SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) September 9, 1998
--------------------------------
FIRSTCITY FINANCIAL CORPORATION
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 1-7614 76-0243729
- --------------------------------------------------------------------------------
(State or Other (Commission File Number) (IRS Employer
Jurisdiction Identification No.)
of Incorporation)
6400 Imperial Drive, Waco, TX 76712
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (254) 751-1750
----------------------------
HOFS02...:\92\54892\0010\1612\FRM4298L.08A
<PAGE>
INFORMATION TO BE INCLUDED IN THE REPORT
ITEM 5. OTHER EVENTS
Press Release of September 9, 1998.
ITEM 7. EXHIBITS
Exhibit number Description
-------------- -----------
99.1 Press Release of September 9, 1998
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FIRSTCITY FINANCIAL CORPORATION
By: /s/ Gary H. Miller
----------------------------------------------
Name: Gary H. Miller
Title: Senior Vice President and Chief Financial
Officer
Date: September 11, 1998
3
<PAGE>
EXHIBIT INDEX
Exhibit number Description
-------------- -----------
99.1 Press Release of September 9, 1998
4
- --------------------------------------------------------------------------------
N E W S R E L E A S E
- --------------------------------------------------------------------------------
FIRSTCITY
FINANCIAL CORPORATION
contact:Suzy W. Taylor
(713) 652-1810
FIRSTCITY ANNOUNCES ANTICIPATED EFFECTS OF LOWER INTEREST RATES
HOUSTON, TEXAS, SEPTEMBER 9, 1998... FirstCity Financial Corporation
today announced that, as a result of a review of the carrying value of its
mortgage servicing rights precipitated by the recent drop in mortgage interest
rates, the company anticipates that a substantial additional provision to
increase its allowance for servicing rights valuation will be required in the
third quarter. The required provision will be determined based upon market
conditions at the end of the third quarter. However, based upon the company's
assessment of the current interest rate environment, it expects the provision to
be in the range of from $10 to $14 million. The additional provision will be
required to reflect the increasing likelihood that the company will experience
increased prepayment speeds in its owned residential servicing portfolio in the
current rate environment. At June 30, 1998, FirstCity reflected $125 million of
mortgage servicing rights. Robust mortgage originations have increased this
total to $151 million as of August 31, 1998, before considering the valuation
allowance.
While the interest rate environment has negative implications on the
mortgage servicing right asset, the Company noted that a lower interest rate
environment is a key driver to increased production levels within its mortgage
business and to its activities in its other businesses. As previously announced,
the Company intends to reduce its overall investment in mortgage servicing
rights through a bulk sale of approximately $3 billion of such servicing rights
which is expected to close in the fourth quarter. Thereafter, the Company
intends to sell a substantial portion of its currently produced servicing rights
in the bulk markets on a periodic basis.
Separately, the company announced that it has decided not to proceed
with a proposed public offering of cumulative preferred stock, and that it will
consider other funding alternatives. A prospectus supplement relating to such
offering was filed with the Securities and Exchange Commission on July 29, 1998
under the Company's outstanding "universal shelf" registration statement.
This press release contains forward-looking statements that are
dependent upon a number of uncertainties that could cause the actual results to
differ materially from those implied, projected or predicted in the
forward-looking statements. When any such forward-looking statement includes a
statement of the assumptions or bases underlying such forward-looking statement,
the Company cautions that, while such assumptions or bases are believed to be
reasonable and are made in good faith, assumed facts or bases almost always vary
from actual results, and the differences between assumed facts or bases and
actual results can be material, depending upon the circumstances. When, in any
forward-looking statement, the Company, or its management, expresses an
expectation or belief as to future results, such expectation or belief is
expressed in good faith and is believed to have a reasonable basis, but there
can be no assurance that the statement of expectation or belief will result or
be achieved or accomplished. The words "believe," "expect," "estimate,"
"project," "anticipate" and similar expressions identify forward-looking
statements.
FirstCity is a diversified financial services company with operations
dedicated to mortgage lending, portfolio asset acquisition and resolution and
consumer lending through over 90 offices in the US and with affiliate
organizations in Europe and Mexico. Its common (FCFC) and preferred (FCFCP and
FCFCO) stocks are listed on the NASDAQ National Market System
