Exhibit 99.1
NEWS RELEASE
Contact: Suzy W. Taylor
866-652-1810
FirstCity Financial Reports Fourth Quarter 2006 and First Quarter 2007 Results
Waco, Texas July 24, 2007……….
Highlights:
Fourth Quarter 2006 Results and
· FirstCity reports 4th quarter 2006 earnings of $1,550,234 or $.13 per diluted share. Total year 2006 earnings were $9.8 million or $.83 per diluted share.
· FirstCity invested $70.2 million in portfolio assets for the 4th quarter 2006.
· FirstCity reports continued earning asset growth of $77.0 million for the 4th quarter 2006.
First Quarter 2007 Results
· FirstCity reports 1st quarter 2007 losses of $914,699 or $.08 per diluted share.
· FirstCity recorded $1.2 million in expenses related to independent investigation during the quarter.
· FirstCity invested $69.5 million in portfolio acquisitions for the 1st quarter 2007, including $36.8 million in SBA loans.
· FirstCity reports continued earning asset growth of $48.4 million for the 1st quarter 2007, increasing total earning assets to $298.8 million.
· FirstCity purchases 50% stake in Chilean business platform
Components of the quarterly results are detailed below (dollars in thousands except per share data):
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| Three Months Ended |
| Year Ended |
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| December 31, |
| December 31, |
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| 2006 |
| 2005 |
| 2006 |
| 2005 |
| ||||
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| (unaudited) |
| (unaudited) |
| ||||||||
Portfolio Asset Acquisition and Resolution |
| $ | 3,009 |
| $ | 3,517 |
| $ | 15,104 |
| $ | 13,780 |
|
Corporate overhead |
| (1,459 | ) | (1,500 | ) | (5,227 | ) | (5,702 | ) | ||||
Earnings from continuing operations |
| 1,550 |
| 2,017 |
| 9,877 |
| 8,078 |
| ||||
Earnings (loss) from discontinued operations, net of taxes |
| — |
| (69 | ) | (75 | ) | 153 |
| ||||
Net earnings to common stockholders |
| $ | 1,550 |
| $ | 1,948 |
| $ | 9,802 |
| $ | 8,231 |
|
Diluted earnings per common share |
| $ | 0.13 |
| $ | 0.16 |
| $ | 0.83 |
| $ | 0.69 |
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(more)
| Three Months Ended |
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| March 31, |
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| 2007 |
| 2006 |
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|
| (unaudited) |
| ||||
Portfolio Asset Acquisition and Resolution |
| $ | 1,870 |
| $ | 3,328 |
|
Corporate overhead * |
| (2,785 | ) | (1,231 | ) | ||
Earnings (loss) from continuing operations |
| (915 | ) | 2,097 |
| ||
Loss from discontinued operations, net of taxes |
| — |
| (75 | ) | ||
Net earnings (loss) to common stockholders |
| $ | (915 | ) | $ | 2,022 |
|
Diluted earnings (loss) per common share |
| $ | (0.08 | ) | $ | 0.17 |
|
* Corporate overhead includes $1.2 million related to the internal investigation during the first quarter. The total expenditures related to the investigation through July 6 were approximately $2.0 million.
Portfolio Asset Acquisition and Resolution
FirstCity purchased $137.9 million in portfolio assets during the fourth quarter of 2006 and invested equity in these portfolios of $70.2 million. These purchases consisted of ten portfolios – seven in the United States, two in Europe and one in Latin America.
FirstCity purchased $78.8 million in portfolio assets during the first quarter of 2007 (including $36.8 million in SBA loans) and invested equity in these portfolios of $69.5 million. These purchases consisted of eight portfolios — six in the United States, one in Europe and one in Latin America.
Portfolio purchases are detailed below (in millions):
| Portfolio Purchases |
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| FirstCity |
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| Latin |
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| FirstCity |
| Investment |
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| Domestic |
| Europe |
| America |
| Total |
| Investment |
| in Other |
| Total |
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2007 |
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1st Quarter |
| $ | 71.6 |
| $ | 3.8 |
| $ | 3.4 |
| $ | 78.8 |
| $ | 69.5 |
| $ | 7.8 |
| $ | 77.3 |
|
YTD 2007 |
| $ | 71.6 |
| $ | 3.8 |
| $ | 3.4 |
| $ | 78.8 |
| $ | 69.5 |
| $ | 7.8 |
| $ | 77.3 |
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2006 |
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4th Quarter |
| $ | 34.6 |
| $ | 101.2 |
| $ | 2.1 |
| 137.9 |
| $ | 70.2 |
| $ | 16.8 |
| $ | 87.0 |
| |
3rd Quarter |
| 35.4 |
| — |
| 56.1 |
| 91.5 |
| 31.5 |
| 3.7 |
| 35.2 |
| |||||||
2nd Quarter |
| 24.2 |
| 1.0 |
| — |
| 25.2 |
| 19.0 |
| 7.0 |
| 26.0 |
| |||||||
1st Quarter |
| 42.4 |
| — |
| — |
| 42.4 |
| 23.3 |
| 0.7 |
| 24.0 |
| |||||||
Total Year 2006 |
| $ | 136.6 |
| $ | 102.2 |
| $ | 58.2 |
| $ | 297.0 |
| $ | 144.0 |
| $ | 28.2 |
| $ | 172.2 |
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2005 |
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4th Quarter |
| $ | 32.9 |
| $ | 37.2 |
| $ | 12.6 |
| $ | 82.7 |
| $ | 35.0 |
| $ | 1.2 |
| $ | 36.2 |
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3rd Quarter |
| 32.3 |
| — |
| 0.6 |
| 32.9 |
| 18.1 |
| — |
| 18.1 |
| |||||||
2nd Quarter |
| 16.1 |
| — |
| — |
| 16.1 |
| 16.1 |
| — |
| 16.1 |
| |||||||
1st Quarter |
| 12.1 |
| — |
| 2.8 |
| 14.9 |
| 2.2 |
| 2.0 |
| 4.2 |
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Total Year 2005 |
| $ | 93.4 |
| $ | 37.2 |
| $ | 16.0 |
| $ | 146.6 |
| $ | 71.4 |
| $ | 3.2 |
| $ | 74.6 |
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Total Year 2004 |
| $ | 91.2 |
| $ | 9.8 |
| $ | 73.1 |
| $ | 174.1 |
| $ | 59.8 |
| $ | — |
| $ | 59.8 |
|
Total Year 2003 |
| $ | 92.6 |
| $ | 31.2 |
| $ | 5.4 |
| $ | 129.2 |
| $ | 22.9 |
| $ | 3.4 |
| $ | 26.3 |
|
For the fourth quarter 2006, operating contribution from the Portfolio Asset Acquisition and Resolution business was $3.0 million. The earnings were comprised of $7.5 million in revenues, $3.7 million in equity in earnings of investments and $8.2 million of expenses, including provisions net of recoveries for loan losses of $170,000. The business generated 51% of the revenues from domestic investments, 29% from investments in Latin America, 19% from investments in Europe and 1% from investments in Canada (including equity in earnings of investments).The major components of revenue for the quarter include equity in earnings of investments of $3.7 million, servicing fees of $2.7 million, and income from Portfolio Assets of $3.4 million.
2
For the first quarter 2007, operating contribution from the Portfolio Asset Acquisition business was $1.9 million. The earnings were comprised of $9.9 million in revenues, $1.8 million in equity in earnings of investments and $9.8 million of expenses. The business generated 61% of the revenues from domestic investments, 23% from investments in Latin America, 15% from investments in Europe and 1% from investments in Canada (including equity in earnings of investments).The major components of revenue for the quarter include equity in earnings of investments of $1.8 million, servicing fees of $ 2.6 million, and income from Portfolio Assets of $5.0 million.
The first quarter earnings were also negatively impacted by provisions net of recoveries for loan losses of $1.9 million, of which $326,000 was on wholly-owned domestic portfolios. The remaining $1.6 million was on acquisition partnerships ($.7 million domestic, $.2 million Europe, and $.7 million Latin America). The Company experiences fluctuations in estimated cash flows from time to time and does not believe that these provisions are indicative of any negative trend.
The following tables detail the impact of net foreign currency gains (losses) on corporate earnings:
| Three Months Ended |
| Year Ended |
| |||||||||
Illustration of the Effects of Currency |
| December 31, |
| December 31, |
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Fluctuations (dollars in thousands) |
| 2006 |
| 2005 |
| 2006 |
| 2005 |
| ||||
|
| (unaudited) |
| (unaudited) |
| ||||||||
Net earnings to Common Stockholders as reported |
| $ | 1,550 |
| $ | 1,948 |
| $ | 9,802 |
| $ | 8,231 |
|
Euro gains |
| 287 |
| 103 |
| 1,068 |
| 793 |
| ||||
Mexican Peso gains (losses) |
| (274 | ) | 690 |
| (585 | ) | 1,470 |
| ||||
Argentine Peso gains (losses) |
| 29 |
| — |
| (30 | ) | — |
| ||||
Canadian Dollar losses |
| (106 | ) | — |
| (112 | ) | — |
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Euro exchange rate at valuation date |
| 0.76 |
| 0.84 |
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Mexican Peso exchange rate at valuation date |
| 10.88 |
| 10.78 |
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Argentine Peso exchange rate at valuation date |
| 3.07 |
| n/a |
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Canadian Dollar exchange rate at valuation date |
| 1.17 |
| n/a |
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| Three Months Ended |
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Illustration of the Effects of Currency |
| March 31, |
| ||||
Fluctuations (dollars in thousands) |
| 2007 |
| 2006 |
| ||
|
| (unaudited) |
| ||||
Net earnings to Common Stockholders as reported |
| $ | (915 | ) | $ | 2,022 |
|
Euro gains (losses) |
| (242 | ) | 334 |
| ||
Mexican Peso gains (losses) |
| (23 | ) | 174 |
| ||
Argentine Peso gains (losses) |
| (11 | ) | 9 |
| ||
Canadian Dollar gains |
| 21 |
| — |
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Euro exchange rate at valuation date |
| 0.75 |
| 0.83 |
| ||
Mexican Peso exchange rate at valuation date |
| 11.08 |
| 10.95 |
| ||
Argentine Peso exchange rate at valuation date |
| 3.10 |
| 3.14 |
| ||
Canadian Dollar exchange rate at valuation date |
| 1.16 |
| n/a |
| ||
3
Other Corporate Matters
Independent Investigation
On July 6, 2007, FirstCity announced that the independent investigation conducted by the Audit Committee of the Board of Directors had concluded. Findings of the investigation were detailed in a news release and 8-K filing that day. FirstCity Financial did not identify any material adjustment to its financial statements that is required in connection with the results of the independent investigation. The costs associated with that investigation through July 6, 2007 were approximately $2.0 million, with $1.2 million reflected in the first quarter 2007 results and approximately $800,000 to be reflected in the second quarter 2007 results.
Separately, due to the investigation, the Company did not timely file its Annual Report on Form 10-K in March 2007, nor the 10Q for the first quarter of 2007. The 10-K was filed today and the 10-Q will be filed as soon as practicable. As previously announced in a press release issued on July 17, 2007, FirstCity received notice from a NASDAQ Listing Qualifications Panel that it had determined to grant the request of the Company for continued listing on The NASDAQ Stock Market, subject to certain conditions set forth in the press release. The Company’s stock will continue to trade on the NASDAQ Global Select Market under the symbol “FCFC” during the exception period.
The independent investigation was conducted to review whether FirstCity and its subsidiaries received inadequate compensation, or other improprieties occurred, with respect to the sale of a loan portfolio to a third party, and FirstCity’s compliance with laws applicable to its foreign operations as a result of allegations against an officer of an affiliate of FirstCity regarding matters that occurred prior to the individual’s becoming an officer of that affiliate. The Audit Committee engaged an outside law firm to act as independent counsel and conduct the investigation. Independent counsel worked with external forensic accountants to conduct its review.
The independent investigation found that the loan portfolio sale was initiated by other portfolio investors, who owned a majority investment in the portfolio, and that the portfolio appeared to have been sold for the best price available at the time. The independent investigation found no evidence indicating that FirstCity or any officer, manager or full-time employee personally benefited from the transactions relating to the portfolio sale. The independent investigation concluded that the sales price received by FirstCity and the other portfolio investors was reasonable based upon the information that was available at the time of the sale.
The independent investigation concluded that it was unable to complete its review of the issues relating to allegations against the officer of an affiliate of FirstCity due to its inability to access certain documentation outside FirstCity’s custody and control. FirstCity has reviewed these issues, performed on-site procedures at the affiliate location and has determined that no adjustment to FirstCity’s financial statements is required in connection with this issue.
The independent investigation recommended improvements designed to provide additional assurances for accurate financial reporting, particularly with respect to FirstCity’s Latin American operations, and to improve FirstCity’s internal control structure. The independent investigation also recommended changes in FirstCity’s approach to foreign business relationships. In addition, the independent investigation made a number of recommendations aimed at improving FirstCity’s compliance practices and procedures. FirstCity has already begun taking steps to implement the foregoing recommendations.
SBA Lending
On December 15, 2006 American Business Lending, Inc., FirstCity’s SBA Lending subsidiary, entered into a credit agreement with Wells Fargo Foothill, Inc. for a working capital facility in the maximum aggregate principal amount of up to $25 million. Interest is based on an interest rate of (a) LIBOR plus 2.625% or alternatively, the greater of (b) the rate of interest announced, from time to time, within Wells Fargo at its principal office in San Francisco as its “prime rate,” or (c) seven and one-half percent (7.50%) per annum. The maturity date of this of this loan agreement is December 14, 2009. On February 27, 2007, this credit facility was increased to $40 million in order to facilitate a $36.8 million acquisition of SBA loans.
4
Industrial Bank Initiative
FirstCity’s application for an industrial bank charter and deposit insurance continues in process at the State of Utah and the FDIC. On January 31, 2007 the Board of Directors of the FDIC voted to extend for one year an earlier imposed moratorium for approval of industrial loan company (“ILC”) charters owned by commercial companies. The moratorium does not apply to ILCs owned by financial companies. The FDIC however determined that FirstCity’s application for charter & deposit insurance was one by a commercial rather than financial company. FirstCity has amended its application for it to be considered a financially owned concern and will continue to aggressively pursue approval of its application.
Liquidity
Notwithstanding the significant acquisitions made by FirstCity in the Fourth Quarter 2006 and First Quarter 2007, FirstCity believes that it has adequate liquidity for its obligations and continuing operations. FirstCity is negotiating a $50 million increase in its loan facility with Bank of Scotland under FirstCity’s Revolving Credit Agreement dated as of November 12, 2004, from $175 million to $225 million, a $50 million increase in the acquisition facility provided to FH Partners L.P., a wholly-owned affiliate of FirstCity, under the Revolving Credit Agreement dated as of August 26, 2005, from $50 million to $100 million, and a new $25 million loan facility with BoS (USA), Inc., an affiliate of Bank of Scotland, which would be subordinated to the Revolving Credit Agreement provided to FirstCity by Bank of Scotland. FirstCity believes that the increased funding being negotiated with the Bank of Scotland and BoS (USA), Inc. can be completed on a timely basis to meet FirstCity’s future liquidity requirements. There can be no assurance that FirstCity can obtain the additional financing from the Bank of Scotland or any other lender.
Chilean Acquisition
In February 2007, FirstCity completed the acquisition a 50% share in Servicios Integrales de Cobranza S.A. (“Servinco”) for a total purchase price of $4 million. Servinco, founded in 1994, is the second largest non-bank related collection company in Chile and is a co-investor with FirstCity in previous portfolio acquisitions. Servinco is widely respected in the business and financial community as an industry leader and is managed by its founders, Lorenzo Galmez and Jose Lagos, both of whom remain active in the business.
Conference Call
A conference call will be held on Tuesday, July 24, 2007 at 9 a.m. Central time to discuss fourth quarter 2006 and first quarter 2007 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 Fourth Quarter 2006 and First Quarter 2007 Conference Call | ||||
Date: | July 24, 2007 |
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Time: | 9:00 a.m. Central Time |
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Host: | James T. Sartain, FirstCity’s President and Chief Executive Officer | ||||
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Web Access: | FirstCity’s web page- | www.fcfc.com/invest.htm or, | |||
| CCBN’s Investor websites- | www.streetevents.com and, | |||
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| www.earnings.com | |||
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Dial In Access: |
| Domestic | 866-314-9013 | ||
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| International | 617-213-8053 | ||
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| Pass code - | 28115124 | ||
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Replay |
| Domestic | 888-286-8010 | ||
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| International | 617-801-6888 | ||
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| Pass code - | 58392066 | ||
The replay will be available until Tuesday, August 7, 2007
5
Forward Looking Statements
Certain statements in this press release, which are not historical in fact, including, but not limited to, statements relating to future performance, may be deemed to be forward-looking statements under the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, any statement that may project, indicate or imply future results, performance or achievements, and may contain the words “expect”, “intend”, “plan”, “estimate”, “believe”, “will be”, “will continue”, “will likely result”, and similar expressions. Such statements inherently are subject to a variety of risks and uncertainties that could cause actual results to differ materially from those projected. There are many important factors that could cause the Company’s actual results to differ materially.
These factors include, but are not limited to, the performance of the Company’s subsidiaries and affiliates, availability of portfolio assets, assumptions underlying portfolio asset performance, risks associated with start up of new businesses and entry into new foreign markets, risks associated with foreign operations, currency exchange rate fluctuations, interest rate risk, risks of declining value of loans, collateral or assets, the degree to which the Company is leveraged, the Company’s continued need for financing, availability of the Company’s credit facilities, ability to obtain additional financing from the Bank of Scotland or any other lender, the impact of certain covenants in loan agreements of the Company and its subsidiaries, the ability of the Company to utilize net operating loss carry forwards, general economic conditions, foreign social and economic conditions, changes (legislative and otherwise) in the asset securitization industry, fluctuation in residential and commercial real estate values, capital markets conditions, including the markets for asset-backed securities, uncertainties of any litigation arising from discontinued operations, factors more fully discussed and identified under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and risk factors and other risks identified in the Company’s Annual Report on Form 10-K for the year ended December 31, 2006, filed with the SEC on July 24, 2007, as well as in the Company’s other filings with the SEC.
Many of these factors are beyond the Company’s control. In addition, it should be noted that past financial and operational performance of the Company is not necessarily indicative of future financial and operational performance. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements.
The forward-looking statements in this release speak only as of the date of this release. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement to reflect any change in the Company’s expectations with regard thereto or any change in events, conditions or circumstances on which any forward-looking statement is based.
The Company is a diversified financial services company with operations dedicated to portfolio asset acquisition and resolution with offices in the U.S. and with affiliate organizations in France and Mexico. Its common stock is listed on the NASDAQ National Market System under the symbol “FCFC.”
6
FirstCity Financial Corporation
Supplemental Tables
Fourth Quarter 2006
7
FirstCity Financial Corporation
Summary of Operations
(In thousands, except per share data)
(Unaudited)
|
| Three Months Ended |
| Year Ended |
| ||||||||
|
| December 31, |
| December 31, |
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|
| 2006 |
| 2005 |
| 2006 |
| 2005 |
| ||||
Revenues: |
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Servicing fees |
| $ | 2,724 |
| $ | 2,782 |
| $ | 12,906 |
| $ | 11,754 |
|
Income from Portfolio Assets |
| 3,436 |
| 1,993 |
| 10,987 |
| 8,262 |
| ||||
Interest income from affiliates |
| 309 |
| 545 |
| 1,498 |
| 1,838 |
| ||||
Interest income from loans receivable - other |
| 559 |
| — |
| 576 |
| — |
| ||||
Other income |
| 574 |
| 1,160 |
| 2,420 |
| 2,239 |
| ||||
Total revenues |
| 7,602 |
| 6,480 |
| 28,387 |
| 24,093 |
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Expenses: |
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Interest and fees on notes payable - other |
| 2,856 |
| 1,344 |
| 8,289 |
| 3,963 |
| ||||
Interest and fees on notes payable to affiliates |
| — |
| 12 |
| 22 |
| 39 |
| ||||
Salaries and benefits |
| 3,721 |
| 3,787 |
| 14,831 |
| 15,200 |
| ||||
Provision (recovery) for loan and impairment losses |
| 170 |
| (224 | ) | 271 |
| 212 |
| ||||
Occupancy, data processing, communication and other |
| 3,058 |
| 2,737 |
| 9,223 |
| 8,311 |
| ||||
Total expenses |
| 9,805 |
| 7,656 |
| 32,636 |
| 27,725 |
| ||||
Equity in earnings of investments |
| 3,712 |
| 3,139 |
| 11,756 |
| 12,013 |
| ||||
Gain on sale of interest in equity investments |
| 54 |
| — |
| 2,459 |
| — |
| ||||
Earnings from continuing operations before income taxes and minority interest |
| 1,563 |
| 1,963 |
| 9,966 |
| 8,381 |
| ||||
Income taxes |
| (46 | ) | 71 |
| (186 | ) | (250 | ) | ||||
Minority interest |
| 33 |
| (17 | ) | 97 |
| (53 | ) | ||||
Earnings from continuing operations |
| 1,550 |
| 2,017 |
| 9,877 |
| 8,078 |
| ||||
Discontinued operations |
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Loss from operations of discontinued components |
| — |
| (100 | ) | (75 | ) | (478 | ) | ||||
Income taxes |
| — |
| 31 |
| — |
| 631 |
| ||||
Loss from discontinued operations |
| — |
| (69 | ) | (75 | ) | 153 |
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Net earnings |
| $ | 1,550 |
| $ | 1,948 |
| $ | 9,802 |
| $ | 8,231 |
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Basic earnings per common share are as follows: |
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Earnings from continuing operations |
| $ | 0.14 |
| $ | 0.18 |
| $ | 0.89 |
| $ | 0.72 |
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Discontinued operations |
| $ | — |
| $ | (0.01 | ) | $ | (0.01 | ) | $ | 0.01 |
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Net earnings per common share |
| $ | 0.14 |
| $ | 0.17 |
| $ | 0.88 |
| $ | 0.73 |
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Wtd. avg. common shares outstanding |
| 10,787 |
| 11,306 |
| 11,125 |
| 11,285 |
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Diluted earnings per common share are as follows: |
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Earnings from continuing operations |
| $ | 0.13 |
| $ | 0.17 |
| $ | 0.84 |
| $ | 0.68 |
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Discontinued operations |
| $ | — |
| $ | (0.01 | ) | $ | (0.01 | ) | $ | 0.01 |
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Net earnings per common share |
| $ | 0.13 |
| $ | 0.16 |
| $ | 0.83 |
| $ | 0.69 |
|
Wtd. avg. common shares outstanding |
| 11,415 |
| 12,009 |
| 11,759 |
| 12,012 |
|
Selected Unaudited Balance Sheet Data
|
| December 31, |
| December 31, |
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| 2006 |
| 2005 |
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Cash |
| $ | 18,472 |
| $ | 12,901 |
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Portfolio Assets, net |
| 108,696 |
| 49,346 |
|
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|
|
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Loans receivable |
| 28,746 |
| 19,606 |
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|
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Equity investments |
| 112,357 |
| 83,785 |
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|
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Deferred tax asset, net |
| 20,101 |
| 20,101 |
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|
|
| ||
Service fees receivable and other assets |
| 9,188 |
| 8,973 |
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|
|
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Discontinued mortgage assets held for sale |
| 103 |
| 157 |
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|
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Total assets |
| $ | 297,663 |
| $ | 194,869 |
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Notes payable - other |
| $ | 187,811 |
| $ | 89,653 |
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Notes payable to affiliates |
| — |
| 606 |
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|
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Minority interest and other liabilities |
| 5,845 |
| 5,578 |
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|
|
| ||
Liabilities from discontinued consumer operations |
| 114 |
| 121 |
|
|
|
|
| ||
Total liabilities |
| 193,770 |
| 95,958 |
|
|
|
|
| ||
Total equity |
| 103,893 |
| 98,911 |
|
|
|
|
| ||
Total liabilities and equity |
| $ | 297,663 |
| $ | 194,869 |
|
|
|
|
|
8
FirstCity Financial Corporation
Supplemental Information
(Dollars in thousands)
(Unaudited)
|
| Three Months Ended |
| Year Ended |
| ||||||||
|
| December 31, |
| December 31, |
| ||||||||
|
| 2006 |
| 2005 |
| 2006 |
| 2005 |
| ||||
Portfolio Asset Acquisition and Resolution: |
|
|
|
|
|
|
|
|
| ||||
Summary Operating Statement Data |
|
|
|
|
|
|
|
|
| ||||
Revenues |
| $ | 7,470 |
| $ | 6,340 |
| $ | 27,522 |
| $ | 23,591 |
|
Equity in earnings of investments |
| 3,712 |
| 3,139 |
| 11,756 |
| 12,013 |
| ||||
Gain on sale of interest in equity investments |
| 54 |
| — |
| 2,459 |
| — |
| ||||
Expenses |
| (8,057 | ) | (6,186 | ) | (26,362 | ) | (21,612 | ) | ||||
Operating contribution before provision for loan and impairment losses |
| 3,179 |
| 3,293 |
| 15,375 |
| 13,992 |
| ||||
Provision for loan and impairment losses |
| 170 |
| (224 | ) | 271 |
| 212 |
| ||||
Operating contribution, net of direct taxes |
| $ | 3,009 |
| $ | 3,517 |
| $ | 15,104 |
| $ | 13,780 |
|
|
|
|
|
|
|
|
|
|
| ||||
Aggregate purchase price of portfolios acquired: |
|
|
|
|
|
|
|
|
| ||||
Acquisition partnerships |
|
|
|
|
|
|
|
|
| ||||
Domestic |
| $ | 34,653 |
| $ | 32,930 |
| $ | 136,596 |
| $ | 93,410 |
|
Latin America |
| 2,132 |
| 12,611 |
| 58,236 |
| 15,999 |
| ||||
Europe |
| 101,132 |
| 37,172 |
| 102,158 |
| 37,172 |
| ||||
Total |
| $ | 137,917 |
| $ | 82,713 |
| $ | 296,990 |
| $ | 146,581 |
|
|
| Purchase |
| FirstCity’s |
|
|
|
|
| ||
|
| Price |
| Investment |
|
|
|
|
| ||
Historical Acquisitions - Annual: |
|
|
|
|
|
|
|
|
| ||
2006 |
| $ | 296,990 |
| $ | 144,048 |
|
|
|
|
|
2005 |
| 146,581 |
| 71,405 |
|
|
|
|
| ||
2004 |
| 174,139 |
| 59,762 |
|
|
|
|
| ||
2003 |
| 129,192 |
| 22,944 |
|
|
|
|
| ||
2002 |
| 171,769 |
| 16,717 |
|
|
|
|
| ||
|
| December 31, |
| December 31, |
|
|
|
|
| ||
|
| 2006 |
| 2005 |
|
|
|
|
| ||
Portfolio acquisition and resolution assets by region: |
|
|
|
|
|
|
|
|
| ||
Domestic |
| $ | 158,147 |
| $ | 105,938 |
|
|
|
|
|
Latin America |
| 28,883 |
| 19,764 |
|
|
|
|
| ||
Europe |
| 61,062 |
| 27,699 |
|
|
|
|
| ||
Canada |
| 2,272 |
| — |
|
|
|
|
| ||
Total |
| $ | 250,364 |
| $ | 153,401 |
|
|
|
|
|
|
| Three Months Ended |
| Year Ended |
| ||||||||
|
| December 31, |
| December 31, |
| ||||||||
|
| 2006 |
| 2005 |
| 2006 |
| 2005 |
| ||||
Revenues and equity in earnings of investments by region: |
|
|
|
|
|
|
|
|
| ||||
Domestic |
| $ | 5,719 |
| $ | 5,290 |
| $ | 22,063 |
| $ | 20,707 |
|
Latin America |
| 3,289 |
| 3,050 |
| 11,191 |
| 10,508 |
| ||||
Europe |
| 2,080 |
| 1,139 |
| 5,913 |
| 4,389 |
| ||||
Canada |
| 94 |
| — |
| 111 |
| — |
| ||||
Total |
| $ | 11,182 |
| $ | 9,479 |
| $ | 39,278 |
| $ | 35,604 |
|
|
|
|
|
|
|
|
|
|
| ||||
Revenues and equity in earnings of investments by source: |
|
|
|
|
|
|
|
|
| ||||
Equity earnings |
| $ | 3,712 |
| $ | 3,139 |
| $ | 11,756 |
| $ | 12,013 |
|
Servicing fees |
| 2,724 |
| 2,782 |
| 12,906 |
| 11,754 |
| ||||
Interest income from affiliates |
| 309 |
| 545 |
| 1,498 |
| 1,838 |
| ||||
Income from Portfolio Assets |
| 3,436 |
| 1,993 |
| 10,987 |
| 8,262 |
| ||||
Interest income from loans receivable - other |
| 559 |
| — |
| 576 |
| — |
| ||||
Other |
| 442 |
| 1,020 |
| 1,555 |
| 1,737 |
| ||||
Total |
| $ | 11,182 |
| $ | 9,479 |
| $ | 39,278 |
| $ | 35,604 |
|
9
|
| Three Months Ended |
| Year Ended |
| ||||||||
|
| December 31, |
| December 31, |
| ||||||||
|
| 2006 |
| 2005 |
| 2006 |
| 2005 |
| ||||
Analysis of Equity Investments |
|
|
|
|
|
|
|
|
| ||||
FirstCity’s Average investment |
|
|
|
|
|
|
|
|
| ||||
Domestic |
| $ | 38,697 |
| $ | 48,771 |
| $ | 45,479 |
| $ | 39,612 |
|
Latin America |
| 19,148 |
| 1,957 |
| 10,897 |
| 1,654 |
| ||||
Europe |
| 30,801 |
| 13,492 |
| 22,774 |
| 12,575 |
| ||||
Europe-Servicing subsidiaries |
| 5,738 |
| 5,484 |
| 5,594 |
| 5,852 |
| ||||
Latin America-Servicing subsidiaries |
| 282 |
| 346 |
| 233 |
| 239 |
| ||||
Total |
| $ | 94,666 |
| $ | 70,050 |
| $ | 84,977 |
| $ | 59,932 |
|
|
|
|
|
|
|
|
|
|
| ||||
FirstCity Share of Equity Earnings: |
|
|
|
|
|
|
|
|
| ||||
Domestic |
| $ | 1,366 |
| $ | 2,033 |
| $ | 6,502 |
| $ | 8,041 |
|
Latin America |
| 127 |
| 23 |
| (189 | ) | (227 | ) | ||||
Europe |
| 1,623 |
| 929 |
| 4,614 |
| 3,556 |
| ||||
Europe-Servicing subsidiaries |
| 317 |
| 106 |
| 750 |
| 353 |
| ||||
Latin America-Servicing subsidiaries |
| 279 |
| 48 |
| 79 |
| 290 |
| ||||
Total |
| $ | 3,712 |
| $ | 3,139 |
| $ | 11,756 |
| $ | 12,013 |
|
|
|
|
|
|
|
|
|
|
| ||||
Selected other data: |
|
|
|
|
|
|
|
|
| ||||
Average investment in wholly owned portfolio assets and loans receivable: |
|
|
|
|
|
|
|
|
| ||||
Domestic |
| $ | 95,629 |
| $ | 48,823 |
| $ | 66,381 |
| $ | 42,567 |
|
Latin America |
| 8,962 |
| 16,629 |
| 12,479 |
| 18,068 |
| ||||
Europe |
| 3,500 |
| 953 |
| 2,475 |
| 652 |
| ||||
Canada |
| 2,286 |
| — |
| 703 |
| — |
| ||||
Total |
| $ | 110,377 |
| $ | 66,405 |
| $ | 82,038 |
| $ | 61,287 |
|
|
|
|
|
|
|
|
|
|
| ||||
Income from wholly owned portfolio assets and loans receivable: |
|
|
|
|
|
|
|
|
| ||||
Domestic |
| $ | 3,595 |
| $ | 2,062 |
| $ | 11,392 |
| $ | 8,506 |
|
Latin America |
| 543 |
| 463 |
| 1,377 |
| 1,559 |
| ||||
Europe |
| 72 |
| 13 |
| 181 |
| 35 |
| ||||
Canada |
| 94 |
| — |
| 111 |
| — |
| ||||
Total |
| $ | 4,304 |
| $ | 2,538 |
| $ | 13,061 |
| $ | 10,100 |
|
|
|
|
|
|
|
|
|
|
| ||||
Servicing fee revenues: |
|
|
|
|
|
|
|
|
| ||||
Domestic partnerships: |
|
|
|
|
|
|
|
|
| ||||
Servicing fee revenue |
| $ | 600 |
| $ | 853 |
| $ | 3,398 |
| $ | 3,578 |
|
Average servicing fee % |
| 3.1 | % | 2.9 | % | 3.0 | % | 3.5 | % | ||||
Latin American partnerships: |
|
|
|
|
|
|
|
|
| ||||
Servicing fee revenue |
| $ | 2,044 |
| $ | 1,881 |
| $ | 7,287 |
| $ | 7,817 |
|
Average servicing fee % |
| 12.8 | % | 12.0 | % | 9.9 | % | 12.1 | % | ||||
Incentive service fees |
| $ | 80 |
| $ | 48 |
| $ | 2,221 |
| $ | 359 |
|
Total Service Fees: |
|
|
|
|
|
|
|
|
| ||||
Servicing fee revenue |
| $ | 2,724 |
| $ | 2,782 |
| $ | 12,906 |
| $ | 11,754 |
|
Average servicing fee % |
| 7.7 | % | 6.2 | % | 6.9 | % | 7.1 | % | ||||
|
|
|
|
|
|
|
|
|
| ||||
Collections: |
|
|
|
|
|
|
|
|
| ||||
Domestic |
| $ | 19,241 |
| $ | 29,460 |
| $ | 114,248 |
| $ | 101,468 |
|
Latin America |
| 16,003 |
| 15,642 |
| 73,781 |
| 64,566 |
| ||||
Europe |
| 12,184 |
| 15,191 |
| 52,348 |
| 56,654 |
| ||||
Subtotal |
| 47,428 |
| 60,293 |
| 240,377 |
| 222,688 |
| ||||
Wholly-owned |
| 17,146 |
| 9,512 |
| 48,116 |
| 29,247 |
| ||||
Total |
| $ | 64,574 |
| $ | 69,805 |
| $ | 288,493 |
| $ | 251,935 |
|
|
|
|
|
|
|
|
|
|
| ||||
Servicing portfolio (face value) |
|
|
|
|
|
|
|
|
| ||||
Domestic |
| $ | 552,925 |
| $ | 532,473 |
|
|
|
|
| ||
Latin America |
| 1,694,649 |
| 1,389,698 |
|
|
|
|
| ||||
Europe |
| 1,062,886 |
| 866,502 |
|
|
|
|
| ||||
Total |
| $ | 3,310,460 |
| $ | 2,788,673 |
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
| ||||
Number of personnel at period end: |
|
|
|
|
|
|
|
|
| ||||
Domestic |
| 57 |
| 64 |
|
|
|
|
| ||||
Latin America |
| 119 |
| 120 |
|
|
|
|
| ||||
Corporate |
| 32 |
| 30 |
|
|
|
|
| ||||
Total personnel |
| 208 |
| 214 |
|
|
|
|
|
10
FirstCity Financial Corporation
Supplemental Tables
First Quarter 2007
11
FirstCity Financial Corporation
Summary of Operations
(In thousands, except per share data)
(Unaudited)
|
| Three Months Ended |
| ||||
|
| March 31, |
| ||||
|
| 2007 |
| 2006 |
| ||
Revenues: |
|
|
|
|
| ||
Servicing fees |
| $ | 2,605 |
| $ | 2,647 |
|
Income from Portfolio Assets |
| 5,035 |
| 2,058 |
| ||
Gain on sale of SBA loans held for sale, net |
| 281 |
| — |
| ||
Interest income from SBA loans |
| 308 |
| — |
| ||
Interest income from affiliates |
| 126 |
| 430 |
| ||
Interest income from loans receivable - other |
| 907 |
| — |
| ||
Other income |
| 779 |
| 580 |
| ||
Total revenues |
| 10,041 |
| 5,715 |
| ||
Expenses: |
|
|
|
|
| ||
Interest and fees on notes payable - other |
| 4,251 |
| 1,698 |
| ||
Interest and fees on notes payable to affiliates |
| — |
| 10 |
| ||
Salaries and benefits |
| 3,999 |
| 3,738 |
| ||
Provision for loan and impairment losses |
| 326 |
| 109 |
| ||
Occupancy, data processing, communication and other |
| 4,157 |
| 1,564 |
| ||
Total expenses |
| 12,733 |
| 7,119 |
| ||
Equity in earnings of investments |
| 1,826 |
| 3,634 |
| ||
Earnings (loss) from continuing operations before income taxes and minority interest |
| (866 | ) | 2,230 |
| ||
Income taxes |
| (157 | ) | (122 | ) | ||
Minority interest |
| 108 |
| (11 | ) | ||
Earnings (loss) from continuing operations |
| (915 | ) | 2,097 |
| ||
Discontinued operations |
|
|
|
|
| ||
Loss from operations of discontinued components |
| — |
| (75 | ) | ||
Income taxes |
| — |
| — |
| ||
Loss from discontinued operations |
| — |
| (75 | ) | ||
Net earnings (loss) |
| $ | (915 | ) | $ | 2,022 |
|
|
|
|
|
|
| ||
Basic earnings (loss) per common share are as follows: |
|
|
|
|
| ||
Earnings (loss) from continuing operations |
| $ | (0.08 | ) | $ | 0.19 |
|
Discontinued operations |
| $ | — |
| $ | (0.01 | ) |
Net earnings (loss) per common share |
| $ | (0.08 | ) | $ | 0.18 |
|
Wtd. avg. common shares outstanding |
| 10,788 |
| 11,307 |
| ||
|
|
|
|
|
| ||
Diluted earnings (loss) per common share are as follows: |
|
|
|
|
| ||
Earnings (loss) from continuing operations |
| $ | (0.08 | ) | $ | 0.18 |
|
Discontinued operations |
| $ | — |
| $ | (0.01 | ) |
Net earnings (loss) per common share |
| $ | (0.08 | ) | $ | 0.17 |
|
Wtd. avg. common shares outstanding |
| 11,431 |
| 11,958 |
|
Selected Unaudited Balance Sheet Data
|
| March 31, |
| December 31, |
| ||
|
| 2007 |
| 2006 |
| ||
Cash |
| $ | 17,211 |
| $ | 18,472 |
|
Portfolio Assets, net |
| 127,750 |
| 108,696 |
| ||
Loans receivable |
| 60,854 |
| 28,746 |
| ||
Equity investments |
| 107,991 |
| 112,357 |
| ||
Deferred tax asset, net |
| 20,101 |
| 20,101 |
| ||
Service fees receivable and other assets |
| 17,618 |
| 9,291 |
| ||
Total assets |
| $ | 351,525 |
| $ | 297,663 |
|
|
|
|
|
|
| ||
Notes payable - other |
| $ | 237,087 |
| $ | 187,811 |
|
Minority interest and other liabilities |
| 11,474 |
| 5,959 |
| ||
Total liabilities |
| 248,561 |
| 193,770 |
| ||
Total equity |
| 102,964 |
| 103,893 |
| ||
Total liabilities and equity |
| $ | 351,525 |
| $ | 297,663 |
|
12
FirstCity Financial Corporation
Supplemental Information
(Dollars in thousands)
(Unaudited)
|
| Three Months Ended |
| ||||
|
| March 31, |
| ||||
|
| 2007 |
| 2006 |
| ||
Portfolio Asset Acquisition and Resolution: |
|
|
|
|
| ||
Summary Operating Statement Data |
|
|
|
|
| ||
Revenues |
| $ | 9,912 |
| $ | 5,546 |
|
Equity in earnings of investments |
| 1,826 |
| 3,634 |
| ||
Expenses |
| (9,542 | ) | (5,743 | ) | ||
Operating contribution before provision for loan and impairment losses |
| 2,196 |
| 3,437 |
| ||
Provision for loan and impairment losses |
| 326 |
| 109 |
| ||
Operating contribution, net of direct taxes |
| $ | 1,870 |
| $ | 3,328 |
|
|
|
|
|
|
| ||
Aggregate purchase price of portfolios acquired: |
|
|
|
|
| ||
Acquisition partnerships |
|
|
|
|
| ||
Domestic |
| $ | 71,568 |
| $ | 42,351 |
|
Latin America |
| 3,401 |
| — |
| ||
Europe |
| 3,802 |
| — |
| ||
Total |
| $ | 78,771 |
| $ | 42,351 |
|
|
| Purchase |
| FirstCity’s |
| ||
|
| Price |
| Investment |
| ||
Historical Acquisitions - Annual: |
|
|
|
|
| ||
2007 |
| $ | 78,771 |
| $ | 69,455 |
|
2006 |
| 296,990 |
| 144,048 |
| ||
2005 |
| 146,581 |
| 71,405 |
| ||
2004 |
| 174,139 |
| 59,762 |
| ||
2003 |
| 129,192 |
| 22,944 |
| ||
|
| March 31, |
| December 31, |
| ||
|
| 2007 |
| 2006 |
| ||
Portfolio acquisition and resolution assets by region: |
|
|
|
|
| ||
Domestic |
| $ | 210,441 |
| $ | 158,147 |
|
Latin America |
| 31,368 |
| 28,883 |
| ||
Europe |
| 54,638 |
| 61,062 |
| ||
Canada |
| 2,357 |
| 2,272 |
| ||
Total |
| $ | 298,804 |
| $ | 250,364 |
|
|
| Three Months Ended |
| ||||
|
| March 31, |
| ||||
|
| 2007 |
| 2006 |
| ||
Revenues and equity in earnings of investments by region: |
|
|
|
|
| ||
Domestic |
| $ | 7,118 |
| $ | 5,354 |
|
Latin America |
| 2,701 |
| 2,653 |
| ||
Europe |
| 1,830 |
| 1,173 |
| ||
Canada |
| 89 |
| — |
| ||
Total |
| $ | 11,738 |
| $ | 9,180 |
|
|
|
|
|
|
| ||
Revenues and equity in earnings of investments by source: |
|
|
|
|
| ||
Equity earnings |
| $ | 1,826 |
| $ | 3,634 |
|
Servicing fees |
| 2,605 |
| 2,647 |
| ||
Gain on sale of SBA loans held for sale, net |
| 281 |
| — |
| ||
Interest income from SBA loans |
| 308 |
| — |
| ||
Interest income from affiliates |
| 126 |
| 430 |
| ||
Income from Portfolio Assets |
| 5,035 |
| 2,058 |
| ||
Interest income from loans receivable - other |
| 907 |
| — |
| ||
Other |
| 650 |
| 411 |
| ||
Total |
| $ | 11,738 |
| $ | 9,180 |
|
13
|
| Three Months Ended |
| ||||
|
| March 31, |
| ||||
|
| 2007 |
| 2006 |
| ||
Analysis of Equity Investments |
|
|
|
|
| ||
FirstCity’s Average investment |
|
|
|
|
| ||
Domestic |
| $ | 35,877 |
| $ | 55,682 |
|
Latin America |
| 18,659 |
| 2,778 |
| ||
Europe |
| 47,436 |
| 19,645 |
| ||
Europe-Servicing subsidiaries |
| 6,125 |
| 5,622 |
| ||
Latin America-Servicing subsidiaries |
| 1,474 |
| 260 |
| ||
Total |
| $ | 109,571 |
| $ | 83,987 |
|
|
|
|
|
|
| ||
FirstCity Share of Equity Earnings: |
|
|
|
|
| ||
Domestic |
| $ | 251 |
| $ | 2,269 |
|
Latin America |
| (10 | ) | 444 |
| ||
Europe |
| 1,540 |
| 978 |
| ||
Europe-Servicing subsidiaries |
| 76 |
| 74 |
| ||
Latin America-Servicing subsidiaries |
| (31 | ) | (131 | ) | ||
Total |
| $ | 1,826 |
| $ | 3,634 |
|
|
|
|
|
|
| ||
Selected other data: |
|
|
|
|
| ||
Average investment in wholly owned portfolio assets and loans receivable: |
|
|
|
|
| ||
Domestic |
| $ | 142,747 |
| $ | 50,263 |
|
Latin America |
| 9,349 |
| 16,123 |
| ||
Europe |
| 3,610 |
| 1,748 |
| ||
Canada |
| 2,287 |
| — |
| ||
Total |
| $ | 157,993 |
| $ | 68,134 |
|
|
|
|
|
|
| ||
Income from wholly owned portfolio assets and loans receivable: |
|
|
|
|
| ||
Domestic |
| $ | 5,967 |
| $ | 2,130 |
|
Latin America |
| 527 |
| 331 |
| ||
Europe |
| 74 |
| 27 |
| ||
Canada |
| 89 |
| — |
| ||
Total |
| $ | 6,657 |
| $ | 2,488 |
|
|
|
|
|
|
| ||
Servicing fee revenues: |
|
|
|
|
| ||
Domestic partnerships: |
|
|
|
|
| ||
Servicing fee revenue |
| $ | 629 |
| $ | 759 |
|
Average servicing fee % |
| 3.7 | % | 3.3 | % | ||
Latin American partnerships: |
|
|
|
|
| ||
Servicing fee revenue |
| $ | 1,958 |
| $ | 1,826 |
|
Average servicing fee % |
| 16.1 | % | 15.0 | % | ||
Incentive service fees |
| $ | — |
| $ | 62 |
|
Total Service Fees-Portfolio Assets: |
|
|
|
|
| ||
Servicing fee revenue |
| $ | 2,587 |
| $ | 2,647 |
|
Average servicing fee % |
| 8.8 | % | 7.5 | % | ||
Service Fees-SBA loans: |
| $ | 18 |
| $ | — |
|
Total Service Fees |
| $ | 2,605 |
| $ | 2,647 |
|
|
|
|
|
|
| ||
Collections: |
|
|
|
|
| ||
Domestic |
| $ | 17,225 |
| $ | 23,269 |
|
Latin America |
| 12,178 |
| 12,145 |
| ||
Europe |
| 33,511 |
| 16,697 |
| ||
Subtotal |
| 62,914 |
| 52,111 |
| ||
Wholly-owned |
| 19,691 |
| 6,731 |
| ||
Total |
| $ | 82,605 |
| $ | 58,842 |
|
|
|
|
|
|
| ||
Servicing portfolio (face value) |
|
|
|
|
| ||
Domestic |
| $ | 619,098 |
| $ | 568,029 |
|
Latin America |
| 1,712,128 |
| 1,330,719 |
| ||
Europe |
| 1,027,430 |
| 882,574 |
| ||
Total |
| $ | 3,358,656 |
| $ | 2,781,322 |
|
|
|
|
|
|
| ||
Number of personnel at period end: |
|
|
|
|
| ||
Domestic |
| 58 |
| 64 |
| ||
Latin America |
| 116 |
| 113 |
| ||
Corporate |
| 32 |
| 30 |
| ||
Total personnel |
| 206 |
| 207 |
|
14