Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

Form 10-Q

 

(Mark One)
x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2008
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission file number 033-19694

 

FirstCity Financial Corporation

(Exact name of registrant as specified in its charter)

 

 

(254) 761-2800

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x     No o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o     No x

 

The number of shares of common stock, par value $.01 per share, outstanding at August 4, 2008 was 10,248,307.

 

 

Table of Contents

 

TABLE OF CONTENTS

 

PART I

Item 1.	Financial Statements
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3.	Quantitative and Qualitative Disclosures About Market Risk
Item 4.	Controls and Procedures
PART II
OTHER INFORMATION
Item 1.	Legal Proceedings
Item 1A.	Risk Factors
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds
Item 3.	Defaults Upon Senior Securities
Item 4.	Submission of Matters to a Vote of Security Holders
Item 5.	Other Information
Item 6.	Exhibits
SIGNATURES
Exhibit Index

 

Table of Contents

 

PART I

 

FINANCIAL INFORMATION

 

Item 1.  Financial Statements.

 

FIRSTCITY FINANCIAL CORPORATION AND SUBSIDIARIES

 

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share data)

 

		June 30,			December 31,
		2008			2007
		(Unaudited)
ASSETS
Cash and cash equivalents		$	12,316		$	23,037
Restricted cash			1,190			509
Portfolio Assets, net		147,840			122,001
Loans receivable - affiliates		18,980			5,447
Loans receivable - SBA held for sale		2,219			133
Loans receivable - SBA held for investment, net		13,692			14,234
Loans receivable - other		16,492			5,995
Equity investments		87,624			87,622
Deferred tax asset, net		20,101			20,101
Service fees receivable ($596 and $785 from affiliates, respectively)		711			842
Servicing assets - SBA loans		749			843
Other assets, net		26,709			17,355
Total Assets		$	348,623		$	298,119
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Notes payable to banks		$	230,585		$	177,329
Note payable to affiliate		8,658			—
Minority interest		3,066			3,209
Other liabilities		12,122			10,758
Total Liabilities		254,431			191,296
Commitments and contingencies (note 13)
Stockholders’ equity:
Optional preferred stock (par value $.01 per share; 98,000,000 shares authorized; no shares issued or outstanding)		—			—
Common stock (par value $.01 per share; 100,000,000 shares authorized; shares issued: 11,326,937 and 11,326,937, respectively; shares outstanding: 10,266,107 and 10,746,437, respectively)		113			113
Treasury stock, at cost: 1,060,830 shares and 580,500 shares, respectively		(9,223		)	(5,978		)
Paid in capital		101,662			101,240
Retained earnings (accumulated deficit)		(511		)	9,602
Accumulated other comprehensive income		2,151			1,846
Total Stockholders’ Equity		94,192			106,823
Total Liabilities and Stockholders’ Equity		$	348,623		$	298,119

 

See accompanying notes to consolidated financial statements.

 

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FIRSTCITY FINANCIAL CORPORATION AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share data)

(Unaudited)

 

		Three Months Ended						Six Months Ended
		June 30,						June 30,
		2008			2007			2008			2007
Revenues:
Servicing fees ($2,484 and $2,728 from affiliates for the three month periods, respectively, and $4,648 and $5,181 from affiliates for the six month periods, respectively)		$	2,706		$	2,977		$	4,906		$	5,582
Income from Portfolio Assets		5,622			5,685			10,557			10,720
Gain on sale of SBA loans held for sale, net		133			343			142			624
Interest income from SBA loans		366			606			842			914
Interest income from affiliates		483			140			633			266
Interest income from loans receivable - other		355			982			630			1,889
Revenue from controlled affiliate		859			—			1,664			—
Other income		965			538			1,619			997
Total revenues		11,489			11,271			20,993			20,992
Expenses:
Interest and fees on notes payable		3,758			4,668			7,441			8,919
Salaries and benefits		5,297			3,864			10,327			7,857
Provision for loan and impairment losses		7,090			746			10,120			1,072
Occupancy, data processing, property protection and other		4,680			4,388			8,605			8,321
Total expenses		20,825			13,666			36,493			26,169
Equity in earnings of investments		3,008			4,332			5,848			6,158
Earnings (loss) from continuing operations before income taxes and minority interest		(6,328		)	1,937			(9,652		)	981
Income tax expense		(98		)	(146		)	(289		)	(213		)
Minority interest		(53		)	15			(31		)	123
Earnings (loss) from continuing operations		(6,479		)	1,806			(9,972		)	891
Discontinued operations
Loss from discontinued operations		(50		)	—			(141		)	—
Net earnings (loss)		$	(6,529	)	$	1,806		$	(10,113	)	$	891
Basic earnings (loss) per common share are as follows:
Earnings (loss) from continuing operations		$	(0.63	)	$	0.17		$	(0.96	)	$	0.08
Discontinued operations		$	—		$	—		$	(0.01	)	$	—
Net earnings (loss) to common stockholders		$	(0.63	)	$	0.17		$	(0.97	)	$	0.08
Weighted average common shares outstanding		10,357			10,789			10,471			10,789
Diluted earnings (loss) per common share are as follows:
Earnings (loss) from continuing operations		$	(0.63	)	$	0.16		$	(0.96	)	$	0.08
Discontinued operations		$	—		$	—		$	(0.01	)	$	—
Net earnings (loss) to common stockholders		$	(0.63	)	$	0.16		$	(0.97	)	$	0.08
Weighted average common shares outstanding		10,357			11,397			10,471			11,414

 

See accompanying notes to consolidated financial statements.

 

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FIRSTCITY FINANCIAL CORPORATION AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

AND COMPREHENSIVE INCOME

(Dollars in thousands)

 

															Retained			Accumulated
															Earnings			Other			Total
		Common Stock					Treasury Stock					Paid in			(Accumulated			Comprehensive			Stockholders’
		Shares		Amount			Shares		Amount			Capital			Deficit)			Income			Equity
Balances, December 31, 2006		11,316,937		$	113		530,300		$	(5,571	)	$	100,562		$	7,417		$	1,372		$	103,893
Exercise of common stock options		10,000		—			—		—			35			—			—			35
Repurchase of common stock		—		—			50,200		(407		)	—			—			—			(407		)
Additional paid in capital arising from stock option compensation expense		—		—			—		—			643			—			—			643
Comprehensive income:
Net earnings for 2007		—		—			—		—			—			2,185			—			2,185
Translation adjustments		—		—			—		—			—			—			474			474
Total comprehensive income																					2,659
Balances, December 31, 2007		11,326,937		$	113		580,500		$	(5,978	)	$	101,240		$	9,602		$	1,846		$	106,823
Repurchase of common stock		—		—			480,330		(3,245		)	—			—			—			(3,245		)
Additional paid in capital arising from stock option compensation expense		—		—			—		—			422			—			—			422
Comprehensive income (loss):
Net loss for the first six months of 2008		—		—			—		—			—			(10,113		)	—			(10,113		)
Translation adjustments		—		—			—		—			—			—			305			305
Total comprehensive loss																					(9,808		)
Balances, June 30, 2008 (unaudited)		11,326,937		$	113		1,060,830		$	(9,223	)	$	101,662		$	(511	)	$	2,151		$	94,192

 

See accompanying notes to consolidated financial statements.

 

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FIRSTCITY FINANCIAL CORPORATION AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

 

		Six Months Ended
		June 30,
		2008			2007
Cash flows from operating activities:
Net earnings (loss)		$	(10,113	)	$	891
Adjustments to reconcile net earnings (loss) to net cash used in operating activities:
Net loss from discontinued operations		141			—
Purchase of SBA loans held for sale		—			(18,355		)
Net principal payments (advances) on SBA loans held for sale		(4,811		)	(413		)
Proceeds from the sale of SBA loans held for sale, net		2,993			15,772
Purchases of Portfolio Assets		(47,345		)	(45,273		)
Proceeds applied to principal on Portfolio Assets		30,924			41,116
Income from Portfolio Assets		(10,557		)	(10,720		)
Capitalized interest and costs on Portfolio Assets and loans receivable		(982		)	(685		)
Provision for loan and impairment losses		10,120			1,072
Equity in earnings of investments		(5,848		)	(6,158		)
Gain on sale of SBA loans held for sale, net		(142		)	(624		)
Depreciation and amortization		1,834			1,365
Net premium amortization of loans receivable		(199		)	(164		)
Stock-based compensation expense related to stock options		422			289
Increase in restricted cash		(681		)	(500		)
Decrease (increase) in service fees receivable		131			(375		)
Increase in other assets		(9,103		)	(2,227		)
Increase in other liabilities		1,568			2,328
Net cash used in operating activities		(41,648		)	(22,661		)
Cash flows from investing activities:
Purchases of property and equipment, net		(1,220		)	(422		)
Net principal collections (advances) on loans receivable		(23,377		)	(4,499		)
Purchases of SBA loans held for investment		—			(17,406		)
Net principal collections (advances) on SBA loans held for investment		445			1,700
Contributions to Acquisition Partnerships and Servicing and Operating Entities		(2,491		)	(21,146		)
Distributions from Acquisition Partnerships and Servicing and Operating Entities		11,052			25,205
Net cash used in investing activities		(15,591		)	(16,568		)
Cash flows from financing activities:
Borrowings under note payable to affiliate		8,658			—
Borrowings under notes payable to banks		93,807			116,973
Principal payments of notes payable to banks, net		(51,773		)	(77,689		)
Payments of debt issuance costs and loan fees		(921		)	(647		)
Repurchase of common stock		(3,245		)	—
Proceeds from issuance of common stock		—			18
Net cash provided by financing activities		46,526			38,655
Net cash used in continuing operations		(10,713		)	(574		)
Cash flows from discontinued operations:
Net cash used in operating activities		(8		)	(18		)
Net cash used in discontinued operations		(8		)	(18		)
Net decrease in cash and cash equivalents		(10,721		)	(592		)
Cash and cash equivalents, beginning of period		23,037			18,472
Cash and cash equivalents, end of period		$	12,316		$	17,880
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest		$	6,154		$	7,741
Income taxes, net of refunds received		179			48

 

See accompanying notes to consolidated financial statements.

 

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FIRSTCITY FINANCIAL CORPORATION AND SUBSIDIARIES

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2008

(Dollars in thousands, except per share data)

(Unaudited)

 

(1)  Basis of Presentation and Summary of Significant Accounting Policies

 

The Company

 

FirstCity Financial Corporation and subsidiaries (the “Company” or “FirstCity”) is a financial services company with offices throughout the United States and Mexico, and a presence in France, Germany, Brazil and Chile. At June 30, 2008, the Company was engaged in one principal reportable segment – Portfolio Asset acquisition and resolution. The portfolio asset acquisition and resolution business involves acquiring portfolios of loans, real estate and other assets or similar single-asset investments (collectively referred to as “Portfolios” or “Portfolio Assets”). The Company generally acquires Portfolio Assets at a discount to their legal principal balances or appraised values, and then services and resolves the Portfolio Assets in an effort to maximize the present value of the ultimate cash recoveries. The Company also invests in special situations and restructuring arrangements such as acquiring or financing distressed debt and businesses, originating junior- and senior-bridge loans, and executing lower middle-market buyouts.

 

Basis of Presentation

 

The unaudited consolidated financial statements of FirstCity reflect, in the opinion of management, all adjustments, consisting only of normal and recurring adjustments, necessary to present fairly FirstCity’s consolidated financial position at June 30, 2008, its results of operations for the three and six month periods ended June 30, 2008 and 2007 and cash flows for the six month periods ended June 30, 2008 and 2007.  Certain disclosures have been condensed or omitted from these financial statements. Accordingly, these financial statements should be read with the consolidated financial statements included in the Company’s 2007 Annual Report on Form 10-K, as amended. Certain amounts in the consolidated financial statements for prior years have been reclassified to conform to current consolidated financial statement presentation.

 

Use of Estimates

 

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Material estimates that are particularly susceptible to significant change in the near-term relate to the estimation of future collections on Portfolio Assets used in the calculation of income and evaluation of impairment for Portfolios; interest rate environments; valuation of the deferred tax asset; prepayment speeds and valuation of servicing assets; valuation of loans receivable (including loans receivable held in securitization trusts); and income tax uncertainties. Actual results could differ materially from those estimates.

 

Restricted Cash

 

Restricted cash includes monies due on loan-related remittances received by the Company and due to third parties.

 

Reclassifications

 

Certain amounts in the consolidated financial statements for prior periods have been reclassified to conform to current consolidated financial statement presentation. In all reporting periods prior to December 31, 2007, FirstCity reported payments of debt issuance costs and loan fees in cash flows from operating activities on the Consolidated Statements of Cash Flows. The Company is now reporting these items in cash flows from financing activities. Prior period amounts reported on the Consolidated Statements of Cash Flows have been adjusted to conform to this treatment which is required under U.S. generally accepted accounting principles. The total amount reclassified was $647 for the six month period ended June 30, 2007. In addition, for the six-month period ended December 31, 2007, FirstCity reported cash received on loan-related remittances and due to third parties as cash and cash equivalents on the Consolidated Balance Sheets. The Company is now reporting this amount as restricted cash on the Consolidated Balance Sheets and cash flows from operating activities on the Consolidated Statements of Cash Flows. The total amount reclassified was $509 at December 31, 2007 on the Consolidated Balance Sheets, and $500 for the six-month period ended June 30, 2007 on the Consolidated Statements of Cash Flows. Management believes that these changes to the Consolidated Statements of Cash Flows and Consolidated Balance Sheets as described above are immaterial relative to the consolidated financial statements taken as a whole. These reclassifications have the following impact on the consolidated financial statements:

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share data) – (continued)

 

		Six Months Ended
		June 30,
		2007
Consolidated Statements of Cash Flows:
Cash flows from operating activities (as reported)		$	(22,808	)
Impact of reclassification on payments of debt issuance costs and loan fees		647
Impact of reclassification on change in restricted cash		(500		)
Cash flows from operating activities (as corrected)		$	(22,661	)
Cash flows from financing activities (as reported)		$	39,302
Impact of reclassification on payments of debt issuance costs and loan fees		(647		)
Cash flows from financing activities (as corrected)		$	38,655

 

		December 31,
		2007
Consolidated Balance Sheets:
Cash and cash equivalents (as reported)		$	23,546
Impact of reclassification of restricted cash		(509		)
Cash and cash equivalents (as corrected)		$	23,037
Restricted cash (as reported)		$	—
Impact of reclassification of restricted cash		509
Restricted cash (as corrected)		$	509

 

(2)  Recently Issued and Recently Adopted Accounting Standards

 

Recently Issued Accounting Standards

 

In March 2008, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 161, Disclosures about Derivative Instruments and Hedging Activities (“SFAS 161”), an amendment to SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. SFAS 161 requires enhanced disclosures about derivative instruments and hedged items that are accounted for under SFAS No. 133 and related interpretations. SFAS 161 will be effective for the Company’s interim and annual financial statements for periods beginning after November 15, 2008, with early adoption permitted. SFAS 161 expands the disclosure requirements for derivatives and hedged items and has no impact on the Company’s accounts for any such instruments. The Company is currently evaluating the impact of adopting SFAS 161 on its financial statement disclosures.

 

In December 2007, FASB issued SFAS No. 141R, Business Combinations (“SFAS 141R”) and SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements – an amendment to ARB No. 51 (“SFAS 160”). SFAS 141R and SFAS 160 require most identifiable assets, liabilities, non-controlling interests, and goodwill acquired in a business combination to be recorded at “full fair value” and require non-controlling interests (previously referred to as “minority interests”) to be reported as a component of equity, which changes the accounting for transactions with non-controlling interest holders. Both SFAS 141R and SFAS 160 are effective for periods beginning on or after December 15, 2008, and earlier adoption is prohibited. SFAS 141R will be applied to business combinations occurring after the effective date. SFAS 160 will be applied prospectively to all non-controlling interests, including any that arose before the effective date. The Company is currently evaluating the impact of adopting SFAS 141R and SFAS 160 on its financial condition and results of operations.

 

In February 2007, the FASB issued SFAS No.159, The Fair Value Option for Financial Assets and Financial Liabilities-Including an amendment of FASB Statement No. 115 (“SFAS 159”). SFAS 159 provides entities an opportunity to choose to measure eligible items at fair value at specified election dates. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings at each subsequent reporting date. The fair value option (i) may be applied instrument by instrument, with certain exceptions, (ii) is irrevocable (unless a new election date occurs) and (iii) is applied only to entire instruments and not to portions of instruments. Adoption of SFAS 159 is optional and, if adopted, would be effective for the Company’s 2008 fiscal year. The Company elected not to adopt SFAS 159. As such, SFAS 159 did not impact the Company’s financial condition, results of operations and cash flows, or financial statement footnote disclosures.

 

Recently Adopted Accounting Standards

 

Effective January 1, 2008, the Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 157, Fair Value Measurements (“SFAS 157”). SFAS 157 defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles, and enhances disclosures about fair value measurements. Fair value is defined under SFAS 157 as the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.  The adoption of SFAS 157 did not have any effect on our financial statements at the date of adoption. For additional information, refer to Note 12 of the Consolidated Financial Statements.

 

In February 2008, the FASB issued FASB Staff Position 157-2, Effective Date of FASB Statement No. 157, which delays the effective date of SFAS 157 for non-financial assets and non-financial liabilities that are not required or permitted to be measured at fair value on a recurring basis. The Company will be required to apply SFAS 157, effective January 1, 2009, to non-financial assets and liabilities that qualified for the deferral.

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share data) – (continued)

 

(3) Discontinued Operations

 

Discontinued operations are comprised of two components previously reported as the Company’s residential and commercial mortgage banking business (“Mortgage”) and the consumer lending business conducted through the Company’s minority interest investment in Drive Financial Services LP (“Consumer”). In the second quarter of 2008, the Company recorded a provision of $46 related to the discontinued Mortgage operations. There was no income or loss from discontinued operations in the first six months of 2007. At June 30, 2008 and December 31, 2007, liabilities from discontinued Consumer operations of $688 and $568, respectively, which consist of state income taxes payable, were included in other liabilities.

 

(4)  Portfolio Assets

 

Portfolio Assets are summarized as follows:

 

		June 30,			December 31,
		2008			2007
Loan Portfolios
Loans Acquired Prior to 2005
Non-performing Portfolio Assets		$	3,686		$	4,177
Performing Portfolio Assets		915			1,266
Loans Acquired After 2004
Loans acquired with credit deterioration		117,699			97,630
Loans acquired with no credit deterioration		4,124			3,871
Outstanding balance		126,424			106,944
Allowance for loan losses		(10,454		)	(1,723		)
Carrying amount of loans, net of allowance		115,970			105,221
Real Estate Portfolios		29,958			14,832
Other		1,912			1,948
Portfolio Assets, net		$	147,840		$	122,001

 

In the first quarter of 2008, the Company discontinued using the income recognition model under AICPA Statement of Position 03-3, Accounting for Certain Loans or Debt Securities Acquired in a Transfer (“SOP 03-3”) for previously-purchased non-performing loan portfolios in Mexico. Recognition of income under SOP 03-3 is dependent on management having the ability to develop reasonable expectations as to both the timing and amount of cash flows to be collected. In the event management cannot develop a reasonable expectation of the timing and amount of cash flows expected to be collected, SOP 03-3 permits the use of the cost-recovery accounting model. Due to uncertainties related to the legal and economic environment in Mexico, management determined that it no longer has the ability to develop a reasonable expectation of the timing of cash flows to be collected, and as of January 1, 2008, began accounting for its non-performing loan portfolios in Mexico under the cost-recovery accounting model – which requires collections received to be applied first against the recorded amount of the loan or pool. When the carrying amount of the loan or pool has been reduced to zero, any additional amounts received are recognized as income. The Company evaluates at the balance sheet date if the remaining amount that is probable of collection is less than the carrying value, and if so, recognizes impairment. For subsequent increases in the actual cash flows or cash flows expected to be collected, management will reverse any existing valuation allowance for that loan or pool. At June 30, 2008, the Company’s carrying amount of non-performing loans in Mexico accounted for using the cost-recovery model in the caption “Loans Acquired After 2004 – Loans acquired with credit deterioration” in the table above approximated $14.9 million. The Company acquired $8.7 million of loan portfolios in Mexico with credit deterioration in the second quarter of 2008 that are accounted for using the cost-recovery accounting model under SOP 03-3.

 

On June 20, 2008, FirstCity and another investor acquired a portfolio of non-performing loans in Mexico for $8.7 million. FirstCity accounted for the investment as a consolidated Portfolio Asset at June 30, 2008 since it has a 58.0% ownership interest in the portfolio. Per terms of the purchase agreement, the other investor (42.0% ownership interest) has the option to acquire additional interests in the loan portfolio so that it would own 80.0% by paying FirstCity an amount equal to 38.0% of the portfolio’s purchase price (and FirstCity would subsequently own 20.0% of the portfolio). If the investor does not exercise its option within sixty-two days from the portfolio purchase date, then FirstCity and the investor will execute a servicing agreement that will entitle FirstCity to receive from the investor an oversight fee in the amount of $698.

 

Certain Portfolio Assets are pledged to secure a $100.0 million revolving loan facility between FH Partners LLC, an indirect wholly-owned affiliate of FirstCity, and Bank of Scotland. See Note 2 to the Company’s 2007 Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC” or “Commission”) on March 17, 2008 for a description of this revolving credit agreement. In addition, certain Portfolio Assets are pledged to secure notes payable of certain consolidated affiliates of FirstCity that are generally non-recourse to FirstCity or any affiliate other than the acquiring entity that incurred the debt.

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except per share data) – (continued)

 

Income from Portfolio Assets is summarized as follows:

 

		Three Months Ended						Six Months Ended
		June 30,						June 30,
		2008			2007			2008			2007
Loan Portfolios
Loans Acquired Prior to 2005
Non-performing Portfolio Assets		$	75		$	126		$	255		$	868
Performing Portfolio Assets		37			213			143			562
Loans Acquired After 2004
Loans acquired with credit deterioration		4,913			5,084			8,466			8,150
Loans acquired with no credit deterioration		97			204			209			696