EX-99.1 2 a09-13072_1ex99d1.htm EX-99.1

Exhibit 99.1

 

NEWS RELEASE

 

Contact:

Suzy W. Taylor

 

866-652-1810

 

 

 

 

FirstCity Financial Corporation Reports First Quarter 2009 Results and Activities

 

Waco, Texas   May 12, 2009

 

Highlights:

 

·                  FirstCity reported first quarter 2009 earnings of $0.6 million or $0.07 per diluted share.

 

·                  FirstCity invested $73.7 million in domestic portfolio acquisitions and other investments during the quarter.

 

·                  Continued available liquidity has enabled FirstCity to invest $31.0 million in domestic portfolio acquisitions and other investments subsequent to first quarter 2009.

 

First Quarter 2009 and Business Outlook

 

The first quarter of 2009 generated earnings of $0.6 million or $0.07 per diluted share compared to a loss of $3.6 million or ($0.34) per diluted share for the first quarter of 2008. The earnings improvement during the first quarter of 2009 was a result of increased revenues directly associated with higher domestic collections in the first quarter of 2009 compared to the same period last year. This additional revenue off-set the non-cash charges of $1.8 million in foreign currency exchange losses and $1.7 million of impairment during the first quarter of 2009. Additionally, FirstCity’s quarterly investments of $73.7 million included $64.9 million of domestic portfolio assets with a face value of $140.8 million acquired from the FDIC, $2.4 million of debt investments through our special situations platform, and $6.4 million of SBA loan originations.

 

Jim Sartain, Chief Executive Officer, said, “FirstCity continues to generate positive cash flows from its investments and loan servicing platform to cover operating expenses and bolster liquidity to fund future investment opportunities. With the availability under our credit lines and shared investment opportunities with other investors, we continue to take advantage of current market opportunities in both of our business segments. Our overall objective remains the same — leverage our expertise and market opportunities by strategically investing in distressed assets and special arrangements to achieve the best execution on our investments and maximize the ultimate cash recoveries.”

 

The Company continues to experience positive growth in the unrealized future gross profit associated with its core portfolio asset business. At the end of March 2009, the unrealized future gross profit on these assets increased to $136.0 million, which is up from $122.3 million at the end of December 2008 (refer to the schedule on page 10 of this release). This is another indicator of the Company’s ability to generate cash flows to support operations and sustain liquidity for future investment opportunities.

 

(more)

 


 

The current market conditions have created increased opportunities for FirstCity to grow its distressed asset business through asset acquisitions at attractive margins, and the Company has been actively pursuing these prospects These opportunities exist in all of FirstCity’s markets, but management is primarily focused on the U.S. market as a result of the rising number of financial institution closures — which in turn increases the supply of distressed assets and the opportunities for legacy asset acquisitions through government programs. Distressed asset acquisitions are generally subject to competitive bidding and negotiations, and the distressed asset markets in which FirstCity operates are highly competitive. As such, there can be no assurance as to the ultimate execution of any on transaction.

 

FirstCity also continues to pursue investments in privately-held middle-market companies through its special situations platform. We believe investment opportunities at attractive risk-adjusted returns are on the rise since these companies are facing increasing difficulty in accessing the capital markets due to the dislocation in the credit markets, and capital constraints and underwriting limitations experienced by commercial financial institutions. FirstCity continues to seek opportunities to provide investment capital to middle-market companies through flexible capital structuring arrangements.

 

FirstCity has $350.0 million of credit facility commitments available to finance its portfolio and asset purchases, capital investments in new ventures, and to provide for working capital to support our growth. At March 31, 2009, FirstCity’s maximum borrowing capacity under these credit commitments approximated $83.2 million (subject to borrowing base requirements of the respective credit facilities). These credit facilities are available to FirstCity through their maturity in November 2010, at which time management expects to negotiate for a maturity date extension. FirstCity is in compliance with all covenants and requirements set forth in the underlying credit agreements for these credit facilities.

 

Items effecting comparability of results for the first quarter of 2009 are as follows:

 

The Company recorded net provisions for loss of $1.7 million during the first quarter of 2009 compared to $4.1 million in the first quarter of 2008. The provisions were recorded to reflect declines in expected realization and delayed timing of asset collections. In the first quarter of 2009, $1.4 million of the net provisions were attributable to domestic assets and $0.2 million related to European assets. The provisions were split between consolidated portfolios ($1.1 million) and non-consolidated subsidiaries ($0.6 million) in the first quarter 2009.

 

Foreign currency exchange losses of $1.8 million were recorded during the first quarter of 2009 compared to $0.6 million of foreign currency exchange gains in the first quarter 2008. In the first quarter of 2009, $1.5 million of the foreign currency exchange losses were attributable to a 13% devaluation of the Mexican peso during the Company’s reporting period for its Mexican operations. However, since the end of March 2009, we have seen improvement in the value of the Mexican peso as it has since appreciated about 8%.

 

Total assets at the end of first quarter 2009 expanded to $378.2 million compared to $328.9 million at the end of fourth quarter 2008 as a result of FirstCity’s loan portfolio acquisitions and other investments during the quarter. The Company’s earning assets experienced a corresponding increase to $346.2 million at the end of March 2009 compared to $296.3 million at the end of December 2008.

 

2


 

Selected financial data for the first quarter of 2009:

 

Revenues in the first quarter of 2009 increased to $15.7 million compared to $9.5 million in the first quarter of 2008. The Company’s earnings in first quarter 2009 include $9.0 million of income and gains from Portfolio Assets; $1.7 million of interest income from loans receivable; $2.4 million of fee income attributable to our loan servicing platform, and $1.7 million of revenue and gains attributable to our majority-owned railroad operations. Increased revenue in the first quarter of 2009 is attributable primarily to increased collections on consolidated portfolios to $30.5 million in first quarter 2009 compared to $19.5 million in the first quarter of 2008, and FirstCity’s increased holdings in earning assets ($346.2 million at the end of March 2009 compared to $236.2 million at the end of March 2008).

 

Equity in earnings of unconsolidated subsidiaries was $0.1 million loss in the first quarter of 2009 compared to $2.8 million of net earnings in the first quarter of 2008. The decline is a result of FirstCity’s share of foreign currency exchange losses of $1.5 million in the first quarter of 2009 compared to $0.4 million of foreign currency exchange gains in the first quarter of 2008, and a decrease in total partnership collections to $19.6 million in first quarter of 2009 from $35.7 million in the first quarter of 2008.

 

Total operating expenses (excluding provision, interest and income tax expenses) for the first quarter of 2009 increased to $9.7 million from $9.0 million in the first quarter 2008 — attributed primarily to $0.6 million of consolidated foreign currency exchange losses recorded in the first quarter of 2009 compared to $0.2 million of consolidated gains in the first quarter of 2008.

 

Total interest expense dropped to $3.5 million in the first quarter of 2009 from $3.7 million in the first quarter of 2008 (even though FirstCity’s average debt holdings increased to $270.1 million at the end of March 2009 from $170.0 million at the end of March 2008). The interest expense decrease is attributable to the Company’s lower average cost of funds of 5.2% during the first quarter of 2009 compared to 8.7% from the same period a year ago.

 

Other Matters

 

Accounting Change

 

On January 1, 2009, the Company adopted SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51 (“SFAS 160”). SFAS 160 changed, among other things, the presentation requirements for noncontrolling (minority) interests. SFAS 160 requires the ownership interests in consolidated subsidiaries held by other parties (previously referred to as minority interests) to be presented in the balance sheet as a component of equity. As a result, the Company’s equity at March 31, 2009 includes $20.9 million of noncontrolling interests. In addition, pursuant to SFAS 160, we reclassified noncontrolling interests in the amount of $15.6 million from total liabilities to equity in our December 31, 2008 balance sheet.

 

3


 

Conference Call

 

A conference call will be held on Tuesday, May 12, 2009 at 9:00 a.m. Central Time to discuss first quarter 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 2008 Conference Call

 

Date:

Tuesday, May 12, 2009

 

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

800-706-7741

 

International

617-614-3471

 

 

 

 

Pass code

39250920

 

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).

 

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, including the risk factors and other risks that are described from time to time in the Company’s filings with the SEC including but not limited to its annual reports on Form 10-K, its quarterly reports on Form 10-Q, and its current reports on Form 8-K, filed with the SEC and available through the Company’s website, which contain a more detailed discussion of the Company’s business, including risks and uncertainties that may affect future results. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof. Information in this press release may be superseded by more recent information or statements, which may be disclosed in later press releases, subsequent filings with the SEC or otherwise. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company’s expectations with regard thereto or to reflect any change in events, conditions or circumstances on which any such forward-looking statements are based, in whole or in part.

 

4


 

FirstCity Financial Corporation

Summary of Operations

(In thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2009

 

2008

 

Revenues:

 

 

 

 

 

Servicing fees

 

$

2,392

 

$

2,200

 

Income from Portfolio Assets

 

9,043

 

4,935

 

Interest income from SBA loans

 

346

 

476

 

Interest income from loans receivable - affiliates

 

923

 

150

 

Interest income from loans receivable - other

 

429

 

275

 

Revenue from railroad operations

 

747

 

805

 

Other income

 

1,801

 

663

 

Total revenues

 

15,681

 

9,504

 

Expenses:

 

 

 

 

 

Interest and fees on notes payable to banks

 

3,044

 

3,683

 

Interest and fees on notes payable to affiliates

 

433

 

—

 

Salaries and benefits

 

5,054

 

5,030

 

Provision for loan and impairment losses

 

1,106

 

3,030

 

Asset-level expenses

 

1,237

 

1,561

 

Occupancy, data processing and other

 

3,406

 

2,455

 

Total expenses

 

14,280

 

15,759

 

Equity in net earnings (loss) of subsidiaries

 

(146

)

2,840

 

Earnings (loss) before income taxes

 

1,255

 

(3,415

)

Income taxes

 

(263

)

(191

)

Net earnings (loss)

 

992

 

(3,606

)

Less: net income attributable to the noncontrolling interests

 

348

 

(22

)

Net earnings (loss) attributable to FirstCity

 

$

644

 

$

(3,584

)

 

 

 

 

 

 

Basic earnings (loss) per common share are as follows:

 

 

 

 

 

Net earnings (loss) attributable to FirstCity stockholders

 

$

0.07

 

$

(0.34

)

Weighted average common shares outstanding

 

9,832

 

10,584

 

 

 

 

 

 

 

Diluted earnings (loss) per common share are as follows:

 

 

 

 

 

Net earnings (loss) attributable to FirstCity stockholders

 

$

0.07

 

$

(0.34

)

Weighted average common shares outstanding

 

9,833

 

10,584

 

 

Selected Unaudited Balance Sheet Data

 

 

 

March 31,

 

December 31,

 

 

 

2009

 

2008

 

Cash and cash equivalents

 

$

18,905

 

$

19,103

 

Restricted cash

 

1,277

 

1,217

 

Earning assets:

 

 

 

 

 

Portfolio acquisition and resolution assets:

 

 

 

 

 

Domestic

 

220,292

 

167,211

 

Latin America

 

39,685

 

42,426

 

Europe

 

45,910

 

48,612

 

Other

 

224

 

228

 

Special situations platform assets

 

40,052

 

37,786

 

Service fees receivable and other assets

 

11,902

 

12,354

 

Total assets

 

$

378,247

 

$

328,937

 

 

 

 

 

 

 

Notes payable to banks

 

$

284,852

 

$

242,889

 

Note payable to affiliate

 

8,658

 

8,658

 

Other liabilities

 

11,731

 

11,515

 

Total liabilities

 

305,241

 

263,062

 

Total equity

 

73,006

 

65,875

 

Total liabilities and equity

 

$

378,247

 

$

328,937

 

 

5


 

FirstCity Financial Corporation

Supplemental Information

(Dollars in thousands)

(Unaudited)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2009

 

2008

 

Summary Operating Statement Data for Each Segment

 

 

 

 

 

Portfolio Asset Acquisition and Resolution segment:

 

 

 

 

 

Revenues

 

$

13,297

 

$

8,233

 

Equity in net earnings (loss) of subsidiaries

 

(985

)

2,840

 

Expenses

 

(10,373

)

(10,137

)

Operating contribution before provision for loan and impairment losses

 

1,939

 

936

 

Provision for loan and impairment losses

 

1,106

 

3,030

 

Operating contribution, net of taxes

 

$

833

 

$

(2,094

)

 

 

 

 

 

 

Special Situations Platform segment:

 

 

 

 

 

Revenues

 

$

2,338

 

$

1,089

 

Equity in net earnings of subsidiaries

 

839

 

—

 

Expenses

 

(1,356

)

(817

)

Operating contribution before provision for loan and impairment losses

 

1,821

 

272

 

Provision for loan and impairment losses

 

—

 

—

 

Operating contribution, net of taxes

 

$

1,821

 

$

272

 

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2009

 

2008

 

Portfolio Asset Acquisition and Resolution segment:

 

 

 

 

 

Revenues and equity in earnings of investments by region:

 

 

 

 

 

Domestic

 

$

9,733

 

$

5,630

 

Latin America

 

919

 

3,035

 

Europe

 

1,652

 

2,395

 

Canada

 

8

 

13

 

Total

 

$

12,312

 

$

11,073

 

 

 

 

 

 

 

Revenues and equity in earnings of investments by source:

 

 

 

 

 

Equity earnings (loss)

 

$

(985

)

$

2,840

 

Income from Portfolio Assets

 

9,043

 

4,935

 

Servicing fees

 

2,392

 

2,200

 

Interest income from SBA loans

 

346

 

476

 

Interest income from affiliates

 

536

 

150

 

Interest income from loans receivable - other

 

207

 

13

 

Other

 

773

 

459

 

Total

 

$

12,312

 

$

11,073

 

 

 

 

 

 

 

Special Situations Platform segment:

 

 

 

 

 

Revenues and equity in earnings of investments by source:

 

 

 

 

 

Equity earnings

 

$

839

 

$

—

 

Interest income from loans receivable - affiliates

 

387

 

—

 

Interest income from loans receivable - other

 

221

 

262

 

Revenue from railroad operations

 

747

 

805

 

Other

 

983

 

22

 

Total

 

$

3,177

 

$

1,089

 

 

 

 

 

 

 

Number of personnel at period end:

 

 

 

 

 

Domestic, Portfolio Asset Acquisition and Resolution segment

 

84

 

75

 

Domestic, Special Situations Platform segment

 

22

 

19

 

Latin America

 

126

 

122

 

Corporate

 

31

 

34

 

Total personnel

 

263

 

250

 

 

6


 

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

 

2009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1st Quarter

 

$

70,238

 

$

—

 

$

—

 

$

70,238

 

$

64,907

 

$

6,418

 

$

2,400

 

$

73,725

 

2008

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4th Quarter

 

$

26,363

 

$

1,823

 

$

—

 

$

28,186

 

$

27,183

 

$

10,071

 

$

3,150

 

$

40,404

 

3rd Quarter

 

2,912

 

—

 

1,576

 

4,488

 

3,241

 

6,040

 

—

 

9,281

 

2nd Quarter

 

28,427

 

—

 

8,314

 

36,741

 

33,448

 

15,443

 

16,756

 

65,647

 

1st Quarter

 

6,692

 

—

 

13,207

 

19,899

 

8,435

 

1,453

 

—

 

9,888

 

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

 

Total Year 2006

 

$

136,596

 

$

102,158

 

$

58,236

 

$

296,990

 

$

144,048

 

$

28,181

 

$

—

 

$

172,229

 

 

Portfolio Asset Acquisition and Resolution segment:

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2009

 

2008

 

Aggregate purchase price of portfolios acquired:

 

 

 

 

 

Acquisition partnerships

 

 

 

 

 

Domestic

 

$

70,238

 

$

6,693

 

Latin America

 

—

 

13,207

 

Europe

 

—

 

—

 

Total

 

$

70,238

 

$

19,900

 

 

 

 

Purchase

 

FirstCity’s

 

 

 

Price

 

Investment

 

Historical Acquisitions of Portfolios - Annual:

 

 

 

 

 

 

 

Three months ended March 31, 2009

 

$

70,238

 

$

64,907

 

2008

 

89,314

 

72,307

 

2007

 

214,333

 

126,714

 

2006

 

296,990

 

144,048

 

2005

 

146,581

 

71,405

 

2004

 

174,139

 

59,762

 

 

 

 

March 31,

 

December 31,

 

 

 

2009

 

2008

 

Portfolio acquisition and resolution assets by region:

 

 

 

 

 

Domestic

 

$

220,292

 

$

167,211

 

Latin America

 

39,685

 

42,426

 

Europe

 

45,910

 

48,612

 

Canada

 

224

 

228

 

Total

 

$

306,111

 

$

258,477

 

 

7


 

FirstCity Financial Corporation

Supplemental Information

(Dollars in thousands)

(Unaudited)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2009

 

2008

 

Analysis of Equity Investments

 

 

 

 

 

FirstCity’s average investment:

 

 

 

 

 

Domestic, Portfolio Asset Acquisition and Resolution segment

 

$

14,824

 

$

23,696

 

Domestic, Special Situations Platform segment

 

1,385

 

—

 

Latin America

 

17,653

 

22,890

 

Europe

 

13,004

 

30,526

 

Europe-Servicing subsidiaries

 

21,938

 

7,153

 

Latin America-Servicing subsidiaries

 

2,969

 

4,925

 

Total

 

$

71,773

 

$

89,190

 

 

 

 

 

 

 

FirstCity’s share of equity earnings (losses):

 

 

 

 

 

Domestic, Portfolio Asset Acquisition and Resolution segment

 

$

1

 

$

266

 

Domestic, Special Situations Platform segment

 

839

 

—

 

Latin America

 

(1,644

)

369

 

Europe

 

752

 

1,686

 

Europe-Servicing subsidiaries

 

169

 

316

 

Latin America-Servicing subsidiaries

 

(263

)

203

 

Total

 

$

(146

)

$

2,840

 

 

 

 

 

 

 

Selected Other Data:

 

 

 

 

 

Average investment in consolidated portfolio assets and loans receivable:

 

 

 

 

 

Domestic, Portfolio Asset Acquisition and Resolution segment

 

$

170,815

 

$

120,750

 

Domestic, Special Situations Platform segment

 

28,215

 

5,627

 

Latin America

 

19,467

 

6,998

 

Europe

 

12,041

 

9,107

 

Canada

 

222

 

350

 

Total

 

$

230,760

 

$

142,832

 

 

 

 

 

 

 

Income from consolidated portfolio assets and loans receivable:

 

 

 

 

 

Domestic, Portfolio Asset Acquisition and Resolution segment

 

$

8,772

 

$

4,973

 

Domestic, Special Situations Platform segment

 

608

 

262

 

Latin America

 

776

 

321

 

Europe

 

576

 

276

 

Canada

 

8

 

13

 

Total

 

$

10,740

 

$

5,845

 

 

 

 

 

 

 

Servicing fee revenues:

 

 

 

 

 

Domestic partnerships:

 

 

 

 

 

Servicing fee revenue

 

$

582

 

$

362

 

Average servicing fee %

 

13.1

%

3.2

%

Latin American partnerships:

 

 

 

 

 

Servicing fee revenue

 

$

1,736

 

$

1,848

 

Average servicing fee %

 

40.3

%

16.3

%

Total Service Fees-Portfolio Assets:

 

 

 

 

 

Servicing fee revenue

 

$

2,318

 

$

2,210

 

Average servicing fee %

 

26.5

%

9.8

%

Service Fees-SBA loans:

 

$

74

 

$

(10

)

Total Service Fees

 

$

2,392

 

$

2,200

 

 

 

 

 

 

 

Collections:

 

 

 

 

 

Domestic partnerships

 

$

4,447

 

$

11,197

 

Latin American partnerships

 

6,090

 

11,764

 

European partnerships

 

9,064

 

12,768

 

Partnership collections

 

19,601

 

35,729

 

Domestic consolidated

 

28,865

 

18,542

 

Latin American consolidated

 

437

 

486

 

European consolidated

 

1,162

 

461

 

Consolidated collections

 

30,464

 

19,489

 

Total Collections

 

$

50,065

 

$

55,218

 

 

 

 

 

 

 

Servicing portfolio (face value) at period end:

 

 

 

 

 

Domestic

 

$

564,401

 

$

556,774

 

Latin America

 

918,214

 

1,596,845

 

Europe

 

1,267,660

 

1,174,578

 

Total

 

$

2,750,275

 

$

3,328,197

 

 

8


 

FirstCity Financial Corporation

Supplemental Information

(Dollars in thousands)

(Unaudited)

 

 

 

Three Months Ended

 

Illustration of the Effects of Foreign

 

March 31,

 

Currency Fluctuations

 

2009

 

2008

 

Net earnings (loss) to common stockholders

 

$

644

 

$

(3,584

)

Foreign currency gains (losses), net:

 

 

 

 

 

Euro

 

(441

)

225

 

Mexican Peso

 

(1,451

)

246

 

Argentine Peso

 

(41

)

(3

)

Canadian Dollar

 

(5

)

(15

)

Chilean Peso

 

124

 

104

 

 

 

 

 

 

 

Exchange rate at valuation date:

 

 

 

 

 

Euro

 

0.76

 

0.63

 

Mexican Peso

 

14.33

 

10.70

 

Argentine Peso

 

3.72

 

3.16

 

Canadian Dollar

 

1.25

 

1.02

 

Chilean Peso

 

586.36

 

440.00

 

 

9


 

FirstCity Financial Corporation

Schedule of Estimated Unrealized Gross Profit from Portfolio Assets

March 31, 2009

(Unaudited)

 

 

 

Basis in Portfolio Assets (1), (4)

 

($ in 000’s)

 

12/31/2007

 

12/31/2008

 

03/31/2009

 

Domestic

 

$

151,802

 

153,148

 

194,676

 

Europe

 

40,340

 

29,555

 

27,094

 

Latin America

 

26,844

 

29,867

 

27,213

 

Total

 

$

218,987

 

212,570

 

248,984

 

 

 

 

Estimated Remaining Collections (2)

 

 

 

12/31/2007

 

12/31/2008

 

03/31/2009

 

Domestic

 

$

195,845

 

217,347

 

280,444

 

Europe

 

52,617

 

39,341

 

37,237

 

Latin America

 

68,900

 

78,211

 

67,274

 

Total

 

$

317,363

 

334,899

 

384,955

 

 

 

 

Estimated Unrealized Gross Profit (3)

 

 

 

12/31/2007

 

12/31/2008

 

03/31/2009

 

Domestic

 

$

44,043

 

64,199

 

85,768

 

Europe

 

12,278

 

9,787

 

10,143

 

Latin America

 

42,056

 

48,344

 

40,060

 

Total

 

$

98,376

 

122,329

 

135,971

 

 

 

 

Estimated Unrealized Gross Profit %

 

 

 

12/31/2007

 

12/31/2008

 

03/31/2009

 

Domestic

 

22.49

%

29.54

%

30.58

%

Europe

 

23.33

%

24.88

%

27.24

%

Latin America

 

61.04

%

61.81

%

59.55

%

Total

 

31.00

%

36.53

%

35.32

%

 

 

This schedule provides selected information related to the Company’s ownership interests in consolidated and non-consolidated 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:

 

 

 

12/31/2007

 

12/31/2008

 

03/31/2009

 

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

 

$

122,001

 

148,213

 

194,407

 

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)

 

(4,474

)

(11,460

)

(16,079

)

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)

 

101,460

 

75,817

 

70,656

 

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

 

$

218,987

 

212,570

 

248,984

 

 

10