FirstCity Financial has Down Third Quarter

Debt purchaser and servicer FirstCity Financial (NASDAQ: FCFC) today reported lower earnings for the third quarter on increased revenue but also increased loan loss provisions and interest expense.

Waco, Texas-based FirstCity said that it earned $2.65 million dollars in the quarter, down 46.6 percent from earnings in the third quarter of 2006. Revenue for the quarter, however, was up 42 percent to $11.6 million.

Third quarter earnings were negatively impacted by provisions for loan losses, net of recoveries, of $732,000.

FirstCity also said that it spent $16.3 million on debt portfolio purchases in Q3.

FirstCity invested $5.9 million in the third quarter in the form of a business acquisition under its special situations platform — FirstCity Crestone — which purchased a majority interest in a short line freight railroad in the Northeastern United States in the third quarter of 2007. FirstCity Crestone was formed in April 2007 for the purpose of investing in distressed debt, special loan originations, leveraged buyouts and other special opportunities. This $5.9 million business acquisition is FirstCity Crestone’s largest investment to date.