FirstCity Financial Announces Industrial Bank Initiative

FirstCity Financial Corporation announced today it has filed an application for an industrial bank charter with the State of Utah Department of Financial Institutions and an application for deposit insurance with the Federal Deposit Insurance Corporation (FDIC). An industrial bank is a limited purpose state chartered depository institution that is subject to state and federal banking regulations but its shareholders are exempt from operation under the Bank Holding Company Act.

The application, if approved, will clear the way for FirstCity to open American Pioneer Bank in Salt Lake City, Utah. Cargill Value Investment (CVI), FirstCity’s longtime investment partner, will own a minority interest in the Bank. The bank will initially be capitalized with $30 million with FirstCity investing $19.2 million. The regulatory review and approval process is expected to take approximately six months.

James T. Sartain, president and CEO of FirstCity, said, “We are excited about the prospects the industrial bank platform will provide and how it will complement our existing business. The establishment of American Pioneer Bank represents an integral initiative to further diversify and enhance FirstCity’s operations. The advantage of low-cost funds available to the industrial bank will allow it to compete effectively in the market for attractive performing loans, and complement FirstCity’s current distressed asset business. With access to the existing infrastructure, expertise and core competencies of FirstCity, the bank will be able to operate efficiently in the performing loan markets.”

The Bank’s business plan is based upon a pure wholesale strategy, according to Sartain. No retail operations, branches or loan origination offices will be built. This approach resembles FirstCity’s and CVI’s established business lines as veteran buyers of loans in the secondary market. “FirstCity’s demonstrated experience in underwriting, credit risk analysis and proven discipline in purchasing and servicing debt instruments will serve as the cornerstone in building American Pioneer Bank,” said Sartain.

American Pioneer Bank will operate independently from FirstCity and CVI with its own board of directors and management. A. Hartie Spence has been appointed president of the bank. Mr. Spence has over 35 years managing banks, including previous positions as President, Chief Executive Officer and Chairman of FDIC insured institutions.

FirstCity Financial Corporation

FirstCity Financial Corporation is a diversified financial services Company with operations dedicated to portfolio asset acquisition and resolution with offices in the U.S. and with affiliate organizations in France and Mexico. Its common (FCFC) stock is listed on the NASDAQ National Market System. For more information, visit www.fcfc.com.