Filed by FirstCity Financial Corporation
                           Pursuant to Rule 425 under the Securities Act of 1933
                                      and deemed filed pursuant to Rule 13e-4(c)
                                      under the Securities Exchange Act of 1934.

                               Subject Company:  FirstCity Financial Corporation
                                                   Commission File No. 033-19694


On June 18, 2002, FirstCity Financial Corporation issued the following press
release:

contact: Suzy W. Taylor
         (866) 652-1810

                FIRSTCITY FINANCIAL CONFIRMS THAT EXCHANGE OFFER
        WILL COMMENCE AFTER REGISTRATION STATEMENT IS DECLARED EFFECTIVE

         WACO, TEXAS, June 18, 2002 - FirstCity Financial Corporation
(Nasdaq: FCFC) today confirmed that its proposed exchange offer for its
outstanding shares of New Preferred Stock has not commenced. FirstCity intends
to commence the proposed exchange offer promptly after its registration
statement with respect to the shares of its Common Stock to be issued in
connection with the proposed exchange offer is declared effective by the
Securities and Exchange Commission. The registration statement was filed with
the Securities and Exchange Commission on June 11, 2002.

         Until the actual commencement of the proposed exchange offer as
described above, any materials submitted by any holder of New Preferred Stock to
the exchange agent pursuant to an attempt to tender its shares in connection
with the proposed tender offer will be returned by the exchange agent to the
stockholder.

         These securities may not be exchanged or sold nor may offers to
exchange or buy be accepted prior to the time the registration statement becomes
effective. This news release shall not constitute an offer to exchange or sell,
or the solicitation of an offer to exchange or buy, nor shall there be any
exchange or sale of these securities in any State in which such offer, exchange,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such State.

         FirstCity has filed a tender offer statement and other related
documents with the Securities and Exchange Commission. Upon the effectiveness of
the registration statement and commencement of the exchange offer, copies of the
exchange offer materials may be obtained from Suzy Taylor, toll free, at (866)
652-1810. HOLDERS OF NEW PREFERRED STOCK ARE STRONGLY ADVISED TO READ THESE
DOCUMENTS WHEN THEY ARE AVAILABLE BECAUSE THEY CONTAIN IMPORTANT INFORMATION.
Stockholders may obtain a free copy of these documents, when they are available,
from FirstCity or at the SEC's website, www.sec.gov.

         Certain statements in this press release, which are not historical in
fact, including, but not limited to, statements relating to the proposed
exchange offer, the proposed recapitalization of FirstCity and future
performance, may be deemed to be forward-looking statements under the Private
Securities Litigation Reform Act of 1995. Forward-looking statements include,
without limitation, any statement that may project, indicate or imply future
results, performance or achievements, and may contain the words "expect",
"intend", "plan", "estimate", "believe", "will be", "will continue", "will
likely result", and similar expressions. Such statements inherently are subject
to a variety of risks and uncertainties that could cause actual results to
differ materially from those projected. There are many important factors that
could cause FirstCity's actual results to differ materially from those indicated
in the forward-looking statements. These factors include, but are not limited
to,



the performance of FirstCity's subsidiaries and affiliates; availability of
portfolio assets; assumptions underlying portfolio asset performance, the degree
to which the FirstCity is leveraged; FirstCity's continued need for financing;
availability of FirstCity's credit facilities; the impact of certain covenants
in loan agreements of FirstCity and its subsidiaries, general economic
conditions; interest rate risk; changes (legislative and otherwise) in the asset
securitization industry; fluctuation in residential and commercial real estate
values; capital markets conditions, including the markets for asset-backed
securities; risks of declining value of loans, collateral or assets; risks
associated with foreign operations; currency exchange rate fluctuations and
foreign social and economic conditions; the ability of FirstCity to utilize net
operating loss carryforwards; uncertainties of any litigation arising from
discontinued operations; factors more fully discussed and identified under Item
7. "Management's Discussion and Analysis of Financial Condition and Results of
Operations," risk factors and other risks identified in FirstCity's Annual
Report on Form 10-K, filed with the SEC on April 1, 2002, as well as in
FirstCity's other filings with the SEC, including the registration statement
described above. Many of these factors are beyond FirstCity's control. In
addition, it should be noted that past financial and operational performance of
FirstCity is not necessarily indicative of future financial and operational
performance. Given these risks and uncertainties, investors should not place
undue reliance on forward-looking statements.

         The forward-looking statements in this release speak only as of the
date of this release. FirstCity expressly disclaims any obligation or
undertaking to release publicly any updates or revisions to any forward-looking
statement to reflect any change in FirstCity's expectations with regard thereto
or any change in events, conditions or circumstances on which any
forward-looking statement is based.

         FirstCity is a diversified financial services company with operations
dedicated to portfolio asset acquisition and resolution and consumer lending
with offices in the U.S. and with affiliate organizations in France and Mexico.
Its common (FCFC) and preferred (FCFCO) stocks are listed on the Nasdaq National
Market System.


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