Investments in Unconsolidated Subsidiaries

6 Months Ended

Jun. 30, 2012

Investments in Unconsolidated Subsidiaries

Investments in Unconsolidated Subsidiaries

(6)  Investments in Unconsolidated Subsidiaries

The Company has investments in Acquisition Partnerships and various servicing and operating entities that are accounted for under the equity method of accounting (refer to Note 1). The condensed combined financial position and results of operations of the Acquisition Partnerships (which include our U.S. and foreign Acquisition Partnerships) and the servicing and operating entities (collectively, the “Equity Investees”), are summarized as follows:

Condensed Combined Balance Sheets

	June 30,		December 31,
	2012		2011
	(Dollars in thousands)
Acquisition Partnerships:
Assets	$	494,389	$	450,189
Liabilities	$	33,626	$	39,401
Net equity	460,763		410,788
	$	494,389	$	450,189
Servicing and operating entities:
Assets	$	174,856	$	163,647
Liabilities	$	100,719	$	86,269
Net equity	74,137		77,378
	$	174,856	$	163,647
Total:
Assets	$	669,245	$	613,836
Liabilities	$	134,345	$	125,670
Net equity	534,900		488,166
	$	669,245	$	613,836
Equity investment in Acquisition Partnerships	$	62,898	$	59,952
Equity investment in servicing and operating entities	40,966		49,441
	$	103,864	$	109,393

Condensed Combined Summary of Operations

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2012			2011			2012		2011
	(Dollars in thousands)
Acquisition Partnerships:
Revenues	$	18,398		$	12,092		$	45,352	$	25,360
Costs and expenses	19,808			7,336			25,511		13,146
Net earnings (loss)	$	(1,410	)	$	4,756		$	19,841	$	12,214
Servicing and operating entities:
Revenues	$	23,634		$	27,410		$	49,693	$	49,423
Costs and expenses	21,466			20,568			42,779		40,476
Net earnings	$	2,168		$	6,842		$	6,914	$	8,947
Equity income (loss) from Acquisition Partnerships	$	861		$	(7	)	$	3,189	$	577
Equity income from servicing and operating entities	1,220			3,290			3,359		4,577
	$	2,081		$	3,283		$	6,548	$	5,154

At June 30, 2012 and December 31, 2011, the Acquisition Partnerships’ total carrying value of loans accounted for under non-accrual methods of accounting (i.e. cost-recovery or cash basis method) approximated $413.0 million and $377.7 million, respectively.

The combined assets and equity of the Equity Investees, and the Company’s carrying value of its equity investments in the Equity Investees, are summarized by geographic region below.

	June 30,		December 31,
	2012		2011
	(Dollars in thousands)
Combined assets of the Equity Investees:
Domestic:
Acquisition Partnerships	$	398,082	$	349,529
Operating entities	58,113		53,256
Latin America:
Acquisition Partnerships	96,307		100,660
Servicing entities	1,889		1,857
Europe - servicing entities	114,854		108,534
	$	669,245	$	613,836
Combined equity of the Equity Investees:
Domestic:
Acquisition Partnerships	$	375,631	$	325,557
Operating entities	18,336		20,515
Latin America:
Acquisition Partnerships	85,132		85,231
Servicing entities	711		763
Europe - servicing entities	55,090		56,100
	$	534,900	$	488,166
Company’s carrying value of its investments in the Equity Investees:
Domestic:
Acquisition Partnerships	$	58,489	$	55,612
Operating entities	11,832		12,508
Latin America:
Acquisition Partnerships	4,409		4,340
Servicing entities	2,760		2,758
Europe - servicing entities (1)	26,374		34,175
	$	103,864	$	109,393

(1)Includes a $6.1 million non-cash reduction to the carrying value of FirstCity’s equity-method investment in a European servicing entity in June 2012 (see Note 3 for additional information).

Revenues and net earnings (losses) of the Equity Investees, and the Company’s share of equity income (loss) of those entities, are summarized by geographic region below. The tables below include individual entities and combined entities under common management that are considered to be significant Equity Investees of FirstCity at June 30, 2012.

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2012			2011			2012			2011
	(Dollars in thousands)
Revenues of the Equity Investees:
Domestic:
Combined Värde Acquisition Partnerships	$	15,071		$	7,813		$	37,668		$	16,068
Other Acquisition Partnerships	46			211			75			295
Other operating entities	7,807			11,040			15,236			19,435
Latin America:
Acquisition Partnerships	3,281			3,910			7,609			8,706
Servicing entity	2,523			2,863			4,796			5,473
Europe:
Acquisition Partnerships	—			158			—			291
MCS et Associes (servicing entity)	12,241			12,356			27,358			22,370
Other servicing entities	1,063			1,151			2,303			2,145
	$	42,032		$	39,502		$	95,045		$	74,783
Net earnings (loss) of the Equity Investees:
Domestic:
Combined Värde Acquisition Partnerships	$	8,294		$	466		$	21,922		$	6,395
Other Acquisition Partnerships	(172		)	(334		)	(999		)	(461		)
Other operating entities	559			3,327			564			3,637
Latin America:
Acquisition Partnerships	(9,532		)	4,581			(1,082		)	6,244
Servicing entity	307			539			482			859
Europe:
Acquisition Partnerships	—			43			—			36
MCS et Associes (servicing entity)	1,237			2,932			5,607			4,345
Other servicing entities	65			44			261			106
	$	758		$	11,598		$	26,755		$	21,161
Company’s equity income (loss) from the Equity Investees:
Domestic:
Combined Värde Acquisition Partnerships	$	1,239		$	46		$	3,763		$	1,028
Other Acquisition Partnerships	(78		)	(158		)	(483		)	(208		)
Other operating entities	291			1,622			226			1,774
Latin America:
Acquisition Partnerships	(300		)	84			(91		)	(272		)
Servicing entity	154			270			241			430
Europe:
Acquisition Partnerships	—			21			—			29
MCS et Associes (servicing entity)	759			1,387			2,828			2,347
Other servicing entities	16			11			64			26
	$	2,081		$	3,283		$	6,548		$	5,154

At June 30, 2012, the Company had $10.6 million in Euro-denominated debt for the purpose of hedging a portion of the Company’s net equity investments in Europe. Refer to Note 10 for additional information.