FirstCity Loss Widens

Debt purchaser FirstCity Financial Corp. reported today a first quarter 2008 loss of $3.6 million, or 0.34 cents per diluted share, compared with a $915,000 loss, or 0.8 cents a share, in the same period a year ago. Revenues totaled $9.5 million in the first quarter, compared with $9.7 million a year ago.

The company’s Portfolio Asset Acquisition business lost $1.8 million in the quarter due to expenses of $13.9 million, compared with $9.3 million in revenues and $2.8 million in earnings on investments. The domestic portion of the division accounted for 55 percent of the revenues, Latin American operations for 25 percent, Europe for 20 percent, and Canada less than 1 percent.

Waco, Texas-based FirstCity (Nasdaq: FCFC) reported it invested $8.4 million in the first quarter to participate in acquiring $19.9 million of portfolio assets with a face value of approximately $546.1 million. The company reported there are rising opportunities due to the deterioration of credit quality at many financial institutions. FirstCity is currently evaluating 28 different transactions representing over $7.6 billion in face value of assets.

FirstCity set aside $4.1 million in provisions for losses, related to declines in values of loan collateral and real estate assets in its domestic portfolios, and slow cash flows from collections on loan portfolios in Latin America and Europe. The company also spent $1.2 million on an independent audit committee investigation in first quarter 2007.

FirstCity management reported that is highly liquid with a $350 million credit facility for portfolio asset acquisitions, and a $40 million credit facility commitment to finance and acquire SBA loans. At the end of the first quarter, FirstCity's maximum borrowing capacity under these commitments was $156 million.