SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934

Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12

FIRSTCITY FINANCIAL CORPORATION
(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

1) Title of each class of securities to which transaction applies:

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2) Aggregate number of securities to which transaction applies:

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3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):

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4) Proposed maximum aggregate value of transaction:

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5) Total Fee Paid:
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Fee paid previously with preliminary materials.

Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.

1) Amount Previously Paid:
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2) Form Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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[FIRSTCITY LOGO]

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 17, 2002

TO THE STOCKHOLDERS OF FIRSTCITY FINANCIAL CORPORATION:

NOTICE IS HEREBY GIVEN THAT the 2002 Annual Meeting of Stockholders
(the "Meeting") of FirstCity Financial Corporation, a Delaware corporation (the
"Company"), will be held at Ridgewood Country Club, 7301 Fish Pond Road, Waco,
Texas 76714, on Tuesday, December 17, 2002, at 9:00 a.m., local time, for the
following purposes:

1. To elect 7 directors, each to serve until the 2003 Annual Meeting of
Stockholders and until their successors are elected and qualified;

2. To ratify the Board of Directors' appointment of independent public
accountants for the Company and its subsidiaries for fiscal year 2002;
and

3. To transact such other business as may properly come before the
Meeting or any adjournments or postponements thereof.

Only holders of record of the Company's Common Stock outstanding as of the
close of business on November 4, 2002, will be entitled to notice of and to vote
at the Annual Meeting and at any adjournments thereof. A proxy card is enclosed
in the pocket on the front of the envelope in which these materials were mailed
to you. Please complete, sign and date the proxy card and return it promptly in
the enclosed postage-paid return envelope. If you attend the meeting you may, if
you wish, withdraw your proxy and vote in person. The list of stockholders of
the Company may be examined at the offices of the Company located at 6400
Imperial Drive, Waco, Texas 76712.

A copy of the Company's Amended Annual Report on Form 10-K/A for the year
ended December 31, 2001, is enclosed.

By Order of the Board of Directors,

/s/ Richard J. Vander Woude

Waco, Texas Richard J. Vander Woude
November 19, 2002 Secretary

IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AT THE MEETING, WHETHER OR NOT
YOU ARE ABLE TO ATTEND PERSONALLY. ACCORDINGLY, PLEASE COMPLETE, SIGN, DATE AND
RETURN PROMPTLY THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED.

[FIRSTCITY LOGO]

PROXY STATEMENT

INTRODUCTION

This Proxy Statement is furnished to stockholders of FirstCity
Financial Corporation, a Delaware corporation (the "Company"), in connection
with the solicitation of proxies by the Company's Board of Directors for use at
the Annual Meeting of Stockholders to be held at Ridgewood Country Club, 7301
Fish Pond Road, Waco, Texas 76714, on Tuesday, December 17, 2002, at 9:00 a.m.,
local time (the "Annual Meeting"), and at any adjournments thereof. The Proxy
Statement and the form of proxy are first being mailed or given to the Company's
stockholders on or about November 19, 2002. The Company's principal executive
offices are located at 6400 Imperial Drive, Waco, Texas 76712, and its telephone
number is (254) 751-1750.

PURPOSE OF THE ANNUAL MEETING

At the Annual Meeting, the holders of shares of common stock, par value
$.01 per share ("Common Stock"), of the Company will be asked

(1) to elect seven directors to serve on the Board of Directors of
the Company, such directors to serve until the next annual
meeting of stockholders and until their successors shall have
been elected and qualified, and

(2) to ratify the Board of Directors' appointment of KPMG LLP
("KPMG") as independent certified public accountants for the
Company and its subsidiaries for fiscal year 2002.

RECORD DATE; NUMBER OF SHARES OUTSTANDING

Only holders of record of Common Stock outstanding as of the close of
business on November 4, 2002 (the "Record Date"), are entitled to notice of and
to vote at the Annual Meeting and at any adjournments of the Annual Meeting. As
of the close of business on the Record Date, 8,376,500 shares of Common Stock
were issued and outstanding and entitled to vote at the Annual Meeting. Unless
otherwise indicated, all references herein to percentages of outstanding shares
of Common Stock are based on 8,376,500 shares outstanding. Each share of Common
Stock is entitled to one vote at the Annual Meeting with respect to each matter
to be voted on.

REQUIRED VOTES

The presence, in person or by proxy, of holders of a majority of the
outstanding shares of Common Stock entitled to vote is necessary to constitute a
quorum at the Annual Meeting. Abstentions and broker non-votes will be counted
in determining whether a quorum is present. Directors will be elected by a
plurality of the votes of the shares of Common Stock present in person or
represented by proxy at the Annual Meeting and entitled to vote on the election
of directors (and therefore abstentions and broker non-votes will have no legal
effect on such election). The affirmative vote of a majority of the shares of
Common Stock present in person or represented by proxy at the Annual Meeting and
entitled to vote will be necessary to ratify the appointment of KPMG as
independent certified public accountants (and therefore abstentions will have
the effect of a negative vote on such proposals and broker non-votes will have
no legal effect on the vote). An automated system administered by the Company's
transfer agent will tabulate the votes cast by proxy prior to the meeting.

All shares of Common Stock represented by properly executed and
unrevoked proxies will be voted at the Annual Meeting in accordance with the
direction on the proxies. IF NO DIRECTION IS INDICATED ON PROPERLY EXECUTED AND
UNREVOKED PROXIES, THE SHARES WILL BE VOTED

o "FOR" THE ELECTION OF THE SEVEN NOMINEES NAMED IN THIS PROXY
AS DIRECTORS, AND

o "FOR" THE PROPOSAL TO RATIFY THE APPOINTMENT OF KPMG AS THE
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS FOR THE COMPANY AND
ITS SUBSIDIARIES FOR FISCAL YEAR 2002.

The Company does not know of any matters, other than those described above,
which will come before the Annual Meeting. If any other matters are properly
presented for action at the Annual Meeting, the persons named in the proxies and
acting under these proxies will have discretion to vote on such matters in
accordance with their best judgment.

REVOCATION OF PROXY

A record holder of Common Stock who executes and returns a proxy has
the power to revoke it at any time before it is voted. A holder who wishes to
revoke a proxy can do so:

o by executing a later dated proxy relating to the same shares
and by delivering it to the Secretary of the Company prior to
the vote at the Annual Meeting,

o by giving written notice of the revocation to the Secretary of
the Company prior to the vote at the Annual Meeting, or

o by appearing in person at the Annual Meeting and voting in
person the shares to which the proxy relates.

All written notices of revocation and other communications relating to the
revocation of proxies should be addressed as follows: FirstCity Financial
Corporation, 6400 Imperial Drive, P.O. Box 8216, Waco, Texas 76714-8216,
Attention: Secretary, telephone (254) 751-1750.

SHAREHOLDER VOTING AGREEMENT

James R. Hawkins, Chairman of the Board of the Company, James T.
Sartain, President and Chief Executive Officer of the Company, and ATARA I,
LTD., a Texas limited partnership ("ATARA"), are parties to a Shareholder Voting
Agreement (the "Shareholder Voting Agreement"), dated as of June 29, 1995, with
Cargill Financial Services Corporation, a Delaware corporation ("Cargill"). The
sole general partner of ATARA is ATARA Corp., a Texas corporation, the Chairman
of the Board and President of which is Rick R. Hagelstein (a former executive
officer of the Company).

Under the terms of the Shareholder Voting Agreement, Messrs. Hawkins
and Sartain, and ATARA, are required to vote their shares of Common Stock to
elect one designee of Cargill as a director of the Company, and Cargill is
required to vote its shares of Common Stock to elect one or more of the
designees of Messrs. Hawkins and Sartain, and ATARA, as directors of the
Company. With respect to the Board nominees for director named below under the
caption "Proposal I - Election of Directors,"

(1) Messrs. Hawkins and Sartain, and ATARA, will vote their shares
of Common Stock for the election of such nominees as
directors, including nominee Jeffery Leu, Cargill's designee
under the Shareholder Voting Agreement, and

(2) Cargill will vote its shares of Common Stock for the election
of such nominees as directors, which nominees are the
designees of Messrs. Hawkins and Sartain, and ATARA, under the
Shareholder Voting Agreement.

Information pertaining to the number of shares of Common Stock owned on November
4, 2002, by each of Messrs. Hawkins and Sartain, and ATARA and Cargill, is set
forth under the caption "Security Ownership of Certain Beneficial Owners and
Management."

SOLICITATION COSTS

The Company will bear the cost of soliciting its proxies, including the
expenses of distributing its proxy materials. In addition to the use of the
mail, proxies may be solicited by personal interview, telephone or telegram by
directors, officers, employees and agents of the Company, who will receive no
additional compensation for doing so. The Company will reimburse brokers,
custodians, nominees and fiduciaries for reasonable out-of-pocket expenses
incurred by them in forwarding proxy materials to the beneficial owners of
Common Stock held by them as stockholders of record.

AMENDED ANNUAL REPORT ON FORM 10-K/A

The Company's Amended Annual Report on Form 10-K/A for the year ended
December 31, 2001, which includes, among other things, the Company's audited
consolidated balance sheets at December 31, 2001 and 2000, and the Company's
audited consolidated statements of operations, statements of shareholders'
equity and statements of cash flows for the years ended December 31, 2001, 2000
and 1999, respectively, has been mailed to stockholders of record as of the
Record Date.

ANNUAL MEETING MATTERS

Directors of the Company are elected each year to hold office until the
next annual meeting of stockholders or until their successors are duly elected
and qualified. The Company's Bylaws provide for a minimum of one and a maximum
of twelve directors. Effective June 30, 2002, David MacLennan resigned as a
director of the Company. Mr. MacLennan recently rejoined Cargill Financial
Services Corporation in its office in Geneva, Switzerland and, due to geographic
considerations, he felt that he could no longer adequately fulfill his duties as
a director. Prior to Mr. MacLennan's resignation, there were eight directors of
the Company. The Board of Directors has not nominated a replacement for Mr.
MacLennan, and the number of director positions has been reduced to seven.

The Certificate of Designations of the Company's New Preferred Stock,
$0.01 par value ("New Preferred Stock"), provides that if dividends payable on
the New Preferred Stock have been in arrears and unpaid for six quarterly
periods, then the holders of New Preferred Stock shall have the right, voting as
a single class, to elect two additional directors of the Company. To exercise
this right, holders of the New Preferred Stock must follow certain prescribed
actions specified in the Certificate of Designations of the New Preferred Stock,
including requesting a special meeting of the holders of the New Preferred
Stock. Since the Company has failed to pay quarterly dividends for six
consecutive quarters on the New Preferred Stock upon failure to pay the dividend
for the fourth quarter of 2000, the holders of the New Preferred Stock are
entitled to exercise their right to elect two additional directors to the
Company's Board until cumulative dividends have been paid in full, upon
following the procedures described in the Certificate of Designations of the New
Preferred Stock.

Seven persons have been nominated by the Board to stand for election at
the Annual Meeting, and each is currently a director of the Company. The Board
of Directors recommends that such seven nominees, each of which is named below,
be elected to serve as directors.

Under the Company's Bylaws, nominations of persons for election to the
Board of Directors also may be made at the Annual Meeting by any stockholder of
the Company entitled to vote for the election of directors at the Annual Meeting
who complies with the notice procedures described in this paragraph. Any such
nomination must be made pursuant to notice in writing to the Secretary of the
Company, and must be delivered to or mailed and received at the principal
executive offices of the Company no later than the tenth (10th) day following
the date that the notice of the meeting is mailed or public announcement was
made. Any such notice must set forth

(1) as to each person whom such stockholder proposes to nominate
for election or reelection as a director, all information
relating to such person that is required to be disclosed in
solicitations of proxies for election of directors, or as
otherwise required, in each case pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or any successor regulation thereto
(including such person's written consent to being named in the
Proxy Statement as a nominee and to serving as a director if
elected); and

(2) as to the stockholder giving such notice,

o the name and address, as they appear on the Company's
books, of such stockholder, and

o the class or series and number of shares of stock of
the Company that are held of record, beneficially
owned, and represented by proxy on the date of such
stockholder nomination and on the Record Date by such
stockholder on such dates.

PROPOSAL I - ELECTION OF DIRECTORS

It is intended that the proxies received from holders of Common Stock,
in the absence of contrary instructions, will be voted at the Annual Meeting for
the election of the Board nominees named below. Although the Company does not
contemplate

that any of the nominees will be unable to serve, decline to serve, or otherwise
be unavailable as a nominee at the time of the Annual Meeting, in such event the
proxies will be voted in accordance with the discretionary authority granted in
the proxies for such other candidate or candidates as may be nominated by the
Board of Directors.

James R. Hawkins, Chairman of the Board of the Company, James T.
Sartain, President and Chief Executive Officer of the Company, and ATARA, are
parties to a Shareholder Voting Agreement with Cargill regarding the voting of
their shares of Common Stock in connection with the election of directors. See
"Introduction - Shareholder Voting Agreement."

NOMINEES FOR ELECTION TO BOARD OF DIRECTORS

The following table sets forth certain information concerning the
nominees for election to the Board of Directors of the Company.

<Table>
<Caption>
Name Age Position
---- --- --------

James R. Hawkins 66 Chairman of the Board

C. Ivan Wilson 75 Vice Chairman of the Board

James T. Sartain 54 President, Chief Executive Officer and Director

Richard E. Bean 58 Director

Dane Fulmer 52 Director

Robert E. Garrison II 60 Director

Jeffery D. Leu 45 Director
</Table>

Further information concerning the Board nominees for election as
directors at the Annual Meeting, including their business experience during the
past five years, appears below.

James R. Hawkins has been Chairman of the Board since the consummation
of the merger of J-Hawk Corporation ("J-Hawk") and First City Bancorporation of
Texas, Inc. (the "Merger"), and was Chairman of the Board and Chief Executive
Officer of J-Hawk from 1976 until the Merger. Mr. Hawkins was also formerly
Chief Executive Officer of FirstCity through January 2001.

C. Ivan Wilson has been Vice Chairman of the Board of FirstCity since
the Merger. From February 1998 to June 1998, Mr. Wilson was Chairman, President
and Chief Executive Officer of Mercantile Bank, N.A., Corpus Christi, Texas, a
national banking organization. Mr. Wilson was Chairman of the Board and Chief
Executive Officer of FCBOT from 1991 to the Merger. Prior to 1991, Mr. Wilson
was the Chief Executive Officer of FirstCity, Texas -- Corpus Christi, one of
FCBOT's banking subsidiaries.

James T. Sartain has been President since the Merger and Chief
Executive Officer since January 2001 and has served as a Director of FirstCity
since the Merger. Prior to January 2001, Mr. Sartain was President and Chief
Operating Officer. From 1988 to the Merger, Mr. Sartain was President and Chief
Operating Officer of J-Hawk.

Richard E. Bean has been a Director of FirstCity since the Merger and
has been Executive Vice President and Chief Financial Officer of Pearce
Industries, Inc. since 1976, which markets a variety of oil field equipment and
machinery. Mr. Bean has also been a member of the Portfolio Committee of the
FirstCity Liquidating Trust since the Merger. Prior to the Merger, Mr. Bean was
Chairman of the FCBOT's Official Committee of Equity Security Holders.

Dane Fulmer has been a Director of FirstCity since May 1999. Mr. Fulmer
serves as Executive Vice President and director of risk management of John
Taylor Financial Group, a broker/dealer and investment advisory firm that Mr.
Fulmer co-founded in 1995. From July 1991 until August 1996, Mr. Fulmer served
as Executive Vice President of Merchants Investment Center of Fort Smith, and as
portfolio manager for Merchants National, the parent company.

Robert E. Garrison II has been a Director of FirstCity since May 1999.
Mr. Garrison is the President, Chief Executive Officer and director of Sanders
Morris Harris Group, a publicly owned financial services firm. Previously, Mr.
Garrison served as Executive Vice President and director of Harris Webb &
Garrison and also served as Chairman, Chief Executive Officer,

and director of Pinnacle Management & Trust Co. Mr. Garrison co-founded both of
these companies in 1994. Both Harris Webb & Garrison and Pinnacle Management &
Trust Co. are subsidiaries of Sanders Morris Harris Group. In addition, Mr.
Garrison serves as Chairman of the Board of BioCyte Therapeutics, a cancer
diagnostic and therapeutic company focused on breast, ovarian, and prostate
cancer. Mr. Garrison serves as a director of TeraForce Technology Corporation,
Inc., a public defense electronics company, Somerset House Publishing, First
Capital Bank, and is a member of the Finance Committee of Memorial Hermann
Hospital System. He has over 36 years of experience in the securities industry.
Mr. Garrison is a Chartered Financial Analyst.

Jeffery D. Leu has been a Director of FirstCity since December 2000.
Mr. Leu is President of the Value Investment Group of Cargill, a wholly owned
subsidiary of Cargill Incorporated, which is regarded as one of the world's
largest privately-held corporations. Mr. Leu joined Cargill in 1981 and has held
various management positions in Cargill's financial businesses.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF
THE NOMINEES FOR DIRECTOR NAMED ABOVE.

VOTE REQUIRED FOR ELECTION OF DIRECTORS

Directors will be elected by a plurality of the votes of the shares of
Common Stock present at the Annual Meeting, in person or by proxy, and entitled
to vote on the election of directors (and therefore abstentions and non-votes
will have no legal effect on such election).

EXECUTIVE OFFICERS

The executive officers of the Company, who are elected by the Board of
Directors of the Company and serve at its discretion, are as follows:

<Table>
<Caption>
Name Age Position
---- --- --------

James R. Hawkins 66 Chairman of the Board

James T. Sartain 54 President and Chief Executive Officer

J. Bryan Baker 41 Senior Vice President and Chief Financial Officer

Terry R. DeWitt 45 Senior Vice President and Co-President of FirstCity Commercial

G. Stephen Fillip 51 Senior Vice President and Co-President of FirstCity Commercial

Joe S. Greak 53 Senior Vice President, Tax Director

James C. Holmes 45 Senior Vice President and Executive Vice President of FirstCity
Commercial

Jim W. Moore 52 President of FirstCity Consumer Lending

Richard J. Vander Woude 48 Senior Vice President, General Counsel and Secretary

</Table>

The business experience of Messrs. Hawkins and Sartain is set forth
under "Proposal I - Election of Directors."

J. Bryan Baker has been Senior Vice President and Chief Financial
Officer since June 2000. Previously, Mr. Baker served as Vice President and
Treasurer from August 1999 to June 2000, as Vice President and Controller of
FirstCity from November 1996 to August 1999, and as Vice President and Assistant
Controller from 1995 to November 1996. From 1990 to 1995, Mr. Baker was with
Jaynes, Reitmeier, Boyd & Therrell, P.C., an independent public accounting firm,
involved in both auditing and consulting. From 1988 to 1990, Mr. Baker was
Controller of Heights Bancshares in Harker Heights, Texas.

Terry R. DeWitt has been Senior Vice President responsible for Due
Diligence and Investment Evaluation of FirstCity since the Merger and has served
as Co-President of FirstCity Commercial ("FirstCity Commercial") since October
1999. Mr. DeWitt served as Senior Vice President responsible for Due Diligence
and Investment Evaluation of J-Hawk from 1992 to the Merger. From 1991 to 1992,
Mr. DeWitt was Senior Vice President of the First National Bank of Central
Texas, a national banking association, and from 1989 to 1991, he was President
of the First National Bank of Goldthwaite, a national banking association.

G. Stephen Fillip has been Senior Vice President since the Merger. Mr.
Fillip has served as President of FirstCity

Servicing Corporation since October 1999 and has served as Co-President of
FirstCity Commercial since October 1999. Mr. Fillip was Senior Vice President of
J-Hawk from 1991 to the Merger. From 1989 to 1991, Mr. Fillip was Executive Vice
President and Chief Credit Officer of BancOne, Texas, N.A. (Waco), a national
banking association.

Joe S. Greak has been Senior Vice President, and Tax Director of the
Company since the Merger. Mr. Greak was the Tax Manager of FCBOT since 1993.
From 1992 to 1993, Mr. Greak was the Tax Manager of New First City - Houston,
N.A. Prior thereto, he was Senior Vice President and Tax Director of First City,
Texas -- Houston, N.A.

James C. Holmes has been Senior Vice President since the Merger. Mr.
Holmes has served as Executive Vice President of FirstCity Commercial since
October 1999. From the Merger to August 1999 Mr. Holmes served as Senior Vice
President and Treasurer of the Company and held the same positions with J-Hawk
from 1994 to the Merger. From 1988 to 1991, Mr. Holmes was a Vice President of
MBank, Waco, a national banking association.

Jim W. Moore has been a senior officer of FirstCity or its predecessor
since November 1992. Currently, Mr. Moore is President of FirstCity Consumer
Lending Corporation, which owns a 31% direct and indirect interest in Drive
Financial Services, LP, where he has served as Executive Vice President and a
member of the Board of Managers since August 2000.

Richard J. Vander Woude has been General Counsel and Senior Vice
President of FirstCity since January 1998 and has served as Secretary since June
2000. Prior thereto, Mr. Vander Woude was a director and shareholder in the law
firm of Vander Woude & Istre, P.C., Waco, Texas from 1992 through 1997. From
1978 to 1992, Mr. Vander Woude was a director and shareholder of Sheehy,
Lovelace & Mayfield, P.C., Waco, Texas.

STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding Common Stock
owned on November 4, 2002 (the "Measurement Date"), by (1) each person who is
known by FirstCity to be the beneficial owner of more than five percent of
Common Stock as of such date, (2) each of FirstCity's directors, (3) each of the
Chief Executive Officer during 2001 and the Company's other four most highly
compensated executive officers during 2001 serving as such at the end of
2001(collectively, the "Named Executive Officers")and (4) all directors and
executive officers of FirstCity as a group. Except as otherwise indicated, all
shares of Common Stock shown in the table are held with sole voting and
investment power.

<Table>
<Caption>
SHARES PERCENT
BENEFICIALLY OF
NAME AND ADDRESS OF BENEFICIAL OWNER(1) OWNED CLASS
--------------------------------------- ------------ -------

James R. Hawkins............................................... 1,138,754 (2)(11) 13.2%
James T. Sartain............................................... 27,097 (3)(11) 4.9%
Ed Smith....................................................... 539,451 (4) 6.4%
1021 Main Street, #1000
Houston, Texas 77002
Lindsey Capital................................................ 419,969 (4) 5.0%
1021 Main Street, #1000
Houston, Texas 77002
Richard E. Bean................................................ 90,133 (5) 1.1%
Dane Fulmer.................................................... 29,850 (6) *
Robert E. Garrison II.......................................... 55,550 (6) *
Jeffery Leu.................................................... 1,250 (7) *
David W. MacLennan............................................. 4,500 (5)(12) *
C. Ivan Wilson................................................. 7,164 (5) *
Terry R. DeWitt................................................ 45,082 (8) *
G. Stephen Fillip.............................................. 76,587 (8) *
Jim W. Moore................................................... 35,957 (9) *
Richard J. Vander Woude........................................ 24,185 (10) *
All directors and executive officers as a group (15 persons)... 2,029,094 23.5%
</Table>

- ----------

* Less than 1%.

(1) The business mailing address of each of such persons (except as otherwise
indicated) is P.O. Box 8216, Waco, Texas 76714-8216.

(2) Includes 250,994 shares of Common Stock held of record by J-Hawk, Ltd.,
the sole general partner of which is Combined Funding, Inc. Mr. Hawkins
may be deemed to beneficially own such shares of Common Stock as a result
of his ownership of over 50% of the common stock of Combined Funding, Inc.

(3) Includes 24,800 and 37,500 shares that may be acquired within 60 days of
the Measurement Date upon the exercise of options granted under
FirstCity's 1995 and 1996 Stock Option and Award Plan.

(4) 419,969 of such shares of Common Stock are held of record by Lindsey
Capital Corporation. Mr. Smith beneficially owns such shares of Common
Stock as a result of his ownership of 100% of the common stock of Lindsey
Capital Corporation.

(5) Includes 4,500 shares that may be acquired within 60 days of the
Measurement Date upon the exercise of options granted under FirstCity's
1996 Stock Option and Award Plan.

(6) Includes 2,500 shares that may be acquired within 60 days of the
Measurement Date upon the exercise of options granted under FirstCity's
1996 Stock Option and Award Plan.

(7) Includes 1,250 shares that may be acquired within 60 days of the
Measurement Date upon the exercise of options granted under FirstCity's
1996 Stock Option and Award Plan. Mr. Leu is an officer of certain
affiliates of Cargill, which, as of the Measurement Date was the record
owner of 221,683 shares of Common Stock. Mr. Leu disclaims beneficial
ownership of such shares. Cargill is party to the Shareholder Voting
Agreement with Messrs. Hawkins and Sartain, and ATARA, regarding Common
Stock.

(8) Includes 11,500 and 18,700 shares that may be acquired within 60 days of
the Measurement Date upon the exercise of options granted under
FirstCity's 1995 and 1996 Stock Option and Award Plan, respectively.

(9) Includes 10,200 and 19,600 shares that may be acquired within 60 days of
the Measurement Date upon the exercise of options granted under
FirstCity's 1995 and 1996 Stock Option and Award Plan, respectively.

(10) Includes 18,750 shares that may be acquired within 60 days of the
Measurement Date upon the exercise of options granted under FirstCity's
1996 Stock Option and Award Plan.

(11) Messrs. Hawkins and Sartain and ATARA, the sole general partner of which
is ATARA Corp., are parties to a Shareholder Voting Agreement with Cargill
regarding Common Stock, pursuant to which ATARA and Messrs. Hawkins and
Sartain are required to vote their shares of Common Stock to elect one
designee of Cargill as a director of FirstCity, and Cargill is required to
vote its shares of Common Stock to elect one or more designees of ATARA
and Messrs. Hawkins and Sartain as directors of FirstCity. Each of Messrs.
Hawkins and Sartain and ATARA disclaims beneficial ownership of the shares
of Common Stock owned by Cargill.

(12) Mr. MacLennan resigned as a Director of FirstCity effective June 30, 2002,
and the information contained herein with respect to Mr. MacLennan is as
of June 30, 2002.

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than 10 percent of Common Stock, to
file with the Securities and Exchange Commission certain reports of beneficial
ownership of Common Stock. Based solely on copies of such reports furnished to
the Company and written representations that no other reports were required, the
Company believes that all applicable Section 16(a) filing requirements were
complied with by its directors, officers and 10 percent stockholders during the
last fiscal year.

BOARD OF DIRECTORS AND COMMITTEES

During 2001, the Board of Directors held seven meetings. Each of the
directors attended more than 75% of such meetings.

The Company's Board of Directors has the following five standing
committees: an Executive Committee; an Audit Committee; a Compensation
Committee; an Investment Committee; and a Nominating Committee. Members of these
committees generally are elected annually at the regular meeting of the Board of
Directors immediately following the annual meeting of stockholders. Further
information concerning the Board's standing committees appears below.

Executive Committee. The Executive Committee presently consists of
Messrs. Hawkins (Chairman) and Sartain. Subject to certain limitations specified
by the Company's Bylaws and the Delaware General Corporation Law, the Executive
Committee is authorized to exercise the powers of the Board of Directors when
the Board is not in session. During 2001, the Executive Committee held no actual
meetings but took numerous actions by unanimous written consent.

Audit Committee. The Audit Committee presently consists of Messrs. Bean
(Chairman), Garrison and Wilson, each of whom is an outside director. The Audit
Committee meets with management to consider the adequacy of the internal
controls of the Company and the objectivity of financial reporting. Its primary
function is to assist the Board of Directors in fulfilling its oversight
responsibilities by reviewing

o the financial information to be provided to the stockholders,
potential stockholders, the investment community and others;

o the systems of internal controls established by the management
and the Board of Directors; and

o the audit process.

The Audit Committee also meets with the independent auditors and with
appropriate Company financial personnel and internal auditors about these
matters. The functions of the Audit Committee also include recommending to the
Board of Directors which firm of independent public accountants should be
engaged by the Company to perform the annual audit, reviewing annually the Audit
Committee Charter, approving certain other types of professional service
rendered to the Company by the independent public accountants and considering
the possible effects of such services on the independence of such public
accountants. The independent auditors periodically meet alone with the Audit
Committee and always have unrestricted access to the Audit Committee. During
2001, the Audit Committee held four meetings. Each of the members of the Audit
Committee attended all such meetings for the period they were members of the
committee.

Compensation Committee. During 2001, the Compensation Committee
consisted of Messrs. Wilson (Chairman), Garrison and MacLennan. Effective June
30, 2002, as a result of Mr. MacLennan's resignation from the Board of
Directors, the Compensation committee consists of Messrs. Wilson (Chairman) and
Garrison. The functions of the Compensation Committee include making
recommendations to the Board of Directors regarding compensation for executive
officers of the Company and its subsidiaries. A separate subcommittee of the
Compensation Committee, the Stock Option Subcommittee (consisting of Messrs.
Wilson, Garrison and MacLennan during 2001 and of Messrs. Wilson and Garrison
effective June 30, 2002), is responsible for all recommendations, reviews,
modifications and approvals with respect to the 1995 Stock Option and Award
Plan, the 1995 Employee Stock Purchase Plan and the 1996 Stock Option and Award
Plan. During 2001, the Compensation Committee held two meetings. Each of the
members of the Compensation Committee attended the meetings.

Investment Committee. The Investment Committee consisted of Messrs.
Sartain (Chairman), Garrison, Fulmer, Wilson, Hawkins, MacLennan and Bean during
2001 and, effective June 30, 2002, consists of Messrs. Sartain (Chairman),
Garrison, Fulmer, Wilson, Hawkins and Bean. The functions of the Investment
Committee include providing oversight and approval of prospective investments
based on thresholds of risk exposure to the Company's balance sheet. During
2001, the Investment Committee held no meetings.

Nominating Committee. The Nominating Committee presently consists of
Messrs. Hawkins (Chairman) and Fulmer. The functions of the Nominating Committee
include recommending to the Board of Directors those persons it believes should
be nominees for election as directors. In this regard, the Nominating Committee
considers the performance of incumbent directors in determining whether such
directors should be nominated to stand for reelection. During 2001, the
Nominating Committee held one meeting. Each of the members of the Nominating
Committee attended the meeting.

Under the Company's Bylaws, nominations of persons for election to the
Board of Directors also may be made by stockholders as described under the
caption "Annual Meeting Matters."

DIRECTOR COMPENSATION

Directors of the Company who are not employees of the Company or any of
its subsidiaries receive a retainer of $3,000 per quarter for their services as
directors (from January 1, 2001 through December 31, 2001, each such director
received an aggregate of $12,000 for such director's services as director for
such period). Such directors also receive $1,000 plus expenses for each regular
and special board of directors meeting attended, and $1,000 plus expenses for
each meeting of any committee of the board of directors attended, and $500 per
each telephonic meeting. Directors who are employees of the Company do not
receive directors' fees.

EXECUTIVE COMPENSATION

The following table sets forth certain information concerning
compensation for services during each of the last three years for (1) the
Company's Chief Executive Officer during 2001, and (2) the Company's other four
most highly compensated executive officers during 2001 serving as such at the
end of 2001:

SUMMARY COMPENSATION TABLE

<Table>
<Caption>
LONG TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION SECURITIES
------------------------------------ UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS (#) COMPENSATION (1)($)
----------------------------- -------- ------------ ----------- ------------- -------------------

James T. Sartain,............ 2001 300,014 -- 50,000 15,190
President and Chief 2000 300,014 130,000 50,000 16,018
Executive Officer 1999 300,014 -- -- 16,843

Terry R. DeWitt,............. 2001 250,000 -- 25,000 4,800
Senior Vice President and 2000 250,000 80,640 -- 5,040
Co-President of FirstCity 1999 214,584 128,400 -- 5,089
Commercial Corporation

G. Stephen Fillip,........... 2001 250,000 -- 25,000 5,190
Senior Vice President and 2000 250,000 83,400 -- 5,310
Co-President of FirstCity 1999 214,584 83,400 -- 5,455
Commercial Corporation

Richard J. Vander Woude,..... 2001 275,000 -- 25,000 4,950
Senior Vice President, 2000 270,883 50,000 25,000 5,378
General Counsel and
Secretary 1999 222,917 49,174 -- 5,534

Jim W. Moore................. 2001 250,000 125,000 25,000 5,190
Senior Vice President and 2000 206,250 130,000 -- 16,977
President of FirstCity 1999 172,917 10,000 -- 4,428
Consumer Lending
</Table>

- ----------

(1) With respect to Messrs. Sartain, DeWitt, Fillip, Vander Woude and
Moore, the total amounts indicated under "All Other Compensation" for
2001 consist of (a) amounts contributed to match a portion of such
employee's contributions under a 401(k) plan ("401(k) Match"), (b)
excess premiums paid on supplemental life insurance policies
("Supplement Life") and (c) personal use of a business vehicle
("Auto"), and (d) amounts paid for moving expenses ("Other"). The
following table details the amounts paid during 2001 for each of the
categories:

<Table>
<Caption>
401(k) SUPPLEMENT
EXECUTIVE MATCH($) LIFE($) AUTO($) TOTAL($)
- ------------------------------ ------------ ------------ ------------ ------------

James T. Sartain ............. 4,500 690 10,000 15,190
Terry R. DeWitt .............. 4,500 300 -- 4,800
G. Stephen Fillip ............ 4,500 690 -- 5,190
Richard J. Vander Woude ...... 4,500 450 -- 4,950
Jim W. Moore ................. 4,500 690 -- 5,190
</Table>

STOCK OPTION AND PURCHASE PLANS AND 401(k) PLAN

In October 1995, on the recommendation of the Stock Option Subcommittee
of the Compensation Committee, the Board of Directors approved the grant of
229,600 stock options under the 1995 Stock Option and Award Plan. Of these
options, 173,600 were granted to the Company's executive officers. The exercise
price for all such options was equal to or greater than the fair market value of
the underlying Common Stock at the date of grant. Therefore, the holders of the
stock options will benefit from such options only when, and to the extent, the
price of Common Stock increases after the grant of the option. The performance
of individual executive officers and other key employees was considered by the
Stock Option Subcommittee in allocating such grants, taking into account the
Company's performance, each individual's contributions thereto and specific
accomplishments in each individual's area of responsibility. In October 1996, on
the recommendation of the Stock Option Subcommittee, the Board of Directors
approved the grant of 18,000 stock options under the 1996 Stock Option and Award
Plan (no such shares were granted to executive officers). In February 1997, on
the recommendation of the Stock Option Subcommittee, the Board of Directors
approved the grant of 95,200 stock options under the 1996 Stock Option and Award
Plan Of these options, 46,200 were granted to the Company's executive officers.
In September 1997, on the recommendation of the Stock Option Subcommittee, the
Board of Directors approved the grant of 30,000 stock options under the 1996
Stock Option and Award Plan (no such shares were granted to executive officers).

At the Company's annual stockholders' meeting, held on April 24, 1996,
the Company's stockholders approved (1) the 1995 Stock Option and Award Plan,
which provides for the grant of up to 230,000 options to purchase Common Stock
to plan participants (229,600 of which have been granted), (2) the 1996 Stock
Option and Award Plan, which provides for the grant to plan participants of up
to 500,000 options to purchase Common Stock and (3) the 1995 Employee Stock
Purchase Plan, under which up to 100,000 shares of Common Stock may be made
available for purchase by plan participants. Grants of options to purchase
15,473 shares of Common Stock have been granted to date. The 1996 Stock Option
and Award Plan also provides for the grant of up to 50,000 performance shares to
employees of the Company, to be awarded in the discretion of the Stock Option
Subcommittee. The performance measure to be used for the purposes of granting
the performance shares will be the extent to which performance goals are met, in
addition to the factors of total stockholder return, return on equity, earnings
per share and the ratio of operating overhead to operating revenue.

Beginning January 1, 1994, the Company also initiated a defined
contribution 401(k) employee profit sharing plan (the "401(k) Plan") in which
the Company matches employee contributions at a stated percentage of employee
contributions to a defined maximum. The Company contributed approximately
$152,000, $263,000, $238,000 in 2001, 2000 and 1999, respectively, to the 401(k)
Plan.

OPTION GRANTS

The following table sets forth certain information with respect to
grants of stock options under the 1995 Stock Option and Award Plan and the 1996
Stock Option and Award Plan during 2001, to the Named Executive Officers. In
addition, there are shown hypothetical gains or "option spreads" that could be
realized for the respective options, based on arbitrarily assumed rates of
annual compound stock price appreciation of 5 percent and 10 percent from the
date the options were granted over the full option terms. The Company granted no
stock appreciation rights during 2001.

<Table>
<Caption>
POTENTIAL
REALIZABLE VALUE AT
OPTION GRANTS IN 2001 ASSUMED ANNUAL
INDIVIDUAL GRANTS RATES OF STOCK
---------------------------------------------------------------------- PRICE APPRECIATION
NUMBER OF SHARES PERCENT OF TOTAL EXERCISE OR BASE FOR OPTION TERM(2)
UNDERLYING OPTIONS OPTIONS GRANTED TO PRICE (PER EXPIRATION ----------------------------
NAME GRANTED(#)(1) EMPLOYEES IN 2001 SHARE)($) DATE 5%($) 10%($)
- ----------------------- ------------------ ------------------ ---------------- ---------- ----------- -----------

James T. Sartain ...... 50,000 15.97% 3.06 12/2/2009 -- --
Terry R. DeWitt ....... 25,000 7.99% 3.06 12/2/2009 -- --
G. Stephen Fillip ..... 25,000 7.99% 3.06 12/2/2009 -- --
Richard J. Vander
Woude ............... 25,000 7.99% 3.06 12/2/2009 -- --
Jim W. Moore .......... 25,000 7.99% 3.06 12/2/2009 -- --
</Table>

- ----------

(1) The options granted to the above persons were granted as of December
20, 2001, at an exercise price of $3.06 (greater than fair market value
of Common Stock on the date of grant). The shares of Common Stock
underlying such option were 50% vested on the grant date, with the
remaining 50% vesting in two equal, consecutive annual installments,
commencing on the first anniversary of the grant date. Subject to the
terms of the 1996 Stock Option and Award Plan, such option may be
exercised to purchase all or any portion of such vested shares at any
time prior to the termination thereof. The unexercised portions of such
options, if any, terminate ten years from the grant date. Such options
are non-transferable other than by will or the laws of descent and
distribution. Under the 1996 Stock Option and Award Plan, the right to
exercise options with respect to unvested shares may be accelerated in
certain circumstances.

(2) As the weighted-average fair value of stock options granted during 2001
was $.99 on the grant date (compared to an exercise price of $3.06),
there is no potential realizable value at assumed annual rates of stock
price appreciation of 5% and 10% for the Option term. There can be no
assurance that the assumed annual appreciation rates will be achieved.

OPTION EXERCISES AND YEAR-END VALUES

The following table sets forth, for the Named Executive Officers, the
number of shares of Common Stock underlying both exercisable and
non-exercisable stock options held by such persons as of December 31, 2001, and
the year-end values for unexercised "in-the-money" options, which represent the
positive spread between the exercise price of any such options and the year-end
market price of Common Stock. All such options were granted under the 1995 Stock
Option and Award Plan and 1996 Stock Option and Award Plan. No options were
exercised by the officers listed below during 2001.

AGGREGATED 2001 OPTION EXERCISES
AND YEAR-END OPTION VALUES

<Table>
<Caption>
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT YEAR END AT YEAR END($)(1)
------------------------------- -------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------ ------------- ------------- ------------- -------------

James T. Sartain ............. 62,300 62,500 -- --
Terry R. DeWitt .............. 30,200 25,000 -- --
G. Stephen Fillip ............ 30,200 25,000 -- --
Richard J. Vander Woude ...... 18,750 31,250 -- --
Jim W. Moore ................. 29,800 25,000 -- --
</Table>

- ----------

(1) Calculated using the aggregate market value (based on December 31, 2001
stock price of $1.20 per share) of the shares of Common Stock
underlying such options, less the aggregate exercise price payable.

BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The following report concerning the specific factors, criteria and
goals underlying decisions on payments and awards of compensation to each of the
executive officers of the Company for fiscal year 2001 is provided by the
Compensation Committee of the Company's Board of Directors.

General. Recommendations regarding compensation of the Company's
executive officers are prepared by the Compensation Committee of the Board of
Directors and are subject to the review, modification and approval of the Board,
except that (1) the Chief Executive Officer does not participate in the
preparation of recommendations, or the review, modification or approval thereof,
with respect to his compensation and (2) all such recommendations, reviews,
modifications and approvals with respect to awards under the 1996 Stock Option
and Award Plan are made solely by the Stock Option Subcommittee of the
Compensation Committee.

The Company's compensation program is designed to enable the Company to
attract, motivate and retain high quality senior management by providing a
competitive total compensation opportunity based on performance. Toward this
end, the Company provides for competitive base salaries, annual variable
performance incentives payable in cash for the achievement of financial
performance goals, and long-term, stock-based incentives that strengthen the
mutuality of interests between senior management and the Company's stockholders.

Section 162(m) ("Section 162(m)") of the Internal Revenue Code of 1986,
as amended (the "Code"), provides that no deduction for federal income tax
purposes shall be allowed to a publicly held corporation for applicable employee
remuneration with respect to any covered employee of the corporation to the
extent that the amount of such remuneration for the taxable year with respect to
such employee exceeds $1.0 million. For purposes of this limitation, the term
"covered employee" generally includes the chief executive officer of the
corporation and the four highest compensated officers of the corporation (other
than the chief executive officer), and the term "applicable employee
remuneration" generally means, with respect to any covered employee for the
taxable year, the aggregate amount allowable as a federal income tax deduction
for services performed by such employee (whether or not during the taxable
year); provided, however, that applicable employee remuneration does not
include, among other items, certain remuneration payable solely on account of
the attainment of one or more performance goals ("performance based
compensation"). It is the Company's general intention that the remuneration paid
to its covered employees not exceed the deductibility limitation established by
Section 162(m). Nevertheless, due to the fact that not all remuneration paid to
covered employees may qualify as performance-based compensation, it is possible
that the Company's deduction for remuneration paid to any covered employee
during a taxable year may be limited by Section 162(m).

Salaries. Salaries for the year 2001 for each of the Company's
executive officers, including its Chief Executive Officer, were determined based
upon such officer's level of responsibility, time with the Company, contribution
to the Company and individual performance. The evaluation of these factors was
subjective, and no fixed, relative weights were assigned thereto.

Bonuses. Messrs. Sartain, DeWitt, Fillip, Vander Woude and Moore were
participants in a bonus plan in each of their respective business units. Messrs.
Sartain, DeWitt, Vander Woude and Fillip were not eligible for bonuses paid in
2001. Mr. Moore participated in a bonus pool established for executive
management of Drive.

Stock Options. The Stock Option Subcommittee of the Compensation
Committee believes that stock options are critical in motivating and rewarding
the creation of long-term stockholder value, and the subcommittee has
established a policy of awarding stock options each year based on the continuing
progress of the Company as well as on individual performance.

In 2001, the Stock Option Subcommittee recommended, and the Board of
Directors approved, the grant of stock options for 275,500 shares of Common
Stock under the 1996 Stock Option and Award Plan (217,000 were granted to the
Company's executive officers). The exercise price with respect to all such
grants was equal to or greater than the fair market value of the underlying
Common Stock at the date of grant so that the holders of such options will
benefit from such options only when, and to the extent, the price of Common
Stock increases after such grant. The performance of individual executive
officers and other key employees was considered by the Stock Option Subcommittee
in allocating such grants, taking into account the Company's performance, each
individual's contributions thereto and specific accomplishments in each
individual's area of responsibility.

Compensation of the Chief Executive Officer. Recommendations regarding
compensation of the Company's Chief Executive Officer are prepared by those
members of the Compensation Committee, and are subject to the review,
modification and approval of those members of the Board, other than the Chief
Executive Officer. Such recommendations, reviews, modifications and approvals
for 2001 were based on the Chief Executive Officer's level of responsibility,
time with the Company, individual performance and significant contributions to
the successful implementation of several important decisions that are expected
to benefit the Company in future years, including the acquisition of various
purchased asset portfolios.

THE COMPENSATION COMMITTEE
C. Ivan Wilson, Chairman
David W. MacLennan*
Robert E. Garrison II

- ---------

* Resigned as a Director of the Company effective June 30, 2002.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Messrs. Wilson (Chairman), Garrison and MacLennan served as members of
the Compensation Committee of the Board of Directors during 2001. Messrs.
Wilson, Garrison and MacLennan served as members of the Stock Option
Subcommittee of the Compensation Committee during 2001. Neither of Messrs.
Wilson, Garrison nor MacLennan was an officer or employee of the Company or any
of its subsidiaries during 2001 or any prior year. No interlocking relationship
exists between the members of the Company's Board of Directors or Compensation
Committee and the board of directors and compensation committee of any other
company, nor has any such interlocking relationship existed in the past.

AUDIT COMMITTEE REPORT

In this section below, we describe our financial and accounting
management policies and practices.

Composition. The Audit Committee of the Board of Directors is composed
of three independent directors, as defined under Rule 4200(a)(15) of the
National Association of Securities Dealers' listing standards. The Audit
Committee presently consists of Messrs. Bean (Chairman), Garrison and Wilson.
The Board of Directors has adopted a written charter for the Audit Committee.

Responsibilities. The responsibilities of the Audit Committee include
recommending to the Board of Directors an accounting firm to be engaged as the
Company's independent accountants. Management is responsible for the Company's
internal controls and financial reporting process. The independent accountants
are responsible for performing an independent audit of the Company's
consolidated financial statements in accordance with auditing standards
generally accepted in the United States of America and for issuing a report
thereon.

Review with Management and Independent Accountants. In this context,
the Audit Committee has met and held discussions with management and the
independent accountants. Management represented to the Audit Committee that the
Company's consolidated financial statements were prepared in accordance with
accounting principles generally accepted in the United States of America, and
the Audit Committee has reviewed and discussed the consolidated financial
statements with management and the independent accountants. The Audit Committee
discussed with the independent accountants matters required to be discussed by
Statement on Auditing Standards No. 61, "Communication with Audit Committees."

The Company's independent accountants also provided to the Audit
Committee the written disclosures required by Independence Standards Board
Standard No. 1, "Independence Discussions with Audit Committees," and the Audit
Committee discussed with the independent accountants, KPMG LLP, that firm's
independence.

Summary. Based upon the Audit Committee's discussions with management
and the independent accountants and the Audit Committee's review of the
representations of management, and the report of the independent accountants to
the Audit Committee, the Audit Committee recommended that the Board of Directors
include the audited consolidated financial statements in the Company's Amended
Annual Report on Form 10-K/A for the year ended December 31, 2001, as filed with
the Securities and Exchange Commission.

THE AUDIT COMMITTEE.
Richard E. Bean (Chairman)
C. Ivan Wilson
Robert E. Garrison II

AUDIT AND RELATED FEES

Audit Fees. The aggregate fees billed by KPMG LLP for professional
services for the audit of the Company's annual consolidated financial statements
for the year 2001 and the review of the consolidated financial statements
included in the Company's Forms 10-Q for the year 2001 were $210,500.

Audit Related Fees. The aggregate fees billed by KPMG LLP for
professional services related to the audit of the Company's annual consolidated
financial statements for the year 2001 were $380,521. These services consisted
primarily of audits of the Company's acquisition partnerships and audits of
investment entities in Mexico.

Financial Information Systems Design and Implementation Fees. There
were no fees billed by KPMG LLP for financial information systems design and
implementation fees for the year 2001.

All Other Fees. The aggregate fees billed by KPMG LLP for tax services
for the year 2001 were $29,356.

The Audit Committee has determined that the provision of services
rendered above is compatible with maintaining KPMG LLP's independence.

EMPLOYMENT AGREEMENTS

In 1999, FirstCity Commercial entered into employment agreements with
Messrs. Terry R. DeWitt, G. Stephen Fillip and James C. Holmes. The term of each
of these contracts runs to December 31, 2004. These contracts provide for
salaries of $250,000, $250,000 and $200,000, respectively. Additionally, these
contracts provide for the establishment of a bonus pool based on the annual net
profits of Commercial before taxes and interest expense on the indebtedness of
Commercial to the Company exceeding certain thresholds. Messrs. DeWitt, Fillip
and Holmes participate in the benefit plans of the Company.

CUMULATIVE TOTAL STOCKHOLDER RETURN

The following performance graph (the "Performance Graph") compares the
cumulative total stockholder return on a share of Common Stock, based on the
market price thereof, with

o the cumulative total return of the CRSP Total Return Index for
the Nasdaq Stock Market (US) (the "Nasdaq Market Index")
prepared for Nasdaq by the Center for Research in Security
Prices ("CRSP") and

o the CRSP Financial Stocks Index (the "Nasdaq Industry Index")
prepared for Nasdaq by CRSP

for the period beginning on December 31, 1996 and ending on December 31, 2001.
Cumulative total stockholder return is based on an annual total return, which
assumes the reinvestment of all dividends for the period shown and assumes that
$100 was invested on December 31, 1996 in each of Common Stock, the Nasdaq
Market Index and the Nasdaq Industry Index. The Company has not declared any
dividends during the period covered by the Performance Graph. The results shown
in the Performance Graph are not necessarily indicative of future performance.

[PERFORMANCE GRAPH]

<Table>
<Caption>
12/31/96 03/31/97 06/30/97 09/30/97 12/31/97 03/31/98 06/30/98 09/30/98 12/31/98
-------- -------- -------- -------- -------- -------- -------- -------- --------

Nasdaq Market 100.00 94.57 111.90 130.82 122.48 143.34 147.28 132.69 172.68

NASDAQ Financial Stocks 100.00 104.36 121.45 141.68 153.93 162.15 158.01 130.72 148.57

FirstCity Financial 100.00 74.14 96.55 87.93 104.74 104.31 100.00 55.17 44.61
</Table>

<Table>
<Caption>
03/31/99 06/30/99 09/30/99 12/31/99 03/31/00 06/30/00 09/29/00 12/29/00 03/31/01
--------- --------- --------- --------- --------- --------- --------- --------- ---------

Nasdaq Market 193.65 211.83 217.11 320.89 360.25 313.24 288.25 193.01 144.08

NASDAQ Financial Stocks 146.11 162.89 142.08 147.58 138.47 128.29 150.73 159.40 153.14

FirstCity Financial 34.37 18.97 5.17 9.48 8.19 6.47 6.57 5.82 4.31
</Table>

<Table>
<Caption>
06/29/01 09/28/01 12/31/01
--------- --------- ---------

Nasdaq Market 169.81 117.81 153.15

NASDAQ Financial Stocks 173.00 166.01 175.34

FirstCity Financial 4.83 6.03 4.14
</Table>

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Company owns equity interests in various purchased asset portfolios
through limited partnerships and limited liability companies ("Acquisition
Partnerships") in which a corporate affiliate of the Company is the sole general
partner or managing member, and the Company and other non-affiliated investors
are limited partners or members. Certain directors and executive officers of the
Company may also serve as directors and/or executive officers of the general
partner or managing member, but receive no additional compensation from or on
behalf of such general partner or managing member for serving in such capacity.
The Company provides asset servicing to such Acquisition Partnerships pursuant
to servicing agreements between the Company and such Acquisition Partnerships.

Under a Right of First Refusal Agreement and Due Diligence
Reimbursement Agreement effective as of January 1, 1998, as amended (the "Right
of First Refusal Agreement") among the Company, FirstCity Servicing Corporation,
Cargill and

its wholly owned subsidiary CFSC Capital Corp. II ("CFSC"), if the Company
receives an invitation to bid on or otherwise obtains an opportunity to acquire
interests in loans, receivables, real estate or other assets located in the
United States, Canada, Mexico, or the Caribbean in which the aggregate amount to
be bid exceeds $4 million, the Company is required to follow a prescribed notice
procedure pursuant to which CFSC has the option to participate in the proposed
purchase by requiring that such purchase or acquisition be effected through an
Acquisition Partnership formed by the Company and Cargill (or an affiliate). The
Right of First Refusal Agreement does not prohibit the Company from holding
discussions with entities other than CFSC regarding potential joint purchases of
interests in loans, receivables, real estate or other assets, provided that any
such purchase is subject to CFSC's right to participate in the Company's share
of the investment. The Right of First Refusal Agreement further provides that,
subject to certain conditions, CFSC will bear 50% of the due diligence expenses
incurred by the Company in connection with proposed asset purchases. The Right
of First Refusal Agreement is a restatement and extension of a similar agreement
entered into among the Company, certain members of the Company's management and
Cargill in 1992. The Right of First Refusal Agreement has a termination date of
January 1, 2003.

The Company has loans receivable, totaling $18.6 million at December
31, 2001, made to certain Acquisition Partnerships located in Mexico. These
loans are at fixed rates ranging from 19% to 20%, with default provisions
allowing for rates from 23% to 30%. The Company also has a loan receivable ($1.2
million at December 31, 2001) to a domestic Acquisition Partnership bearing
interest at Prime plus 7%. Payments on these notes are dependent upon proceeds
from the resolution of Portfolio Assets held by the Acquisition Partnerships.

During the first quarter of 2001, the Company sold 35% of its equity
interest in a domestic Acquisition Partnership to CFSC for $7.0 million
resulting in a gain of $3.1 million. In the third quarter of 2001, the Company
sold all of its interest in another domestic Acquisition Partnership to CFSC for
$.6 million resulting in a gain of $.2 million.

During 2000, Cargill provided the Company with a $30 million credit
facility (increased to $35 million in August 2002), which matures in March 2003.
Borrowings under such facility bore interest at LIBOR plus 4.5% and were secured
by investments in Acquisition Partnerships. As of December 31, 2001, outstanding
borrowings under such facility were $27.4 million. Jeffery D. Leu, a director of
the Company, is an officer of certain affiliates of Cargill. The Company
believes that the terms of this credit facility are generally as favorable to
the Company as the terms it would receive from an independent third party.

During 1999, Cargill provided the Company with a $9.6 million credit
facility, which matures in January 2003. Borrowings under such facility bore
interest at LIBOR plus 5% and were secured by the stock of Bosque Asset
Corporation and the proceeds of the class F and UR certificates held by
FirstStreet Investment, LLC. As of May 18, 2001, outstanding borrowings under
such facility were $7.6 million. The Company believes that the terms of this
credit facility are generally as favorable to the Company as the terms it would
receive from an independent third party.

Pursuant to a noncancellable operating lease, the Company leases the
office space for its principal executive offices in Waco, Texas from a trust
created for the benefit of the children of James R. Hawkins, the Chairman of the
Board of the Company. This lease expires in December of 2001 and contains an
option in favor of the Company pursuant to which the Company may renew the lease
for two additional five-year periods, with escalating lease payments. Rental
expenses under such lease for calendar year 2001 were $90,000. The Company
believes that the terms of such lease are generally as favorable to the Company
as the terms it would receive from an independent third party.

At March 15, 2002, Terry R. DeWitt, the Co-President of FirstCity
Commercial, had indebtedness with the Company in the amount of $125,000. The
largest amount of indebtedness outstanding at any time during 2001 was $132,000.
Such indebtedness is unsecured and bears interest at the rate of 5% annually.
Repayment of such indebtedness is expected from future performance bonuses from
the Company. To the extent such repayment from performance bonuses does not meet
the amounts due under this indebtedness, the difference between the amount due
and the amount repaid from performance bonuses will be forgiven. If employment
is terminated during the term, the remaining amount due will not be forgiven.

PROPOSAL II - RATIFICATION AND APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS

The Board of Directors has appointed KPMG LLP ("KPMG") to serve as
independent certified public accountants for the Company and its subsidiaries
for fiscal year 2002. It is intended that such appointments be submitted to the
stockholders of

the Company for ratification at the Annual Meeting. KPMG has served as the
Company's auditors since October 27, 1995 (on which date KPMG was so appointed
by the Board of Directors, which appointment was recommended by the Board's
Audit Committee) and has no investment in the Company or its subsidiaries.

Although the submission of this matter to the stockholders is not
required by law, the Board of Directors will reconsider its selection of
independent accountants if this appointment is not ratified by the stockholders.
Ratification will require the affirmative vote of the majority of the shares of
Common Stock represented at the meeting, in person or by proxy.

It is expected that representatives of KPMG will be present at the
Annual Meeting with an opportunity to make a statement should they desire to do
so and to respond to appropriate questions from stockholders.

THE AUDIT COMMITTEE AND THE BOARD OF DIRECTORS RECOMMEND A VOTE "FOR"
KPMG AS CERTIFIED PUBLIC ACCOUNTANTS FOR THE COMPANY AND ITS SUBSIDIARIES FOR
FISCAL YEAR 2002.

STOCKHOLDERS' PROPOSALS

Pursuant to the Exchange Act, and regulations under the Exchange Act,
individual stockholders have a limited right to propose for inclusion in the
proxy statement a single proposal for action to be taken at an annual meeting of
the stockholders. Proposals intended to be presented at the annual meeting to be
held in 2003 must be received at the Company's principal executive offices no
later than August 14, 2003. Such proposals should be addressed as follows:
FirstCity Financial Corporation, P.O. Box 8216, Waco, Texas 76714, Attention:
Secretary.

Stockholder proposals submitted outside of the Securities and Exchange
Commission's procedures for including such proposals in the Company's proxy must
be mailed or delivered to the attention of the Secretary at the address above
and must, in the case of a proposal with respect to the annual meeting to be
held in 2003, be received by the Company no later than August 14, 2003. The
proposal must comply in all respects with the requirements set forth in the
Company's bylaws, and the Board of Directors may reject any proposal not made in
accordance with these requirements. A copy of these requirements is available
upon request from the Secretary of the Company at the address set forth above.

With respect to nominations of one or more persons for election as
directors, written notice of the stockholder's intent to make such
nomination(s), which notice must comply in all respects with the requirements
therefor set forth in the Company's bylaws, must be mailed or delivered to the
attention of the Secretary at the address above and must be received by the
Company no later than thirty days, and no sooner than sixty days, prior to the
date of the 2003 annual meeting of stockholders or, if such annual meeting is
not publicly announced at least forty days prior to the date of such annual
meeting, no later than the close of business ten days after the date of such
public announcement. The nomination must be made in accordance with the
provisions in the Company's bylaws, and if the presiding officer of the annual
meeting determines that the nomination does not comply with the provisions, he
may cause the nomination to be disregarded. A copy of the nomination provisions
is available upon request from the Secretary of the Company at the address set
forth above.

OTHER MATTERS

Management does not presently know of any matters which may be
presented for action at the Annual Meeting other than those set forth herein.
However, if any other matters properly come before the Annual Meeting, it is the
intention of the persons named in the proxies solicited by Management to
exercise their discretionary authority to vote the shares represented by all
effective proxies on such matters in accordance with their best judgment.

By Order of the Board of Directors,

/s/ Richard J. Vander Woude

November 19, 2002 Richard J. Vander Woude
Secretary

PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!

ANNUAL MEETING OF STOCKHOLDERS
FIRSTCITY FINANCIAL CORPORATION

DECEMBER 17, 2002

Please Detach and Mail in the Envelope Provided

A [X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE

1. To elect seven directors, each to serve until the next Annual Meeting of
Stockholders and until their successors are elected and qualified;

FOR WITHHELD
[ ] [ ]

For, except vote withheld from the following nominee(s):

- --------------------------------------------------------------------------------

NOMINEES:
James R. Hawkins
C. Ivan Wilson
James T. Sartain
Richard E. Bean
Dane Fulmer
Robert E. Garrison II
Jeffery D. Leu

2. To ratify the Board of Directors' appointment of KPMG LLP ("KPMG") as
independent certified public accountants for the Company and its
subsidiaries for fiscal year 2002.

FOR AGAINST ABSTAIN
[ ] [ ] [ ]

Please complete, sign, date and return promptly the enclosed proxy in the
envelope provided.

Signature(s) Signature(s) Date
-------------------- -------------------- ---------

NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee, or guardian, please
give full title as such.

FIRSTCITY FINANCIAL CORPORATION

PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

FOR THE ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON DECEMBER 17, 2002

The undersigned hereby appoints James T. Sartain and Richard J. Vander
Woude, jointly and severally, as proxies, with full power of substitution and
with discretionary authority, to vote all shares of Common Stock that the
undersigned is entitled to vote at the Annual Meeting of Stockholders (the
"Meeting") of FirstCity Financial Corporation, a Delaware corporation (the
"Company"), to be held at Ridgewood Country Club, 7301 Fish Pond Road, Waco,
Texas 76714, on Tuesday, December 17, 2002, at 9:00 a.m., local time.

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IF NO DIRECTION IS INDICATED, THE SHARES WILL BE VOTED "FOR" THE ELECTION OF THE
NOMINEES NAMED HEREIN AS DIRECTORS AND "FOR" THE PROPOSAL TO RATIFY THE
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS FOR THE COMPANY AND ITS
SUBSIDIARIES FOR FISCAL YEAR 2002.

(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)