Exhibit 99.1
FIRST INVESTORS REPORTS FIRST QUARTER EARNINGS
HOUSTON, Sept. 8 /PRNewswire-FirstCall/ -- First Investors Financial
Services (NASDAQ/OTC: FIFS) has reported net income of $924,864 or $0.21 per
share for the three months ended July 31, 2005 as compared to $86,953 or $0.02
per share for the three months ended July 31, 2004. The increase in net income
is primarily attributable to an increase in interest income associated with
growth in the portfolio of receivables held for investment, and lower provision
for credit losses associated with the improvements in delinquency and net
charge-off rates.
As of July 31, 2005, First Investors' portfolio of receivables held for
investment, net was $299 million compared to $249 million at April 30, 2005. For
the three months ended July 31, 2005, the Company reported $80 million in new
loan originations compared to $28 million for the three months ended July 31,
2004. New loan origination volume for the three months ended July 31, 2005,
increased 70% as compared to new loan originations during the three months ended
April 30, 2005. As a result of this increase in origination volume, the average
outstanding for the portfolio of receivables held for investment increased 30%
over the prior year period.
Net interest income for the three months ended July 31, 2005, increased 7%
compared to the three months ended July 31, 2004. The increase was primarily due
to the increase in the average portfolio of receivables held for investment
which was offset by a 70 basis point decline in effective yields and a 100 basis
point increase in the Company's cost of funds. Net interest spread decreased
from 10.0% for the three months ended July 31, 2004, to 8.3% for the three
months ended July 31, 2005, 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, and an increase in the
Company's cost of funds. The increase in cost of funds is primarily related to
an increase in market rates due to the current economic climate and market rate
increases adopted by the Federal Reserve System.
Total operating expenses as a percentage of managed receivables increased
slightly from 3.7% for the three months ended July 31, 2004 to 3.8% for the
three months ended July 31, 2005, due to higher loan origination costs
associated with the increasing origination volume. The dollar delinquency rate
declined from 2.7% to 0.6%, and the annualized charge-off rate decreased from
4.7% to 2.5% for the three months ended July 31, 2004 as compared to the three
months ended July 31, 2005, 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 are very pleased
with the results for the first quarter and expect continued growth in interest
income and lower provision expense for the remainder of the year. We are
experiencing solid origination growth in both our direct and indirect channels.
Our credit quality indicators, namely the 30+ day delinquency rate and the
annualized net charge-off rate are lower than we have experienced in our 17-year
history, and are currently at levels that exceed our expectations. This is being
driven by quality asset growth as well as a strong collection effort. Our
business model is hitting on all cylinders as we continue to focus on generating
quality receivables growth, delivering outstanding credit performance and
achieving continued growth in profitability."
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
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2005 2004
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Interest Income $ 8,498 $ 6,952
Interest Expense 2,960 1,777
Net Interest Income 5,538 5,175
Provision for Credit Losses 1,652 2,442
Income after Provision for Credit Losses 3,886 2,733
Servicing Revenue 578 970
Other finance charges and fees 508 399
Insurance products 291 142
Income from investment 126 194
Other interest income 250 74
Other income 144 110
Unrealized Loss on Interest Rate
Derivative Positions (3) (68)
Total other income 1,894 1,821
Total Costs and Expenses 4,324 4,417
Income before Provision for Income Taxes
and Minority Interest 1,456 137
Provision for Income Taxes 531 50
Minority Interest --- ---
Net Income $ 925 $ 87
Basic and Diluted
Net Income Per Common Share $ 0.21 $ 0.02
Other Operating Data
Average Principal Balance of Receivables
Held for Investment $ 268,242 $ 206,950
Average Managed Receivables 449,239 478,580
Originations Volume 79,964 28,016
Effective Yield on Receivables Held
for Investment 12.7% 13.4%
Average Cost of Debt 4.4% 3.4%
Weighted Average Number of Shares
Outstanding (in thousands) 4,412 5,000
July 31, April 30,
2005 2005
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Financial Position
Cash and Short-Term Investments $ 21,731 $ 21,511
Receivables Held for Investment, Net 298,989 248,977
Receivables Acquired for Investment, Net 542 641
Assets Held for Sale 680 943
Total Assets 334,730 283,510
Total Debt 304,446 254,613
Total Other Liabilities 3,867 3,405
Total Liabilities 308,313 258,018
Total Shareholders' Equity 26,417 25,492
Shareholders' Equity per Common Share 5.99 5.78
As of or As of or
For the Three For the Three
Months Ended Months Ended
July 31, July 31,
2005 2004
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Credit Quality Data
Receivables Held for Investment:
30 + days past due
Number of Loans 1.1% 3.7%
$ Amount 0.6% 2.7%
Net Charge-offs as a % of
average receivables 2.5% 4.7%
Net Charge-offs for the period ending $ 1,707 $ 2,439