First Investors Reports A 142% Increase In Fiscal Year Earnings

HOUSTON, July 12, 2012 /PRNewswire/ -- First Investors Financial Services Group, Inc. ("FIFS"-OTCQB) has reported net earnings of $2,268,202, or $0.33 per fully diluted share, for the three months ended April 30, 2012, and $8,137,229, or $1.30 per fully diluted share, for the year ended April 30, 2012.  This compares to net earnings of $1,342,365, or $0.27 per fully diluted share, for the three months ended April 30, 2011, and $3,365,461, or $0.69 per fully diluted share, for the year ended April 30, 2011.  The results for the year ended April 30, 2012 are a record for the Company, and were driven by growth in interest income, expansion of the Company's net interest margin and a lower provision for credit losses which resulted from lower net charge-offs.  These factors were offset by lower servicing income related to a decline in third-party managed receivables and higher operating expenses associated with an increase in origination volume.

Net interest income increased 21.6% during the year ended April 30, 2012, due to a combination of growth in the Company's portfolio of receivables held for investment, the positive impact provided by a portfolio of automobile loans acquired by the Company in October 2010 and a 60 basis point increase in net interest spread.  The Company reported origination volume of $257.2 million for the year ended April 30, 2012, which represented a 79.2% increase over the $143.5 million in loans originated for the year ended April 30, 2011.   The average principal balance of receivables held for investment increased 14.4% to $375.8 million for the year ended April 30, 2012.  Servicing revenue decreased 72.0% due to a decline in the average balance of the third-party managed portfolio resulting from a combination of principal amortization and the release of servicing rights in conjunction with the sale of a third party client portfolio in September 2011.  Total operating expenses increased 9.4% for the year ended April 30, 2012, as compared to the year ended April 30, 2011, primarily due to an increase in salaries and benefits and other operating costs, including postage and printing, credit bureau fees and third party costs associated with growth in origination volume and in the average balance of receivables held for investment.    

As of April 30, 2012, the portfolio of Receivables Held for Investment, net was $424.6 million, a 27.6% increase over the balance as of April 30, 2011, due to an increase in origination volume.  The delinquency rate by dollars of delinquent accounts increased from 1.8% as of April 30, 2011, to 2.0% as of April 30, 2012, while the annual net charge-off rate decreased from 5.3% to 3.3% over the same period.  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 extremely proud of our results for fiscal year 2012, a year in which we generated record earnings, near record origination volume and a significant improvement in our net charge-off rate.  Growth in origination volume was driven by both our indirect and direct lending channels.  Our indirect business volume benefited from an 81.6% increase in the number of dealers we serve, as we added ten new dealer service managers to both existing and new markets.  Our effective yield increased from 13.8% to 14.8% as newer loans at more favorable pricing replaced older vintage loans.  From a credit quality perspective, we saw a $5.0 million decrease in our net charge-offs due to lower repossessions and non-repossession charge-offs and higher recovery rates.  This positively impacted the provision for credit losses which declined 21.4% over the period.  During the fiscal year, we also completed two senior/subordinate securitizations, issuing $250 million in asset-backed notes at attractive pricing and enhancement levels.  For fiscal year 2013, we will focus on growing our receivables portfolio and continuing to achieve 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.

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