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 December 4, 2002, FirstCity Financial Corporation issued the following press
release:

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


            FIRSTCITY FINANCIAL ANNOUNCES EXTENSION OF EXCHANGE OFFER

            WACO, TEXAS, DECEMBER 4, 2002...FirstCity Financial Corporation
(Nasdaq: FCFC) today announced that it has extended its exchange offer for New
Preferred Stock, which will remain open until 12:00 midnight on Friday, December
6, 2002, unless extended. FirstCity has extended the exchange offer while it
finalizes documentation to fulfill the closing conditions of the exchange offer,
including loan documentation to refinance FirstCity's debt facilities with Bank
of Scotland and BoS(USA) Inc. and to provide additional financing to FirstCity,
as contemplated by the FirstCity's proposed recapitalization. The exchange offer
constitutes part of the recapitalization.

FirstCity is offering to exchange each share of its New Preferred Stock for, at
the holder's election, either:

         (1)  $10.00 cash and 2 shares of FirstCity's common stock, or
         (2)  $ 8.00 cash and 3 shares of FirstCity's common stock.

The exchange offer is subject to several conditions. The most significant
conditions include:

    (1)  the closing of the $16 million non-recourse loan from Bank of Scotland
         (which will provide the cash proceeds of the exchange offer), the
         refinancing and the additional financing described above, and the other
         transactions contemplated by FirstCity's proposed recapitalization,

    (2)  the tender of at least 80% of the outstanding shares of New Preferred
         Stock, and

    (3)  the lack of any change or development involving a prospective change in
         or affecting FirstCity's business or financial affairs that, in the
         reasonable judgment of FirstCity's board of directors, would or might
         prohibit, restrict or delay consummation of the exchange offer or
         materially impair the contemplated benefits to FirstCity of the
         exchange offer.

Because there are multiple conditions to the closing of the transactions
contemplated by the recapitalization that are beyond the control of FirstCity,
FirstCity cannot provide any assurances that these conditions will be satisfied
and that the exchange offer and the recapitalization will close.

As of December 4, 2002, approximately 1,033,734 shares, or approximately 84.5%,
of New Preferred Stock have been deposited with the exchange agent with respect
to the exchange offer.

Materials regarding the exchange offer have been mailed to holders of New
Preferred Stock. FirstCity has filed a tender offer statement and other related
documents with the Securities and Exchange Commission



concerning the exchange offer. Copies of the exchange offer materials may be
obtained either from Suzy Taylor, by calling her toll free at (866) 652-1810, or
from the SEC's website, www.sec.gov. HOLDERS OF NEW PREFERRED STOCK ARE STRONGLY
ADVISED TO READ THESE DOCUMENTS BECAUSE THEY CONTAIN IMPORTANT INFORMATION.

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.

Certain statements in this press release, which are not historical in fact,
including, but not limited to, statements relating to the proposed
recapitalization 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 consummation of the exchange offer and the
other transactions of the recapitalization; the effects of the exchange offer
and the recapitalization in general; 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, as amended, for the fiscal
year ended December 31, 2001, 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
stock (FCFC) and New Preferred Stock (FCFCO) are listed on the Nasdaq National
Market System.


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