First Investors Reports Record Year-to-Date Operating Results

HOUSTON, March 8, 2012 /PRNewswire/ -- First Investors Financial Services Group, Inc. ("FIFS.OTCQB") reported today net income of $1,885,108, or $0.28 per fully-diluted share, for the three months ended January 31, 2012, and $5,869,028, or $0.97 per fully-diluted share, for the nine months ended January 31, 2012.  This compares to net income of $741,717, or $0.15, per fully-diluted share and net income of $2,023,096, or $0.42, per fully-diluted share reported for the three and nine months ended January 31, 2011.  The results for the three and nine month periods ending January 31, 2012 were positively impacted by growth in the average portfolio of receivables held for investment, a wider net interest spread and a significantly lower provision for credit losses.  Also during the nine months ended January 31, 2012, the Company's net income before tax was positively impacted by a net gain of $646,638 from the sale of its 50 percent residual interest in a third-party portfolio in August 2011 in exchange for the release of servicing rights to the portfolio.   The results for the nine months ended January 31, 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 separate portfolio back to the third-party client which had elected to re-establish a servicing platform.  This resulted in a net pre-tax gain to the Company of $735,396 for the nine months ended January 31, 2011.  

As of January 31, 2012, First Investors' portfolio of receivables held for investment, net increased 21.2% to $400.6 million, as compared to January 31, 2011.  For the three and nine months ended January 31, 2012, the Company reported new origination volume of $67.4 million and $186.7 million, respectively, which represents an increase of 60.9% and 83.2%, respectively over the $41.9 million and $101.9 million originated during the three and nine months ended January 31, 2011, respectively.   Net interest income increased 19.1% and 21.8% during the three and nine months ended January 31, 2012, respectively, when compared to the three and nine months ended January 31, 2011.  The increase in net interest reflects an increase in the net interest spread and additional net interest income earned from the receivables portfolio acquired by the Company in October 2010.  The net interest spread was 11.9% and 12.1% for the three and nine months ended January 31, 2012, respectively, as compared to 11.8% and 11.4% for the three and nine months ended January 31, 2011.  Total operating expenses, as a percentage of the managed portfolio, were 5.4% and 5.1% for the three and nine months ended January 31, 2012, respectively, as compared to 3.9% and 3.6% for the three and nine months ended January 31, 2011, respectively.  The increase in operating expenses as a percentage of the managed portfolio reflects the decline in the average managed portfolio during the three and nine months ended January 31, 2012, which lowered the level of operating leverage the Company was able to achieve, and an increase in marketing expense and staffing to accommodate the Company's growth objectives.

The delinquency rate, based on the outstanding dollar balance of delinquent accounts, was 2.4% at January 31, 2012 compared to 2.7% at January 31, 2011, while the annualized charge-off rate decreased from 5.7% for the nine months ended January 31, 2011 to 3.6% for the nine months ended January 31, 2012, resulting from a decrease in repossessions and defaults, which reflects better performance of loans from the 2009 and newer vintages, higher post charge-off recovery rates and higher vehicle recovery rates.

The Company also announced that on March 1, 2012, it issued $150 million in term asset-backed notes in a private placement transaction.  The notes consisted of six, sequential pay classes and carried a weighted average coupon at issuance of 2.24%.  Initial credit enhancement consists of a cash reserve account equal to 1.5% of the outstanding principal balance of the initial receivables pool and an initial overcollateralization of 0%.  The issuance represented the Company's third term securitization since January 2011.  Proceeds from the issuance were used to reduce the amount of borrowings outstanding under the Company's warehouse credit facility in order to allow room for growth in the Company's portfolio of receivables held for investment.  

Tommy A. Moore, Jr., President and CEO, stated, "We continue to see strong operating results in fiscal year 2012 and are particularly pleased with the operating results for the three and nine month months ended January 31, 2012.  Our origination growth rates continue to improve in both our indirect and direct lending segments and we have invested significantly in our marketing infrastructure to support our growth initiatives.  We continue to see year-over-year improvements in credit quality, particularly annualized net losses, while the competitive environment remains manageable.  The completion of the term note issuance in March increases our available warehouse capacity and allows us to lock in our net interest margin. We are also extremely pleased with the execution we were able to achieve, both in terms of pricing and enhancement levels and believe this demonstrates both our commitment to strong underwriting standards but also our ability to appropriately price for the type of credit that we originate.  With the closing of this transaction, First Investors will have issued $400 million in asset-backed securities since January, 2011. "

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 licensed or exempt from license in 40 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.

SOURCE First Investors Financial Services Group, Inc.

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