WACO, Texas, May 12, 2009 (GLOBE NEWSWIRE) -- FirstCity Financial Corporation (Nasdaq:FCFC)
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.
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.
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.
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).
The FirstCity Financial Corporation logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4413
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.
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, Dec. 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
========= =========
FirstCity Financial Corporation
Supplemental Information
(Dollars in thousands)
(Unaudited)
Three Months Ended
March 31,
Summary Operating Statement Data for Each Segment 2009 2008
------------------------------------------------- -------- --------
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,
Portfolio Asset Acquisition and Resolution 2009 2008
------------------------------------------ -------- --------
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
======== ========
FirstCity Financial Corporation
Supplemental Information
(Dollars in thousands)
(Unaudited)
Portfolio Purchases and Other Investments:
------------------------------------------
Portfolio Purchases
------------------------------------------
Latin
Domestic Europe America Total
--------- --------- --------- ---------
2009
1st Quarter $ 70,238 $ -- $ -- $ 70,238
========= ========= ========= =========
2008
4th Quarter $ 26,363 $ 1,823 $ -- $ 28,186
3rd Quarter 2,912 -- 1,576 4,488
2nd Quarter 28,427 -- 8,314 36,741
1st Quarter 6,692 -- 13,207 19,899
--------- --------- --------- ---------
Total Year 2008 $ 64,394 $ 1,823 $ 23,097 $ 89,314
========= ========= ========= =========
Total Year 2007 $ 121,679 $ 23,199 $ 69,455 $ 214,333
========= ========= ========= =========
Total Year 2006 $ 136,596 $ 102,158 $ 58,236 $ 296,990
========= ========= ========= =========
FirstCity
FirstCity Investment
FirstCity Investment in Special
Investment in Other Situations Total
--------- --------- --------- ---------
2009
1st Quarter $ 64,907 $ 6,418 $ 2,400 $ 73,725
========= ========= ========= =========
2008
4th Quarter $ 27,183 $ 10,071 $ 3,150 $ 40,404
3rd Quarter 3,241 6,040 -- 9,281
2nd Quarter 33,448 15,443 16,756 65,647
1st Quarter 8,435 1,453 -- 9,888
--------- --------- --------- ---------
Total Year 2008 $ 72,307 $ 33,007 $ 19,906 $ 125,220
========= ========= ========= =========
Total Year 2007 $ 126,714 $ 10,476 $ 11,530 $ 148,720
========= ========= ========= =========
Total Year 2006 $ 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, Dec. 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
========= =========
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
=========== ===========
FirstCity Financial Corporation
Supplemental Information
(Dollars in thousands)
(Unaudited)
Three Months Ended
March 31,
Illustration of the Effects of Foreign ------------------
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
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 3/31/2009
-------------------------------------------------------------------
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 3/31/2009
---------------------------------
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 3/31/2009
---------------------------------
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 3/31/2009
---------------------------------
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%
=================================
A graphic accompanying this release is available at http://media.globenewswire.com/cache/9623/file/6870.pdf