First Investors Reports First Quarter Earnings

HOUSTON, Sept. 15 /PRNewswire-FirstCall/ -- First Investors Financial Services Group ("FIFS") has reported net income of $276,054, or $0.06 per share, for the three months ended July 31, 2010, as compared to $522,649, or $0.11 per share, for the three months ended July 31, 2009.  The decrease in net income is primarily attributable to a decrease in interest income as a result of a decline in the average portfolio outstanding and lower revenues from third-party servicing.  These were partially offset by lower interest expense and a lower provision for credit losses.

As of July 31, 2010, First Investors' portfolio of receivables held for investment, net was $329.7 million compared to $339.3 million at April 30, 2010.  For the three months ended July 31, 2010, the Company reported $28.3 million in new loan originations compared to $6.8 million for the three months ended July 31, 2009.  Despite the increase in origination volume, the average outstanding balance for the portfolio of receivables held for investment decreased 21.3% during the three months ended July 31, 2010 as compared to July 31, 2009.  

Net interest income for the three months ended July 31, 2010, decreased 14.1% compared to the three months ended July 31, 2009.  The decrease was due to the decrease in the average portfolio of receivables held for investment which was partially offset by an increase in the effective yield and a lower cost of funds.  Effective yields increased from 12.9% for the three months ended July 31, 2009, to 13.4% for the three months ended July 31, 2010.  The Company's weighted average cost of funds decreased from 2.9% for the three months ended July 31, 2009, to 2.5% for the three months ended July 31, 2010.  The increase in effective yields reflects the Company's efforts to increase the interest rates it charges on its portfolio as well as lower interest write-offs related to repossessions.  The decrease in the cost of funds reflects lower short-term interest rates and lower borrowing spreads.  Revenue from servicing activities for the three months ended July 31, 2010 decreased 26.3% as the average portfolio serviced for others decreased from $291.8 million to $188.9 million.

Total operating expenses declined 7.3% during the three months ended July 31, 2010 compared to the three months ended July 31, 2009 though operating expenses as a percentage of average managed receivables increased from 3.6% for the three months ended July 31, 2009, to 4.6% for the three months ended July 31, 2010 due to the declining management portfolio.  The dollar delinquency rate decreased from 2.8% to 2.5%, while the annualized charge-off rate increased from 5.8% to 6.0% for the three months ended July 31, 2010, as compared to the three months ended July 31, 2009 due to the denominator effect created by the amortizing portfolio.  The dollar amount of net charge-offs declined from $6.1 million for the three months ended July 31, 2009 to $5.0 million for the three months ended July 31, 2010.

Tommy A. Moore, Jr., President and CEO, commenting on the results, noted, "We are encouraged by the continued growth in our origination volume and are optimistic that we will continue to grow our loan assets.  We are also pleased to see our credit quality continues to improve both in terms of delinquency rates as well as the dollar amount of net charge-offs.  Our focus for the remainder of the fiscal year will be to grow our portfolio of receivables held for investment and interest revenue to take advantage of our improving net interest spread."

First Investors is a consumer finance company engaged in originating and holding for investment automobile finance receivables and promissory notes originated from franchised automobile dealers or through a refinancing transaction with the vehicle owner.  The Company specializes in lending to consumers with impaired credit profiles.  The Company also purchases receivables through portfolio acquisitions or from third party originators and performs third-party loan servicing for unaffiliated clients.  The Company is headquartered in Houston, Texas.  Copies of this press release and other information on the Company including its historical financial statements are also available on the Company's web site at www.fifsg.com.

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.

SOURCE First Investors Financial Services Group, Inc.