FirstCity Financial Corporation Reports Second Quarter 2010 Results
The Company recorded net impairment provisions of $3.2 million during Q2 2010 compared to $2.0 million in Q2 2009. The provisions in Q2 2010 were recorded primarily to reflect changes in management's estimates as to the timing and amount of projected future collections and declines in domestic real estate values. The global distribution of Q2 2010 net impairment provisions included $2.3 million for domestic assets, $0.2 million related to Latin American assets, and $0.7 million related to European assets. Net provisions in Q2 2010 were split between consolidated assets ($2.6 million) and FirstCity's share of net provisions from unconsolidated subsidiaries ($0.6 million).
The Company's share of foreign currency transaction losses from its consolidated and unconsolidated foreign operations was $0.6 million for Q2 2010, compared to $2.2 million of foreign currency transaction gains for the same period in 2009.
Equity in earnings of unconsolidated subsidiaries was $1.8 million in Q2 2010 compared to $1.2 million for Q2 2009. This favorable increase in equity earnings was due to additional equity earnings of $2.4 million and $0.6 million reported by our special situations platform subsidiaries and foreign servicing entities, respectively, in Q2 2010 compared to Q2 2009; off-set partially by $2.4 million of lower equity earnings reported by our domestic and foreign acquisition partnerships in Q2 2010 compared to Q2 2009.
In Q2 2010, the Company also recognized a $4.8 million gain attributable to the transaction that resulted in the Company obtaining a controlling financial interest in its coal mine subsidiary. The Company owned a noncontrolling interest in this entity prior to the transaction. Under business combination accounting guidance, FirstCity recorded the coal mine subsidiary's assets and liabilities at fair value and re-measured its previously-held noncontrolling interest in the coal mine subsidiary to fair value on the date control was obtained – which resulted in the Company's recognition of the gain.
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