Exhibit 99.1
First Investors Reports Higher Fiscal Year Earnings
HOUSTON, July 11 /PRNewswire-FirstCall/ -- First Investors Financial
Services Group, Inc. (Nasdaq: FIFS) has reported today net income of $332,618
or, $0.07 per share, for the fiscal year ended April 30, 2003 compared to a
net loss of $309,012, or $0.06 per share, for the fiscal year ended
April 30, 2002. The results for the 2003 fiscal year were positively impacted
by an additional $1,080,433 in income associated with servicing revenues
generated by the addition of $473.5 million in managed assets during the third
and fourth fiscal quarters. This increase in managed assets resulted from the
acquisition of a $197.5 million portfolio of loans by First Auto Receivables
Corp., in which the Company also owns a 40% equity stake; and, the addition of
a $276 million servicing portfolio under a third-party servicing arrangement
with an unrelated investor group. The comparison of results is also impacted
by certain nonrecurring charges incurred during fiscal year 2002. These
include the write-off of $602,162 in deferred financing costs associated with
the restructure of certain debt facilities and a $882,000 charge, net of
minority interest, to write-down the value of Receivables Acquired for
Investment to reflect higher expected losses in that portfolio.
For the twelve-month period, First Investors' portfolio of Receivables
Held for Investment, Net increased 6.4% to $229 million as a result of an
increase in loan originations during the period. New loan originations for
the twelve-month period were $111.9 million compared to $77.6 million in the
prior year period. Net interest income for the year declined $1.1 million or
4.5% primarily as a result of a $1.7 million decrease in net interest income
attributable to the portfolio of receivables acquired for investment and a
decrease in the effective yield on the portfolio of receivables held for
investment from 15.4% to 15.0%. These declines were offset by the increase in
the portfolio of receivables held for investment, which largely occurred
during the third and fourth quarters, and a decrease in the average cost of
debt by 2.2 percentage points. The delinquency rate increased slightly from
2.9% at April 30, 2002 to 3.1% at April 30, 2003 while the annualized charge-
off rate increased from 4.1% to 4.7% over the same period as a result of a
higher number of repossessions during the period and lower recovery rates on
repossessed collateral.
Tommy A. Moore, Jr., President and CEO, stated that "First Investors
accomplished a number of objectives during fiscal year 2003. First, we saw
our portfolio of receivables held for investment increase for the first time
in two years as a result of industry consolidation and our increased focus on
direct lending. This increase was driven by an increase in year over year
origination volume which began in November and remained positive throughout
the fourth quarter. Second, we made a strategic investment in a
$197.5 million portfolio of auto loans and facilitated the acquisition of an
additional $276 million portfolio from a bankrupt lender in which we retained
all servicing rights. Operationally, this not only provides us with a
significant revenue stream over the next two to three years but also allows us
to leverage our servicing costs which had increased over the past two years as
a result of the decline in our portfolio of receivables held. Perhaps most
importantly, these two transactions demonstrate not only our ability to take
advantage of opportunities within our segment where we can make attractive
returns but also highlight our capabilities in loan servicing and collections.
While our core operating results for the year were negatively impacted by
higher repossession rates and lower recovery rates on the sale of collateral,
we believe our portfolio has performed reasonably well despite the challenging
economic environment. Our delinquency rates continue to remain low and the
performance of out originations over the past 18 months has been favorable.
This should translate into lower net chargeoffs once the economy, and
particularly the employment environment, begin to improve. Overall, we are
encouraged by a number of positive factors including the recent increase in
our origination volume which we expect to continue and which should translate
into increased revenue growth starting in fiscal 2004 and the addition of the
servicing revenue associated with the two portfolios which should provide
significant other income over the next two to three years."
First Investors is a specialized consumer finance company engaged in the
purchase and retention of automobile finance receivables originated from
franchised automobile dealers and directly through consumers from the sale of
new and late-model used vehicles. The Company is headquartered in Houston,
Texas and operates in 28 states.
The statements contained in this release, which are not historical
statements of fact, may constitute forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Any such
forward-looking statements involve a number of risks and uncertainties. The
actual results of future events could differ materially from those stated in
any forward-looking statements herein.
First Investors Financial Services Group, Inc.
Condensed Consolidated Statements of Operations and Selected Data
(Unaudited)
Dollars in thousands, except per share data
For the
Twelve Months Ended
April 30,
2003 2002
Interest Income $32,940 $37,547
Interest Expense 10,166 13,710
Net Interest Income 22,774 23,837
Provision for Credit Losses 10,338 8,941
Loss on Receivables Acquired for Investment --- 1,260
Income after Provision for Credit Losses 12,436 13,636
Late fee and Other Income 1,886 1,810
Servicing Income 1,081 ---
Unrealized Loss on Interest Rate
Derivative Positions 329 121
Total Operating Expenses 14,436 15,490
Income (Loss) before Provision for Income
Taxes and Minority Interest 638 (165)
Provision for Income Taxes (Benefits) 191 (60)
Minority Interest 114 204
Net Income (Loss) $333 $(309)
Basic and Diluted
Net Income (Loss) Per Common Share $0.07 $(0.06)
Other Operating Data
Average Principal Balance of Receivables
Held for Investment $217,163 $226,682
Total Managed Receivables 659,270 221,280
Originations Volume 111,854 77,585
Effective Yield on Receivables
Held for Investment 15.0% 15.4%
Average Cost of Debt 4.6% 5.8%
Weighted Average Number of
Shares Outstanding (in thousands) 5,104 5,510
April 30, April 30,
2003 2002
(audited)
Financial Position
Cash and Short-Term Investments $21,920 $23,995
Receivables Held for Investment, Net 228,989 215,243
Receivables Acquired for Investment, Net 2,704 9,020
Assets Held for Sale 1,303 1,315
Total Assets 272,996 265,913
Total Debt 238,764 230,468
Minority Interest 732 932
Total Shareholders' Equity 26,493 26,586
Shareholders' Equity per Common Share 5.27 4.93
As of or As of or
For the Twelve For the Twelve
Months Ended Months Ended
Credit Quality Data April 30, April 30,
2003 2002
Receivables Held for Investment:
30 + days past due
Number of Loans 3.9% 2.9%
$ Amount 3.1% 2.9%
Net Charge-offs as a % of average
receivables 4.7% 4.1%
Net Charge-offs for the period ending $10,279 $9,291