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Contact:		Suzy W. Taylor
		866-652-1810

FirstCity Financial (NASDAQ FCFC) Reports Second Quarter 2005 Earnings of $ 2.7 Million

Waco, Texas August 3, 2005...

Highlights of the Quarter:

	•		FirstCity reports 2^nd quarter 2005 earnings of $2.7 million, or $.23 per diluted share

	•		FirstCity invested $16.1 million in portfolio assets for the quarter.

FirstCity Financial Corporation today announced net earnings to common stockholders for the quarter ended June 30, 2005 of $2.7 million or $ .23 per share on a diluted basis.

Components of the results are detailed below (dollars in thousands except per share data):


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	(unaudited)						(unaudited)
	2005			2004			2005			2004
Portfolio Asset Acquisition and Resolution	$	4,128		$	2,443		$	8,243		$	6,489
Corporate interest		—			(1,026	)		—			(2,026	)
Corporate overhead		(1,308	)		(1,031	)		(2,874	)		(2,343	)

Earnings from continuing operations		2,820			386			5,369			2,120

Earnings (loss) from discontinued operations		(97	)		2,913			(97	)		6,028

Net earnings to common stockholders	$	2,723		$	3,299		$	5,272		$	8,148

Diluted earnings per common share	$	0.23		$	0.28		$	0.44		$	0.69

James T. Sartain, President and CEO of FirstCity said, “We had a strong quarter in terms of acquisitions and were able to deploy our capital in attractive investments. The pipeline remains strong as the Company continues to build momentum.”

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Portfolio Asset Acquisition and Resolution

FirstCity purchased $16.1 million in portfolio assets during the second quarter of 2005. Purchases consisted of eight portfolios — all in the United States. All portfolios purchased during the quarter are wholly-owned by FirstCity, which allowed the Company to invest $16.1 million in equity.

Portfolio purchases are detailed below (in millions):


	Domestic		Europe		Latin America		Total		Invested Equity

2005
2^nd Quarter	$	16.1	$	—	$	—	$	16.1	$	16.1
1^st Quarter		12.1		—		2.8		14.9		2.2

YTD 2005	$	28.2	$	—	$	2.8	$	31.0	$	18.3	*

2004
4^th Quarter	$	23.2	$	—	$	22.7	$	45.9	$	11.1
3^rd Quarter		26.6		—		9.5		36.1		27.1
2^ndQuarter		34.9		9.8		40.7		85.4		18.5
1^st Quarter		6.5		—		.2		6.7		3.1

Total Year 2004	$	91.2	$	9.8	$	73.1	$	174.1	$	59.8

Total Year 2003	$	92.6	$	31.2	$	5.4	$	129.2	$	22.9	*

Total Year 2002	$	61.4	$	98.7	$	11.7	$	171.8	$	16.7


*		In addition to the portfolio acquisitions above, FirstCity invested $2.0 million in partnerships during the first six months of 2005 and $3.4 million in partnerships during 2003.

Operating contribution from the Portfolio Asset Acquisition business for the second quarter was $4.1 million. The earnings are comprised of $9.2 million in revenues and $5.0 million of expenses. The business generated 52% of the revenues from domestic investments, 32% from investments in Latin America and 16% from investments in Europe. The major components of revenue for the quarter include equity earnings in Acquisition Partnerships and servicing entities of $3.7 million, servicing fees of $2.9 million, gain on resolution of Portfolio Assets of $1.2 million and interest income and other of $1.4 million.

Operating contribution from the Portfolio Asset Acquisition business for the second quarter includes net foreign currency gains of $688,000, which is comprised of $424,000 in Mexican peso gains and $264,000 of Euro gains. Quarterly results were less impacted by foreign currency fluctuations, as the Company borrowed in Euros to hedge the risk associated with foreign currency exposure.

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The following table details the impact of these items on corporate earnings.


	Three Months Ended					Six Months Ended
	June 30,					June 30,
Illustration of the Effects of Currency	2005		2004			2005		2004
Fluctuations (dollars in thousands)	(unaudited)					(unaudited)

Net earnings to Common Stockholders as reported	$	2,723	$	3,299		$	5,272	$	8,148
Mexican Peso gains (losses)		424		(678	)		744		(216	)
Euro gains		264		249			494		558


Peso exchange rate at valuation date		10.84		11.45
Euro exchange rate at valuation date		0.83		0.83

Conference Call

A conference call will be held today at 9:00 a.m. Central Daylight time to discuss second quarter 2005 results. A question and answer session will follow the prepared remarks. Details to access the call and webcast are as follows:


Event:		FirstCity Financial Corporation Second Quarter 2005 Conference Call
Date:		Wednesday, August 3, 2005
Time:		9:00 a.m. Central Daylight Time
Host:		James T. Sartain, FirstCity’s President and Chief Executive Officer
Web
Access:	FirstCity’s web page- www.fcfc.com/invest.htm or,
	CCBN’s Investor websites- www.streetevents.com and, www.earnings.com
Dial In
Access:	Domestic	800-706-7748
	International	617-614-3473

	Pass code —	18511213

Replay	Domestic	888-286-8010
	International	617-801-6888

	Pass code —	65897167

The replay will be available until Thursday August 18, 2005

Forward Looking Statements

Certain statements in this press release, which are not historical in fact, including, but not limited to, statements relating to 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 the Company’s actual results to differ materially.

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These factors include, but are not limited to, the performance of the Company’s subsidiaries and affiliates, availability of portfolio assets, assumptions underlying portfolio asset performance, risks associated with foreign operations, currency exchange rate fluctuations, interest rate risk, risks of declining value of loans, collateral or assets, the degree to which the Company is leveraged, the Company’s continued need for financing, availability of the Company’s credit facilities, the impact of certain covenants in loan agreements of the Company and its subsidiaries, the ability of the Company to utilize net operating loss carry forwards, general economic conditions, foreign social and economic conditions, 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, 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,” and risk factors and other risks identified in the Company’s Annual Report on Form 10-K for the year ended December 31, 2004, filed with the SEC on March 22, 2005, as well as in the Company’s other filings with the SEC.

Many of these factors are beyond the Company’s control. In addition, it should be noted that past financial and operational performance of the Company 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. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement to reflect any change in the Company’s expectations with regard thereto or any change in events, conditions or circumstances on which any forward-looking statement is based.

The Company 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 stock is listed on the NASDAQ National Market System under the symbol “FCFC.”

FirstCity Financial Corporation
Summary of Operations
(In thousands, except per share data)
(Unaudited)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2005			2004			2005			2004
Revenues:
Servicing fees from affiliates	$	2,909		$	3,716		$	6,081		$	6,748
Gain on resolution of Portfolio Assets		1,205			162			3,067			237
Equity in earnings of investments		3,690			2,639			7,091			6,814
Interest income from affiliates		460			617			895			1,061
Interest income — other		634			51			1,136			136
Other income		381			444			730			1,782

Total revenues		9,279			7,629			19,000			16,778
Expenses:
Interest and fees on notes payable to affiliates		10			20			18			45
Interest and fees on notes payable — other		838			1,818			1,710			3,506
Interest on shares subject to mandatory redemption		—			67			—			133
Salaries and benefits		3,684			3,477			7,842			7,554
Provision for loan and impairment losses		29			22			114			22
Occupancy, data processing, communication and other		1,753			1,784			3,666			3,233

Total expenses		6,314			7,188			13,350			14,493
Earnings from continuing operations before income taxes and minority interest		2,965			441			5,650			2,285
Income taxes		(103	)		(72	)		(242	)		(156	)

Earnings from continuing operations before minority interest		2,862			369			5,408			2,129
Minority interest		(42	)		17			(39	)		(9	)

Earnings from continuing operations		2,820			386			5,369			2,120

Discontinued operations
Earnings (loss) from operations of discontinued components		(97	)		3,312			(97	)		6,455
Income taxes		—			(399	)		—			(427	)

Earnings (loss) from discontinued operations		(97	)		2,913			(97	)		6,028

Net earnings	$	2,723		$	3,299		$	5,272		$	8,148


Basic earnings per common share are as follows:
Earnings from continuing operations	$	0.25		$	0.03		$	0.48		$	0.19
Discontinued operations	$	(0.01	)	$	0.26		$	(0.01	)	$	0.54
Net earnings per common share	$	0.24		$	0.29		$	0.47		$	0.73
Wtd. avg. common shares outstanding		11,274			11,235			11,268			11,216

Diluted earnings per common share are as follows:
Earnings from continuing operations	$	0.24		$	0.03		$	0.45		$	0.18
Discontinued operations	$	(0.01	)	$	0.25		$	(0.01	)	$	0.51
Net earnings per common share	$	0.23		$	0.28		$	0.44		$	0.69
Wtd. avg. common shares outstanding		12,025			11,820			12,016			11,806

Selected Unaudited Balance Sheet Data

	June 30,			December 31,
	2005			2004

Cash	$	5,337		$	9,724
Portfolio Assets, net		43,862			37,952
Loans receivable from Acquisition Partnerships		20,400			21,255
Equity investments		53,181			57,815
Deferred tax asset, net		20,101			20,101
Service fees receivable and other assets		8,428			10,193
Discontinued mortgage assets held for sale		409			1,817

Total assets	$	151,718		$	158,857


Notes payable to affiliates	$	545		$	491
Notes payable — other		49,153			50,812
Minority interest and other liabilities		4,866			6,048
Liabilities from discontinued consumer operations		987			9,033
Liabilities from discontinued mortgage operations		—			50

Total liabilities		55,551			66,434
Total equity		96,167			92,423

Total liabilities and equity	$	151,718		$	158,857

FirstCity Financial Corporation
Supplemental Information
(Dollars in thousands)
(Unaudited)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2005		2004		2005		2004
Portfolio Asset Acquisition and Resolution:
Summary Operating Statement Data
Revenues	$	9,159	$	7,489	$	18,767	$	16,434
Expenses		5,002		5,024		10,410		9,923

Operating contribution before provision for loan and impairment losses		4,157		2,465		8,357		6,511
Provision for loan and impairment losses		29		22		114		22

Operating contribution, net of direct taxes	$	4,128	$	2,443	$	8,243	$	6,489

Aggregate purchase price of portfolios acquired:
Acquisition partnerships
Domestic	$	16,073	$	34,937	$	28,181	$	41,486
Latin America		—		40,650		2,763		40,800
Europe		—		9,837		—		9,837

Total	$	16,073	$	85,424	$	30,944	$	92,123


	Purchase		FirstCity's
Historical Acquisitions — Annual:	Price		Investment

2005 year to date	$	30,944	$	18,286
2004		174,139		59,762
2003		129,192		22,944
2002		171,769		16,717
2001		224,927		24,319
2000		394,927		22,140

	June 30,		June 30,
	2005		2004

Portfolio acquisition and resolution assets by region:
Domestic	$	79,735	$	53,355
Latin America		20,283		18,788
Europe		17,619		19,828

Total	$	117,637	$	91,971

	Three Months Ended				Six Months Ended
	June 30,				June 30,

	2005		2004		2005		2004

Revenues by region:
Domestic	$	4,764	$	4,204	$	10,726	$	8,350
Latin America		2,973		2,265		5,370		4,862
Europe		1,422		1,020		2,671		3,222

Total	$	9,159	$	7,489	$	18,767	$	16,434

Revenues by source:
Equity earnings	$	3,690	$	2,639	$	7,091	$	6,814
Servicing fees		2,909		3,716		6,081		6,748
Interest income — loans		1,049		642		1,951		1,165
Gain on resolution of Portfolio Assets		1,205		162		3,067		237
Other		306		330		577		1,470

Total	$	9,159	$	7,489	$	18,767	$	16,434

FirstCity Financial Corporation
Supplemental Information
(Dollars in thousands)
(Unaudited)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2005			2004			2005			2004
*Analysis of Equity Investments in Acquisition Partnerships:*
FirstCity’s Average investment in Acquisition Partnerships
Domestic	$	35,561		$	37,162		$	35,969		$	36,951
Latin America		1,778			1,065			1,658			1,054
Europe		18,513			16,771			18,567			17,693

Total	$	55,852		$	54,998		$	56,194		$	55,698


FirstCity Share of Equity Earnings:
Domestic	$	1,911		$	2,594		$	4,224		$	4,543
Latin America		467			(890	)		470			(778	)
Europe		1,312			935			2,397			3,049

Total	$	3,690		$	2,639		$	7,091		$	6,814


*Selected other data:*
Average investment in wholly owned portfolio assets and loans receivable:
Domestic	$	39,570		$	10,500		$	38,620		$	8,509
Latin America		18,909			16,770			18,947			15,284
Europe		505			1,426			517			1,805

Total	$	58,984		$	28,696		$	58,084		$	25,598


Income from wholly owned portfolio assets and loans receivable:
Domestic	$	1,863		$	250		$	4,256		$	446
Latin America		384			537			747			913
Europe		7			17			15			43

Total	$	2,254		$	804		$	5,018		$	1,402


Servicing fee revenues:
Domestic partnerships:
$ Collected	$	24,057		$	31,085		$	51,491		$	57,438
Servicing fee revenue		833			1,223			1,974			2,261
Average servicing fee %		3.5	%		3.9	%		3.8	%		3.9	%
Latin American partnerships:
$ Collected	$	23,031		$	20,249		$	33,928		$	35,095
Servicing fee revenue		1,915			2,400			3,896			4,356
Average servicing fee %		8.3	%		11.9	%		11.5	%		12.4	%
Incentive service fees	$	161		$	93		$	211		$	131
Total Service Fees:
$ Collected	$	47,088		$	51,334		$	85,419		$	92,533
Servicing fee revenue		2,909			3,716			6,081			6,748
Average servicing fee %		6.2	%		7.2	%		7.1	%		7.3	%

Servicing portfolio (face value)
Domestic	$	485,435		$	442,710
Latin America		1,447,634			1,159,490
Europe		809,955			832,692

Total	$	2,743,024		$	2,434,892


Number of personnel at period end:
Domestic		66			60
Latin America		128			144
Corporate		34			33

Total personnel		228			237