SOURCE: FirstCity Financial Corporation

February 10, 2006 07:30 ET

FirstCity Financial (NASDAQ: FCFC) Reports Fourth Quarter 2005 Earnings

WACO, TX -- (MARKET WIRE) -- February 10, 2006 -- (NASDAQ: FCFC)

Highlights of the Quarter:

--  FirstCity reports 4th quarter 2005 earnings of $1,948,137, or $.16 per
    diluted share.
    
--  FirstCity invested $35 million in portfolio assets for the quarter.
    
--  FirstCity reports continued earning asset growth of $25 million for
    the quarter.
    
Components of the quarterly results are detailed below (dollars in
 thousands except per share data):


                                 Three Months Ended    Twelve Months Ended
                                     December 31,          December 31,
                                   2005       2004       2005       2004
                                 --------   --------   --------   --------
                                     (unaudited)           (unaudited)
Portfolio Asset Acquisition and
 Resolution                      $  3,517   $  4,310   $ 13,780   $ 14,437
Corporate interest                      -       (374)         -     (3,378)
Corporate overhead                 (1,500)    (1,997)    (5,702)    (6,048)
                                 --------   --------   --------   --------
Earnings from continuing
 operations                         2,017      1,939      8,078      5,011
Earnings (loss) from
 discontinued operations, net
 of taxes                             (69)    50,639        153     58,623
                                 --------   --------   --------   --------
Net earnings to common
 stockholders                    $  1,948   $ 52,578   $  8,231   $ 63,634
                                 ========   ========   ========   ========
Diluted earnings per common
 share                           $   0.16   $   4.41   $   0.69   $   5.37
                                 ========   ========   ========   ========
Earnings from continuing operations of $2 million for the quarter reflected strong collections of $70 million as well as $793,000 of foreign currency gains for the quarter.

James T. Sartain, President and CEO said, "We are pleased with the strong purchases in the fourth quarter and the resulting growth in earning assets. The pipeline for prospective investments remains strong and the company is well positioned to take advantage of its strong liquidity to continue the growth of the asset base."

Portfolio Asset Acquisition and Resolution

FirstCity purchased $82.7 million in portfolio assets during the fourth quarter of 2005. Purchases consisted of thirteen portfolios; two in Europe, two in South America and nine in the United States. Invested equity of $35 million for the quarter advanced total year investments to $71.4 million.

Portfolio purchases are detailed below (in millions):

                                               Latin              Invested
                         Domestic    Europe   America    Total     Equity
                           -----     -----     -----     ------     -----
                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
                           -----     -----     -----     ------     -----
   YTD 2005                $93.4     $37.2     $16.0     $146.6     $71.4
                           =====     =====     =====     ======     =====
                2004
4th Quarter                $23.2     $   -     $22.7     $ 45.9     $11.1
3rd  Quarter                26.6         -       9.5       36.1      27.1
2nd Quarter                 34.9       9.8      40.7       85.4      18.5
1st Quarter                  6.5         -       0.2        6.7       3.1
                           -----     -----     -----     ------     -----
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 $3.2
  million in partnerships during 2005 and $3.4 million in partnerships
  during 2003.
Operating contribution from the portfolio asset acquisition business for the fourth quarter was $3.5 million. The earnings were comprised of revenues of $6.4 million and $3.1 million of equity in earnings of investments, net of $6.2 million in expenses and $224,000 of net recoveries of loan and impairment losses. The business generated 56% of the revenues (including equity in earnings of investments) from domestic investments, 32% from investments in Latin America and 12% from investments in Europe. The major components of revenue for the quarter included servicing fees of $2.8 million, gain on resolution of portfolio assets of $1.1 million, interest income of $1.5 million and other income of $1.0 million.

Operating contribution from the portfolio asset acquisition business for the fourth quarter included net foreign currency gains of $793,000 comprised of $690,000 in Mexican peso gains and $103,000 of Euro gains.

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


                                    Three Months Ended  Twelve Months Ended
                                        December 31,       December 31,
Illustration of the Effects of
 Currency Fluctuations (dollars in     2005     2004      2005     2004
 thousands)                             (unaudited)         (unaudited)
                                      -------  -------   -------  -------
Net earnings to Common Stockholders
 as reported                          $ 1,948  $52,578   $ 8,231  $63,634
Mexican peso gains                        690      288     1,470      247
Euro gains (losses)                       103     (178)      793      675
                                      -------  -------   -------  -------

Peso exchange rate at valuation date    10.78    11.30
Euro exchange rate at valuation date     0.84     0.75
Conference Call

A conference call will be held today at 9:00 a.m. Central time to discuss fourth quarter 2005 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 2005
                    Conference Call
     Date:         Friday, February 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        866-578-5747
                   International   617-213-8054
                   Pass code -     91948358

     Replay        Domestic        888-286-8010
                   International   617-801-6888
                   Pass code -     82525743
The replay will be available until Friday, February 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, 2004, filed with the SEC on March 22, 2005, 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."



                    FirstCity Financial Corporation
                          Summary of Operations
                 (In thousands, except per share data)
                             (Unaudited)

                                Three Months Ended         Year Ended
                                    December 31,          December 31,
                                    2005       2004      2005        2004
                                 --------   --------   --------   --------
Revenues:
      Servicing fees
       from affiliates            $ 2,782    $ 3,671   $ 11,754   $ 13,747
      Gain on resolution
       of Portfolio Assets          1,072        811      5,438      1,649
      Interest income
       from affiliates                545        570      1,838      2,263
      Loan interest income            921        483      2,824        823
      Other income                  1,160        356      2,239      2,659
                                 --------   --------   --------   --------
           Total revenues           6,480      5,891     24,093     21,141
                                 --------   --------   --------   --------
Expenses:
      Interest and fees on
       notes payable to
       affiliates                      12          8         39         65
      Interest and fees on
       notes payable - other        1,344      1,266      3,963      6,846
      Interest on shares subject
       to mandatory redemption          -         66          -        265
      Salaries and benefits         3,787      4,912     15,200     16,139
      Provision (recovery) for
       loan and impairment
       losses                        (224)         7        212         30
      Occupancy, data processing,
       communication and other      2,613      2,186      8,187      7,560
                                 --------   --------   --------   --------
           Total expenses           7,532      8,445     27,601     30,905
                                 --------   --------   --------   --------
           Equity in earnings
            of investments          3,139      4,443     12,013     14,913
                                 --------   --------   --------   --------
Earnings from continuing
 operations before income
 taxes and minority interest        2,087      1,889      8,505      5,149
    Income taxes                      (53)        70       (374)       (75)
    Minority interest                 (17)       (20)       (53)       (63)
                                 --------   --------   --------   --------
Earnings from continuing
 operations                         2,017      1,939      8,078      5,011
                                 --------   --------   --------   --------
Discontinued operations
    Earnings (loss) from
     operations of
     discontinued
     components                      (100)    51,716       (478)    60,382
    Income taxes                       31     (1,077)       631     (1,759)
                                 --------   --------   --------   --------
    Earnings (loss) from
     discontinued
     operations                       (69)    50,639        153     58,623
                                 --------   --------   --------   --------
Net earnings                      $ 1,948   $ 52,578    $ 8,231   $ 63,634
                                 ========   ========   ========   ========

Basic earnings per
 common share are
 as follows:
   Earnings from continuing
    operations                     $ 0.18     $ 0.17     $ 0.72     $ 0.45
   Discontinued operations        $ (0.01)    $ 4.50     $ 0.01     $ 5.22
   Net earnings per common
    share                          $ 0.17     $ 4.67     $ 0.73     $ 5.67
   Wtd. avg. common shares
    outstanding                    11,306     11,253     11,285     11,230

Diluted earnings per
 common share are
 as follows:
   Earnings from continuing
    operations                     $ 0.17     $ 0.16     $ 0.68     $ 0.42
   Discontinued operations        $ (0.01)    $ 4.25     $ 0.01     $ 4.95
   Net earnings per common
    share                          $ 0.16     $ 4.41     $ 0.69     $ 5.37
   Wtd. avg. common shares
    outstanding                    12,009     11,913     12,012     11,840


             Selected Unaudited Balance Sheet Data

                                             December 31,     December 31,
                                                  2005             2004
                                                ---------       ---------
      Cash                                       $ 12,901         $ 9,724
      Portfolio Assets, net                        49,346          37,952
      Loans receivable                             19,606          21,255
      Equity investments                           83,785          57,815
      Deferred tax asset, net                      20,101          20,101
      Service fees receivable
       and other assets                             8,973          10,193
      Discontinued mortgage assets
       held for sale                                  157           1,817
                                                ---------       ---------
         Total assets                           $ 194,869       $ 158,857
                                                =========       =========

      Notes payable to affiliates                   $ 606           $ 491
      Notes payable - other                        89,653          50,812
      Minority interest and other liabilities       5,578           6,048
      Liabilities from discontinued
       consumer operations                            121           9,033
      Liabilities from discontinued
       mortgage operations                              -              50
                                                ---------       ---------
         Total liabilities                         95,958          66,434
         Total equity                              98,911          92,423
                                                ---------       ---------
         Total liabilities and equity           $ 194,869       $ 158,857
                                                =========       =========


               FirstCity Financial Corporation
                   Supplemental Information
                    (Dollars in thousands)
                        (Unaudited)

                                Three Months Ended         Year Ended
                                   December 31,            December 31,
                                 2005        2004        2005       2004
                                -------   --------    --------    --------
Portfolio Asset Acquisition
 and Resolution:
    Summary Operating
     Statement Data
        Revenues                $ 6,340    $ 5,758    $ 23,591    $ 20,537
        Equity in earnings
         of investments           3,139      4,443      12,013      14,913
        Expenses                 (6,186)    (5,884)    (21,612)    (20,983)
                                -------   --------    --------    --------
        Operating contribution
         before provision for
         loan and impairment
         losses                   3,293      4,317      13,992      14,467
        Provision (recovery) for
         loan and impairment
         losses                    (224)         7         212          30
                                -------   --------    --------    --------
        Operating contribution,
         net of direct taxes    $ 3,517    $ 4,310    $ 13,780    $ 14,437
                                =======   ========    ========    ========
    Aggregate purchase price of
     portfolios acquired:
      Acquisition partnerships
        Domestic               $ 32,930   $ 23,227    $ 93,410    $ 91,300
        Latin America            12,611     22,735      15,999      73,002
        Europe                   37,172          -      37,172       9,837
                                -------   --------    --------    --------
           Total               $ 82,713   $ 45,962   $ 146,581   $ 174,139
                                =======   ========    ========    ========

                                              Purchase         FirstCity's
    Historical Acquisitions - Annual:           Price           Investment
                                              ---------          ---------
        2005                                  $ 146,581           $ 71,405
        2004                                    174,139             59,762
        2003                                    129,192             22,944
        2002                                    171,769             16,717
        2001                                    224,927             24,319

                                           December 31,       December 31,
                                                 2005               2004
                                              ---------          ---------
    Portfolio acquisition and
     resolution assets by region:
        Domestic                              $ 105,938           $ 77,280
        Latin America                            19,764             20,876
        Europe                                   27,699             19,859
                                              ---------          ---------
           Total                              $ 153,401          $ 118,015
                                              =========          =========

                               Three Months Ended          Year Ended
                                  December 31,             December 31,
                                  2005       2004       2005         2004
                                -------   --------    --------    --------
    Revenues and equity in
     earnings of investments
      by region:
       Domestic                 $ 5,290    $ 5,864    $ 20,707    $ 18,899
       Latin America              3,050      2,576      10,508      10,189
       Europe                     1,139      1,761       4,389       6,362
                                -------   --------    --------    --------
          Total                 $ 9,479   $ 10,201    $ 35,604    $ 35,450
                                =======   ========    ========    ========

    Revenues and equity in
     earnings of investments
     by source:
       Equity earnings          $ 3,139    $ 4,443    $ 12,013    $ 14,913
       Servicing fees             2,782      3,671      11,754      13,747
       Interest income - loans    1,466      1,052       4,662       3,085
       Gain on resolution
        of Portfolio Assets       1,072        811       5,438       1,649
       Other                      1,020        224       1,737       2,056
                                -------   --------    --------    --------
          Total                 $ 9,479   $ 10,201    $ 35,604    $ 35,450
                                =======   ========    ========    ========


                         FirstCity Financial Corporation
                            Supplemental Information
                             (Dollars in thousands)
                                   (Unaudited)

                                Three Months Ended         Year Ended
                                   December 31,            December 31,
                                 2005        2004       2005        2004
                               --------    --------  ---------   ---------
Analysis of Equity Investments
 in Acquisition Partnerships:
FirstCity's Average investment
 in Acquisition Partnerships
      Domestic                 $ 48,771    $ 36,885   $ 39,612    $ 36,941
      Latin America               2,302       1,268      1,893       1,141
      Europe                     18,977      18,087     18,427      17,832
                               --------    --------  ---------   ---------
        Total                  $ 70,050    $ 56,240   $ 59,932    $ 55,914
                               ========    ========  =========   =========

FirstCity Share of
 Equity Earnings:
      Domestic                  $ 2,033     $ 2,942    $ 8,041     $ 9,905
      Latin America                  70        (143)        62        (992)
      Europe                      1,036       1,644      3,910       6,000
                               --------    --------  ---------   ---------
        Total                   $ 3,139     $ 4,443   $ 12,013    $ 14,913
                               ========    ========  =========   =========

Selected other data:
Average investment in wholly
 owned portfolio assets
 and loans receivable:
      Domestic                 $ 48,823    $ 36,738   $ 42,567    $ 19,028
      Latin America              16,629      17,893     18,068      16,568
      Europe                        953         173        652       1,112
                               --------    --------  ---------   ---------
        Total                  $ 66,405    $ 54,804   $ 61,287    $ 36,708
                               ========    ========  =========   =========

Income from wholly owned
 portfolio assets and loans
 receivable:
      Domestic                  $ 2,062     $ 1,344    $ 8,506     $ 2,653
      Latin America                 463         504      1,559       2,017
      Europe                         13          15         35          64
                               --------    --------  ---------   ---------
        Total                   $ 2,538     $ 1,863   $ 10,100     $ 4,734
                               ========    ========  =========   =========

Servicing fee revenues:
      Domestic partnerships:
        Servicing fee
         revenue                  $ 853     $ 1,405    $ 3,578     $ 4,858
        Average servicing
         fee %                      2.9%        4.5%       3.5%        4.0%
      Latin American partnerships:
        Servicing fee
         revenue                $ 1,881     $ 2,184    $ 7,817     $ 8,557
        Average servicing
         fee %                     12.0%       19.4%      12.1%       11.8%
      Incentive service
       fees                        $ 48        $ 82      $ 359       $ 332
      Total Service Fees:
        Servicing fee
         revenue                $ 2,782     $ 3,671   $ 11,754    $ 13,747
        Average servicing
         fee %                      6.2%        8.6%       7.1%        7.1%

Collections:
      Domestic                 $ 29,460    $ 31,236  $ 101,468   $ 120,956
      Latin America              15,642      11,268     64,566      72,716
      Europe                     15,191      19,823     56,654      90,397
                               --------    --------  ---------   ---------
        Subtotal                 60,293      62,327    222,688     284,069
      Wholly-owned                9,512       3,553     29,247       7,864
                               --------    --------  ---------   ---------
          Total                $ 69,805    $ 65,880  $ 251,935   $ 291,933
                               ========    ========  =========   =========

Servicing portfolio (face value)
      Domestic                $ 532,473   $ 465,685
      Latin America           1,389,698   1,478,537
      Europe                    866,502     915,951
                            ----------- -----------
        Total               $ 2,788,673 $ 2,860,173
                            =========== ===========

Number of personnel at period end:
      Domestic                       64          65
      Latin America                 120         139
      Corporate                      30          33
                            ----------- -----------
        Total personnel             214         237
                            =========== ===========
    

Contact Information

  • Contact:
    Suzy W. Taylor
    866-652-1810