manufacturing

 

 

 

10,466

 

 

Operating revenue - coal mine

 

15,329

 

 

28,429

 

 

Other

 

421

 

338

 

1,258

 

1,647

 

Total

 

$

28,818

 

$

3,284

 

$

59,682

 

$

7,394

 

 

 

 

 

 

 

 

 

 

 

Number of personnel at period end:

 

 

 

 

 

 

 

 

 

Domestic, Portfolio Asset Acquisition and Resolution segment

 

88

 

90

 

 

 

 

 

Domestic, Special Situations Platform segment

 

32

 

26

 

 

 

 

 

Latin America

 

114

 

126

 

 

 

 

 

Corporate

 

30

 

30

 

 

 

 

 

Total personnel

 

264

 

272

 

 

 

 

 

 

6


 


 

FirstCity Financial Corporation

Supplemental Information

(Dollars in thousands)

(Unaudited)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

 

 

2010

 

2009

 

2010

 

2009

 

Analysis of Equity Investments

 

 

 

 

 

 

 

 

 

FirstCity’s average investment:

 

 

 

 

 

 

 

 

 

Domestic, Portfolio Asset Acquisition and Resolution segment

 

$

32,495

 

$

12,424

 

$

21,366

 

$

13,816

 

Domestic, Special Situations Platform segment

 

8,536

 

1,411

 

5,023

 

1,402

 

Latin America

 

16,671

 

18,042

 

17,064

 

17,843

 

Europe

 

5,099

 

11,917

 

6,539

 

12,607

 

Europe-Servicing subsidiaries

 

30,184

 

24,255

 

26,942

 

22,998

 

Latin America-Servicing subsidiaries

 

1,750

 

2,897

 

2,048

 

2,939

 

Total

 

$

94,735

 

$

70,946

 

$

78,982

 

$

71,605

 

 

 

 

 

 

 

 

 

 

 

FirstCity’s share of equity earnings (losses):

 

 

 

 

 

 

 

 

 

Domestic, Portfolio Asset Acquisition and Resolution segment

 

$

(98

)

$

(300

)

$

(61

)

$

216

 

Domestic, Special Situations Platform segment

 

11,408

 

1,464

 

14,260

 

1,661

 

Latin America

 

(550

)

(207

)

(505

)

(460

)

Europe

 

(1,158

)

(290

)

(2,123

)

689

 

Europe-Servicing subsidiaries

 

473

 

(26

)

3,274

 

54

 

Latin America-Servicing subsidiaries

 

(113

)

(220

)

(838

)

(687

)

Total

 

$

9,962

 

$

421

 

$

14,007

 

$

1,473

 

 

 

 

 

 

 

 

 

 

 

Selected Other Data:

 

 

 

 

 

 

 

 

 

Average investment in consolidated portfolio assets and loans receivable:

 

 

 

 

 

 

 

 

 

Domestic, Portfolio Asset Acquisition and Resolution segment

 

$

215,556

 

$

224,696

 

$

215,376

 

$

201,313

 

Domestic, Special Situations Platform segment

 

28,598

 

30,481

 

28,288

 

29,871

 

Latin America

 

17,745

 

19,275

 

18,208

 

19,329

 

Europe

 

12,882

 

25,344

 

15,938

 

17,324

 

Canada

 

 

 

 

137

 

Total

 

$

274,781

 

$

299,796

 

$

277,810

 

$

267,974

 

 

 

 

 

 

 

 

 

 

 

Income from consolidated portfolio assets and loans receivable:

 

 

 

 

 

 

 

 

 

Domestic, Portfolio Asset Acquisition and Resolution segment

 

$

6,008

 

$

11,750

 

$

25,500

 

$

34,740

 

Domestic, Special Situations Platform segment

 

662

 

706

 

1,814

 

1,858

 

Latin America

 

1,449

 

889

 

3,085

 

2,776

 

Europe

 

1,684

 

566

 

8,321

 

1,547

 

Canada

 

 

 

 

16

 

Total

 

$

9,803

 

$

13,911

 

$

38,720

 

$

40,937

 

 

 

 

 

 

 

 

 

 

 

Servicing fee revenues:

 

 

 

 

 

 

 

 

 

Domestic partnerships:

 

 

 

 

 

 

 

 

 

Servicing fee revenue

 

$

691

 

$

365

 

$

986

 

$

1,396

 

Average servicing fee

 

3.2

%

7.8

%

3.4

%

7.3

%

Latin American partnerships:

 

 

 

 

 

 

 

 

 

Servicing fee revenue

 

$

1,439

 

$

1,744

 

$

4,684

 

$

5,202

 

Average servicing fee %

 

32.3

%

25.6

%

26.5

%

34.5

%

Total Service Fees-Portfolio Assets:

 

 

 

 

 

 

 

 

 

Servicing fee revenue

 

$

2,130

 

$

2,109

 

$

5,670

 

$

6,598

 

Average servicing fee %

 

8.3

%

18.4

%

12.1

%

19.3

%

Service Fees-SBA loans:

 

$

122

 

$

113

 

$

328

 

$

419

 

Total Service Fees

 

$

2,252

 

$

2,222

 

$

5,998

 

$

7,017

 

 

 

 

 

 

 

 

 

 

 

Collections:

 

 

 

 

 

 

 

 

 

Domestic unconsolidated partnerships

 

$

21,347

 

$

4,667

 

$

29,221

 

$

19,042

 

Latin American unconsolidated partnerships

 

6,080

 

8,673

 

22,182

 

20,535

 

European unconsolidated partnerships

 

2,180

 

7,200

 

12,109

 

22,578

 

Total unconsolidated partnership collections

 

29,607

 

20,540

 

63,512

 

62,155

 

Domestic consolidated partnerships

 

18,958

 

36,891

 

78,026

 

116,085

 

Latin American consolidated partnerships

 

1,416

 

594

 

2,608

 

1,930

 

European consolidated partnerships

 

2,706

 

4,982

 

13,412

 

6,606

 

Total consolidated partnership collections

 

23,080

 

42,467

 

94,046

 

124,621

 

Total collections

 

$

52,687

 

$

63,007

 

$

157,558

 

$

186,776

 

 

 

 

 

 

 

 

 

 

 

Servicing portfolio (face value) at period end:

 

 

 

 

 

 

 

 

 

Domestic

 

$

1,123,882

 

$

766,491

 

 

 

 

 

Latin America

 

1,544,181

 

1,419,269

 

 

 

 

 

Europe

 

1,075,782

 

1,750,148

 

 

 

 

 

Total

 

$

3,743,845

 

$

3,935,908

 

 

 

 

 

 

7


 


 

FirstCity Financial Corporation

Supplemental Information

(Dollars in thousands)

(Unaudited)

 

Portfolio Purchases and Other Investments:

 

 

 

 

 

 

 

 

 

FirstCity

 

 

 

 

 

Portfolio Purchases

 

 

 

FirstCity

 

Investment

 

 

 

 

 

 

 

 

 

Latin

 

 

 

FirstCity

 

Investment

 

in Special

 

 

 

 

 

Domestic

 

Europe

 

America

 

Total

 

Investment

 

in Other

 

Situations

 

Total

 

2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3rd Quarter

 

$

15,025

 

$

 

$

 

$

15,025

 

$

10,513

 

$

4,956

 

$

148

 

$

15,617

 

2nd Quarter

 

141,566

 

 

 

141,566

 

28,122

 

14,482

 

8,107

 

50,711

 

1st Quarter

 

18,114

 

 

 

18,114

 

14,605

 

9,005

 

4,790

 

28,400

 

Total Year 2010

 

$

174,705

 

$

 

$

 

$

174,705

 

$

53,240

 

$

28,443

 

$

13,045

 

$

94,728

 

2009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4th Quarter

 

$

14,608

 

$

 

$

 

$

14,608

 

$

13,188

 

$

5,903

 

$

3,370

 

$

22,461

 

3rd Quarter

 

48,659

 

 

 

48,659

 

21,000

 

2,403

 

3,481

 

26,884

 

2nd Quarter

 

67,085

 

 

 

67,085

 

48,559

 

19,149

 

3,164

 

70,872

 

1st Quarter

 

70,238

 

 

 

70,238

 

64,907

 

6,418

 

2,400

 

73,725

 

Total Year 2009

 

$

200,590

 

$

 

$

 

$

200,590

 

$

147,654

 

$

33,873

 

$

12,415

 

$

193,942

 

Total Year 2008

 

$

64,394

 

$

1,823

 

$

23,097

 

$

89,314

 

$

72,307

 

$

33,007

 

$

19,906

 

$

125,220

 

Total Year 2007

 

$

121,679

 

$

23,199

 

$

69,455

 

$

214,333

 

$

126,714

 

$

10,476

 

$

11,530

 

$

148,720

 

 

Portfolio Asset Acquisition and Resolution segment:

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

 

 

2010

 

2009

 

2010

 

2009

 

Aggregate purchase price of portfolios acquired:

 

 

 

 

 

 

 

 

 

Acquisition partnerships

 

 

 

 

 

 

 

 

 

Domestic

 

$

 

15,025

 

$

 

48,659

 

$

 

174,705

 

$

 

185,982

 

Latin America

 

 

 

 

 

Europe

 

 

 

 

 

Total

 

$

 

15,025

 

$

 

48,659

 

$

 

174,705

 

$

 

185,982

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchase

 

FirstCity’s

 

 

 

 

 

 

 

Price

 

Investment

 

 

 

 

 

Historical acquisitions of Portfolios - annual:

 

 

 

 

 

 

 

 

 

First nine months of 2010

 

$

 

174,705

 

$

 

53,240

 

 

 

 

 

2009

 

200,590

 

147,654

 

 

 

 

 

2008

 

89,314

 

72,307

 

 

 

 

 

2007

 

214,333

 

126,714

 

 

 

 

 

2006

 

296,990

 

144,048

 

 

 

 

 

2005

 

146,581

 

71,405

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

December 31,

 

 

 

 

 

 

 

2010

 

2009

 

 

 

 

 

Portfolio acquisition and resolution assets by region:

 

 

 

 

 

 

 

 

 

Domestic

 

$

246,732

 

$

225,406

 

 

 

 

 

Latin America

 

39,077

 

41,248

 

 

 

 

 

Europe

 

50,060

 

57,888

 

 

 

 

 

Total

 

$

335,869

 

$

324,542

 

 

 

 

 

 

Special Situations Platform segment:

 

 

 

Total

 

FirstCity Denver’s Investment

 

 

 

Investment

 

Debt

 

Equity

 

Total

 

Historical investments - annual:

 

 

 

 

 

 

 

 

 

First nine months of 2010

 

$

13,564

 

$

8,650

 

$

4,395

 

$

13,045

 

2009

 

20,058

 

12,023

 

392

 

12,415

 

2008

 

28,750

 

16,650

 

3,256

 

19,906

 

2007

 

22,314

 

5,630

 

5,900

 

11,530

 

 

8



 

FirstCity Financial Corporation

Supplemental Information

(Dollars in thousands)

(Unaudited)

 

Summary of Consolidated Portfolio Assets (at Carrying Value) by Region and Type

 

 

 

September 30, 2010

 

 

 

Income-Accruing Loans

 

Non-Accrual Loans

 

 

 

 

 

 

 

Purchased

 

 

 

Purchased Credit-

 

 

 

 

 

 

 

 

 

Credit-

 

 

 

Impaired Loans

 

Other

 

 

 

 

 

 

 

Impaired

 

 

 

 

 

Cost recovery

 

 

 

Cost recovery

 

 

 

 

 

 

 

Loans

 

Other

 

Cash basis

 

basis

 

Cash basis

 

basis

 

Real Estate

 

Total

 

United States

 

$

495

 

$

4,061

 

$

100,255

 

$

49,573

 

$

1,638

 

$

 

$

36,652

 

$

192,674

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

France

 

 

1,069

 

3,860

 

 

 

1,906

 

 

6,835

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Germany

 

 

 

2,671

 

 

 

 

 

2,671

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mexico

 

 

 

 

9,572

 

 

 

 

9,572

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

495

 

$

5,130

 

$

106,786

 

$

59,145

 

$

1,638

 

$

1,906

 

$

36,652

 

$

211,752

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2009

 

 

 

Income-Accruing Loans

 

Non-Accrual Loans

 

 

 

 

 

 

 

Purchased

 

 

 

Purchased Credit-

 

 

 

 

 

 

 

 

 

 

 

Credit-

 

 

 

Impaired Loans

 

Other

 

 

 

 

 

 

 

Impaired

 

 

 

 

 

Cost recovery

 

 

 

Cost recovery

 

 

 

 

 

 

 

Loans

 

Other

 

Cash basis

 

basis

 

Cash basis

 

basis

 

Real Estate

 

Total

 

United States

 

$

42,385

 

$

5,323

 

$

42,125

 

$

78,165

 

$

2,770

 

$

 

$

26,438

 

$

197,206

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

France

 

 

1,555

 

 

7,648

 

 

2,305

 

 

11,508

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Germany

 

5,225

 

 

 

 

 

 

 

5,225

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mexico

 

 

 

 

10,445

 

 

 

 

10,445

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

47,610

 

$

6,878

 

$

42,125

 

$

96,258

 

$

2,770

 

$

2,305

 

$

26,438

 

$

224,384

 

 

Illustration of the Effects of Foreign Currency Fluctuations on Net Earnings

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

September 30,

 

 

 

 

 

 

 

 

 

 

 

2010

 

2009

 

2010

 

2009

 

 

 

 

 

 

 

 

 

Net earnings to common stockholders

 

$

2,559

 

$

2,000

 

$

10,725

 

$

10,390

 

 

 

 

 

 

 

 

 

Foreign currency gains (losses), net:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Euro

 

503

 

141

 

(446

)

81

 

 

 

 

 

 

 

 

 

Mexican Peso

 

103

 

(81

)

100

 

230

 

 

 

 

 

 

 

 

 

Argentine Peso

 

(4

)

(5

)

(16

)

(54

)

 

 

 

 

 

 

 

 

Chilean Peso

 

59

 

57

 

(8

)

260

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exchange rate at valuation date:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Euro

 

0.73

 

0.69

 

 

 

 

 

 

 

 

 

 

 

 

 

Mexican Peso

 

12.50

 

13.50

 

 

 

 

 

 

 

 

 

 

 

 

 

Argentine Peso

 

3.97

 

3.85

 

 

 

 

 

 

 

 

 

 

 

 

 

Chilean Peso

 

489.46

 

555.30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9



 

FirstCity Financial Corporation

Schedule of Estimated Unrealized Gross Profit from Portfolio Assets

September 30, 2010

(Unaudited)

 

 

 

Basis in Portfolio Assets (1), (4)

 

($ in 000’s)

 

12/31/2008

 

12/31/2009

 

9/30/2010

 

Domestic

 

$

153,148

 

190,541

 

201,599

 

Europe

 

29,555

 

32,665

 

20,708

 

Latin America

 

29,867

 

27,473

 

23,510

 

Total

 

$

212,570

 

250,679

 

245,817

 

 

 

 

Estimated Remaining Collections (2)

 

 

 

12/31/2008

 

12/31/2009

 

9/30/2010

 

Domestic

 

$

217,347

 

276,018

 

291,604

 

Europe

 

39,341

 

50,328

 

34,092

 

Latin America

 

78,211

 

70,398

 

65,739

 

Total

 

$

334,899

 

396,744

 

391,435

 

 

 

 

Estimated Unrealized Gross Profit (3)

 

 

 

12/31/2008

 

12/31/2009

 

9/30/2010

 

Domestic

 

$

64,199

 

85,476

 

90,006

 

Europe

 

9,787

 

17,663

 

13,383

 

Latin America

 

48,344

 

42,925

 

42,229

 

Total

 

$

122,329

 

146,064

 

145,618

 

 

 

 

Estimated Unrealized Gross Profit %

 

 

 

12/31/2008

 

12/31/2009

 

9/30/2010

 

Domestic

 

29.54

%

30.97

%

30.87

%

Europe

 

24.88

%

35.10

%

39.26

%

Latin America

 

61.81

%

60.97

%

64.24

%

Total

 

36.53

%

36.82

%

37.20

%

 

 

This schedule provides selected information related to the Company’s ownership interests in consolidated and unconsolidated Portfolio Assets and is provided for informational purposes to provide an indication of the future potential unrealized gross profit attributable to those portfolios. In preparing this schedule, management was required to make certain estimates and assumptions surrounding the underlying assets in the Portfolios that impact the reported amounts. Such estimates and assumptions could change in the future, as more information becomes known, which could impact the reported amounts. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates.

 


(1) Basis in Portfolio Assets represents FirstCity’s share of the unamortized purchase price of the Portfolios held by the various acquisition entities, some of which are consolidated by FirstCity and others held through equity investments in unconsolidated partnerships.

(2) Estimated Remaining Collections represents FirstCity’s share of future projected net cash collections expected from the Portfolios Assets.

(3) Unrealized Gross Profit represents the excess difference between the Estimated Remaining Collections and the Basis in Portfolio Assets.

(4) FirstCity considers Basis in Portfolio Assets a useful measurement of the Company’s underlying holdings and interests in Portfolio Assets. As FirstCity’s share of Basis in Portfolio Assets is considered a non-GAAP measure, the following reconciliation is provided:

 

 

 

12/31/2008

 

12/31/2009

 

9/30/2010

 

FirstCity’s consolidated Portfolio Assets (as reported in “Portfolio Assets” on the balance sheet of the respective Form 10-K or 10-Q)

 

$

 148,213

 

224,384

 

211,752

 

Noncontrolling interests in FirstCity’s consolidated Portfolio Assets (component of “Non- controlling interests” on the balance sheet of the respective Form 10-K or 10-Q)

 

(11,460

)

(37,277

)

(28,700

)

FirstCity’s interest in Portfolio Assets held by Acquisition Partnerships (a component of “Assets” as reported in the “Condensed Combined Balance Sheets” tabular disclosure under the “Equity Investments” footnote of the respective Form 10-K or 10-Q)

 

75,817

 

63,572

 

62,766

 

FirstCity’s basis in consolidated and non-consolidated Portfolio Assets

 

$

212,570

 

250,679

 

245,817

 

 

10