SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) April 29, 1998
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FIRSTCITY FINANCIAL CORPORATION
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 1-7614 76-0243729
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(STATE OR OTHER JURISDICTION (COMMISSION FILE NUMBER) (IRS EMPLOYER
OF INCORPORATION) IDENTIFICATION NO.)
6400 Imperial Drive, Waco, TX 76712
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code (254) 751-1750
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HOFS02...:\92\54892\0010\1612\FRM4298L.080
<PAGE>
INFORMATION TO BE INCLUDED IN THE REPORT
ITEM 5. OTHER EVENTS
Press Release of April 29, 1998.
ITEM 7. EXHIBITS
Exhibit number Description
99.1 Press Release of April 29, 1998
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FIRSTCITY FINANCIAL CORPORATION
By: /s/ Gary H. Miller
---------------------------------
Name: Gary H. Miller
Title: Senior Vice President and
Chief Financial Officer
Date: April 29, 1998
3
<PAGE>
EXHIBIT INDEX
Exhibit number Description
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99.1 Press Release of April 29, 1998
4
NEWS RELEASE
First City
Financial Corporation
Contact: Suzy W. Taylor
(713) 652-1810
FIRSTCITY FINANCIAL ANNOUNCES FIRST QUARTER 1998 RESULTS
HOUSTON, TEXAS APRIL 29, 1998... FirstCity Financial
Corporation today announced earnings of $5.6 million for the quarter ended March
31, 1998. After dividends on the company's preferred stock and minority
interests in subsidiaries, earnings were $4.3 million or $.64 per share on a
fully diluted basis, compared to $7.6 million or $1.14 per share in the first
quarter of 1997. The first quarter 1997 results reflect the positive effect of
the $6.8 million, or $1.03 per share, payment from First City Liquidating Trust
in settlement of its servicing contract with the company.
Commenting on the first quarter results, James T. Sartain, President of
FirstCity noted, "Results for the quarter reflect strong progress in each of our
businesses and we believe we are well positioned for a strong 1998."
In Mortgage Banking, total originations for the quarter ended March 31,
1998 of $1.9 billion grew 43% compared to the prior quarter, and more than
tripled originations from 1997's comparable quarter. The favorable interest rate
environment coupled with the continued expansion of the company's origination
channels were major contributors to the strong growth experienced. The servicing
portfolio increased by $508 million to end the quarter at $7.2 billion, as
mortgage originations outpaced the impact of refinance activity in the quarter.
Capital Corp., FirstCity's recently established mortgage conduit, held loans in
inventory totaling $92 million by quarter's end. The company anticipates its
first securitization of these loans in the second quarter of 1998.
The portfolio asset acquisition and resolution business had a strong
first quarter as portfolio acquisitions totaled approximately $52 million. Asset
purchases were varied in nature, the largest purchase being a portfolio of real
estate assets located in Texas. Collections for the quarter of $69.7 million
compared favorably to $40.5 million in the prior year's comparable quarter.
The consumer lending unit, which primarily originates auto finance
receivables, completed a restructuring at year-end 1997. FirstCity Funding, the
revamped origination unit, originated loans of $18.5 million during the quarter,
and has originated an aggregate of approximately 2000 loans to date. These
loans, which are individually underwritten and bought at discounts anticipated
to cover any potential losses, have been acquired from dealers at an average 13%
discount to face value and carry an average coupon of over 19%. Funding's
aggregate initial investment in its portfolio is at an overall loan-to-wholesale
value ratio of 86%. The formation of FirstCity Funding coincided with the
termination of the origination program pursuant to which auto finance contracts
were purchased from participating financial institutions based on contractual,
pre-set underwriting guidelines. Loans generated through this discontinued
program were not acquired at sufficient discounts to cover losses associated
with the loans, and resulted in a $2.4 million loss provision in the first
quarter 1998. FirstCity was contractually obligated to fund contracts under this
discontinued program through January 31, 1998 and therefore acquired
approximately $13.4 million of these loans during the quarter.
<PAGE>
(more)
(2)
Separately, FirstCity intends to exercise its option to repurchase for
$1.00 each and all Warrants to purchase shares of its common stock.
Approximately 497,000 of these Warrants are outstanding and each Warrant allows
the holder to purchase one share of common stock at a price of $25 per share.
The company has the right to repurchase these Warrants, after completion of a
mandatory 45 day notice period, for $1.00 if the common stock price at the close
of market exceeds $31.25 for 10 of 15 consecutive trading days. April 28, 1998
marked the 10th consecutive trading day on which the common stock closing price
exceeded $31.25. Therefore, 45 days after the repurchase notice has been given
to holders, the company will repurchase Warrants that have not been exercised.
If all Warrants are exercised, it will result in approximately $12.4 million of
new common equity for FirstCity.
This press release contains forward looking statements. These
statements are generally identified by the use of words or phrases such as
"expect", "anticipate", "should", etc. The forward looking statements are based
on FirstCity's current expectations and are dependent upon a number of
uncertainties that could cause the actual results to differ materially from
those implied, projected or predicted in the forward looking statements. The
Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for
such forward looking statements. Factors which may affect actual results include
FirstCity's ability to continue to grow its earnings base, its access to public
markets to sell assets as well as the overall interest rate environment and
other factors. In addition to the factors listed in this press release, please
refer to the Company's public documents filed with the SEC for a more in depth
discussion of risks and risk factors.
FirstCity is a diversified financial services company with operations
dedicated to mortgage lending, portfolio asset acquisition and resolution and
consumer lending through over 90 offices in the US and with affiliate
organizations in Europe and Mexico. Its common (FCFC) and preferred (FCFCP and
FCFCO) stocks are listed on the NASDAQ National Market System.
<PAGE>
FIRSTCITY FINANCIAL CORPORATION
FINANCIAL SUMMARY
<TABLE>
<CAPTION>
(Amounts in thousands, except per share data)
QUARTER ENDED:
Mar. 31, 1998 Mar. 31, 1997
------------------ ------------------
<S> <C> <C>
Revenues:
Gain on sale of mortgage loans $ 20,269 $ 5,321
Net mortgage warehouse income 1,722 766
Gain on sale of mortgage servicing rights - 2,266
Servicing fees:
Mortgage 4,694 3,571
Other 1,113 7,862 (1)
Gain on resolution of Portfolio Assets 3,097 5,301
Equity earnings of Acquisition Partnerships 3,214 1,541
Rental income on real estate Portfolios 81 70
Interest income 3,799 2,779
Other income 4,037 1,161
Interest income on Class "A" Certificate - 1,659
------------------ ------------------
Total revenues 42,026 32,297
Expenses:
Interest on notes payable 3,418 2,862
Salaries and benefits 16,017 8,991
Amortization
Mortgage servicing rights 3,176 1,547
Other 432 953
Provision for loan losses 2,352 798
Harbor merger related expenses - -
Occupancy, data processing and other 11,691 7,577
------------------ ------------------
Total expenses 37,086 22,728
Net earnings before minority interest,
================== ==================
preferred dividends and income taxes $ 4,940 $ 9,569
================== ==================
Benefit (provision) for income taxes 641 (352)
------------------ ------------------
Net earnings before minority interest 5,581 9,217
and preferred dividends
Minority interest (215) -
Preferred dividends 1,515 1,659
================== ==================
Net earnings to common shareholders $ 4,281 $ 7,558
================== ==================
Net earnings per common share - basic 0.66 1.16
Net earnings per common share - diluted 0.64 1.14
Wtd. avg. common shares outstanding - basic 6,531 6,514
Wtd. avg. common shares outstanding - diluted 6,678 6,613
</TABLE>
(1) - Includes $6,800 received as a result of terminating the Investment
Management Agreement with the FirstCity Liquidating Trust in the first
quarter of 1997.
<PAGE>
FIRSTCITY FINANCIAL CORPORATION
SELECTED BALANCE SHEET DATA
(Amounts in thousands)
<TABLE>
<CAPTION>
Mar. 31, 1998 Dec. 31, 1997
------------- -------------
<S> <C> <C>
Mortgage Assets $ 1,191,418 $ 650,775
Portfolio acquisition and resolution assets 114,045 125,480
Consumer assets 61,491 61,135
Deferred tax asset 31,384 30,614
Total assets 1,469,136 940,119
Notes payable 1,267,797 750,781
Preferred stock 41,908 41,908
Total shareholders' equity 119,539 112,758
SUMMARY INCOME STATEMENT DATA FOR EACH BUSINESS
Revenues $ 28,689 $ 12,733
Expenses 24,716 11,687
----------------- -----------------
Operating contribution before direct taxes $ 3,973 $ 1,046
================= =================
================= =================
Operating contribution, net of direct taxes $ 3,884 $ 658
================= =================
Revenues 9,038 15,785 (1)
Expenses 4,855 6,320
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Operating contribution before direct taxes $ 4,183 $ 9,465
================= =================
Operating contribution, net of direct taxes $ 4,169 $ 9,365
================= =================
Revenues 2,956 2,057
Expenses 5,451 2,803
----------------- -----------------
Operating contribution before direct taxes $ (2,495) $ (746)
================= =================
Operating contribution, net of direct taxes $ (2,495) $ (747)
================= =================
</TABLE>
(1) - Includes $6,800 received as a result of terminating the Investment
Management Agreement with the FirstCity Liquidating Trust in the first
quarter of 1997.
<PAGE>
FIRSTCITY FINANCIAL CORPORATION
SUPPLEMENTAL INFORMATION
(Amounts in thousands)
<TABLE>
<CAPTION>
QUARTER ENDED:
Mar. 31, 1998 Mar. 31, 1997
----------------- -----------------
<S> <C> <C>
Quarterly origination:
Direct Retail Residential:
Conventional $ 102,494 $ 30,357
FHA/VA/FHMA 117,470 48,132
Home Improvement - -
Brokered 19,913 7,903
Broker Retail Residential:
Conventional 1,258,371 379,739
FHA/VA/FHMA 213,758 35,099
Home Equity 58,261 11,045
Commercial:
Correspondent 113,265 -
Construction 15,596 10,757
Acquisition of Home Equity 36,416 -
----------------- -----------------
Total Mortgage Production 1,935,544 523,032
================= =================
Servicing portfolio:
Conventional 4,897,749 3,748,717
Agency 876,405 592,473
Other 22,109 72,562
Commercial 1,400,287 145,809
----------------- -----------------
Total Mortgage Servicing portfolio 7,196,550 4,559,561
================= =================
Selected other data:
Net warehouse income 1,722 766
Net margin on warehouse balances 0.75% 1.20%
Gain on loans sold ($):
Residential 18,513 4,955
Home Equity 1,756 366
Gain on loans sold (%):
Residential 1.46% 1.05%
Home Equity 4.54% 3.65%
OMSR income as a percent of loans sold 1.81% 1.77%
Servicing revenues:
Residential 4,284 3,332
Commercial 238 43
Sub-serviced 172 196
----------------- -----------------
4,694 3,571
================= =================
Number of personnel at period end:
Production 442 272
Servicing 119 111
Other 602 321
----------------- -----------------
Total personnel 1,163 704
================= =================
</TABLE>
<PAGE>
FIRSTCITY FINANCIAL CORPORATION
SUPPLEMENTAL INFORMATION
(Amounts in thousands)
<TABLE>
<CAPTION>
QUARTER ENDED:
Mar. 31, 1998 Mar. 31, 1997
----------------- -----------------
<S> <C> <C>
Aggregate purchase price of portfolios acquired:
Wholly owned $ 1,109 $ -
Acquisition partnerships 50,862 47,237
----------------- -----------------
51,971 47,237
================= =================
Collections:
Wholly owned 16,976 14,842
Acquisition partnerships 52,692 25,631
----------------- -----------------
69,668 40,473
================= =================
Average investment in Portfolio Assets:
Nonperforming 49,619 45,431
Performing 14,212 8,100
Real estate 18,307 23,833
Servicing portfolio (face value) 865,622 864,632
Selected other data:
Servicing fees:
Acquisition partnerships 660 873
Other 69 6,989
Gain on resolution of Portfolio Assets:
Nonperforming 2,263 3,971
Performing 299 -
Real estate 535 1,330
----------------- -----------------
3,097 5,301
================= =================
Gross profit margin on Portfolio Assets:
Nonperforming 22.40% 37.36%
Performing 7.99% -
Real estate 17.08% 31.60%
Interest yield on performing Portfolio Assets 24.47% 19.66%
Number of personnel at period end:
Production 10 11
Servicing 64 95
----------------- -----------------
Total personnel 74 106
================= =================
Automobile and other consumer loans acquired:
FirstCity Funding 18,532 -
National Auto Funding 13,407 29,775
Other 1,436 1,349
Origination characteristics (FirstCity Funding only):
Face value to wholesale value 99.28%
Weighted average coupon 19.44%
Purchase discount (% of face value) 13.35%
Servicing portfolio (face value) 121,272 59,977
Selected other data:
Interest income 2,566 2,015
Average yield 13.49% 18.38%
Servicing fees 384 34
Number of personnel at period end:
Production 56 18
Servicing 79 38
----------------- -----------------
Total personnel 135 56
================= =================
</TABLE>
