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.
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 | ||
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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 | 800-510-0219 | |
| International | 617-614-3451 | |
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| 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).
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.
FirstCity Financial Corporation
Summary of Operations
(Dollars in thousands, except per share data)
(Unaudited)
|
| Three Months Ended |
| Nine Months Ended |
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| September 30, |
| September 30, |
| ||||||||
|
| 2010 |
| 2009 |
| 2010 |
| 2009 |
| ||||
Revenues: |
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Finance and Servicing: |
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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: |
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| ||||
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: |
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Finance and Servicing: |
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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 |
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|
| 18,104 |
| 13,804 |
| 50,897 |
| 40,809 |
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Manufacturing, Railroad and Coal Mine: |
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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 |
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Basic earnings per common share are as follows: |
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Net earnings attributable to FirstCity stockholders |
| $ | 0.25 |
| $ | 0.20 |
| $ | 1.07 |
| $ | 1.06 |
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Weighted average common shares outstanding |
| 10,160 |
| 9,838 |
| 10,054 |
| 9,834 |
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Diluted earnings per common share are as follows: |
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Net earnings attributable to FirstCity stockholders |
| $ | 0.25 |
| $ | 0.19 |
| $ | 1.06 |
| $ | 1.02 |
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Weighted average common shares outstanding |
| 10,280 |
| 10,325 |
| 10,162 |
| 10,160 |
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Selected Balance Sheet Data | |||||||||||||
(Dollars in thousands) | |||||||||||||
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|
| September 30, |
| December 31, |
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| 2010 |
| 2009 |
| ||||
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| (Unaudited) |
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Cash and cash equivalents |
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| $ | 35,549 |
| $ | 80,368 |
| ||
Restricted cash |
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| 1,356 |
| 1,364 |
| ||||
Earning assets: |
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Portfolio Asset Acquisition and Resolution assets: |
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Domestic |
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| 246,732 |
| 225,406 |
| ||||
Latin America |
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| 39,077 |
| 41,248 |
| ||||
Europe |
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| 50,060 |
| 57,888 |
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Special Situations Platform assets |
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| 50,337 |
| 41,688 |
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Service fees receivable and other assets |
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| 22,052 |
| 17,112 |
| ||||
Total assets |
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| $ | 445,163 |
| $ | 465,074 |
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Notes payable to banks and other |
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| $ | 285,975 |
| $ | 305,888 |
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Note payable to affiliate |
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|
| 7,686 |
| 7,838 |
| ||||
Other liabilities |
|
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|
|
| 29,839 |
| 26,077 |
| ||||
Total liabilities |
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| 323,500 |
| 339,803 |
| ||||
Total equity |
|
|
|
|
| 121,663 |
| 125,271 |
| ||||
Total liabilities and equity |
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| $ | 445,163 |
| $ | 465,074 |
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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 |
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Portfolio Asset Acquisition and Resolution segment: |
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Revenues |
| $ | 12,823 |
| $ | 16,817 |
| $ | 49,358 |
| $ | 49,083 |
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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 |
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Special Situations Platform segment: |
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Revenues |
| $ | 17,410 |
| $ | 1,820 |
| $ | 45,422 |
| $ | 5,733 |
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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 |
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|
| Three Months Ended |
| Nine Months Ended |
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|
| September 30, |
| September 30, |
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|
| 2010 |
| 2009 |
| 2010 |
| 2009 |
| ||||
Portfolio Asset Acquisition and Resolution segment: |
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Revenues and equity in earnings of investments by region: |
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Domestic |
| $ | 7,543 |
| $ | 12,506 |
| $ | 31,752 |
| $ | 38,024 |
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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 |
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Revenues and equity in earnings (loss) of investments by source: |
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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 |
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Special Situations Platform segment: |
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Revenues and equity in earnings of investments by source: |
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Equity in earnings of unconsolidated subsidiaries |
| $ | 11,408 |
| $ | 1,464 |
| $ | 14,260 |
| $ | 1,661 |
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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 |
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Number of personnel at period end: |
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Domestic, Portfolio Asset Acquisition and Resolution segment |
| 88 |
| 90 |
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Domestic, Special Situations Platform segment |
| 32 |
| 26 |
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Latin America |
| 114 |
| 126 |
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Corporate |
| 30 |
| 30 |
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Total personnel |
| 264 |
| 272 |
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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 |
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FirstCity’s average investment: |
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Domestic, Portfolio Asset Acquisition and Resolution segment |
| $ | 32,495 |
| $ | 12,424 |
| $ | 21,366 |
| $ | 13,816 |
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Domestic, Special Situations Platform segment |
| 8,536 |
| 1,411 |
| 5,023 |
| 1,402 |
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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 |
|
|
|
|
|
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 |
| ||||
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 |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
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 |
|