EXHIBIT 99.1
FIRST INVESTORS REPORTS THIRD QUARTER OPERATING RESULTS
HOUSTON, March 12 /PRNewswire-FirstCall/ -- First Investors Financial
Services Group, Inc. (OTC Bulletin Board: FIFS) has reported net income of
$821,059 or $0.18 per basic share for the three months ended January 31, 2007
and $2,852,530 or $0.64 per basic share for the nine months ended January 31,
2007. This compares to net income, of $318,491 or $0.07 per share and net income
of $2,007,995 or $0.45 per share reported for the three and nine months ended
January 31, 2006, respectively. The results for the nine months ended January
31, 2007, include a $668,712 gain associated with the reduction in an allowance
for uncertain tax position related to prior period tax returns, which served to
lower tax expense. The results for the three and nine months ended January 31,
2006, include non-recurring legal fees and settlement costs totaling $440,599,
net of taxes, and $506,592, net of taxes, respectively, associated with the
settlement of a lawsuit. Adjusting for these non-recurring items, net income was
$759,090 or $0.17 per basic share and $2,514,587 or $0.57 per basic share for
the three and nine month periods ended January 31, 2006, as compared to $821,059
or $0.18 per basic share and $2,183,818 or $0.49 per basic share for the three
and nine months ended January 31, 2007, respectively.
During the three and nine months ended January 31, 2007, the Company
benefited from higher net interest income and higher other income which was
offset by a higher provision for loan losses and an increase in operating
expenses related to growth in the Company's new loan origination volume. Net
interest income increased 28.1% during the three months ended January 31, 2007
due to a 36.2% increase in the average portfolio of receivables held for
investment and a 0.5% increase in effective yield, due to lower amortization of
capitalized loan costs. These factors offset a 1.1% increase in the cost of
funds. Net interest income for the nine months ended January 31, 2007 increased
24.5% as the average receivables outstanding increased 38.7% and the effective
yield increased 0.1%. These factors offset a 1.0% increase in the cost of funds.
Total operating expenses, excluding legal costs associated with the settlement
of a lawsuit in the prior year periods, increased 17.7% for the three and nine
months ended January 31, 2007 as compared to January 31, 2006, as a result of
the increase in loan origination volume. Total operating costs as a percentage
of the managed portfolio were 4.6% and 4.3% for the three and nine months ended
January 31, 2007, respectively, compared to 4.6% and 4.2% for the three and nine
months ended January 31, 2006, adjusted for legal costs. As of January 31, 2007,
the portfolio of receivables held for investment, net was $480.5 million, a
27.3% increase over the balance as of April 30, 2006. For the nine months ended
January 31, 2007, the Company reported new origination volume of $240.8 million,
which represents an increase of 26.8% over the $189.9 million originated during
the nine months ended January 31, 2006. The delinquency rate by dollars of
delinquent accounts and the annualized net charge-off rate remained constant at
0.4% and 2.5%, respectively, for the nine months ended January 31, 2007 as
compared to the nine months ended January 31, 2006.
In addition, the Board of Directors announced that the Company has entered
into employment agreements with Tommy A. Moore, Jr., President and CEO and
Bennie H. Duck, Executive Vice President and Chief Financial Officer. The
agreements, which are designed to provide the company with stability and
continuity within its executive management structure, carry an initial term of
three years at salary, bonus and benefit levels which are consistent with
existing practices. The agreements also contain customary severance, non-
compete and confidentiality provisions.
Tommy A. Moore, Jr., President and CEO, stated, "We have been very pleased
with our portfolio growth rates and our credit quality year-to-date. Our growth
rates have been driven primarily by our direct to consumer segment which, due to
the inability to capitalize advertising costs, creates some mismatch in our
expenses. Over the past two quarters we have chosen to focus on our direct
channel to provide originations and revenue growth, primarily as a result of our
concerns over lax lending standards in the indirect market including increasing
loan-to-value guidelines and waiving of documentation and verification
requirements such as proof of income which we believe are many of the factors
negatively impacting the mortgage market. While the advertising cost mismatch in
our direct segment, along with an increasing cost of funds, has impacted
short-term profits, we believe that in addition to increasing subsequent period
revenues, the direct portfolio will produce lower losses and servicing costs
over its life."
First Investors is a specialized consumer finance company engaged in the
origination and retention of automobile finance receivables originated from
franchised automobile dealers and directly through consumers from the sale or
refinance 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 Earnings 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
---------------------------- ----------------------------
2007 2006 2007 2006
------------ ------------ ------------ ------------
Interest Income $ 14,553 $ 10,332 $ 40,258 $ 28,744
Interest Expense 6,364 3,938 17,383 10,374
Net Interest Income 8,189 6,394 22,875 18,370
Provision for Credit Losses 3,236 1,822 8,431 5,538
Income after Provision for
Credit Losses 4,953 4,572 14,444 12,832
Servicing revenue 377 433 1,053 1,506
Other finance charges and fees 876 696 2,435 1,803
Insurance products 451 226 932 780
Income from investment 163 96 418 333
Other interest income 482 336 1,342 869
Other income --- 183 --- 569
Realized loss on interest rate
derivative positions --- (195) --- (175)
Total other income 2,349 1,775 6,180 5,685
Total operating expenses 6,171 5,938 17,241 15,447
Income before Provision for
Income Taxes 1,131 409 3,383 3,070
Provision for income taxes 310 91 531 1,062
Net Earnings $ 821 $ 318 $ 2,852 $ 2,008
Basic Net Earnings Per
Common Share $ 0.18 $ 0.07 $ 0.64 $ 0.45
Diluted Net Earnings Per
Common Share $ 0.17 $ 0.07 $ 0.60 $ 0.44
Other Operating Data
Average Principal Balance of
Receivables
Held for Investment $ 449,705 $ 329,993 $ 418,509 $ 301,737
Total Managed Receivables 532,193 460,125
Originations Volume 88,594 41,604 240,802 189,945
Effective Yield on Receivables
Held for Investment 13.0% 12.5% 12.8% 12.7%
Average Cost of Debt 5.7% 4.6% 5.5% 4.5%
Weighted Average Number of Basic
Shares Outstanding
(in thousands) 4,478 4,452 4,470 4,434
Weighted Average Number of
Diluted
Shares Outstanding
(in thousands) 4,771 4,741 4,788 4,614
January 31 April 30,
Financial Position 2007 2006
- ---------------------------------------- ------------ ------------
Cash and Short-Term Investments $ 1,760 $ 3,380
Restricted Cash 37,171 25,538
Receivables Held for Investment, net 480,464 377,399
Assets Held for Sale 1,344 960
Total Assets 533,815 419,288
Total Debt 495,312 382,618
Total Other Liabilities 7,176 8,549
Total Liabilities 502,488 391,167
Total Shareholders' Equity 31,327 28,121
Shareholders' Equity per Common Share 7.00 6.31
As of or As of or
For the Nine For the Nine
Months Ended Months Ended
January 31 January 31
Credit Quality Data 2007 2006
- ---------------------------------------- ------------ ------------
Receivables Held for Investment:
30 + days past due
Number of Loans 0.8% 0.8%
$ Amount 0.4% 0.4%
Net Charge-offs as a % of average
receivables 2.5% 2.5%
Net Charge-offs for the period ending $ 7,773 $ 5,560
SOURCE First Investors Financial Services Group, Inc.
-0- 03/12/2007
/CONTACT: Bennie H. Duck of First Investors Financial Services Group,
Inc., +1-713-977-2600/