First Rate Quarter for First City

First City Financial Corp. (NASDAQ: FCFC) reported second quarter net earnings of $1.8 million, up 38 percent compared with nearly $1.3 million in the same period a year ago. Second quarter earnings were hurt by a $518,000 provision for loan losses.

Total revenues were $11.3 million, up 66 percent from $6.9 million in the second quarter of 2006. The Waco, Texas-based debt purchaser generated 50 percent of its revenues from its portfolio assets, 26 percent from servicing fees, and nearly 9 percent from interest income from loans receivables.

First City spent $25.2 million on portfolio acquisitions in the quarter, down from $69.5 million in the first quarter but up from $19 million in the second quarter of 2006.

First City is negotiating an increase in its loan facilities from $225 million to $350 million, including an increase from $175 million to $225 million from Bank of Scotland, and a new $25 million loan facility with BoS (USA), a Bank of Scotland affiliate. First City is also seeking to increase its loan facility to $100 million from $50 million from FH Partners LP, a wholly owned First City affiliate.

First City reports it doesn’t rely on “Wall Street for operating capital but has a strong relationship with Bank of Scotland and expects completion” of the new loan agreements in “the next few weeks.”