Exhibit 99.1
First Investors Reports Third Quarter Earnings
HOUSTON, March 10 /PRNewswire-FirstCall/ -- First Investors Financial
Services (Nasdaq: FIFS) has reported a net loss of $167,492, or $0.03 per
share, for the third quarter ended January 31, 2004, and net income of
$240,392, or $0.05 per share, for the first nine months of the 2004 fiscal
year. This compares to net income of $62,790, or $0.01 per share, for the
third quarter ended January 31, 2003, and net income of $252,615, or $0.05 per
share, for the first nine months of the 2003 fiscal year. The results for the
third quarter and year-to-date period were adversely affected by lower
interest income and higher provision expense which offset lower interest
expense and higher other income associated with the Company's servicing
activities.
For the nine-month period, First Investors' portfolio of receivables held
for investment, net decreased 6% to $216 million as a result of a decline in
new loan originations during the period. New loan originations for the three-
and nine-month periods were $17.6 million and $68.2 million compared to
$40.6 million and $85.9 million in the prior year periods. The prior year
periods include the origination of approximately $20 million in new loans on a
one-time flow basis through another independent finance company that was
unable to fund its outstanding purchase commitments during the third quarter
of 2003 due to its bankruptcy filing. Adjusting for this one time event, new
loan originations were down 15% for the three-month period and up 4% for the
nine-month period. Net interest income for the quarter was down 13% due to a
decline in the average portfolio outstanding and a decrease in the effective
yield from 15.4% to 13.7%. The decline in effective yield resulted from (i) a
greater mix of loans originated directly to consumers and loans secured by new
car collateral which typically carry lower interest rates; and, (ii) an
increase in non-accrual loans, primarily repossessions and charge-offs. Net
interest income for the year-to-date period increased slightly as interest
expense savings offset a decline in the average portfolio and a reduction in
effective yields. The delinquency rate decreased from 5.0% at January 31,
2003 to 3.1% at January 31, 2004 while the annualized charge-off rate
increased from 4.6% to 6.0% over the same period. The increase in the net
charge-off rate resulted from a higher number of repossessions during the
period and lower recovery rates on repossessed collateral.
Tommy A. Moore, Jr., President and CEO, stated that "While we are
disappointed in the operating results for the quarter, which were driven
largely by lower loan origination volume and higher repossession rates, we are
very encouraged by our most recent credit quality trends. Our delinquency
trends have been generally positive over the past nine months but we had
continued to experience higher charge-off rates due to general economic
conditions, the sluggish employment environment and lower recovery rates on
repossessions as a result of the weak used car market. During February, we
posted the lowest delinquency rate we have experienced in over a year at 2.74%
while repossessions declined by 25% from January. Perhaps more encouraging is
that the trend for March is even better. From a loan origination perspective,
we have approached the market cautiously over the past year due to economic
uncertainties and aggressive lending practices from some of our competitors.
While this has caused a decline in interest revenue, it is also the primary
reason that our portfolio has performed admirably during the prolonged
economic slump and the jobless recovery. As we approach fiscal 2005, we will
continue to look for opportunities to deploy our capital through new loan
originations, both in our direct and indirect lending segments, that provide
appropriate returns for the risk being taken. Further, we also expect to
expand our fee income through non-capital intensive activities including
lending alliances and servicing activities."
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 27 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 For the
Three Months Ended Nine Months Ended
January 31, January 31,
2004 2003 2004 2003
Interest Income $ 7,499 $ 8,415 $ 23,493 $ 25,072
Interest Expense 2,342 2,486 6,249 8,062
Net Interest Income 5,157 5,929 17,244 17,010
Provision for Credit Losses 3,324 2,815 9,986 7,453
Income after Provision for
Credit Losses 1,833 3,114 7,258 9,557
Servicing Revenue 1,347 222 3,845 222
Late fees and Other income 322 297 1,171 809
Income from investment 274 145 818 145
Other interest income 199 57 385 227
Unrealized Loss on Interest
Rate Derivative Positions (27) (40) (33) (163)
Total Costs and Expenses 4,211 3,703 13,077 10,275
Income (Loss) before Provision
for Income Taxes and
Minority Interest (263) 92 367 522
Provision for Income Taxes
(Benefits) (96) 36 138 145
Minority Interest --- (7) (11) 124
Net Income (Loss) $(167) $ 63 $ 240 $ 253
Basic and Diluted
Net Income (Loss)
Per Common Share $(0.03) $ 0.01 $ 0.05 $ 0.05
Other Operating Data
Average Principal Balance
of Receivables Held
for Investment $218,320 $219,111 $223,507 $214,478
Total Managed Receivables 528,389 417,894
Originations Volume 17,584 40,654 68,218 85,871
Effective Yield on
Receivables Held for
Investment 13.7% 15.4% 14.0% 15.3%
Average Cost of Debt 4.0% 4.5% 3.6% 4.9%
Weighted Average Number
of Shares Outstanding
(in thousands) 5,082 5,035 5,080 5,134
Jan. 31, April 30,
2004 2003
Financial Position
Cash and Short-Term Investments $ 33,602 $ 21,920
Receivables Held for Investment, Net 215,943 228,989
Receivables Acquired for Investment, Net 1,476 2,704
Assets Held for Sale 1,132 1,303
Total Assets 267,348 272,996
Total Debt 236,452 238,764
Minority Interest --- 732
Total Shareholders' Equity 27,301 26,493
Shareholders' Equity per Common Share 5.46 5.27
As of or As of or
For the Nine For the Nine
Months Ended Months Ended
Jan. 31, Jan. 31,
Credit Quality Data 2004 2003
Receivables Held for Investment:
30 + days past due
Number of Loans 3.8% 5.8%
$ Amount 3.1% 5.0%
Net Charge-offs as a %
of average receivables 6.0% 4.6%
Net Charge-offs for the period ending $ 10,122 $ 7,391
SOURCE First Investors Financial Services
-0- 03/10/2004
/CONTACT: Bennie H. Duck of First Investors Financial Services,
+1-713-977-2600/
(FIFS)
CO: First Investors Financial Services
ST: Texas
IN: FIN
SU: ERN