EX-99.1 2 a06-11605_1ex99d1.htm EX-99

Exhibit 99.1

 

NEWS RELEASE

 

Contact:

 

Suzy W. Taylor

 

 

866-652-1810

 

 

FirstCity Financial (NASDAQ FCFC) Reports First Quarter 2006 Earnings

 

Waco, Texas May 10, 2006

 

Highlights of the Quarter:

 

•          FirstCity reports 1st quarter 2006 earnings of $2,022,141 or $.17 per  diluted share

 

•          FirstCity invested $23.3 million in portfolio assets for the quarter.

 

•          FirstCity reports continued earning asset growth of $12.4 million for the quarter.

 

Components of the quarterly results are detailed below (dollars in thousands except per share data):

 

 

 

Three Months Ended
March 31, 2006
(unaudited)

 

 

 

2006

 

2005

 

Portfolio Asset Acquisition and Resolution

 

$

3,328

 

$

4,115

 

Corporate overhead

 

(1,231

)

(1,566

)

Earnings from continuing operations

 

2,097

 

2,549

 

Loss from discontinued operations net of taxes

 

(75

)

—

 

Net earnings to common stockholders

 

$

2,022

 

$

2,549

 

Diluted earnings per common share

 

$

0.17

 

$

0.21

 

 

James T. Sartain, President and CEO said, “We were pleased with the strong acquisitions and equity investments in the first quarter.  Our asset base continues to grow as we progress toward a critical mass in earning assets. The revenues and resulting earnings from this growth will build steadily over time. Our pipeline is strong and we are currently evaluating 29 different transactions representing over $4 billion in face value of assets.”

 

Portfolio Asset Acquisition and Resolution

 

FirstCity purchased $42.4 million in portfolio assets during the first quarter of 2006 and invested equity in these portfolios of $23.3 million.  These purchases consisted of three portfolios – all in the United States.

(more)

 


 

Portfolio purchases are detailed below (in millions):

 

 

 

Domestic

 

Europe

 

Latin
America

 

Total

 

Invested
Equity

 

2006

 

 

 

 

 

 

 

 

 

 

 

1st Quarter

 

$

42.4

 

—

 

—

 

$

42.4

 

$

23.3

*

2005

 

 

 

 

 

 

 

 

 

 

 

4th Quarter

 

$

32.9

 

$

37.2

 

$

12.6

 

$

82.7

 

$

35.0

 

3rd Quarter

 

32.3

 

—

 

0.6

 

32.9

 

18.1

 

2nd Quarter

 

16.1

 

—

 

—

 

16.1

 

16.1

 

1st Quarter

 

12.1

 

—

 

2.8

 

14.9

 

2.2

 

Total Year 2005

 

$

93.4

 

$

37.2

 

$

16.0

 

$

146.6

 

$

71.4

*

Total Year 2004

 

$

91.2

 

$

9.8

 

$

73.1

 

$

174.1

 

$

59.8

 

Total Year 2003

 

$

92.6

 

$

31.2

 

$

5.4

 

$

129.2

 

$

22.9

*

 

* In addition to the portfolio acquisitions above, FirstCity invested $730,000 in partnerships during the first quarter of 2006, $3.2 million during 2005 and $3.4 million during 2003.

 

Operating contribution from the Portfolio Asset Acquisition business for the first quarter was $3.3 million. The earnings were comprised of $5.5 million in revenues, $3.6 million in equity in earnings of investments and $5.8 million of expenses, including a provision for loan losses of $109,000. The business generated 58% of the revenues (including equity in earnings of investments) from domestic investments, 29% from investments in Latin America and 13% from investments in Europe. The major components of revenue for the quarter include equity earnings in Acquisition Partnerships and servicing entities of $3.6 million, servicing fees of $2.6 million, gain on resolution of Portfolio Assets of $1.3 million and interest income of $1.2 million.

 

Operating contribution from the Portfolio Asset Acquisition business for the first quarter includes net foreign currency gains of $517,000, which is comprised of $334,000 of Euro gains, $174,000 in Mexican peso gains and $9,000 in Argentine peso gains. The Company continued to borrow in Euros to hedge the risk associated with foreign currency exposure.

 

The following table details the impact of these items on corporate earnings:

 

Illustration of the Effects of Currency
Fluctuations (dollars in thousands)

 

Three Months Ended
March 31,

 

2006

 

2005

 

 

(unaudited)

 

Net earnings to Common Stockholders as reported

 

$

2,022

 

$

2,549

 

Euro gains

 

334

 

230

 

Mexican Peso gains

 

174

 

319

 

Argentine Peso gains

 

9

 

—

 

 

 

 

 

 

 

Euro exchange rate at valuation date

 

0.83

 

0.77

 

Mexican Peso exchange rate at valuation date

 

10.95

 

11.29

 

Argentine Peso exchange rate at valuation date

 

3.14

 

n/a

 

 

2


 

Conference Call

 

A conference call will be held today at 9:00 a.m. Central time to discuss first quarter 2006 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 First Quarter 2006 Conference Call

Date:

 

Wednesday, May 10, 2006

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

800-599-9816

 

 

 

International

617-847-8705

 

 

 

 

 

 

 

 

Pass code -

92311829

 

 

 

 

 

Replay

 

 

Domestic

888-286-8010

 

 

 

International

617-801-6888

 

 

 

 

 

 

 

 

Pass code -

15714033

 

The replay will be available until Wednesday May 24, 2006.

 

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 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, 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, 2005, filed with the SEC on March 16,2006, 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.”

 

3


 

FirstCity Financial Corporation

Summary of Operations

(In thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended
March 31,

 

 

 

2006

 

2005

 

Revenues:

 

 

 

 

 

Servicing fees from affiliates

 

$

2,647

 

$

3,172

 

Gain on resolution of Portfolio Assets

 

1,284

 

1,862

 

Interest income from affiliates

 

430

 

424

 

Loan interest income

 

774

 

478

 

Other income

 

580

 

384

 

Total revenues

 

5,715

 

6,320

 

Expenses:

 

 

 

 

 

Interest and fees on notes payable - other

 

1,698

 

872

 

Interest and fees on notes payable to affiliates

 

10

 

8

 

Salaries and benefits

 

3,738

 

4,158

 

Provision (recovery) for loan and impairment losses

 

109

 

85

 

Occupancy, data processing, communication and other

 

1,564

 

1,913

 

Total expenses

 

7,119

 

7,036

 

Equity in earnings of investments

 

3,634

 

3,401

 

 

 

 

 

 

 

Earnings from continuing operations before income taxes and minority interest

 

2,230

 

2,685

 

Income taxes

 

(122

)

(139

)

Minority interest

 

(11

)

3

 

Earnings from continuing operations

 

2,097

 

2,549

 

Discontinued operations

 

 

 

 

 

Earnings (loss) from operations of discontinued components

 

(75

)

—

 

Income taxes

 

—

 

—

 

Earnings (loss) from discontinued operations

 

(75

)

—

 

Net earnings

 

$

2,022

 

$

2,549

 

 

 

 

 

 

 

Basic earnings per common share are as follows:

 

 

 

 

 

Earnings from continuing operations

 

$

0.19

 

$

0.23

 

Discontinued operations

 

$

(0.01

)

$

—

 

Net earnings per common share

 

$

0.18

 

$

0.23

 

Wtd. avg. common shares outstanding

 

11,307

 

11,262

 

 

 

 

 

 

 

Diluted earnings per common share are as follows:

 

 

 

 

 

Earnings from continuing operations

 

$

0.18

 

$

0.21

 

Discontinued operations

 

$

(0.01

)

$

—

 

Net earnings per common share

 

$

0.17

 

$

0.21

 

Wtd. avg. common shares outstanding

 

11,958

 

12,007

 

 

Selected Unaudited Balance Sheet Data

 

 

 

March 31,
2006

 

December 31,
2005

 

Cash

 

$

9,248

 

$

12,901

 

Portfolio Assets, net

 

52,124

 

49,346

 

Loans receivable

 

20,107

 

19,606

 

Equity investments

 

92,892

 

83,785

 

Deferred tax asset, net

 

20,101

 

20,101

 

Service fees receivable and other assets

 

8,983

 

8,973

 

Discontinued mortgage assets held for sale

 

91

 

157

 

Total assets

 

$

203,546

 

$

194,869

 

 

 

 

 

 

 

Notes payable - other

 

$

95,330

 

$

89,653

 

Notes payable to affiliates

 

546

 

606

 

Minority interest and other liabilities

 

6,583

 

5,578

 

Liabilities from discontinued consumer operations

 

121

 

121

 

Total liabilities

 

102,580

 

95,958

 

Total equity

 

100,966

 

98,911

 

Total liabilities and equity

 

$

203,546

 

$

194,869

 

 

4


 

FirstCity Financial Corporation

Supplemental Information

(Dollars in thousands)

(Unaudited)

 

 

 

Three Months Ended
March 31,

 

 

 

2006

 

2005

 

Portfolio Asset Acquisition and Resolution:

 

 

 

 

 

Summary Operating Statement Data

 

 

 

 

 

Revenues

 

$

5,546

 

$

6,207

 

Equity in earnings of investments

 

3,634

 

3,401

 

Expenses

 

(5,743

)

(5,408

)

Operating contribution before provision for loan and impairment losses

 

3,437

 

4,200

 

Provision (recovery) for loan and impairment losses

 

109

 

85

 

Operating contribution, net of direct taxes

 

$

3,328

 

$

4,115

 

Aggregate purchase price of portfolios acquired:

 

 

 

 

 

Acquisition partnerships

 

 

 

 

 

Domestic

 

$

42,351

 

$

12,108

 

Latin America

 

—

 

2,763

 

Europe

 

—

 

—

 

Total

 

$

42,351

 

$

14,871

 

 

 

 

Purchase
Price

 

FirstCity’s
Investment

 

Historical Acquisitions - Annual:

 

 

 

 

 

2006

 

$

42,351

 

$

23,342

 

2005

 

146,581

 

71,405

 

2004

 

174,139

 

59,762

 

2003

 

129,192

 

22,944

 

2002

 

171,769

 

16,717

 

 

 

 

March 31,
2006

 

December 31,
2005

 

Portfolio acquisition and resolution assets by region:

 

 

 

 

 

Domestic

 

$

119,285

 

$

105,938

 

Latin America

 

19,661

 

19,764

 

Europe

 

26,736

 

27,699

 

Total

 

$

165,682

 

$

153,401

 

 

 

 

Three Months Ended
March 31,

 

 

 

2006

 

2005

 

Revenues and equity in earnings of investments by region:

 

 

 

 

 

Domestic

 

$

5,354

 

$

5,962

 

Latin America

 

2,653

 

2,397

 

Europe

 

1,173

 

1,249

 

Total

 

$

9,180

 

$

9,608

 

 

 

 

 

 

 

Revenues and equity in earnings of investments by source:

 

 

 

 

 

Equity earnings

 

$

3,634

 

$

3,401

 

Servicing fees

 

2,647

 

3,172

 

Interest income - loans

 

1,204

 

902

 

Gain on resolution of Portfolio Assets

 

1,284

 

1,862

 

Other

 

411

 

271

 

Total

 

$

9,180

 

$

9,608

 

 

5


 

 

 

Three Months Ended
March 31,

 

 

 

2006

 

2005

 

Analysis of Equity Investments in Acquisition Partnerships:

 

 

 

 

 

FirstCity’s Average investment in Acquisition Partnerships

 

 

 

 

 

Domestic

 

$

55,682

 

$

36,552

 

Latin America

 

3,038

 

1,518

 

Europe

 

25,267

 

18,874

 

Total

 

$

83,987

 

$

56,944

 

 

 

 

 

 

 

FirstCity Share of Equity Earnings:

 

 

 

 

 

Domestic

 

$

2,269

 

$

2,313

 

Latin America

 

313

 

3

 

Europe

 

1,052

 

1,085

 

Total

 

$

3,634

 

$

3,401

 

 

 

 

 

 

 

Selected other data:

 

 

 

 

 

Average investment in wholly owned portfolio assets and loans receivable:

 

 

 

 

 

Domestic

 

$

50,263

 

$

36,315

 

Latin America

 

16,123

 

19,096

 

Europe

 

1,748

 

530

 

Total

 

$

68,134

 

$

55,941

 

 

 

 

 

 

 

Income from wholly owned portfolio assets and loans receivable:

 

 

 

 

 

Domestic

 

$

2,130

 

$

2,393

 

Latin America

 

331

 

363

 

Europe

 

27

 

8

 

Total

 

$

2,488

 

$

2,764

 

 

 

 

 

 

 

Servicing fee revenues:

 

 

 

 

 

Domestic partnerships:

 

 

 

 

 

Servicing fee revenue

 

$

759

 

$

1,141

 

Average servicing fee %

 

3.3

%

4.2

%

Latin American partnerships:

 

 

 

 

 

Servicing fee revenue

 

$

1,826

 

$

1,981

 

Average servicing fee %

 

15.0

%

18.2

%

Incentive service fees

 

$

62

 

$

50

 

Total Service Fees:

 

 

 

 

 

Servicing fee revenue

 

$

2,647

 

$

3,172

 

Average servicing fee %

 

7.5

%

8.3

%

 

 

 

 

 

 

Collections:

 

 

 

 

 

Domestic

 

$

23,269

 

$

27,434

 

Latin America

 

12,145

 

10,898

 

Europe

 

16,697

 

13,198

 

Subtotal

 

52,111

 

51,530

 

Wholly-owned

 

6,731

 

8,338

 

Total

 

$

58,842

 

$

59,868

 

 

 

 

 

 

 

Servicing portfolio (face value)

 

 

 

 

 

Domestic

 

$

568,029

 

$

450,204

 

Latin America

 

1,330,719

 

1,446,059

 

Europe

 

882,574

 

867,078

 

Total

 

$

2,781,322

 

$

2,763,341

 

 

 

 

 

 

 

Number of personnel at period end:

 

 

 

 

 

Domestic

 

64

 

65

 

Latin America

 

113

 

129

 

Corporate

 

30

 

31

 

Total personnel

 

207

 

225

 

 

6