Discontinued Operations

3 Months Ended

Mar. 31, 2013

Discontinued Operations

Discontinued Operations

(3)  Discontinued Operations

On January 22, 2013, FirstCity Business Lending Corporation, an indirect wholly-owned subsidiary of the Company, entered into a stock purchase agreement with CS ABL Holdings, LLC to sell all of the common stock and the preferred stock of American Business Lending, Inc. (“ABL”) to CS ABL Holdings, LLC, a direct wholly-owned subsidiary of CapitalSpring Finance Company, LLC, for a total estimated purchase price of approximately $11.2 million.  At December 31, 2012, the carrying value of the Company’s investment was $7.5 million.  The sale is subject to the approval of the U.S. Small Business Administration, and the satisfaction of other conditions of the stock purchase agreement.  ABL is included in the Company’s Portfolio Asset Acquisition and Resolution business segment. The table below represents the carrying amounts of the major classes of ABL’s assets and liabilities:

American Business Lending, Inc.

Balance Sheets

(Dollars in thousands)

	March 31,		December 31,
	2013		2012
Assets
Cash and cash equivalents	$	297	$	594
Restricted cash	1,273		1,154
Loans receivable - SBA held for sale	3,588		1,087
Loans receivable - SBA held for investment, net of allowance for loan losses of $559 and $518	20,392		19,372
Service fees receivable	58		55
Servicing assets - SBA loans	1,122		1,131
Other assets	709		750
Total Assets	$	27,439	$	24,143
Liabilities
Notes payable to bank	$	18,290	$	15,214
Other liabilities	1,606		1,450
Total Liabilities	$	19,896	$	16,664

The major components of income from discontinued operations in the consolidated statements of earnings are as follows:

American Business Lending, Inc.

Statements of Earnings

(Dollars in thousands)

	March 31,		March 31,
	2013		2012
Revenues	$	778	$	1,100
Costs and expenses	666		886
Earnings before income taxes	112		214
Income tax expense	1		1
Income from discontinued operations	$	111	$	213

ABL has a $25 million revolving loan facility with Wells Fargo Capital Finance (“WFCF”) that provides funding for ABL to finance and acquire SBA 7(a) loans.  This loan facility is secured by substantially all of ABL’s assets and matures January 31, 2015.  Outstanding borrowings bear interest at alternate annual rates equal to (i) LIBOR rate plus 3.50% for LIBOR rate loans; (ii) base rate (higher of LIBOR rate or Wells Fargo prime rate) plus 0.75% for base rate loans; or (iii) base rate plus 0.75%.  FirstCity provides WFCF with an unconditional limited guaranty for all of ABL’s obligations under this facility up to a maximum amount of $5.0 million plus enforcement costs.