First Investors Reports Record Fourth Quarter and Fiscal Year Earnings

HOUSTON, July 14, 2011 /PRNewswire/ -- First Investors Financial Services Group, Inc. ("FIFS"-OTCQB) has reported net earnings of $1,342,365, or $0.29 per basic common share, for the three months ended April 30, 2011, and $3,365,461, or $0.72 per basic common share, for the year ended April 30, 2011.  This compares to net earnings of $155,999, or $0.03 per basic common share, for the three months ended April 30, 2010, and $735,735, or $0.16 per basic common share, for the year ended April 30, 2010.  The results for the year ended April 30, 2011 were positively impacted by a one-time exit fee received by the Company in September 2010, in exchange for its agreement to release servicing rights on a portfolio to the third-party client which had elected to re-establish a servicing platform.  This agreement positively impacted net income by $302,896, or $0.06 per fully-diluted share, for the year ended April 30, 2011.  The results for the year ended April 30, 2010, include a $250,243 gain, after taxes, associated with the reduction of an uncertain tax position and the reversal of certain accruals for interest and penalties related to this position.

For the year ended April 30, 2011, the Company benefited from lower interest expense, a lower provision for credit losses and lower operating expenses which were partially offset by lower interest income and lower other income.  Net interest income increased 2.4% during the year ended April 30, 2011, primarily due to the positive impact provided by a portfolio of automobile loans acquired by the Company in October 2010, a 102 basis point increase in the effective yield on the portfolio of receivables held for investment, a 29 basis point decrease in the average cost of debt and a 14.2% decrease in the average debt outstanding.  This was partially offset by a 13.9% decrease in the average outstanding balance of the portfolio of receivables held for investment.  Servicing revenue decreased 61.7% due to the amortization of the serviced portfolio, the release of portfolio servicing rights back to a third party client in September 2010 and the acquisition of a portfolio previously serviced on behalf of a third party client in October 2010.  Total operating expenses decreased 5.1% for the year ended April 30, 2011, as compared to the year ended April 30, 2010, primarily due to decreases in headcount, other interest expense and repossession and collection-related fees.  These were partially offset by increases in printing and postage costs associated with the Company's decision to re-enter the direct lending market in August 2010.

As of April 30, 2011, the portfolio of Receivables Held for Investment, net was $332.8 million, a 1.9% decrease over the balance as of April 30, 2010.  For the year ended April 30, 2011, the Company reported new origination volume of $143.5 million, which represents an increase of 189.9% over the $49.5 million originated during the year ended April 30, 2010.  The delinquency rate by dollars of delinquent accounts decreased from 2.1% as of April 30, 2010, to 1.8% as of April 30, 2011, while the annual net charge-off rate decreased from 6.5% to 5.3% as of the same dates.  The decrease in the net charge-off rate is due to a combination of lower repossession rates and higher vehicle recovery rates.

Tommy A. Moore, Jr., President and CEO, commenting on the results, noted, "We are very pleased with our operating results for the fiscal year ended April 30, 2011, which represented the highest net income in the history of the Company.  We reported a significant increase in our origination volume, resulting from improvement in our indirect lending segment as well as the impact of our decision to re-enter the direct lending segment in August 2010.  We realized a significant increase in net interest income from the acquisition of a portfolio consisting of $39.1 million in active loans and $35.8 million in charged-off loans in October 2010 from a third-party servicing client.  Our credit quality, measured both by delinquency rates and net charge-off rates, improved during fiscal year 2011, which positively impacted our provision for credit losses.  During the fiscal year, we also completed our first senior/subordinate securitization, issuing $150 million in asset-backed notes in January 2011.  In May 2011, we announced that we had entered into a definitive agreement to sell 1,666,667 shares of common stock to certain accredited investors affiliated with the Company at a price of $7.50 per share in a two tranche transaction.  We closed the first tranche, which covered 666,667 shares in May 2011, and will close the second tranche covering the remaining shares in November 2011.  The proceeds from the sale will be used to fund the growth in our portfolio of receivables held for investment.  For fiscal year 2012, we will focus on growing our receivables portfolio and continuing to drive improvements in our credit quality."

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.