Exhibit 99.1
First Investors Reports First Quarter Earnings and Expands Share Repurchase
Program
HOUSTON, Sept. 10 /PRNewswire-FirstCall/ -- First Investors Financial
Services (Nasdaq: FIFS) has reported net income of $86,953 or $0.02 per share
for the three months ended July 31, 2004, the first quarter of fiscal year
2005. This compares to the $220,079 or $0.04 per share reported for the three
months ended July 31, 2003. The decline in net income is largely the result
of an unrealized loss on interest rate derivative positions of $67,657 during
the 2004 quarter compared to an unrealized gain on interest rate derivative
positions of $142,757 for the 2003 quarter. Adjusting for these non-cash
gains and losses, net income for the three months ended July 31, 2004, would
have been $129,915 compared to $129,428 for the three months ended
July 31, 2003. During the three months ended July 31, 2004, the Company
benefited from a lower provision for loan losses and a lower cost of funds,
which was offset by lower interest revenue and lower servicing revenue.
The Board of Directors has also announced an amendment to its Share
Repurchase Plan originally adopted in December 2001. Under this amendment,
the Company is authorized to repurchase up to an additional $1.5 million of
common stock in open market or in privately negotiated transactions. The
timing, price and quantity of any future purchases will be at the discretion
of the Company and will be based on a variety of factors including stock price
and other market and economic conditions.
As of July 31, 2004, First Investors' portfolio of receivables held for
investment, net was $210.1 million compared to $209.8 million at
April 30, 2004. For the three months ended July 31, 2004, the Company
reported $28.0 million in new loan originations compared to $28.1 million and
$20.8 million for the three months ended July 31, 2003, and April 30, 2004,
respectively. New loan origination volume for the three months ended
July 31, 2004, increased by 34% compared to new loan originations during the
three months ended April 30, 2004. Net interest income for the three months
ended July 31, 2004, decreased 14.5% compared to the three months ended
July 31, 2003. The decrease was primarily due to a 9% reduction in the
average portfolio of receivables held for investment and a 80 basis point
decline in effective yields, which was offset by a 10 basis point decline in
the Company's cost of funds. Net interest spread decreased from 10.7% for the
three months ended July 31, 2003, to 10.0% for the three months ended
July 31, 2004, as a result of the declining effective yields which is
attributed to an increase in percentage of receivables generated directly with
consumers which typically carry a lower yield. Total operating expenses
increased from 2.8% in the 2003 period to 3.7% in the 2004 period due to
higher loan origination costs associated with the increasing volume and lower
operating leverage as a result of the decline in the total managed portfolio.
The dollar delinquency rate declined from 3.4% to 2.7%, for the three months
ended July 31, 2003 and July 31, 2004, respectively, while the annualized
charge-off rate decreased from 5.9% to 4.7% for the three months ended
July 31, 2003 and July 31, 2004, respectively, reflecting the improving
economic environment, the positive impact of management's decision to restrict
underwriting policies in 2001 prior to the recession and an increasing mix of
direct loans which typically experience lower delinquency and loss rates.
Tommy A. Moore, Jr., President and CEO, stated that, "We have begun to see
the positive impact of a number of key initiatives. First, we are benefiting
from lower provision expense as a result of the improving performance of our
portfolio. Second, our origination volume during the first quarter was on
target and returning to the levels that we expect. We expect continued
improvements in both of these areas throughout the remainder of 2005. By
increasing our revenue growth through an increase in loan origination volume
and reducing our net charge-offs, we expect to see a marked improvement in
profitability during 2005."
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
Three Months Ended
July 31
2004 2003
Interest Income $ 6,952 $ 8,070
Interest Expense 1,777 2,018
Net Interest Income 5,175 6,052
Provision for Credit Losses 2,442 3,391
Income after Provision for Credit Losses 2,733 2,661
Servicing Revenue 970 1,275
Late fees and Other income 631 379
Income from investment 194 248
Other interest income 74 47
Unrealized (Loss)/Gain on Interest
Rate Derivative Positions (68) 142
Total other income 1,801 2,091
Total Costs and Expenses 4,397 4,415
Income (Loss) before Provision for
Income Taxes and Minority Interest 137 337
Provision for Income Taxes (Benefits) 50 126
Minority Interest --- (9)
Net Income (Loss) $87 $220
Basic and Diluted
Net Income (Loss) Per Common Share $0.02 $0.04
Other Operating Data
Average Principal Balance of Receivables
Held for Investment $ 206,950 $ 227,982
Average Managed Receivables 478,580 639,301
Originations Volume 28,003 28,106
Effective Yield on Receivables
Held for Investment 13.4% 14.2%
Average Cost of Debt 3.4% 3.5%
Weighted Average Number of
Shares Outstanding (in thousands) 5,000 5,071
July 31, April 30,
2004 2004
Financial Position
Cash and Short-Term Investments $ 18,531 $ 21,055
Receivables Held for Investment, Net 210,123 209,777
Receivables Acquired for Investment, Net 992 1,190
Assets Held for Sale 889 851
Total Assets 243,215 245,756
Total Debt 213,396 216,185
Total Other Liabilities 2,428 2,267
Total Liabilities 215,824 218,452
Total Shareholders' Equity 27,391 27,304
Shareholders' Equity per Common Share 5.48 5.46
As of or As of or
For the Three For the Three
Months Ended Months Ended
July 31, July 31,
Credit Quality Data 2004 2003
Receivables Held for Investment:
30 + days past due
Number of Loans 3.7% 4.4%
$ Amount 2.7% 3.4%
Net Charge-offs as a % of average
receivables 4.7% 5.9%
Net Charge-offs for the period
ending $ 2,439 $ 3,362
SOURCE First Investors Financial Services
-0- 09/10/2004
/CONTACT: Bennie H. Duck of First Investors Financial Services,
+1-713-977-2600/
(FIFS)
CO: First Investors Financial Services
ST: Texas
IN: FIN AUT
SU: ERN