SC 13E3/A

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Amendment No. 1

to

SCHEDULE 13E-3

RULE 13E-3 TRANSACTION STATEMENT

UNDER SECTION 13(E) OF

THE SECURITIES EXCHANGE ACT OF 1934

FirstCity Financial Corporation

(Name of the Issuer)

FirstCity Financial Corporation

Hotspurs Holdings LLC

Hotspurs Acquisition Corporation

The Värde Fund X (Master), L.P.

The Värde Fund X (GP), L.P.

The Värde Fund X GP, LLC

The Värde Fund VI-A, L.P.

Värde Investment Partners, L.P.

Värde Investment Partners (Offshore) Master, L.P.

Värde Investment Partners G.P., LLC

Värde Partners, L.P.

Värde Partners, Inc.

George G. Hicks

Marcia L. Page

Gregory S. McMillan

(Names of Person(s) Filing Statement)

Common Stock, par value $0.01 per share

(Title of Class of Securities)

33761X107

(CUSIP Number of Class of Securities)

James T. Sartain President and Chief Executive Officer FirstCity Financial Corporation 6400 Imperial Drive Waco, Texas 76712 (254) 761-2800 David A. Marple Värde Partners, Inc. Hotspurs Holdings LLC Hotspurs Acquisition Corporation 8500 Normandale Lake Blvd., Suite 1500 Minneapolis, Minnesota 55437 (952) 893-1554

(Name, Address, and Telephone Numbers of Person Authorized to

Receive Notices and Communications on Behalf of the Persons Filing Statement)

with copies to:

Brian D. Barnard Haynes and Boone, LLP 201 Main Street, Suite 2200 Fort Worth, Texas 76102 Andrew J. Noreuil Mayer Brown LLP 71 South Wacker Drive Chicago, Illinois 60606

This statement is filed in connection with (check the appropriate box):

a.xThe filing of solicitation materials or an information statement subject to Regulation 14A, Regulation 14C or Rule 13e-3(c) under the Securities Exchange Act of 1934.

b.¨The filing of a registration statement under the Securities Act of 1933.

c.¨A tender offer.

d.¨None of the above.

Check the following box if the soliciting materials or information statement referred to in checking box (a) are preliminary copies:  x

Check the following box if the filing is a final amendment reporting the results of the transaction:   ¨

Calculation of Filing Fee
Transaction valuation*	$107,092,608	Amount of filing fee**	$14,608

*The transaction valuation was calculated based upon the sum of (A) 10,556,197 shares of common stock (including restricted shares), which represents the total number of shares of FirstCity Financial Corporation common stock outstanding as of January 28, 2013, multiplied by the merger consideration of $10.00 per share, plus (B) (1) 624,750 shares of common stock underlying outstanding options with an exercise price of $10.00 per share or less, as of January 28, 2013, multiplied by (2) the excess of the per share merger consideration over the weighted average exercise price of $7.55.

**The amount of the filing fee, calculated in accordance with Rule 0-11(c) and the Fee Rate Advisory #1 for Fiscal Year 2013, equals the product of 0.00013640 multiplied by the proposed maximum aggregate value of the transaction.

xCheck the box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule, and the date of its filing.

Amount Previously Paid: $14,608	Filing Party: FirstCity Financial Corporation:
Form or Registration No.: Schedule 14A — Preliminary Proxy Statement	Date Filed: February 1, 2013

Table of Contents

Item 1. Summary Term Sheet	4
Item 2. Subject Company Information	4
Item 3. Identity and Background of Filing Person	5
Item 4. Terms of the Transaction	5
Item 5. Past Contacts, Transactions, Negotiations and Agreements	6
Item 6. Purposes of the Transaction and Plans or Proposals	8
Item 7. Purposes, Alternatives, Reasons and Effects	8
Item 8. Fairness of the Transaction	10
Item 9. Reports, Opinions, Appraisals and Negotiations	12
Item 10. Source and Amounts of Funds or Other Consideration	12
Item 11. Interest in Securities of the Subject Company	13
Item 12. The Solicitation or Recommendation	14
Item 13. Financial Statements	14
Item 14. Persons/Assets, Retained, Employed, Compensated or Used	15
Item 15. Additional Information	15
Item 16. Exhibits	15

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Introduction

This Amendment No. 1 amends and supplements the Rule 13E-3 Transaction Statement on Schedule 13E-3 that was filed with the Securities and Exchange Commission (the “SEC”) on February 1, 2013. This Amendment No. 1 to Schedule 13E-3 (this “Schedule 13E-3”) is being filed with the SEC pursuant to Section 13(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), by (i) FirstCity Financial Corporation, a Delaware corporation (the “Company”), (ii) Hotspurs Holdings LLC, a Delaware limited liability company (“Parent”), (iii) Hotspurs Acquisition Corporation, a Delaware corporation (“Merger Subsidiary”), (iv) The Värde Fund X (Master), L.P., a Delaware limited partnership, (v) The Värde Fund X (GP), L.P., a Delaware limited partnership, (vi) The Värde Fund X GP, LLC, a Delaware limited liability company, (vii) The Värde Fund VI-A, L.P., a Delaware limited partnership, (viii) Värde Investment Partners, L.P., a Delaware limited partnership, (ix) Värde Investment Partners (Offshore) Master, L.P., a Cayman Islands exempted limited partnership, (x) Värde Investment Partners G.P., LLC, a Delaware limited liability company, (xi) Värde Partners, L.P., a Delaware limited partnership, (xii) Värde Partners, Inc., a Delaware corporation, (xiii) George G. Hicks, (xiv) Marcia L. Page, and (xv) Gregory S. McMillan (collectively, the “Filing Persons”).  This Schedule 13E-3 relates to the Agreement and Plan of Merger, dated as of December 20, 2012 (as it may be amended from time to time, the “Merger Agreement”), by and among the Company, Parent and Merger Subsidiary.

Pursuant to the Merger Agreement, Merger Subsidiary will merge with and into the Company, with the Company continuing as the surviving corporation (the “Merger”).  If the Merger is completed, each share of the Company’s common stock and each share of the Company’s restricted stock, including those previously unvested shares that will become fully vested immediately prior to the effective time of the Merger (other than shares held by the Company, Parent or any of their wholly-owned subsidiaries and shares held by stockholders who have perfected their appraisal rights under Delaware law), will be converted into the right to receive $10.00 in cash, without interest on the terms and subject to the conditions set forth in the Merger Agreement (the “Merger Consideration”).  In addition, each outstanding option to purchase shares of the Company’s common stock granted under the Company’s equity incentive plans or any other agreement, whether or not then vested or exercisable, will become fully vested and exercisable immediately prior to the effective time of the Merger and cancelled as of the effective time of the Merger.  The holders of such stock options will be entitled to receive an amount in cash, without interest, equal to (i) the excess, if any, of the Merger Consideration over the per share exercise price of such stock option multiplied by (ii) the aggregate number of shares into which such stock option was exercisable immediately prior to the effective time of the Merger.  As a result of the Merger, the Company will become a private company that is wholly-owned by Parent.

Concurrently with the filing of this Schedule 13E-3, the Company is filing with the SEC an amended preliminary proxy statement (the “Proxy Statement”) under Regulation 14A of the Exchange Act, pursuant to which the Company’s board of directors is soliciting proxies from stockholders of the Company in connection with the Merger.  The adoption of the Merger Agreement requires the affirmative vote of the holders of a majority of the issued and outstanding shares of the Company’s common stock.  The Proxy Statement is attached hereto as Exhibit (a)(2). A copy of the Merger Agreement is attached to the Proxy Statement as Annex A and is incorporated herein by reference. As of the date hereof, the Proxy Statement is in preliminary form, and is subject to completion or amendment.

Pursuant to General Instruction F to Schedule 13E-3, the information in the Proxy Statement, including all annexes, exhibits and appendices thereto, is expressly incorporated by reference herein in its entirety, and responses to each item herein are qualified in their entirety by the information contained in the Proxy Statement.  The cross references below are being supplied pursuant to General Instruction G to Schedule 13E-3 and show the location in the Proxy Statement of the information required to be included in response to the items of Schedule 13E-3.  All information contained in, or incorporated by reference into, this Schedule 13E-3 concerning any of the Filing Persons has been provided by such Filing Persons.

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The filing of this Schedule 13E-3 shall not be construed as an admission by any Filing Person, or by any affiliate of a Filing Person, that the Company is “controlled” by any Filing Person, or that any Filing Person is an “affiliate” of the Company within the meaning of Rule 13e-3 promulgated under Section 13(e) of the Exchange Act.

Item 1. Summary Term Sheet

The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Summary Term Sheet”

“Questions and Answers About the Merger and the Special Meeting”

Item 2. Subject Company Information

(a) Name and address. The Company’s name and the address and telephone number of its principal executive offices are as follows:

FirstCity Financial Corporation

6400 Imperial Drive

Waco, Texas 76712

(254) 761-2800

(b) Securities. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Questions and Answers About the Merger and the Special Meeting”

“The Special Meeting—Record Date and Quorum”

(c) Trading market and price. The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:

“Common Stock Market Price and Dividend Information”

(d) Dividends. The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:

“Common Stock Market Price and Dividend Information—Dividend Policy”

(e) Prior public offerings. The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:

“Common Stock Market Price and Dividend Information—Prior Public Offerings”

(f) Prior stock purchases. The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:

“Certain Purchases and Sales of FirstCity Common Stock—Transactions During the Past Two Years.”

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Item 3. Identity and Background of Filing Person

(a) Name and address. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Summary Term Sheet”

“The Parties to the Merger”

“Important Information Concerning FirstCity”

“Directors and Executive Officers of FirstCity”

“Important Information Concerning Parent, Merger Subsidiary and the Värde Filing Persons”

(b) Business and background of entities. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Summary Term Sheet”

“Important Information Concerning FirstCity”

“Directors and Executive Officers of FirstCity”

“Important Information Concerning Parent, Merger Subsidiary and the Värde Filing Persons”

(c) Business and background of natural persons. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Directors and Executive Officers of FirstCity”

“Important Information Concerning Parent, Merger Subsidiary and the Värde Filing Persons”

Item 4. Terms of the Transaction

(a) Material terms. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Summary Term Sheet”

“Questions and Answers About the Merger and the Special Meeting”

“Special Factors — Background of the Merger”

“Special Factors — Recommendation of the SRC and Board of Directors; Reasons for Recommending Approval of the Merger”

“Special Factors — Reasons of Parent, Merger Subsidiary and the Värde Filing Persons for the Merger”

“Special Factors — Effects of the Merger”

“Special Factors — Financial Interests of the Company’s Directors, Officers and Employees in the Merger”

“Special Factors — Accounting Treatment of the Merger”

“Special Factors — Material United States Federal Income Tax Considerations”

“The Special Meeting — Required Vote”

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“The Merger Agreement — The Merger”

“The Merger Agreement —Merger Consideration”

“The Merger Agreement — Treatment of Stock Options and Restricted Common Stock”

“Advisory Vote on ‘Golden Parachute Compensation’”

“Annex A — Agreement and Plan of Merger”

(c) Different terms. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Summary Term Sheet”

“Questions and Answers About the Merger and the Special Meeting”

“Special Factors — Effects of the Merger”

“Special Factors — Financial Interests of the Company’s Directors, Officers and Employees in the Merger”

“Special Factors — Support Agreement”

“Special Factors — Securities Purchase Agreement”

“The Merger Agreement — Treatment of Stock Options and Restricted Common Stock”

“Advisory Vote on ‘Golden Parachute Compensation’”

“Annex A — Agreement and Plan of Merger”

(d) Appraisal rights. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Summary Term Sheet”

“Questions and Answers About the Merger and the Special Meeting”

“Rights of Appraisal”

“Annex C — Section 262 of the General Corporation Law of the State of Delaware”

(e) Provisions for unaffiliated security holders. The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:

“Special Factors — Provisions for Unaffiliated Stockholders”

(f) Eligibility for listing or trading.  Not applicable.

Item 5. Past Contacts, Transactions, Negotiations and Agreements

(a) Transactions. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Summary Term Sheet”

“Special Factors — Background of the Merger”

“Special Factors — Financial Interests of the Company’s Directors, Officers and Employees in the Merger”

“Advisory Vote on ‘Golden Parachute Compensation’”

(b) Significant corporate events. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

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“Summary Term Sheet”

“Questions and Answers About the Merger and the Special Meeting”

“Special Factors — Background of the Merger”

“Special Factors — Recommendation of the SRC and Board of Directors; Reasons for Recommending Approval of the Merger”

“Special Factors — Position of Parent, Merger Subsidiary and the Värde Filing Persons as to the Fairness of the Merger”

“Special Factors — Financial Interests of the Company’s Directors, Officers and Employees in the Merger”

“Special Factors — Support Agreement”

“Special Factors — Equity Commitment Letter”

“Special Factors — Limited Guarantee”

“The Special Meeting — Stock Ownership and Interests of the Company’s Directors and Officers and the Värde Filing Persons”

“The Merger Agreement”

“Annex A — Agreement and Plan of Merger”

(c) Negotiations or contacts. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Special Factors — Background of the Merger”

“Special Factors — Recommendation of the SRC and Board of Directors; Reasons for Recommending Approval of the Merger”

“Special Factors — Position of Parent, Merger Subsidiary and the Värde Filing Persons as to the Fairness of the Merger”

“Special Factors — Financial Interests of the Company’s Directors, Officers and Employees in the Merger”

(e) Agreements involving the subject company’s securities. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Summary Term Sheet”

“Questions and Answers About the Merger and the Special Meeting”

“Special Factors — Background of the Merger”

“Special Factors — Recommendation of the SRC and Board of Directors; Reasons for Recommending Approval of the Merger”

“Special Factors — Position of Parent, Merger Subsidiary and the Värde Filing Persons as to the Fairness of the Merger”

“Special Factors — Reasons of Parent, Merger Subsidiary and the Värde Filing Persons for the Merger”

“Special Factors — Financial Interests of the Company’s Directors, Officers and Employees in the Merger”

“Special Factors — Support Agreement”

“Special Factors — Securities Purchase Agreement”

“The Special Meeting — Stock Ownership and Interests of the Company’s Directors and Officers and the Värde Filing Persons”

“The Merger Agreement”

“Advisory Vote on ‘Golden Parachute Compensation’”

“Security Ownership of Certain Beneficial Owners and Management”

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“Certain Purchases and Sales of FirstCity Common Stock”

“Annex A — Agreement and Plan of Merger”

Item 6. Purposes of the Transaction and Plans or Proposals

(b) Use of securities acquired. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Summary Term Sheet”

“Questions and Answers About the Merger and the Special Meeting”

“Special Factors — Effects of the Merger”

“Special Factors — Financial Interests of the Company’s Directors, Officers and Employees in the Merger”

“The Merger Agreement”

“Advisory Vote on ‘Golden Parachute Compensation’”

“Annex A — Agreement and Plan of Merger”

(c)(1)-(8) Plans. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Summary Term Sheet”

“Questions and Answers About the Merger and the Special Meeting”

“Special Factors — Background of the Merger”

“Special Factors — Recommendation of the SRC and Board of Directors; Reasons for Recommending Approval of the Merger”

“Special Factors — Position of Parent, Merger Subsidiary and the Värde Filing Persons as to the Fairness of the Merger”

“Special Factors — Reasons of Parent, Merger Subsidiary and the Värde Filing Persons for the Merger”

“Special Factors — Effects of the Merger”

“Special Factors — Effects of the Merger on FirstCity’s Net Book Value and Net Income”

“Special Factors — Financial Interests of the Company’s Directors, Officers and Employees in the Merger”

“Special Factors — Support Agreement”

“Special Factors — Securities Purchase Agreement”

“The Merger Agreement”

“Advisory Vote on ‘Golden Parachute Compensation’”

“Annex A — Agreement and Plan of Merger”

Item 7. Purposes, Alternatives, Reasons and Effects

(a) Purposes. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Summary Term Sheet”

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“Questions and Answers About the Merger and the Special Meeting”

“Special Factors — Background of the Merger”

“Special Factors — Recommendation of the SRC and Board of Directors; Reasons for Recommending Approval of the Merger”

“Special Factors — Position of Parent, Merger Subsidiary and the Värde Filing Persons as to the Fairness of the Merger”

“Special Factors — Reasons of Parent, Merger Subsidiary and the Värde Filing Persons for the Merger”

“Special Factors — Effects of the Merger”

“Special Factors — Financial Interests of the Company’s Directors, Officers and Employees in the Merger”

(b) Alternatives. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Special Factors — Background of the Merger”

“Special Factors — Recommendation of the SRC and Board of Directors; Reasons for Recommending Approval of the Merger”

“Special Factors — Position of Parent, Merger Subsidiary and the Värde Filing Persons as to the Fairness of the Merger”

“Special Factors — Reasons of Parent, Merger Subsidiary and the Värde Filing Persons for the Merger”

(c) Reasons. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Summary Term Sheet”

“Special Factors — Background of the Merger”

“Special Factors — Recommendation of the SRC and Board of Directors; Reasons for Recommending Approval of the Merger”

“Special Factors — Position of Parent, Merger Subsidiary and the Värde Filing Persons as to the Fairness of the Merger”

“Special Factors — Reasons of Parent, Merger Subsidiary and the Värde Filing Persons for the Merger”

“Special Factors — Effects of the Merger”

“Special Factors — Projected Financial Information”

“Special Factors — Financial Interests of the Company’s Directors, Officers and Employees in the Merger”

(d) Effects. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Summary Term Sheet”

“Questions and Answers About the Merger and the Special Meeting”

“Special Factors — Background of the Merger”

“Special Factors — Recommendation of the SRC and Board of Directors; Reasons for Recommending Approval of the Merger”

9

“Special Factors — Reasons of Parent, Merger Subsidiary and the Värde Filing Persons for the Merger”

“Special Factors — Effects of the Merger”

“Special Factors — Effects of the Merger on FirstCity’s Net Book Value and Net Income”

“Special Factors — Financial Interests of the Company’s Directors, Officers and Employees in the Merger”

“Special Factors — Material United States Federal Income Tax Considerations”

“Special Factors — Estimated Fees and Expenses”

“The Merger Agreement”

“Advisory Vote on ‘Golden Parachute Compensation’”

“Annex A — Agreement and Plan of Merger”

Item 8. Fairness of the Transaction

(a) Fairness. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Summary Term Sheet”

“Questions and Answers About the Merger and the Special Meeting”

“Special Factors — Background of the Merger”

“Special Factors — Recommendation of the SRC and Board of Directors; Reasons for Recommending Approval of the Merger”

“Special Factors — Position of Parent, Merger Subsidiary and the Värde Filing Persons as to the Fairness of the Merger”

“Special Factors — Reasons of Parent, Merger Subsidiary and the Värde Filing Persons for the Merger”

(b) Factors considered in determining fairness. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Summary Term Sheet”

“Questions and Answers About the Merger and the Special Meeting”

“Special Factors — Background of the Merger”

“Special Factors — Recommendation of the SRC and Board of Directors; Reasons for Recommending Approval of the Merger”

“Special Factors — Opinion of the Company’s Financial Advisor”

“Special Factors — Position of Parent, Merger Subsidiary and the Värde Filing Persons as to the Fairness of the Merger”

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“Special Factors — Reasons of Parent, Merger Subsidiary and the Värde Filing Persons for the Merger”

“Special Factors — Projected Financial Information”

“Special Factors — Effects of the Merger”

“Special Factors — Effects of the Merger on FirstCity’s Net Book Value and Net Income”

“Special Factors — Financial Interests of the Company’s Directors, Officers and Employees in the Merger”

“Annex B — Opinion of Lazard Middle Market LLC”

See also the materials attached hereto as exhibits (c)(2), (c)(3) and (c)(4) and incorporated by reference herein, which were prepared by Lazard Middle Market LLC for the Strategic Review Committee and the Board of Directors of the Company.

(c) Approval of security holders. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Summary Term Sheet”

“Questions and Answers About the Merger and the Special Meeting”

“Special Factors — Background of the Merger”

“Special Factors — Recommendation of the SRC and Board of Directors; Reasons for Recommending Approval of the Merger”

“The Special Meeting — Record Date and Quorum”

“The Special Meeting — Required Vote”

“The Merger Agreement — Conditions to the Completion of the Merger”

“Annex A — Agreement and Plan of Merger”

(d) Unaffiliated representative. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Summary Term Sheet”

“Special Factors — Background of the Merger”

“Special Factors — Recommendation of the SRC and Board of Directors; Reasons for Recommending Approval of the Merger”

“Special Factors — Position of Parent, Merger Subsidiary and the Värde Filing Persons as to the Fairness of the Merger”

(e) Approval of directors. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Summary Term Sheet”

“Questions and Answers About the Merger and the Special Meeting”

“Special Factors — Background of the Merger”

“Special Factors — Recommendation of the SRC and Board of Directors; Reasons for Recommending Approval of the Merger”

“Special Factors — Position of Parent, Merger Subsidiary and the Värde Filing Persons as to the Fairness of the Merger”

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(f) Other offers.  None.

Item 9. Reports, Opinions, Appraisals and Negotiations

(a)-(b) Report, opinion or appraisal; Preparer and summary of the report, opinion or appraisal . The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Summary Term Sheet”

“Special Factors — Background of the Merger”

“Special Factors — Recommendation of the SRC and Board of Directors; Reasons for Recommending Approval of the Merger”

“Special Factors — Opinion of the Company’s Financial Advisor”

“Special Factors — Position of Parent, Merger Subsidiary and the Värde Filing Persons as to the Fairness of the Merger”

“Special Factors — Estimated Fees and Expenses”

“The Merger Agreement — Representations and Warranties”

“Annex A — Agreement and Plan of Merger”

“Annex B — Opinion of Lazard Middle Market LLC”

See also the materials attached hereto as exhibits (c)(2), (c)(3) and (c)(4) and incorporated by reference herein, which were prepared by Lazard Middle Market LLC for the Strategic Review Committee and the Board of Directors of the Company.

(c) Availability of documents. The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:

“Additional Information”

The reports, opinions or appraisals referenced in this Item 9 will be made available for inspection and copying at the principal executive offices of the Company during its regular business hours.

Item 10. Source and Amounts of Funds or Other Consideration

(a) Source of funds. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Summary Term Sheet”

“Questions and Answers About the Merger and the Special Meeting”

“Special Factors — Background of the Merger”

“Special Factors — Recommendation of the SRC and Board of Directors; Reasons for Recommending Approval of the Merger”

“Special Factors — Position of Parent, Merger Subsidiary and the Värde Filing Persons as to the Fairness of the Merger”

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“Special Factors — Equity Commitment Letter”

“Special Factors — Limited Guarantee”

“The Merger Agreement”

“Annex A — Agreement and Plan of Merger”

(b) Conditions. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Summary Term Sheet”

“Questions and Answers About the Merger and the Special Meeting”

“Special Factors — Background of the Merger”

“Special Factors — Recommendation of the SRC and Board of Directors; Reasons for Recommending Approval of the Merger”

“Special Factors — Position of Parent, Merger Subsidiary and the Värde Filing Persons as to the Fairness of the Merger”

“Special Factors — Equity Commitment Letter”

“Special Factors — Limited Guarantee”

“The Merger Agreement”

“Annex A — Agreement and Plan of Merger”

(c) Expenses. The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:

“Special Factors — Estimated Fees and Expenses”

“The Merger Agreement — Termination Fees and Expense Reimbursement; Remedies”

“Annex A — Agreement and Plan of Merger”

(d) Borrowed funds.  Not applicable.

Item 11.  Interest in Securities of the Subject Company

(a) Securities ownership. The information set forth in the Proxy Statement under the following caption is incorporated herein by reference:

“Special Factors — Securities Purchase Agreement”

“Security Ownership of Certain Beneficial Owners and Management”

(b) Securities transactions. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Summary Term Sheet”

“Special Factors — Background of the Merger”

“Special Factors — Support Agreement”

“Certain Purchases and Sales of FirstCity Common Stock”

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Item 12. The Solicitation or Recommendation

(d) Intent to tender or vote in a going-private transaction. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Summary Term Sheet”

“Questions and Answers About the Merger and the Special Meeting”

“Special Factors — Background of the Merger”

“Special Factors — Recommendation of the SRC and Board of Directors; Reasons for Recommending Approval of the Merger”

“Special Factors — Support Agreement”

“The Special Meeting — Stock Ownership and Interests of the Company’s Directors and Officers and the Värde Filing Persons”

“The Merger Agreement — No Solicitation”

“Security Ownership of Certain Beneficial Owners and Management”

“Annex A — Agreement and Plan of Merger”

(e) Recommendations of others. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Summary Term Sheet”

“Questions and Answers About the Merger and the Special Meeting”

“Special Factors — Recommendation of the SRC and Board of Directors; Reasons for Recommending Approval of the Merger”

“Special Factors — Position of Parent, Merger Subsidiary and the Värde Filing Persons as to the Fairness of the Merger”

“Special Factors — Reasons of Parent, Merger Subsidiary and the Värde Filing Persons for the Merger”

“Special Factors — Support Agreement”

“The Special Meeting — Stock Ownership and Interests of the Company’s Directors and Officers and the Värde Filing Persons”

“The Merger Agreement — Representations and Warranties”

“The Merger Agreement — No Solicitation”

“Security Ownership of Certain Beneficial Owners and Management”

“Annex A — Agreement and Plan of Merger”

Item 13. Financial Statements

(a) Financial statements. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Special Factors — Effects of the Merger on FirstCity’s Net Book Value and Net Income”

“Selected Historical Consolidated Financial Data”

“Additional Information”

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(b) Pro forma information.  Not applicable.

Item 14. Persons/Assets, Retained, Employed, Compensated or Used

(a) Solicitations or recommendations. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Questions and Answers About the Merger and the Special Meeting”

“Special Factors — Estimated Fees and Expenses”

“The Special Meeting — Solicitation of Proxies”

(b) Employees and corporate assets. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Questions and Answers About the Merger and the Special Meeting”

“Special Factors — Estimated Fees and Expenses”

“Special Factors — Background of the Merger”

“Special Factors — Financial Interests of the Company’s Directors, Officers and Employees in the Merger”

“The Special Meeting — Solicitation of Proxies”

“Advisory Vote on ‘Golden Parachute Compensation’”

Item 15. Additional Information

(b) Golden Parachute Payment. The information set forth in the Proxy Statement under the following captions is incorporated herein by reference:

“Summary Term Sheet”

“Special Factors — Background of the Merger”

“Special Factors — Financial Interests of the Company’s Directors, Officers and Employees in the Merger”

“The Merger Agreement — Treatment of Stock Options and Restricted Common Stock”

“Advisory Vote on ‘Golden Parachute Compensation’”

“Annex A — Agreement and Plan of Merger”

(c) Other material information.  The entirety of the Proxy Statement, including all annexes thereto, is incorporated herein by reference.

Item 16.  Exhibits

(a)(2)(i)	Preliminary Proxy Statement of FirstCity Financial Corporation, incorporated by reference to the Schedule 14A filed with the Securities and Exchange Commission on March 25, 2013.
(a)(2)(ii)	Form of Proxy Card, incorporated herein by reference to the Proxy Statement.
(a)(2)(iii)	Letter to Stockholders of FirstCity Financial Corporation, incorporated herein by reference to

15

	the Proxy Statement.
(a)(2)(iv)	Notice of Special Meeting of Stockholders, incorporated herein by reference to the Proxy Statement.
(a)(2)(v)	Press Release dated December 21, 2012, filed as Exhibit 99.1 to the Company’s Current Report on Form 8-K, filed December 21, 2012 and incorporated herein by reference.
(c)(1)	Opinion of Lazard Middle Market LLC, incorporated herein by reference to Annex B of the Proxy Statement.
(c)(2)	Discussion Materials, dated March 23, 2012, of Lazard Middle Market LLC for the Strategic Review Committee and the Board of Directors of the Company.
(c)(3)	Supplemental Discussion Materials, dated March 28, 2012, of Lazard Middle Market LLC for the Strategic Review Committee and the Board of Directors of the Company.
(c)(4)*	Presentation, dated December 20, 2012, of Lazard Middle Market LLC for the Board of Directors of the Company.
(d)(1)	Agreement and Plan of Merger, dated as of December 20, 2012, by and among FirstCity Financial Corporation, Hotspurs Holdings LLC and Hotspurs Acquisition Corporation, incorporated herein by reference to Annex A of the Proxy Statement.
(d)(2)	Equity Commitment Letter, dated as of December 20, 2012, by and among The Värde Fund X (Master) L.P., Värde Investment Partners, L.P., Värde Investment Partners (Offshore) Master, L.P., The Värde Fund VI-A, L.P. and Hotspurs Holdings LLC, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed December 26, 2012 and incorporated herein by reference.
(d)(3)	Limited Guarantee, dated as of December 20, 2012, by and among The Värde Fund X (Master) L.P., Värde Investment Partners, L.P., Värde Investment Partners (Offshore) Master, L.P., The Värde Fund VI-A, L.P. and FirstCity Financial Corporation, filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed December 26, 2012 and incorporated herein by reference.
(d)(4)*	Management Agreement, dated as of December 20, 2012, by and between Hotspurs Holdings LLC and Terry R. DeWitt.
(d)(5)*	Management Agreement, dated as of December 20, 2012, by and between Hotspurs Holdings LLC and James C. Holmes.
(d)(6)*	Management Agreement, dated as of December 20, 2012, by and between Hotspurs Holdings LLC and Mark B. Horrell.
(d)(7)	Retirement and Consulting Agreement, dated as of December 20, 2012, by and between James T. Sartain and Värde Partners, Inc., filed as Exhibit 10.7 to the Company’s Current Report on Form 8-K, filed December 26, 2012 and incorporated herein by reference.
(d)(8)	Separation Agreement, dated as of December 20, 2012, by and between J. Bryan Baker and FirstCity Financial Corporation, filed as Exhibit 10.5 to the Company’s Current Report on Form 8-K, filed December 26, 2012 and incorporated herein by reference.
(d)(9)	Separation Agreement, dated as of December 20, 2012, by and between Joe S. Greak and FirstCity Financial Corporation, filed as Exhibit 10.6 to the Company’s Current Report on Form 8-K, filed December 26, 2012 and incorporated herein by reference.
(d)(10)	Separation Agreement, dated as of December 20, 2012, by and between Jim W. Moore and FirstCity Financial Corporation, filed as Exhibit 10.4 to the Company’s Current Report on Form 8-K, filed December 26, 2012 and incorporated herein by reference.
(d)(11)	Support Agreement, dated as of December 20, 2012, by and among Hotspurs Holdings LLC and certain stockholders of FirstCity Financial Corporation, filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed December 26, 2012 and incorporated herein by reference.
(d)(12)	Securities Purchase Agreement, dated June 29, 2010, by and among FirstCity Financial Corporation and Värde Investment Partners, L.P., filed as Exhibit 10.60 to the Company’s Form 10-Q dated August 16, 2010 and incorporated herein by reference.

16

(f)  Section 262 of the Delaware General Corporation Law, incorporated herein by reference to Annex C of the Proxy Statement.

* Previously filed on February 1, 2013.

17

SIGNATURES

After due inquiry and to the best of my knowledge and belief, the undersigned certify that the information set forth in this statement is true, complete and correct.

Dated: March 25, 2013

FIRSTCITY FINANCIAL CORPORATION
By:	/s/ James T. Sartain
Name:	James T. Sartain
Title:	Chief Executive Officer
HOTSPURS HOLDINGS LLC
By:	/s/ David A. Marple
Name:	David A. Marple
Title:	Assistant Secretary
HOTSPURS ACQUISITION CORPORATION
By:	/s/ David A. Marple
Name:	David A. Marple
Title:	Assistant Secretary
THE VÄRDE FUND X (MASTER), L.P.
By:	The Värde Fund X (GP), L.P., Its General Partner
By:	The Värde Fund X GP, LLC, Its General Partner
By:	Värde Partners, L.P., Its Managing Member
By:	Värde Partners, Inc., Its General Partner
By:	/s/ David A. Marple
Name:	David A. Marple
Title:	General Counsel
THE VÄRDE FUND X (GP), L.P.
By:	The Värde Fund X GP, LLC, Its General Partner
By:	Värde Partners, L.P., Its Managing Member
By:	Värde Partners, Inc., Its General Partner
By:	/s/ David A. Marple
Name:	David A. Marple
Title:	General Counsel

18

THE VÄRDE FUND X GP, LLC
By:	Värde Partners, L.P., Its Managing Member
By:	Värde Partners, Inc., Its General Partner
By:	/s/ David A. Marple
Name:	David A. Marple
Title:	General Counsel
THE VÄRDE FUND VI-A, L.P.
By:	Värde Investment Partners G.P., LLC, Its General Partner
By:	Värde Partners, L.P., Its Managing Member
By:	Värde Partners, Inc., Its General Partner
By:	/s/ David A. Marple
Name:	David A. Marple
Title:	General Counsel
VÄRDE INVESTMENT PARTNERS, L.P.
By:	Värde Investment Partners G.P., LLC, Its General Partner
By:	Värde Partners, L.P., Its Managing Member
By:	Värde Partners, Inc., Its General Partner
By:	/s/ David A. Marple
Name:	David A. Marple
Title:	General Counsel
VÄRDE INVESTMENT PARTNERS (OFFSHORE) MASTER, L.P.
By:	Värde Investment Partners G.P., LLC, Its General Partner
By:	Värde Partners, L.P., Its Managing Member
By:	Värde Partners, Inc., Its General Partner
By:	/s/ David A. Marple
Name:	David A. Marple
Title:	General Counsel
VÄRDE INVESTMENT PARTNERS G.P., LLC
By:	Värde Partners, L.P., Its Managing Member
By:	Värde Partners, Inc., Its General Partner
By:	/s/ David A. Marple
Name:	David A. Marple
Title:	General Counsel

19

VÄRDE PARTNERS, L.P.
By:	Värde Partners, Inc., Its General Partner
By:	/s/ David A. Marple
Name:	David A. Marple
Title:	General Counsel
VÄRDE PARTNERS, INC.
By:	/s/ David A. Marple
Name:	David A. Marple
Title:	General Counsel
GEORGE G. HICKS
/s/ George G. Hicks
MARCIA L. PAGE
/s/ Marcia L. Page
GREGORY S. MCMILLAN
/s/ Gregory S. McMillan

20

EX-99.(C)(2)

Exhibit (c)(2)

DISCUSSION MATERIALS PREPARED EXCLUSIVELY FOR : 2 3 M A R CH 2 0 1 2

DRAFT Disclaimer . The information herein has been prepared by Lazard based upon information supplied by the Company or publicly available information, and portions of the information herein may be based upon certain statements, estimates and forecasts provided by the Company with respect to the anticipated future performance of the Company. We have relied upon the accuracy and completeness of the foregoing information, and have not assumed any responsibility for any independent verification of such information or any independent valuation or appraisal of any of the assets or liabilities of the Company, or any other entity, or concerning solvency or fair value of the Company or any other entity. With respect to financial forecasts, we have assumed that they have been reasonably prepared in good faith on bases reflecting the best currently available estimates and judgments of management of the Company as to the future financial performance of the Company. We assume no responsibility for and express no view as to such forecasts or the assumptions on which they are based. The information set forth herein is based upon economic, monetary, market and other conditions as in effect on, and the information made available to us as of, the date hereof, unless indicated otherwise. These materials and the information contained herein are confidential and may not be disclosed publicly or made available to third parties without the prior written consent of Lazard; provided, however, that you may disclose to any and all persons the U.S. federal income tax treatment and tax structure of the transaction described herein and the portions of these materials that relate to such tax treatment or structure. These materials are preliminary and summary in nature and do not include all of the information that the Company should evaluate in considering a possible transaction. Nothing herein shall constitute a commitment or undertaking on the part of Lazard or any related party to provide any service. These materials do not constitute tax, accounting, actuarial, legal or other specialist advice, and Lazard shall have no duties or obligations to you in respect of these materials or other advice provided to you, except to the extent specifically set forth in an engagement or other written agreement, if any, that is entered into by Lazard and you.

DRAFT Table of Contents I EXECUTIVE SUMMARY 1 II STRATEGIC LANDSCAPE 6 III PERFORMANCE 9 IV PRELIMINARY DUE DILIGENCE OBSERVATIONS 22 V MANAGEMENT PROJECTIONS 24 VI PRELIMINARY VALUATION CONSIDERATIONS 29 VII PRELIMINARY CONSIDERATIONS - STRATEGIC ALTERNATIVES 39 VIII APPENDIX 50

DRAFT I Executive Summary .

DRAFT Executive Summary We view FirstCity Financial as one of the oldest and most experienced asset managers specializing in the acquisition, servicing, management and disposition of non-performing assets. Ahead of its time, the Company was founded in 1986 and has deployed more than $4 billion to acquire more than $12 billion (face value) of portfolio assets, focusing principally on commercial real estate loans and commercial & industrial loan portfolios FirstCity’s deep domain expertise and systematic approach to origination, servicing and asset value realization has contributed significantly to the attractiveness of the leadership team and platform to third party creditors, investors and strategic partners; carefully planned and opportunistic partnerships have served the Company well from time to time in providing expansion avenues into adjacent asset classes and geographic regions. Senior management’s long-term dedication to and specialization within the sector, and time-tested ability to retain a cohesive leadership team has manifestly generated significant credibility, good will and an extensive network of business relationships in the marketplace; management’s tenure and stability have also contributed to the generation of attractive returns on purchased assets with an average unlevered cash-on-cash IRR1 of 20%+ over the course of the last decade. While a recent financial restructuring substantially removed near-term ongoing concern risk, the positioning as a highly experienced and well-placed ‘go-to- Company’s specialist in a large and opportunity-rich industry has and is presently undermined by funding and liquidity constraints, a complex capital structure, and a thinly-traded micro-cap public stock. Due to these and other factors, the Company’s ability to execute on its business plan and achieve its financial forecast as an independent company is brought into question (considered doubtful) in the absence of additional capital becoming available on reasonable terms. 1 I E X E C U T I V E S UMMAR Y . 1 Internal calculation of IRR equivalent to unlevered cash on cash collections excluding all servicing and other expenses.

DRAFT Today’s Discussion Review and report on the due diligence analysis conducted Preliminary observations Initial views on potential strategic alternatives 2 . I E X E C U T I V E S UMMAR Y

DRAFT Potential Next Steps 1. Continue due diligence and refine financial and valuation analysis 2. Identify and preview potential strategic partners (tiered) and a potential process plan 3. Continue to facilitate Apollo / Perella due diligence and report back 4. Mobilize necessary resources to expedite the preparation of the Company for a potential market check and sale process 5. Revisit within 2 weeks: Updated diligence Revised / refined valuation analysis Apollo / PW status Process outline Strategic partner discussion 3 . I E X E C U T I V E S UMMAR Y

DRAFT Recent Dates 17th February LMM / FirstCity engagement letter executed 20th February Onsite organizational meeting; management presentations and preliminary due diligence 24th February Inbound calls from Fortress Investment Group; Stephens, Inc.; Apollo/PW group 24th February LMM granted access to electronic data room 29th February LMM receives information request list and cover letter from Apollo / PerellaWeinberg group 3rd March LMM authorized to provide information to Apollo / Perella Weinberg group; 3/23 BoD meeting set 6th8th March Onsite due diligence meetings; LMM receives inbound call from York Capital (7th) & Varde Partners (8th) FEBRUARY MARCH 27th February LMM attended lunch meeting with Apollo / Perella Weinberg group 16th March Apollo / Perella Weinberg group begin to receive access to confirmatory due diligence items 24th February LMM authorized to meet Apollo / Perella Weinberg group 20th March FirstCity Q4 and YE 2011 earnings conference call 4 . I E X E C U T I V E S UMMAR Y 23rd March Update FirstCity BOD

DRAFT CORPORATE Corporate orientation and overview; multiple senior management presentations Business due diligence including interviews with senior management and key business line leaders Business segment review including all international businesses and assets Business plan and 5-year financial forecast FINANCIAL Current funding structure; capitalization; 2H 2011 restructuring; liquidity position and outlook Financial statements and audits Off-balance sheet relationships; non-core assets and investments (including special situations) Management’s ‘base case’ financial forecast and capital / financing assumptions Tax ORIGINATION AND UNDERWRITING Target market Industry developments and marketplace opportunity (market sizing) Origination strategy; pipeline; due diligence and pricing processes; proprietary internal systems and procedures Historical and projected deployment / acquisition (origination) activity Historical pricing trends; collection trends; actual v/s budget comparative analysis SERVICING Review of global servicing platform and operations Evaluated characteristics of the servicing platform to identify sources of potential franchise value TECHNOLGY & SYSTEMS Primary internal (mission-critical) technology platform (ASR) including management demonstrations LEGAL Key contracts Current and pending litigation Change of control implications on loan and facility covenants Other primary agreements Due Diligence Recap 5 . I E X E C U T I V E S UMMAR Y

DRAFT II Strategic Landscape .

DRAFT Positioning INTELLECTUAL PROPERTY Significant intellectual property developed and resident from 25+ years of specialized experience in origination, investing, servicing and disposition transactions and de minimus attrition / turnover of key employees ASSET VALUATION, SERVICING & AND RESOLUTION EXPERTISE 25-year history & industry pioneer Deep domain expertise and vast relationship network Strategic and financial relationships in U.S. and abroad I I S T R A T EG I C L ANDS C A PE TRACK RECORD 25-years: $ 4B deployed to acquire $12B (face value) of assets 10-years: unlevered cash-on-cash (pre-servicing) IRR of 20+ % Since 2001: gross cash collections of 130%+ (avg.) of purchase price LEADERSHIP Cohesive senior management with 25 years of team experience 30 + years (avg.) of direct industry experience Vast relationship network and considerable professional good will; synonymous team and brand DIFFERENTIATED Long-term specialization and integrated model (originate, service, manage, divest) differentiated from new market entrants; generalists, and part-time participants HIGH VALUE-ADD APPROACH Integrated model and robust internal systems platform offers differentiated and difficult-toreplicate high value-added model Extensive special servicing and workout expertise across a wide range of assets and regions through multiple cycles $3B+ servicing portfolio across 14 different investment partners 6 . 1 2 3 4 5 6

DRAFT ALTERNATIVE ASSET MANAGERS Multi-fund and multi-strategy systematic or opportunistic managers of third-party limited partner funds; typically heavily focused on credit and/or real-estate Global focus and origination network; work independently or as part of consortia; generally do not offer servicing capabilities Focus on the highly competitive larger loan pools; strong ties to major Wall Street firms Origination Underwriting Servicing INDEPENDENT SPECIALTY FINANCIAL & SECTOR SPECIALISTS Independent specialty / regional investors Consistency of participation highly dependent on institutional-quality funding base and multiple traditional, bank, Wall Street and/or non-traditional funding sources, including both on-and-off balance sheet Many lack scale, enterprise-wide systems, purchasing power and consistent sources of origination Many remain niche buyers of smaller, offthe- run loan pools or partner with third party investors Origination Underwriting Servicing Landscape MULTI-NATIONAL / INTEGRATED Integrated firms typically with global footprint and major bracket Wall Street capabilities Global origination, expansive structured finance capabilities including syndication and securitization experience; substantial 3rd party investor distribution capabilities Target market segment: highly competitive larger loan pools on a global basis; trophy property assets and asset portfolios Origination Underwriting Servicing Description General Capabilities Sample Participants = yes, = no = yes, = no = yes, = no NLA 7 I I S T R A T EG I C L ANDS C A PE . Waterfall Asset Management

DRAFT Industry Developments OBSERVATIONS & CONSIDERATIONS GROWTH OF FINANCIAL SECTOR IMPAIRED ASSETS Analyst estimates1: $500 Bn of impaired assets within the U.S banking sector alone (v/s $135B in 2006) $180 Bn of FDIC loss-share assets available to be marketed by acquiring banks in the coming 2-5 years $800 - $1,000 Bn of CRE loans expected to mature in the next 5-years; up to 1/3 of all borrowers expected to be unable to pay off or refinance DEAL ACTIVITY DRIVEN BY ONGOING DELEVERAGING Management views transaction activity accelerating as regulated institutions continue to pursue deleveraging strategies Bank managements increasingly focused on achieving new regulatory capital ratios and compliance An estimated 68 distressed funds seeking to raise funds totaling $47Bn for deployment in the CRE loan sector $100 Bn (est.) of assets (face value) marketed in 2011; the 2012 estimate is $120 Bn M&A DRIVEN MARK-TO-MARKET AS TRANSACTION CATALYST A wave of community and regional bank M&A activity is expected, driven by a strategic refocus by larger banks on growth via consolidations and virtual capitulation by smaller banks facing soft earnings outlook and razor-thin NIM in a historically-low rate environment Mark-to-market triggered by change of control and recap transaction accounting is expected to fuel additional supply in the secondary market, creating further opportunities for the secondary market participants EUROPE Management views the European opportunity to be larger and longer-tailed than the U.S. opportunity Total assets of European banks approximate €41 trillion; analysts estimate asset sales of €2.0 Trillion over 10-years NPLs forecast to be sold in the next 12-24 months estimated at €50-100bn European banks face refinancing of approximately €1.3 trillion over the next 3-years PRICING Increased competition from both traditional and non-traditional investors, along with favorable financing terms has buoyed pricing from cyclical lows, however most industry analysts agree significant upside remains FRAGMENTED MIDDLE MARKET COMPETITION Episodic involvement from boutique participants, subscale relationship networks and internal systems generally preclude consistent competition from boutique and regional players in lower-mid market loan pools ($20-50MM) Larger competitors complete less frequently in the low-mid market due to inability to capture scale economies for their larger LPs and investment partners I I S T R A T EG I C L ANDS C A PE 1 FDIC and E&Y Source: Company Management, SNL, Preqin 8 .

DRAFT III Performance .

DRAFT Source: Company Management and public filings Face value of originations is the face value of loans purchased by FirstCity (Portfolio Assets). The discount to face value is the face value less the combined contribution from FirstCity & Varde. I I I P E R FORMANC E Origination (Deployment) Trends A consistent and specialized market participant with a strong reputation and extensive multi-jurisdictional origination network, FirstCity’s deployment activity nonetheless reflects increasingly evident direct funding constraints, resulting in a higher percentage of purchased assets being channeled into its off balance-sheet partnerships; this operating model has and will continue to impact the growth profile of on-balance-sheet earning assets and the overall earnings outlook. $24 $17 $23 $60 $71 $144 $127 $72 $148 $68 $58 $201 $155 $106 $114 $76 $153 $87 $17 $53 $158 $229 $542 $530 $258 $669 $183 $559 $300 $709 $209 $194 $271 $0 $250 $500 $750 $1,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 FirstCity share of originations Varde share of originations Aggregate implied discount to face value ($ in Millions) $767 $702 $387 $843 $330 $856 $516 $798 $410 $420 $558 Face Value of Origination 9 .

DRAFT Source: Company Management and pubic filings % Face value paid represents the historical yearly weighted average of the purchase price for FirstCity’s loan portfolio acquisitions (Portfolio Assets). I I I P E R FORMANC E Pricing Trends A historically low rate environment pressuring investment returns in traditional asset classes and an increased supply of dedicated funds targeting distressed real estate portfolios and troubled assets has pushed industry pricing to above precrisis levels, suggesting that scale economies and operating efficiency will factor heavily in near-term earnings prospects. 29% 25% 33% 21% 44% 35% 42% 11% 49% 54% 52% 0% 25% 50% 75% 100% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 31.5% Weighted Average Purchase Price % of Face Value Paid 10 .

DRAFT $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 $Millions Portfolio Assets Equity Investments Railroad/manufacturing Investment Securities Source: Company Management. For purposes of this analysis, LMM defines earning assets as Portfolio Assets, Loans Receivable, Total Equity Investments, Investment Securities, Operating Entity Assets, and Assets Held for Sale I I I P E R FORMANC E Growth (Earning Assets) The declining growth rate in consolidated earning assets leading up to 2010 and an increased dependence on equity investments for earnings growth highlight capacity constraints at a point in the cycle characterized by management as the most attractive purchasing environment in the history; such constraints were punctuated in 2011 when total earning assets declined by 23% and portfolio assets declined by 35%, a year when FirstCity was limited to acquiring (for its own balance sheet) only $58 MM, a relatively small share of $287 MM of total deployments. 11 . FirstCity’s Company’s

DRAFT I I I P E R FORMANC E Performance (Cash Recoveries) Gross collections (cash on cash, before servicing expenses) as a percentage of purchase price (aggregate deployments) has averaged 133%, with relatively low budget : actual variance highlighting FirstCity’s high quality origination network, and disciplined due diligence and pricing regimen; still, FirstCity is receiving proportionately less direct economic benefit of this solid and consistent performance as a result of the on-balance-sheet v/s off-balance-sheet mix shift. Source: Company Management. For purposes of this analysis, LMM defines the Current Collection Ratio as the gross cash on cash collections, before servicing as of 12/31/11 for the U.S. platform; Budgeted refers to the forecasted cash on cash collections, before servicing at the time of origination. 132% 181% 133% 128% 129% 115% 107% 145% 144% 131% 134% 144% 130% 125% 130% 134% 130% 138% 148% 140% 142% 133% 100% 125% 150% 175% 200% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Current Budgeted Weighted Average 133% Average Current Collection Ratio % of Initial Investment 12 .

DRAFT I I I P E R FORMANC E Performance (Portfolio IRR) Long-term specialization, disciplined pricing and robust servicing capabilities have assisted in the achievement of 20+% IRR’s through multiple cycles with relatively low actual : forecast difference Source: Company Management. 1 Internal IRR formula based on unlevered cash on cash collections before servicing and other expenses 21% 46% 21% 20% 12% 10% 4% 31% 29% 21% 25% 20% 35% 14% 19% 15% 17% 15% 24% 31% 26% 25% 0% 10% 20% 30% 40% 50% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Actual Forecasted Weighted Avg. IRR Average IRR1 : 21.7% Internal Rate of Return % 13 .

DRAFT Financial Results (Annual Cash Collection Trends) I I I P E R FORMANC E Over an 11 year period, FirstCity has recovered more than $3.0B of cumulative cash collections with approximately 20% of collections as consolidated assets and almost 80% of collections derived from (off-balance sheet) unconsolidated partnerships. Source: Company Management. For purposes of this analysis, LMM defines Annual Cash Collections as Total Unconsolidated Partnership Collections and Total Consolidated Partnership Collections consistent with the Company’s filings 274 273 290 284 223 240 214 161 87 109 184 19 10 8 8 29 48 86 63 178 126 128 $0 $100 $200 $300 $400 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Gross collections: Unconsolidated partnerships Gross collections: Consolidated partnerships $293 $252 $292 $298 $283 $224 $300 $288 $312 $234 $265 Gross annual collections 14 .

DRAFT Financial Results (Cash Collections by Vintage) I I I P E R FORMANC E Approximately 80% of forecast collections from vintage 2007 deployments have been collected; 2011, 2010 and to a lesser extent 2009 deployments represent the preponderance of the near-term collection pipeline, which underscores the importance of the consolidated / unconsolidated mix shift in near-term earnings forecasts. Source: Company Management. For purposes of this analysis, LMM defines Gross Cash Collections as the Gross Cash Collections for the U.S. Platform. Cash Collections by vintage refers to Gross Cash Collections from pools of assets originated in a given year. $182 $112 $123 $112 $105 $153 $86 $125 $218 $182 $41 $183 $113 $125 $116 $121 $179 $108 $147 $312 $326 $383 $0 $100 $200 $300 $400 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Actual Gross Cash Collections (As of 12/31/11) Estimated Gross Cash Collections ($ in Millions) 99.6% 99.4% 98.5% 87.1% 96.5% 85.3% 79.2% 70.0% 85.4% 55.8% 10.7% % Completion 15 .

DRAFT Financial Results (Core Revenue) I I I P E R FORMANC E Pro-forma revenue are presented to exclude items considered one-time and non-core by LMM; pro-forma revenue trends underscore the trends in core revenue growth (negative) and the trends in portfolio income (shrinking). $0 $20 $40 $60 $80 $100 $120 2007 2008 2009 2010 2011 Servicing fees Portfolio income ABL investment income Interest income - other loans Equity in earnings of subsidiaries Gain on investment/subsidiary sales Income from consol Crestone subs Other income $55 $45 $79 $100 $78 Total Core Revenue ($ in Millions) Source: Company Management. Core Revenue excludes certain one-time items considered by LMM to be non-core including the following items: 2008:$20.2mm DTA writedown 2009: $2.3mm business combination gain and $6.1mm from a legal settlement 2010: $4.6mm business combination gain 2011: $26.5mm debt extinguishment gain and $0.4mm business combination gain 16 .

DRAFT Financial Results (Core Net Income) I I I P E R FORMANC E Pro forma net income represents LMM adjustments for one-time and non-recurring revenues and punctuates FirstCity’s core operating earnings trends. $2.2 ($26.5) $10.4 $7.9 ($2.8) ($30) ($25) ($20) ($15) ($10) ($5) $0 $5 $10 $15 2007 2008 2009 2010 2011 Core Net Income ($ in Millions) Source: Company Management. Core Net income excludes certain one-time items considered by LMM to be non-core including the following items: 2008: $20.2mm DTA writedown 2009: $2.3mm business combination gain and $6.1mm from a legal settlement 2010: $4.6mm business combination gain 2011: $26.5mm debt extinguishment gain and $0.4mm business combination gain 17 .

DRAFT $0.00 $5.00 $10.00 $15.00 $20.00 $25.00 $30.00 $35.00 Jan-96 Aug-96 Mar-97 Oct-97 May-98 Dec-98 Jul-99 Feb-00 Sep-00 Apr-01 Nov-01 Jun-02 Jan-03 Aug-03 Mar-04 Oct-04 May-05 Dec-05 Jul-06 Feb-07 Sep-07 Apr-08 Nov-08 Jun-09 Jan-10 Aug-10 Mar-11 Oct-11 Stock Price Performance (Absolute, Since IPO) FirstCity’s stock has generally not recovered from the Harbor Financial write-down; current share price approximates the value at which the shares traded 8-years ago. Source: FactSet and SNL Financial; as of 3/21/12. 12/20/11 Recognized $26mm one time gain in Q4 relating to the restructuring Bank of Scotland credit facility 9/30/09 FCFC enters into agreement to settle Prudential lawsuit resulting in a $6.2mm gain 6/30/10 Refinanced $287M senior credit facility with Bank of Scotland; enter into an investment agreement with Värde Investment Partners LP I I I P E R FORMANC E Current Price: $8.95 9/2004 Sold interest in Drive Financial ($87M) 1/2001 Hawkins named Chairman, Sartain named CEO 8/2000 Sold interest in auto finance company to Bank of Scotland 3/1997 Merger with Harbor Financial ($46M) 5/1996 Acquired National Auto Funding 9/1999 Incurred a write-down of $63.1mm related to Harbor Financial transaction 9/1998 MSR provision of $28.5mm; incurred a quarterly loss of $40mm Median = $7.58 $ Price per Share 18 . 3/20/12 Recognized a one time impairment of $9.2mm in Q4 related to FCFC’s Mexican business

DRAFT Mar-07 Dec-07 Aug-08 May-09 Jan-10 Oct-10 Jul-11 Mar-12 20 40 60 80 100 120 -65.82% -44.72% -14.76% -5 -2.24% Jan-96 Apr-98 Aug-00 Dec-02 Apr-05 Jul-07 Nov-09 Mar-12 0 50 100 150 200 250 300 350 -53.79 -63.40% -51.52% 79.84% 124.62% 1 YEAR 180 Days Source: FactSet, as of 3/21/12; values indexed at 100 as of beginning of analysis period; Receivables Management Peer Group includes AACC, ASFI, ECPG, FCFC and PRAA; Commercial Finance Peer Group includes CSE, DFR, CIT, GMT, KFN, MRLN, MFI, MIND, NEWS, PLUS. Commercial Finance Peer Group Receivables Management Peer Group S&P 500 FirstCity I I I P E R FORMANC E FirstCity’s stock price has halved since the IPO; the recent rally represents a response to the successful debt restructuring. Stock Price Performance (Relative % Change Since IPO) NASDAQ Bank Index SINCE IPO 5 YEAR 19 . Mar-11 May-11 Jul-11 Aug-11 Oct-11 Dec-11 Jan-12 Mar-12 70 80 90 100 110 120 130 140 -13.46 1.58% 3.43% 8.05% 25.35% Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 80 90 100 110 120 130 140 150 160 -2.5 15.10% 18.26% 19.92% 39.63%

DRAFT Source: SNL Financial; as of 3/21/12. AVERAGE DAILY TRADING VOLUME (in thousands) DAILY VOLUME AS % OF FLOAT Period Median Volume Median Notional Value 5-Year ~6,400 $41.3k 3-Year ~5,800 $37.7k 1-Year ~3,900 $27.6k 180 Day ~3,500 $25.7k Period FirstCity Median Receivables Management Peers Median Commercial Financing PeersMedian 5-Year 0.07% 0.63% 0.45% 3-Year 0.07% 0.54% 0.40% 1-Year 0.04% 0.54% 0.43% 180 Day 0.04% 0.57% 0.43% I I I P E R FORMANC E Liquidity and Float A non-traditional IPO (reverse merger), thin float and micro-cap profile is generally not conducive to institutional coverage nor substantive institutional sponsorship; paired with a difficult-to-understand business, these characteristics impair the - Company’s ability to raise capital through traditional equity, equity linked and debt capital markets transactions. 0% 1% 2% 3% 4% 5% Receivables Management Peers Commercial Financing Peers FirstCity 0 70 140 210 280 350 20 .

DRAFT Coverage & Wall Street Sponsorship Note: Prices as of 3/21/12 I I I P E R FORMANC E Price Current Market Number of Mean Implied Mean Price / Target / Stock Cap Covering Mean Price Price 2012 EPS 2012 EPS Tangible Company Ticker Price ($M) Analysts Rating Target Appreciation Estimate Estimate Book First City Financial Corporation FCFC $8.95 $93 None None None Commercial Finance CapitalSource Inc. CSE $7.18 $1,761 13 Buy $7.79 8.5% $0.52 13.81x 1.27x CIT Group Inc. CIT $42.24 $8,482 17 Buy $44.00 4.2% $1.38 30.61x 0.99x GATX Corporation GMT $42.61 $1,990 8 Buy $51.67 21.3% $2.61 16.33x 2.14x Marlin Business Services Corp. MRLN $14.85 $189 3 Strong Buy $17.00 14.5% $0.77 19.29x 1.32x Mitcham Industries, Inc. MIND $21.76 $270 5 Buy $29.67 36.4% $1.99 10.93x 2.58x Median $1,761 8 14.5% 16.33x 1.32x Receivables Management Asset Acceptance Capital Corp. AACC $4.73 $145 4 Buy $7.33 55.0% $0.44 10.75x 1.63x Encore Capital Group, Inc. ECPG $21.86 $536 6 Strong Buy $35.20 61.0% $2.92 7.49x 2.32x Portfolio Recovery Associates, Inc. PRAA $70.07 $1,201 6 Strong Buy $94.80 35.3% $6.95 10.08x 2.73x Median $536 6 55.0% 10.08x 2.32x 21 .

DRAFT IV Preliminary Due Diligence Observations .

DRAFT Situation Summary I V P R E L I M I N AR Y DUE D I L I G ENCE OB S E R V A T ION S . RESULTS and CONDITIONS CONSIDERATION Deployments / origination activity: $287MM of total deployments (originations) in 2011 represented a near record year for purchasing YTD Q1 2012 is on track to be a record quarter with $90MM of total deployments expected Cash collection activity: Total collections increased 33% in 2011, from $234.3MM to $311.7MM representing a record year of collections Growth: Servicing revenue increased 28% in 2011 from $8.7MM in 2010 Consolidated revenues increased 0.5% in 2011 to $105.3MM Revenue has grown at a 17.7% CAGR over a 5-year period Net income increased 93.7% in 2011 from $12.5MM in 2010 Net income has grown at a 82.5% CAGR over a 5-year period ? FirstCity’s investment in 2011 originations declined to the lowest level in 5- years to 20% (58.1MM / 287.3MM) ? Despite record deployments, the balance sheet continues to shrink, with consolidated earning assets down 23% for the year ending 12/31/11 and consolidated portfolio assets down 35% for the same period ? Unconsolidated partnerships represented close to 60% of total collections, and increased nearly 70% in 2011 from $108.7MM in 2010 to $183.7MM ? Collections from consolidated partnerships increased 2% from $125.7MM in 2010 to $128.0MM in 2011; collections generated from consolidated partnerships contributed 41% to total collections ? Servicing revenue remains a small overall component of revenues ? 2011 revenues included a $26.5MM one-time accounting gain relating to the restructuring of the BOS facility; pro forma for the exclusion of the one-time gain, total consolidated revenue was $78.8MM, 25% lower than stated revenues; 21% lower than 2010 revenues excluding the one-time gain of $4.6MM relating to a business combination and 44% more than total revenues generated in 2007 ? FirstCity’s two primary sources of core revenue (income from portfolio assets and income from Crestone subsidiaries) contributed $47.6MM in 2011, a decline of 22% from $61.1MM in 2010. ? Excluding the one-time gain from the BOS facility restructuring, 2011 net income was $(2.3)MM, a 135% decline from 2010 net earnings excluding a $4.6MM one-time gain from a business combination. ? A depleting NOL will result in an additional earnings constraint. 22

DRAFT Situation Summary I V P R E L I M I N AR Y DUE D I L I G ENCE OB S E R V A T ION S . CONSIDERATION and ABILITY TO CAPITALIZE Funding and Liquidity Generation: FirstCity was successful in restructuring a senior BOS facility in Q4, 2011, booking a large one-time accounting gain Near/intermediate going-concern risk was mitigated, and the gain contributed to strong 2011 revenues and earnings results Stock Price Performance: o The market responded favorably to the debt restructuring; FirstCity’s stock price rallied 23% between the announced restructuring and January 5, 2012 Pipeline: o Management recently described its pipeline as the most robust in history, FirstCity is currently involved in active due diligence on approx. $600MM of potential originations (face value) The Opportunity: Market and Industry Developments o Management was recently quoted as describing the market opportunity both in the US and abroad to be the best and most lucrative in firm history; compelling market opportunity for non-performing asset purchase and servicing opportunities RESULTS and CONDITIONS ? The debt restructuring did not improve FirstCity’s cash position ? The Company remains funding-constrained, with limited capacity and a significant percentage of assets encumbered by current lenders. ? The current stock price and its illiquidity, along with current capital structure, leverage ratios and existing covenants severely limit access to traditional capital markets; liquidity otherwise available via select asset divestitures subject to an available market and covenant waivers. ? FirstCity’s stock continues to trade at a discount to book value (NAV), the micro-cap and thinly traded profile all but precludes the Company from accessing the traditional equity and equity-linked institutional marketplace. ? The Company remains uncovered by Wall Street; a relatively complex business and thin float limit institutional investor interest ? With significant funding constraints, and assuming no additional funding, options include declining participation (which may impact reputation as an incumbent) or directing an increasing proportion of new originations to its off-balance sheet partnerships, in which case economic participation will be marginalized and the balance sheet will continue to shrink. ? Specialty finance companies that are not growing (originations, collections, earning assets, earnings etc) are generally perceived by investors to be in run-off (liquidation) and are valued accordingly. ? In its present condition, FirstCity is not positioned to effectively leverage its established brand, strong domain reputation, vast origination network and sophisticated, high-efficacy internal servicing and collections systems to capitalize on a multi-generational market opportunity; participation (even if nominal) will result in an increasing proportion of originations being channeled into unconsolidated (off-balance-sheet) partnerships and a decreasing amount of on-balance-sheet participation; capital partners will accrue primary economic benefit while FirstCity is likely to accrue nominal economic benefit. . 23

DRAFT V Management Projections .

DRAFT Assumptions GENERAL ASSUMPTIONS All forecast deployments funded with new capital (zero current debt capacity for new purchases) Debt funding: all new deployments dependent on management securing additional debt capacity Equity funding required to support new deployments assumed to be sourced from (i) unencumbered liquidity (cash); (ii) unencumbered excess cash collections; (iii) prospective capital offerings, including select asset sales Collection performance: Collection-to-cost ratio of 135%; implies a 26% gross profit on every collection dollar Collection expenses (e.g. maintenance, insurance, etc.) assumed to be 6.0% of aggregate collections Incremental overhead estimated to support new deployments is assumed to be 0.5% of gross new collections Additional expenses include interest on existing and new debt facilities, salaries and benefits, executive bonuses, costs from the Crestone subsidiaries and other expenses Assumes net operating losses are exhausted by June 2013; thereafter, earnings are subject to 39% effective tax rate TERMS ON NEW FINANCING Weighted average interest rate: 6.00% Other financing costs: 0.50% Advance rate on senior acquisition debt: 60% Excess cash flow to service debt: Year 1: 70% Year 2: 70% Year 3: 60% Year 4: 50% Year 5: 50% V MANA GEMENT P ROJ E C T I O N S . 24

DRAFT $366 $400 $309 $264 $280 $278 $313 $351 $0 $100 $200 $300 $400 $500 2009 2010 2011 2012 2013 2014 2015 2016 $148 $68 $58 $90 $140 $120 $180 $200 $0 $50 $100 $150 $200 $250 2009 2010 2011 2012 2013 2014 2015 2016 Assumptions (Key Drivers) Source: Company management (a) Represents participation in originations Projected Actual Actual Projected Earnings Assets Originations (a) GROSS COLLECTIONS CURVE Projected $ in Millions $ in Millions % Collected Each Year 25

DRAFT Financial Forecast ($ in millions) Source: Company Management (a) 2011 2016E originations represent FirstCity’s share of total originations. Historical Projected CAGR 2009 2010 2011 2012 2013 2014 2015 2016 '11A - '16E Summary Income Statement: Servicing Fees $9 $9 $11 $9 $6 $2 $0 $0 (50.7%) Management/Incentive Fees 0 0 0 2 7 3 1 2 NA Portfolio Income 54 46 41 30 40 45 47 60 8.0% ABL Investment Income 3 2 4 4 1 1 0 0 (47.3%) Equity in Earnings of Subsidiaries 0 15 2 14 15 12 8 7 27.3% Income from Consol. Crestone Subs 5 19 7 4 4 4 4 4 (9.0%) Other Income 17 18 40 6 8 8 8 9 (26.6%) Total Revenues $88 $109 $105 $70 $81 $74 $68 $82 (4.9%) Total Expenses (56) (72) (64) (44) (43) (46) (49) (55) (3.0%) Operating Profit $32 $37 $41 $26 $38 $28 $19 $27 (8.2%) Minority Interest (6) (13) (9) (4) (2) (3) (1) (1) (38.9%) Impairment (5) (9) (4) (5) (4) (4) (4) (4) 0.0% Pre-Tax Income $21 $15 $28 $17 $32 $21 $14 $22 (4.7%) Income Taxes (2) (2) (4) (0) (6) (8) (6) (9) 16.5% Net Income $19 $13 $24 $16 $25 $13 $9 $13 (10.9%) Summary Balance Sheet: Total Assets 465 460 356 305 313 310 351 396 2.1% Equity 78 88 112 130 156 169 177 191 11.2% Deployments (a) 148 68 58 90 140 120 180 200 Operating Metrics: Debt/Equity 4.35x 3.82x 1.96x 1.23x 0.94x 0.76x 0.91x 1.02x ROE 26.1% 17.5% 28.7% 15.9% 17.8% 7.8% 5.0% 7.3% Effective Tax Rate 9.5% 13.3% 14.3% 2.9% 20.3% 39.0% 39.0% 39.0% Per Share Statistics: Earnings per Share $1.86 $1.27 $2.33 $1.58 $2.45 $1.23 $0.84 $1.29 (11.1%) Book Value per Share $7.62 $8.63 $10.87 $12.57 $15.02 $16.25 $17.09 $18.38 11.1% 26

DRAFT Capitalization (Current Balance Sheet (12/31/11) ($ in thousands) (a) FLGB is a structured finance entity created to restructure and repay the Company's debt owed to Bank of Scotland and Bank of America. Approximately 75% of total assets are currently securing the BOS Reducing Note Facility within FLBG x x FC Investment FLBG(a) Holding Bank of Scotland Consolidated Assets: Cash and Cash Equivalents $14,606 $21,425 $36,031 Portfolio Assets 21,539 102,373 123,912 Loans Receivable -- 45,696 45,696 Interest Receivable -- 285 285 Investment Securities Available for Sale, net 1,000 2,798 3,798 Equity Investments 51,365 58,028 109,393 Assets Held for Sale -- 9,900 9,900 Service Fees Receivable 1,088 ($174) 913 Loan Servicing Assets - SBA -- 1,090 1,090 Other Assets 1,893 23,435 25,327 Total Assets $91,491 $264,855 $356,346 Liabilities: Notes Payable - BoS $0 $86,579 $86,579 Notes Payable - Other 11,757 91,600 103,357 Notes Payable - Affiliates -- -- -- Other Liabilities 7,804 21,203 29,007 Total Liabilities $19,562 $199,381 $218,943 Equity: FirstCity Investor Equity $70,419 $41,557 $111,976 Noncontrolling Interest 1,510 23,916 25,427 Total Equity $71,929 $65,474 $137,403 Total Liabilities & Equity $91,491 $264,855 $356,346 x x 27

DRAFT Credit Facilities (Current Structure) Source: Company Management as of 12/31/2011. (a) Excludes $25mm FLBG2 Holdings note, which has been written down to $0 on the balance sheet. V MANA GEMENT P ROJ E C T I ONS . Description Issue Date Type Original Face Value Balance Sheet Carrying Value Rate Maturity LTV % Amortization Requirements Other Key Terms Bank of Scotland 6/25/10 Reducing Note Facility $268,479 $86,579 0.25% fixed 12/21/14 62.1% 90% of cash flow paydown outstanding balance Secured by substantially all assets and equity investments of FirstCity Commercial Corp.; Minimum tangible net worth of $90MM for FirstCity Financial; 10% of cash flow leak through provision; Consent required upon change of control Bank of America $50mm term note 12/21/11 Term 51,000 49,228 LIBOR + 2.75% 12/1/14 63.4% $20mm in 2012; $5mm every 6 months thereafter Secured by all assets of FH Partners; 5% servicing fee; excess cash flows then go to paydown bank of scotland Wells Fargo 2/15/12 Revolving Note 25,000 21,405 Alternate interest rates based on Wells Fargo base rate + margin, LIBOR + 2/15/15 60.0% Revolving line of credit solely for SBA orginations Secured by assets of ABL and guaranteed by FirstCity up to $5.0mm; Key man provisions regarding director composition Merrill Lynch Mortgage Trust 3/30/06 Term 7,800 7,361 6.07% fixed 4/5/16 -- $47,117 per month; Bullet at maturity Secured by assets of Oregon Short Line Building Bank of America - WAMCO 30 10/30/07 Term 37,500 6,355 LIBOR + 2.75% 12/1/12 56.5% Bullet at maturity Secured by all assets of Wamco 30 Fifth Third Bank 3/14/11 Term 3,750 3,531 Prime Rate + margin (0.50- 1.50%) or LIBOR + 3/1/16 -- Montly Amortization of $31,250 with balance at Secured by assets of FirstCity's consolidated railroad subsidiaries Fifth Third Bank 3/14/11 Line of Credit 0 1,625 Prime Rate + margin (0.50- 1.50%) or LIBOR + margin (2.25-3.25%) 3/1/13 -- Bullet at maturity $5 million Acquisition Line of Credit available until March 2013 at which time any outstanding amounts convert to Term Debt maturing in March 2016. Secured by assets of FirstCity's GATX Rail (East Penn RR) 4/15/11 Capital Lease 750 735 Capital lease 10/1/22 -- Monthly P&I payments of $7,289 $7,289 monthly payment through Oct. 2022 Republic Corporation loan participation 11/1/11 Participation 333 333 -- 2/28/15 -- Bullet at maturity Participation in underlying loan originated to Republic Corp. (borrower) by FC Crestone entity (lender); terms same as the lead BEI Electronics loan participation 6/30/10 Participation 156 163 -- 3/31/13 -- Bullet at maturity Participation in underlying loan originated to BEI (borrower) by FC Crestone entity (lender); terms same as the lead term-note Subtotal $394,768 $178,188 Central National Bank 9/1/11 Term 5,665 $4,869 5.0% fixed 8/15/14 51.8% Cash Flow Note; bullet at maturity Secured by assets of FirstStorm Partners 2, 30% leak through of cash flow once 50% LTV reached First National Bank of Central Texas 10/30/10 Term 5,250 4,457 5.0% fixed through Oct. 2013, then greater of 4.50% or Prime + 0.25%, or 10/30/15 46.2% $250K every six months; bullet at maturity Secured by assets of MPortfolio 2 LLC, 20% leak through of cash flow once 50% LTV reached First National Bank of Central Texas 2/11/11 Term 3,400 2,432 5.0% fixed 2/11/16 48.3% Cash Flow Note; bullet at maturity Secured by assets of FirstStorm Partners 1, 20% leak through of cash flow once 50% LTV reached Subtotal $14,315 $11,758 Consolidated Total $409,083 $189,946 FLBG(a) FC INVEST. HLDGS 28

DRAFT VI Preliminary Valuation Considerations .

DRAFT Benchmarking Source: SNL and FactSet (3/21/12), based on a closing price of $8.95 Note: Receivables Management Peer Group includes AACC, ASFI, ECPG, FCFC and PRAA; Commercial Finance Peer Group includes CSE, DFR, CIT, GMT, KFN, MRLN, MFI, MIND, NEWS, PLUS. 29 Average Current 3 Month 12 Month FirstCity Financial Corp. 0.82x 0.89x 0.77x Commerical Finance trading comps 1.16 1.10 1.01 Receivables Management trading comps 1.25 1.27 1.40 FirstCity Financial Corp. 0.82x 0.89x 0.77x Commerical Finance trading comps 1.22 1.15 1.05 Receivables Management trading comps 1.34 1.37 1.51 FirstCity Financial Corp. 3.8x 7.6x 6.2x Commerical Finance trading comps 12.2 12.5 15.2 Receivables Management trading comps 11.5 11.0 13.8 P/BV P/TBV LTM P/E

DRAFT MARKET CAPITALIZATION HYPOTHETICAL LIQUIDATION TRADING COMPARABLES PRECEDENT TRANSACTIONS DCF (DIVIDEND DISCOUNT) PREMIUMS PAID BALANCE SHEET FAIR MARKET VALUE The 52-week range of the share price Current share price as of 3/21/12 is $8.95 Based on case projections and a stress case whereby net cash flows are reduced ~$15mm Assumes a discount rate of 20% Assumes a P/TBV range of 0.90x 23 1.30x based on select comparable commercial finance and receivables management companies Assumes a P/BV range of 0.95 23 1.05x based on select precedent specialty finance transactions Intrinsic value of the Company as an ongoing concern Based on projections Discount rate range of 17.5% - 22.5% and a 1.0x P/TBV exit multiple Assumes a 20 30% premium to the current share price Based on the premium paid in select specialty finance and small cap FIG transactions Base on a moderate stress case and a contingent case whereby balance assets are reduced, on average, by 7% and 17%, respectively IMPLIED P/TBV SHARE PRICE LOW HIGH MARKET PRICE (52-WEEK RANGE) 0.53x 0.93x HYPOTHETICAL LIQUIDATION 0.76x 0.87x TRADING COMPARABLES 0.90x 1.30x PRECEDENT TRANSACTIONS 0.95x 1.05x DCF (DIVIDEND DISCOUNT) 0.62x 0.76x PREMIUMS PAID 0.99x 1.07x HYPOTHETICAL BALANCE SHEET FAIR MARKET VALUE 0.54x 0.79x $5.79 $8.21 $9.78 $10.33 $6.71 $10.74 $5.82 $10.09 $9.43 $14.13 $11.41 $8.27 $11.64 $8.59 Valuation Summary . Note: Implied P/TBV multiples based on 12/31/11 tangible book value per share of $10.87. 30

DRAFT Comparable Trading Comps Source: FactSet and SNL Financial; as of 3/21/12. V I P R E L IMI N A R Y V A L U A T I O N C ONS I DE R A T I O N S . 31 Stock Mkt % of Price / Price / GAAP PE Div. Reported (1) Debt / Price($) Cap 52 Week 52 Wk BV TBV CY 2012 CY 2013 Yield LTM LTM Equity Ticker 3/21/12 ($MM) High Low High (X) (X) (X) (X) (%) ROAA (%) ROAE (%) (X) FirstCity Financial Corporation FCFC $8.95 $93 $10.09 $5.79 88.7% 0.82x NM NA NA 0.0% 5.3% 17.9% 1.8x COMMERCIAL FINANCE CapitalSource Inc. CSE $7.18 $1,761 $7.31 $5.08 98.2% 1.17x 1.31x 13.7x 12.5x 0.6% (0.6%) (2.6%) 0.8x CIT Group Inc. CIT $42.24 $8,482 $44.88 $27.68 94.1% 0.95x 1.00x NM 15.6x 0.0% 0.1% 0.4% 3.0x GATX Corporation GMT $42.61 $1,990 $45.50 $28.90 93.6% 1.77x 1.92x 16.3x 14.1x 2.7% 2.0% 9.6% 3.2x Marlin Business Services Corp. MRLN $14.85 $189 $16.58 $9.37 89.6% 1.15x 1.15x 19.3x 12.5x 1.9% 1.3% 3.8% 0.6x MicroFinancial Incorporated MFI $6.80 $97 $7.11 $4.29 95.6% 1.28x 1.28x 10.5x 9.1x 4.1% 6.1% 12.4% 0.8x Mitcham Industries, Inc. MIND $21.76 $270 $26.76 $9.52 81.3% 1.89x 2.02x 9.0x 9.0x 0.0% 10.2% 14.0% 0.0x NewStar Financial, Inc. NEWS $10.60 $524 $12.43 $7.17 85.3% 0.93x 0.93x NA NA 0.0% 0.8% 2.5% 2.4x High - - 98.2% 1.89 2.02x 19.3x 15.6% 4.1% 10.2% 14.0% 3.2% Average - - 91.1% 1.31 1.37 13.7 12.1 1.3 2.8 5.7 1.5 Median - - 93.6% 1.17 1.28 13.7 12.5 0.6 1.3 3.8 0.8 Low - - 81.3% 0.93 0.93 9.0 9.0 0.0 NM NM 0.0 RECEIVABLES MANAGEMENT Asset Acceptance Capital Corp. AACC $4.73 $145 $5.97 $2.80 79.2% 1.05x 1.17x 10.9x 8.8x 0.0% 3.2% 9.2% 1.3x Asta Funding, Inc. ASFI $8.05 $118 $8.75 $6.40 92.0% 0.67x 0.67x NA NA 1.0% 4.3% 6.3% 0.4x Encore Capital Group, Inc. ECPG $21.86 $536 $33.16 $18.96 65.9% 1.44x 1.51x 7.5x 6.7x 0.0% 8.0% 18.1% 1.1x Portfolio Recovery Associates, Inc. PRAA $70.07 $1,201 $90.95 $56.76 77.0% 2.02x 2.31x 10.5x 8.5x 0.0% 9.8% 18.7% 0.4x High - - 92.0% 2.02x 2.31x 10.9x 8.8x 1.0% 9.8% 18.7% 1.3x Average - - 78.5% 1.29 1.42 9.6 8.0 0.3 6.3 13.1 0.8 Median - - 78.1% 1.25 1.34 10.5 8.5 0.0 6.2 13.7 0.7 Low - - 65.9% 0.67 0.67 7.5 6.7 0.0 3.2 6.3 0.4

DRAFT Historical Perspective (Price / TBV) Source: SNL, FactSet (3/21/12) Note: a) FirstCity had a tangible book value per share of ($0.21) in 3Q2002 b) Pre-crisis defined as the period from 3/18/02 to 12/31/07 c) Financial crisis defined as the period from 1/1/08 to 3/31/09 d) Post-crisis defined as the period from 4/1/09 to current e) 3/21/12 Note: Receivables Management Peer Group includes AACC, ASFI, ECPG, FCFC and PRAA; Commercial Finance Peer Group includes CSE, DFR, CIT, GMT, KFN, MRLN, MFI, MIND, NEWS, PLUS 0.82x 1.22x 1.34x 0.00 1.00 2.00 3.00 4.00 5.00 6.00x Mar 2002 Mar 2004 Mar 2006 Mar 2008 Mar 2010 Mar 2012 FirstCity Commercial Finance Peer Group Receivables Management Peer Group (a) 32 V I P R E L IMI N A R Y V A L U A T I O N C ONS I DE R A T I O N S . P/TBV trading ranges of small-cap specialty finance companies have tended to converge since the 2008-09 financial crisis Average P/TBV Financial Post- Pre-Crisis (b) Crisis (c) Crisis (d) Current (e) FirstCity Financial Corp. 1.50x 0.47x 0.90x 0.82x Comm. Finance 1.31 0.70 0.89 1.22 Receivables Mgmt. 3.00 1.68 1.62 1.34

DRAFT Comparable Transactions(1) . Source: SNL. (1) Select specialty finance transactions announced since 1/1/2000; TEV at the time of announcement <$250mm 33 V I P R E L I M I N AR Y V A L U A T I O N CONS I DE R A T I O N S Announce Target Transaction Implied Multiple Date Acquiror Target Ticker Value BV TBV LTM EPS 2/3/11 Cerberus Silverleaf Resorts SVLF $95.3 0.46x 0.46x 11.4x 12/27/10 Investor group United PanAm Financial UPFC 110.4 0.83 0.85 NM 8/3/09 Prospect Capital Patriot Capital Funding PCAP 86.3 0.49 0.51 NM 9/16/08 EZCORP Value Financial Services VFSI 76.7 4.13 NA NA 1/28/08 Hypo Real Estate Hldg. Quadra Realty Trust QRR 179.2 0.75 0.77 40.5 2/28/07 CRX Acquisition Cronos Group CRNS 134.8 1.42 1.81 14.0 2/15/07 Investor group Fieldstone Invst. Corp. FICC 188.1 0.44 0.44 NM 9/13/05 Wachovia AmNet Mortgage AMNT 80.8 1.12 1.06 NM 9/6/05 WDM Fund United Financial Mortgage UFMC 35.8 1.11 1.20 25.6 5/27/05 New Century Financial RBC Mortgage Company PRFN 80.6 NA NA NA 1/20/05 iStar Financial Falcon Financial Invst. Trust FLCN 119.7 1.02 1.02 NM 9/22/04 Capital One Financial Onyx Acceptance Corp. ONYX 190.8 1.70 2.23 17.1 6/30/04 Allied Capital Financial Pacific FNPC 92.9 NA NA NA 11/12/03 General Electric HPSC HDR 75.0 1.69 2.02 23.4 7/12/03 American Home Mortgage Apex Mortgage Capital AXM 181.2 0.95 0.93 3.6 3/31/03 Consumer Portfolio Services TFC Enterprises TFCE 21.8 0.46 0.47 NM High 4.13x 2.23x 40.5x Mean 1.18 1.06 19.4 Median 0.99 0.93 17.1 Low 0.44 0.44 3.6

DRAFT SELECTED FINANCIAL TRANSACTIONS (ALL SECTORS) Premiums Paid (1) (2) Source: SNL. (1) Announced transactions involving publicly traded target companies in the specialty finance sector; transactions since March 2002; transaction value less than $250mm at the time of announcement (2) Announced transactions involving publicly traded target companies in the financials industry excluding banks; transactions since March 2002; transaction value less than $250mm at the time of announcement IMPLIED PREMIUMS SELECTED SPECIALTY FINANCIAL TRANSACTIONS 41.1 61.5 54.9 79.4 0.0% 25.0 50.0 75.0 100.0 Premium % 10-Year Avg. 36.6% 34.7% 38.3% 31.8% 60.0% 56.9% 53.6% 44.3% 52.8% 54.4% 49.3% 39.1% 57.4% 44.7% 28.3% 28.8% 0.0 25.0 50.0 75.0 100.0 1- Year Avg. 3-Year Avg. 5-Year Avg. 10-Year Avg. 1 Day Before 1 Month Prior 3 Months Prior 1 Year Prior V I P R E L IMI N A R Y V A L U A T I O N C ONS I DE R A T I O N S . 75 total transactions: 17 Financial Technology 7 Broker/Dealer 30 Insurance 6 Investment Company 15 Specialty Finance 34

DRAFT DCF (Dividend Discount) ($ in millions) . 1 Based on 10,381,000 fully-diluted shares outstanding shares as of December 31, 2011. 35 V I P R E L I M I N AR Y V A L U A T I O N CONS I DE R A T I O N S FIRSTCITY - MANAGEMENT FORECAST 2011A 2012E 2013E 2014E 2015E 2016E TV Net Income $24.0 $16.5 $25.5 $12.7 $8.7 $13.4 Dividends 0.0 0.0 0.0 0.0 0.0 0.0 Period Ending Shareholder's Equit 112.0 130.5 155.9 168.7 177.4 190.8 Terminal Multiple (P/TBV) 1.00x Terminal Value $190.8 NPV (@ 20%) $76.7 Per Share Price1 $7.44 P/TBV EXIT MULTIPLE 0.80x 1.00x 1.20x 0.8x 1.0x 1.2x 12.5% $8.22 $10.28 $12.33 15.0% 7.37 9.21 11.05 17.5% 6.61 8.27 9.92 20.0% 5.95 7.44 8.93 22.5% 5.37 6.71 8.06 25.0% 4.85 6.07 7.28 Implied LTM P/E 11.4x 14.2x 17.0x DISCOUNT RATE

DRAFT Liquidation Scenario (Overview and Assumptions) . PRIMARY ASSUMPTIONS Premium/(discount) to current share price based on a price of $8.95 as of 3/21/12 Discount rate range: 12.5% 25.0% Total tax shield of $246.0mm, comprised of: Tax basis: $219.6; NOLs: $26.4 It is assumed that the first $246.0mm of net pre-tax cash flows (including cash used to service debt) are tax-exempt Effective tax rate: 39.0% (35.0% federal, 4.0% state); taxes applied to cash flows above aggregate tax shield Fully-diluted shares outstanding: 10,381,000 (12/31/11) Cash and equivalents (unencumbered): $11.3mm (12/31/11) Estimated administrative and overhead expenses through the wind-down period: $48.4mm (includes approx. $5.7mm of employee retention + compensation expense, and; $2.2mm for employee severance expense Based on historical expenses as a percent of gross cash collections (~6.0%); in line with prior years BASE CASE Base Case: Implied WAL: 29.3 months DOWNSIDE CASE Downside Case: 2012, 2013 and 2014 collections are adjusted down 5.0%, 2.5% and 2.5%, respectively 2016 collections are adjusted up 2.5% and 2.5%, respectively Result: Approx. $7.5mm loss of base case net cash flows Implied WAL: 31.1 months EXTENDED WAL CASE Extended WAL Case: 2012, 2013 and 2014 collections are lowered 10.0%, 10.0% and 5.0%, respectively 2015, 2016 and 2016+ collections are increased 5.0%, 10.0% and 15.0%, respectively No change to base case net cash flows Implied WAL: 35.1 months REDUCED NET CASH FLOW CASE Reduced Net Cash Flow Case: 2012, 2013 and 2014 collections are lowered 5.0%, 5.0% and 5.0%, respectively Result : $14.5mm loss of base case net cash flows Implied WAL: 30.6 months 36 V I P R E L I M I N AR Y V A L U A T I O N CONS I DE R A T I O N S Collections and timing of collections; assumes management’s base case scenatrio Adjusts net cash flows under management’s bse case (timing and gross collections change based on the following adjustments to management’s base case assumptions: based on the following adjustments to management’s base case assumptions:

DRAFT ($ in thousands, except per share amounts) . (a) Net collections net of (following) repayment to all existing credit facilities including Bank of Scotland and Bank of America under the terms of the current facilities Management Base Case Cash Flows @ 20.0% Discount Rate Net FC Invest. Net Cash FLBG Holdings Collections(a) Overhead Taxes Flows 2012 $9,859 $49,616 $59,475 ($17,512) -- $41,963 2013 4,543 40,876 45,418 (15,811) -- 29,607 2014 15,575 12,299 27,875 (8,250) ($3,834) 15,791 2015 29,797 7,393 37,190 (3,400) (13,178) 20,612 2016 30,934 2,841 33,775 (3,380) (11,854) 18,541 2016+ 9,187 34 9,221 (4) (3,595) 5,623 Total $99,895 $113,059 $212,954 ($48,357) ($32,461) $132,136 Share Price Sensitivities Premium/(Discount) to Current Share Price ($8.95) Case Case Mgmt. Mgmt. Extended Reduced Mgmt. Mgmt. Extended Reduced Base Downside WAL Cash Base Downside WAL Cash 12.5% $10.73 $9.93 $9.94 $9.44 19.9% 10.9% 11.1% 5.5% 15.0% 10.27 9.45 9.38 9.00 14.7% 5.6% 4.8% 0.5% 17.5% 9.83 9.02 8.86 8.59 9.9% 0.7% (1.0%) (4.1%) 20.0% 9.43 8.61 8.38 8.21 5.4% (3.8%) (6.3%) (8.3%) 22.5% 9.06 8.24 7.95 7.85 1.2% (8.0%) (11.2%) (12.2%) 25.0% 8.71 7.89 7.55 7.53 (2.7%) (11.8%) (15.6%) (15.9%) Net Cash Flows Lost - $ -- ($7.5) ($0.1) ($14.5) WAL 29.3 31.1 35.1 30.6 Implied Price/Tangible Book Value of $10.87 (12/31/11) Case Mgmt. Mgmt. Extended Reduced Base Downside WAL Cash 12.5% 0.99x 0.91x 0.91x 0.87x 15.0% 0.94 0.87 0.86 0.83 17.5% 0.90 0.83 0.81 0.79 20.0% 0.87 0.79 0.77 0.75 22.5% 0.83 0.76 0.73 0.72 25.0% 0.80 0.73 0.69 0.69 Discount Rate Discount Rate 37 V I P R E L I M I N AR Y V A L U A T I O N CONS I DE R A T I O N S

DRAFT Balance Sheet - Stress Test Analysis . a) Consolidated unaudited balance sheet as of 12/31/11 b) Based on 10,381,000 fully-diluted shares outstanding of as of 12/31/11 c) Assumes the following declines in value: 5% Portfolio Assets; 3% for SBA loans; 10% for other Loans Receivable 10% for Equity Investments; 15% for Equity Investments in Servicing Entities; 20% for Investment Securities AFS; 10% of Operating Assets; 10% for Assets Held for Sale; case-by-case percentage declines assumed for Other Assets. Non-controlling interest is adjusted by corresponding amounts for those assets that the Company consolidates but does not own 100%. d) Assumes the following declines in value: 15% Portfolio Assets; 10% for SBA Loans; 25 for other Loans Receivable; 20% for Equity Investments; 30% for Equity Investments in Servicing Entities; 50% for Investment Securities AFS; 20% for Operating Assets; 20% for Assets Held for Sale; case-by-case percentage declines assumed for Other Assets. Non-controlling interest is adjusted by corresponding amounts for those assets that the Company consolidates but does not own 100%. 38 V I P R E L I M I N AR Y V A L U A T I O N CONS I DE R A T I O N S ($000) Est. Est. Loss Loss Consolidated Rate Moderate Rate Contingent (12/31/11)a % Casec % Cased Assets Cash and cash equivalents $35,996 0% $35,996 0% $35,996 Restricted Cash 35 0% 35 0% 35 Portfolio Assets 123,946 (5%) 117,749 (15%) 105,354 Loans Receivable 45,947 (6%) 43,234 (16%) 38,493 Equity Investments 109,393 (12%) 96,607 (23%) 83,821 Investment Securities - AFS 3,798 (20%) 3,039 (13%) 3,298 Operating Entity Assets 15,703 (10%) 14,133 (20%) 12,562 Assets Held for Sale 9,900 (10%) 8,910 (20%) 7,920 Total Earning Assets 308,687 (8%) 283,671 (19%) 251,448 Other Assets 11,628 (13%) 10,102 (21%) 9,181 Total Assets 356,346 (7%) 329,804 (17%) 296,660 Liabilities Total Liabilities 218,943 0% 218,943.2 0% 218,943.2 Non-controlling Interest 25,427 (15%) 21,638.2 (32%) 17,281.5 Sub total 244,370 (2%) 240,581 (3%) 236,225 Shareholders' Equity 111,976 (20%) 89,223 (46%) 60,435 Book Value per Share $10.79 (20%) $8.59 (46%) $5.82 Premium / (Discount) to Current Book Value per Share ($2.19) ($4.96) Implied Price to Book Value per Shareb 0.80x 0.54x Total Liabilities and Shareholders' Equity 356,346 329,804 296,660

DRAFT VII Preliminary Considerations - Strategic Alternatives .

DRAFT Preliminary Considerations V I I P R E L I M I N AR Y C ONS I DE R A T I O N S - S T R A T E G I C A L T E RNA T I V ES In considering potential strategic alternatives based on the non-exhaustive due diligence and analyses conducted thus far, LMM has considered among other factors (i) historical operating performance; (ii) historical and current funding structure; (iii) current position in the marketplace and market opportunities and industry developments; (iv) small- -year forecast and outlook for the business, and; (vi) capital alternatives reasonably available to the Company. In summary, we considered the following alternatives Status Quo Attempt to renegotiate / modify the Varde agreement -balance sheet leverage within acquisition partnerships Capital Markets Offering Enhance funding and deployment capacity by evaluating and pursuing appropriate equity, equity-linked and debt offerings in the public, hybrid and/or private markets Select Asset Sales As an alternative to or in addition to raising capital, consider divesting of certain unencumbered assets to enhance funding capacity; seek and obtain covenant waivers from existing creditors if and as needed Fund Placement Enhance funding capacity by capitalizing an off-balance sheet special purpose vehicle (SPV) with strategic capital partners in which FirstCity retains significant equity interest and for which FirstCity serves as external manager Full Sale of the Company Full or majority sale of the Company to either a strategic or a financial acquirer Liquidation Initiate and manage an orderly winding down of the business including among other components managing the portfolios in runoff and reductions in force . 39 FirstCity’s profile and lace of research coverage;(v) management’s 5 Continue to operate the business according to management’s base case finanaical forecast Seek limited leverage on equity investments’ “on balance sheet” + seek off-

DRAFT Preliminary Considerations V I I P R E L I M I N AR Y C ONS I DE R A T I O N S - S T R A T E G I C A L T E RNA T I V ES Strategic considerations: In order to grow, specialty finance companies must continue to raise and deploy capital Receivables Earning assets Cash collections (recoveries) Revenues Earnings ROA; ROE Without captive sources of funding via customer deposits (banks), specialty finance companies are dependent on funding from third party creditors, from equity investors, and from the redeployment of unencumbered earnings to support all-important purchasing (origination) capacity. In the absence of growth, sophisticated investors will generally view a specialty finance company to be in run-off (orderly liquidation), and will consider such observations when valuing the enterprise Strategic questions: Is FirstCity growing? In the absence of a material shift in positioning or strategy, is FirstCity able to grow organically? Does FirstCity have sufficient funding (origination capacity) and access to appropriate deployment opportunities in order to acquire enough earning assets to more than offset liquidating assets ? Is the market valuing FirstCity as a growth company, or as a company that is in run-off? . 40

DRAFT Status Quo (Preliminary Considerations) Considerations EARNINGS, SHARE PRICE AND SHAREHOLDER REALIZATION IMPLICATIONS Completely dependent on management base case financial forecast, itself dependent on securing significant additional funding Estimated PV1: $5.95 - $8.93 per share; implies a range that is lower than the estimated liquidation value and a (approximate) 20% discount to the current share price Doubtful that the attractive market opportunity will be realized Constrained liquidity limits the deployment, collections, revenue and earnings outlook, with earning assets forecast continuing to shrink Utilization of NOL by 2013, and resulting tax expense weighs on future net income Stock is already thinly traded, limiting traditional capital markets alternatives; doubtful that institutional investor sponsorship will increase in the near-term, although investors will tend to value the Company as a liquidation/run-off opportunity if growth is not apparent In the absence of an amended Varde agreement, the economic benefit from both portfolio purchases and servicing will continue to accrue disproportionately to Varde Status quo assumes continued burden of public company expenses EXECUTION CONSIDERATIONS Limited growth may impact employee morale + threaten long-standing cohesion TIMING As the assets and firm profits decline, the ability to obtain a for the company will likely erode V I I P R E L I M I N AR Y C ONS I DE R A T I O N S - S T R A T E G I C A L T E RNA T I V ES . 41 1 DCF(Dividend Discount) value Company’s “premimum”

DRAFT Liquidation (Preliminary Considerations) Considerations EARNINGS, SHARE PRICE AND SHAREHOLDER REALIZATION IMPLICATIONS Estimated value per share range of $8.21- $9.43 (approximately a 10% discount and a 5% premium to today’s share price), assuming a base case discount factor of 20% Opportunity cost of a franchise (going-concern or growth) premium Opportunity cost of forgone (highly attractive) market opportunity No elimination of public company expenses; retain net operating loss tax benefits EXECUTION Inherently unstable process Threatens long-term cohesion among employees and senior management Loss of key employees places further pressure on collections Incremental expenses are material (retention and severance expense) TIMING Significant percentage of aggregate cash collections will be received in the early years, although a full liquidation may take as many as 5+ years V I I P R E L I M I N AR Y C ONS I DE R A T I O N S - S T R A T E G I C A L T E RNA T I V ES . 42

DRAFT SPV Fund Raising (Considerations) Considerations EARNINGS, SHARE PRICE AND SHAREHOLDER REALIZATION IMPLICATIONS Current income would be highly dependent on the size of the fund or funds raised; however, the majority of profits would be earned over multiple years and likely to be subordinated to return of investor capital plus a preferred return Substantial portion of the value almost always accrues to the capital partner/s Utilization of the NOL by 2013, and the resulting tax expense, significantly weighs on future earnings Unlikely to attract additional investor interest in the shares No elimination of public company expenses EXECUTION High-degree of execution risk as inaugural fund Previous attempts have been unsuccessful (2008 and 2011) Significant key employee risk TIMING Fund raising process is time intensive and can span up to 1-2 years for first-time managers Highly competitive fund raising environment could extend timing further as LP investors in the marketplace are concentrating their investment with fewer institutions V I I P R E L I M I N AR Y C ONS I DE R A T I O N S - S T R A T E G I C A L T E RNA T I V ES . 43 FirstCity’s

DRAFT Select Asset Sales (Considerations) Considerations EARNINGS, SHARE PRICE AND SHAREHOLDER REALIZATION IMPLICATIONS Most important consideration relates to reconciling liquidity shortfall with realistically estimated capacity that may be available if and to the extent assets can in fact be divested and proceeds remain unencumbered Current estimates: FMV of all assets outside the BOS facility relatively modest (approx. $52MM of equity investments) Proceeds may be difficult to leverage pending current credit capacity Given the recent restructuring of the Bank of Scotland facility, it may be difficult to obtain waivers to obtain liquidity from assets securing its agreement; LMM has not yet surveyed market appetite Motivated liquidation of assets may compromise the market position vis a via maximizing value Restrictive market terms on new bank facilities will continue to pressure originations and the future financial results Utilization of NOL by 2013, and the resulting tax expense, will also significantly weigh on future earnings No elimination of public company expenses EXECUTION Varde appears well positioned in a sale for the majority of the unencumbered assets as its partnerships represent approximately $50MM of the equity investments We understand Varde to have a right of first refusal TIMING Unencumbered assets already have a relatively short duration vast majority are expected to pay down within 18-24 months Likely to take substantially more time to consummate a transaction if the counterparty is not Varde OTHER $90MM minimum TNW covenant related to FirstCity Financial guarantee for the Bank of Scotland facility V I I P R E L I M I N AR Y C ONS I DE R A T I O N S - S T R A T E G I C A L T E RNA T I V ES . 44 Company’s Company’s  –

DRAFT Capital Markets Transaction (Considerations) Considerations EARNINGS, SHARE PRICE AND SHAREHOLDER REALIZATION IMPLICATIONS All forms of traditional capital (equity, hybrid, debt) are anticipated to be very expensive We cannot be assured of investor demand for such product Based on a number of factors including stock price, relative illiquidity and small-cap profile, we would anticipate a significant discount due to high cost capital (assuming capital is in fact available) Risk NOL preservation if a change of control is triggered by equity or equity-linked issuance No elimination of public company expenses No guarantees of institutional coverage EXECUTION Given the illiquidity in the stock, the earnings profile, and access to acceptable liquidity/credit facilities, an investment in the Company will not likely appeal to public investors As such, domain of equity investors will likely overlap with universe of buyers seeking control High degree of execution risk equity raise would be contingent on debt and vice versa Complex existing funding structure, encumbered assets, and FirstCity Financial guarantee to Bank of Scotland will constrain investor willingness to invest Depending of availability of credit and related terms, the Company will likely require additional equity to fund origination growth on a go-forward basis Careful review and consideration of change of control issues New equity investor may require significant governance rights TIMING Contingent, parallel debt and equity process complicates execution and would extend timing . 45 V I I P R E L I M I N AR Y C ONS I DE R A T I O N S - S T R A T E G I C A L T E RNA T I V ES –

DRAFT Equity Capital Markets (Recent Issuance Trends) Source: ECM Analytics and PlacementTracker as of 12/31/11. Note: Excludes SPACs, REITs, closed-end funds and offerings less than $10mm. OVERALL QUARTERLY NEW ISSUANCE 2005-2011 YTD 2005 2006 2007 2008 2009 2010 2011 # of FIG Offerings 25 28 36 31 96 90 24 32 32 22 31 23 25 62 26 22 6 61 64 59 54 51 40 53 48 39 14 20 % of All Offerings 7.9% 10.1% 9.3% 7.6% 32.7% 25.8% 11.9% 7.7% 9.9% 6.7% 12.6% 6.4% 14.0% 22.3% 15.3% 21.6% 5.5% 18.4% 19.5% 17.0% 18.5% 19.5% 19.1% 14.8% 16.2% 14.2% 11.8% 12.1% . 46 V I I P R E L I M I N AR Y C ONS I DE R A T I O N S - S T R A T E G I C A L T E RNA T I V ES —

DRAFT Equity Capital Markets (PIPE Transactions) (1) V I I P R E L I M I N AR Y C ONS I DE R A T I O N S - S T R A T E G I C A L T E RNA T I V ES . PIPE PRICING - PREMIUM / (DISCOUNT) AT CLOSING NUMBER OF PIPE TRANSACTIONS AGGREGATE PROCEED RAISED Source: Dealogic All 2012 data through March 19th, 2012 (1) Excludes banks $ in Billions 47

DRAFT Source: Dealogic All 2012 data through March 19th, 2012 V I I P R E L I M I N AR Y C ONS I DE R A T I O N S - S T R A T E G I C A L T E RNA T I V ES AMOUNT SECURITIZED . CORPORATE DEBT ISSUED Debt Capital Markets (Recent Developments) NUMBER OF CORPORATE DEBT TRANSACTIONS NUMBER OF SECURITIZATION TRANSACTIONS $ in Billions $ in Billions 48

DRAFT Control Sale (Considerations) Considerations EARNINGS, SHARE PRICE AND SHAREHOLDER REALIZATION Likely greatest relative value versus other alternatives Possibility of capturing a share of synergies, such as funding, cross-selling, incremental originations, etc. Provides shareholders with a liquidity event Eliminates public company costs However, lack of stand-alone funding options for the Company may pressure ultimate value Net operating loss tax benefits will likely be negatively impacted by a change of control EXECUTION Complex story in highly risky market segment with a non-homogenous portfolio will increase execution risk and could significantly extend the time to execute a transaction Limited buyer universe–target interested parties with a strong funding position and experience in investing in non-performing loan pools One party has completed substantive due diligence and has had a previous relationship with the company A few parties have made inbound calls expressing interest Careful review and consideration of change of control issues TIMING Ability to launch a sale process would need to be carefully orchestrated and timed Identify and agree on possible target buyers Draft appropriate process and legal documentation Management preparation for a sale process (e.g. develop management presentations, rehearsal, etc.) V I I P R E L I M I N AR Y C ONS I DE R A T I O N S - S T R A T E G I C A L T E RNA T I V ES . 49

DRAFT VIII Appendix .

DRAFT Preparedness STATUS COMENTARY MARKETING RESOURCES Marketing resources, including teaser, management presentation and financial model will need to be refined / developed prior to being shared with potential buyers Public company status and associated information in the public domain will help facilitate buyer due diligence ELECTRONIC DATA ROOM Over 700 documents populate the existing electronic dataroom; however, further legal and HR related information will be required additions Organization of the dataroom is required prior to presenting to potential buyers Consider migrating to a dataroom platform that is better suited for a formal sell-side process and is able to provide additional functionality and security features MANAGEMENT PRESENTATIONS Develop materials with Management to create a concise, well-orchestrated investor presentation Requires rehearsal of senior management team as well as business line leaders LEGAL DOCUMENTS Company counsel to begin drafting definitive agreements V I I I A P P ENDI X . 50

DRAFT Apollo / Perella Weinberg Due Diligence Update Tax Many of the requested items have been provided Accounting and other miscellaneous items The company continues to assemble and share information Legal Limited information has been provided as many items are not in electronic form; in process . 51 V I I I APPENDI X

EX-99.(C)(3)

Exhibit (c)(3)

SUPPLEMENTAL DISCUSSION MATERIALS PREPARED EXCLUSIVELY FOR: 28 MARCH 2012 CON FIDENTIAL

1 Recent Performance Source: FactSet and SNL Financial; as of 3/27/12. P R O J E C T H O T S P U R S Volume (in thousands) $ Share price 27.53 41.32 30.92 1.85 8.23 1.93 1.35 $9.95 $8.93 $8.95 $8.94 $9.08 $9.04 $8.94 0 5 10 15 20 25 30 35 40 45 $8.75 $9.00 $9.25 $9.50 $9.75 $10.00 3/19/12 3/20/12 3/21/12 3/22/12 3/23/12 3/26/12 3/27/12 Volume ('000) Price ($)

Benchmarking 1) Pro forma calculations remove the effect of $26.5MM non cash gain related to the Bank of Scotland debt refinancing 2) LTM reflects the last twelve months of net income Source: SNL and FactSet (3/27/12), based on a closing price of $8.94 Note: Receivables Management Peer Group includes AACC, ASFI, ECPG, FCFC and PRAA; Commercial Finance Peer Group includes CSE, DFR, CIT, GMT, KFN, MRLN, MFI, MIND, NEWS, PLUS. P R O J E C T H O T S P U R S  Current Pro-forma1 3 Month 12 Month FirstCity Financial Corp. 0.82x 1.08x 0.89x 0.77x Commerical Finance trading comps 1.16 1.11 1.01 Receivables Management trading comps 1.28 1.28 1.39 FirstCity Financial Corp. 0.82x 1.08x 0.89x 0.77x Commerical Finance trading comps 1.23 1.16 1.05 Receivables Management trading comps 1.38 1.37 1.50 FirstCity Financial Corp. 3.84x NM 7.41x 6.17x Commerical Finance trading comps 11.50 12.36 15.18 Receivables Management trading comps 11.87 11.02 13.69 LTM P/E 2 P/BV P/TBV Average 2

MARKET PRICE TRADING COMPARABLES PRECEDENT TRANSACTIONS PREMIUMS PAID DCF (DIVIDEND DISCOUNT) HYPOTHETICAL LIQUIDATION HYPOTHETICAL BALANCE SHEET FMV 52-week range of the share price Current price as of 3/27/12 is $8.94 P/TBV range of 0.90x – 1.30x Commercial finance and receivables management peer groups P/BV range of 0.95 – 1.05x based on select precedent specialty finance transactions 36-41% premium to current share price Premium paid in select specialty finance and small cap FIG transactions Intrinsic value of the Company as an ongoing concern Based on management’s projections Discount rate range of 17.5% - 22.5% and a 1.0x P/TBV exit multiple Based on management’s base case projections and a stress case whereby net cash flows are reduced ~$15mm Assumes a discount rate of 20% Based on a moderate stress case and a contingent case whereby balance assets are reduced, on average, by 7% and 17%, respectively IMPLIED P/TBV SHARE PRICE LOW HIGH MARKET BASED MARKET PRICE (52-WEEK RANGE) 0.53x 0.93x TRADING COMPARABLES 0.90x 1.30x PRECEDENT TRANSACTIONS 0.95x 1.05x PREMIUMS PAID 1.12x 1.16x FUNDAMENTAL DCF (DIVIDEND DISCOUNT) 0.62x 0.76x HYPOTHETICAL LIQUIDATION 0.76x 0.87x HYPOTHETICAL BALANCE SHEET FAIR MARKET VALUE 0.54x 0.79x $5.79 $9.78 $10.33 $12.16 $6.69 $8.21 $5.82 $10.09 $14.13 $11.41 $12.60 $8.24 $9.43 $8.59 Note: Implied P/TBV multiples based on actual, consolidated 12/31/11 tangible book value per share of $10.87 (unaudited) 3 P R O J E C T H O T S P U R S

Trading Comps Source: FactSet and SNL Financial; as of 3/27/12. 4 Stock Mkt % of Price / Price / GAAP PE Div. Debt / Price($) Cap 52 Week 52 Wk BV TBV CY 2012 CY 2013 Yield LTM LTM Equity Ticker 3/27/12 ($MM) High Low High (X) (X) (X) (X) (%) ROAA (%) ROAE (%) (X) FirstCity Financial Corporation FCFC $8.94 $93 $10.09 $5.79 88.6% 0.82x 0.82x NA NA 0.0% 5.3% 17.9% 1.8x COMMERCIAL FINANCE CapitalSource Inc. CSE $6.82 $1,692 $7.31 $5.08 93.3% 1.11x 1.25x 13.2x 12.0x 0.6% (0.6%) (2.6%) 0.8x CIT Group Inc. CIT $41.33 $8,299 $44.88 $27.68 92.1% 0.93x 0.98x NM 15.3x 0.0% 0.1% 0.4% 3.0x GATX Corporation GMT $41.75 $1,950 $45.50 $28.90 91.8% 1.73x 1.88x 16.0x 13.8x 2.7% 2.0% 9.6% 3.2x Marlin Business Services Corp. MRLN $15.49 $197 $16.58 $9.37 93.4% 1.20x 1.20x 20.1x 13.1x 1.9% 1.3% 3.8% 0.6x MicroFinancial Incorporated MFI $6.90 $98 $7.11 $4.31 97.0% 1.30x 1.30x 10.6x 9.2x 4.1% 6.1% 12.4% 0.8x Mitcham Industries, Inc. MIND $22.33 $277 $26.76 $9.52 83.5% 1.94x 2.08x 9.2x 9.2x 0.0% 10.2% 14.0% 0.0x NewStar Financial, Inc. NEWS $10.87 $537 $12.43 $7.17 87.4% 0.95x 0.95x NA NA 0.0% 0.8% 2.5% 2.4x High - - 97.0% 1.94 2.08x 20.1x 15.3% 4.1% 10.2% 14.0% 3.2% Average - - 91.2% 1.31 1.38 13.8 12.1 1.3 2.8 5.7 1.5 Median - - 92.1% 1.20 1.25 13.2 12.5 0.6 1.3 3.8 0.8 Low - - 83.5% 0.93 0.95 9.2 9.2 0.0 NM NM 0.0 RECEIVABLES MANAGEMENT Asset Acceptance Capital Corp. AACC $4.89 $150 $5.97 $2.80 81.9% 1.09x 1.21x 11.2x 9.1x 0.0% 3.2% 9.2% 1.3x Asta Funding, Inc. ASFI $8.20 $120 $8.75 $6.40 93.7% 0.68x 0.68x NA NA 1.0% 4.3% 6.3% 0.4x Encore Capital Group, Inc. ECPG $22.38 $549 $33.16 $18.96 67.5% 1.48x 1.55x 7.7x 6.9x 0.0% 8.0% 18.1% 1.1x Portfolio Recovery Associates, Inc. PRAA $73.11 $1,254 $90.95 $56.76 80.4% 2.10x 2.41x 11.0x 8.8x 0.0% 9.8% 18.7% 0.4x High - - 93.7% 2.10x 2.41x 11.2x 9.1x 1.0% 9.8% 18.7% 1.3x Average - - 80.9% 1.34 1.46 10.0 8.2 0.3 6.3 13.1 0.8 Median - - 81.1% 1.28 1.38 11.0 8.8 0.0 6.2 13.7 0.7 Low - - 67.5% 0.68 0.68 7.7 6.9 0.0 3.2 6.3 0.4 Reported (1) P R O J E C T H O T S P U R S

Comparable Transactions(1) Source: SNL. (1) Select specialty finance transactions announced since 1/1/2000; TEV at the time of announcement <$250mm 5 Announce Target Transaction Implied Multiple Date Acquiror Target Ticker Value BV TBV LTM EPS 2/3/11 Cerberus Silverleaf Resorts SVLF $95.3 0.46x 0.46x 11.4x 12/27/10 Investor group United PanAm Financial UPFC 110.4 0.83 0.85 NM 8/3/09 Prospect Capital Patriot Capital Funding PCAP 86.3 0.49 0.51 NM 9/16/08 EZCORP Value Financial Services VFSI 76.7 4.13 NA NA 1/28/08 Hypo Real Estate Hldg. Quadra Realty Trust QRR 179.2 0.75 0.77 40.5 2/28/07 CRX Acquisition Cronos Group CRNS 134.8 1.42 1.81 14.0 2/15/07 Investor group Fieldstone Invst. Corp. FICC 188.1 0.44 0.44 NM 9/13/05 Wachovia AmNet Mortgage AMNT 80.8 1.12 1.06 NM 9/6/05 WDM Fund United Financial Mortgage UFMC 35.8 1.11 1.20 25.6 5/27/05 New Century Financial RBC Mortgage Company PRFN 80.6 NA NA NA 1/20/05 iStar Financial Falcon Financial Invst. Trust FLCN 119.7 1.02 1.02 NM 9/22/04 Capital One Financial Onyx Acceptance Corp. ONYX 190.8 1.70 2.23 17.1 6/30/04 Allied Capital Financial Pacific FNPC 92.9 NA NA NA 11/12/03 General Electric HPSC HDR 75.0 1.69 2.02 23.4 7/12/03 American Home Mortgage Apex Mortgage Capital AXM 181.2 0.95 0.93 3.6 3/31/03 Consumer Portfolio Services TFC Enterprises TFCE 21.8 0.46 0.47 NM High 4.13x 2.23x 40.5x Mean 1.18 1.06 19.4 Median 0.99 0.93 17.1 Low 0.44 0.44 3.6 P R O J E C T H O T S P U R S

SELECTED FINANCIAL TRANSACTIONS (ALL SECTORS) Premiums Paid (1) (2) Source: SNL. (1) Announced transactions involving publicly traded target companies in the specialty finance sector; transactions since March 2002; transaction value less than $250mm at the time of announcement (2) Announced transactions involving publicly traded target companies in the financials industry excluding banks; transactions since March 2002; transaction value less than $250mm at the time of announcement IMPLIED PREMIUMS SELECTED SPECIALTY FINANCIAL TRANSACTIONS 41.06 61.53 54.89 79.42 0.0% 25.0 50.0 75.0 100.0 Premium % 10-Year Avg. 36.6% 34.7% 38.3% 31.8% 60.0% 56.9% 53.6% 44.3% 52.8% 54.4% 49.3% 39.1% 57.4% 44.7% 28.3% 28.8% 0.0 25.0 50.0 75.0 100.0 1- Year Avg. 3-Year Avg. 5-Year Avg. 10-Year Avg. 1 Day Before 1 Month Prior 3 Months Prior 1 Year Prior 75 total transactions: 17 Financial Technology 7 Broker/Dealer 30 Insurance 6 Investment Company 15 Specialty Finance 6 P R O J E C T H O T S P U R S % % % %

 ($ in millions) Source: Company Management (a) 2011 2016E originations represent FirstCity's share of total originations. 7 P R O J E C T H O T S P U R S Historical Projected CAGR 2009 2010 2011 2012 2013 2014 2015 2016 '11A - '16E Summary Income Statement: Servicing Fees $9 $9 $11 $9 $6 $2 $0 $0 (50.7%) Management/Incentive Fees $0 0 0 2 7 3 1 2 NA Portfolio Income $54 46 41 29 37 40 41 53 5.4% ABL Investment Income $3 2 4 4 1 1 0 0 (47.3%) Equity in Earnings of Subsidiaries $4 15 2 14 15 12 8 7 27.3% Income from Consol. Crestone Subs 5 19 7 4 4 4 4 4 (9.0%) Other Income 13 18 40 6 8 8 8 9 (26.4%) Total Revenues $88 $109 $105 $69 $78 $69 $62 $75 (6.5%) Total Expenses (56) (72) (64) (42) (39) (42) (45) (50) (4.7%) Operating Profit $32 $37 $41 $27 $39 $27 $17 $25 (9.6%) Minority Interest (6) (13) (9) (4) (2) (3) (1) (1) (38.9%) Impairment (5) (9) (4) (5) (4) (4) (4) (4) 0.0% Pre-Tax Income $21 $15 $28 $18 $32 $20 $13 $20 (6.5%) Income Taxes (2) (2) (4) (1) (6) (8) (5) (8) 14.3% Net Income $19 $13 $24 $18 $26 $12 $8 $12 (12.7%) Summary Balance Sheet: Total Assets 465 460 356 298 303 297 336 379 1.3% Equity 78 88 112 132 158 170 178 190 11.2% Deployments (a) 148 68 58 75 120 100 160 180 25.4% Operating Metrics: Debt/Equity 4.35x 3.82x 1.96x 1.16x 0.84x 0.67x 0.82x 0.94x ROE 185.6% 127.5% 232.9% 172.4% 251.4% 117.5% 73.9% 117.5% Effective Tax Rate 9.5% 13.3% 14.3% 2.9% 19.4% 39.0% 39.0% 39.0% Per Share Statistics: Earnings per Share $1.86 $1.27 $2.33 $1.72 $2.51 $1.18 $0.74 $1.17 (12.8%) Book Value per Share $7.62 $8.63 $10.87 $12.71 $15.22 $16.40 $17.14 $18.31 11.0% Management’s Financial Forecast

DCF (Dividend Discount) ($ in millions) 1 Based on 10,381,000 fully-diluted shares outstanding shares as of December 31, 2011. 8 P R O J E C T H O T S P U R S FIRSTCITY - MANAGEMENT FORECAST 2011A 2012E 2013E 2014E 2015E 2016E TV Net Income $24.0 $17.9 $26.1 $12.2 $7.7 $12.2 Dividends 0.0 0.0 0.0 0.0 0.0 0.0 Period Ending Shareholder's Equity 112.0 131.9 158.0 170.2 177.9 190.1 Terminal Multiple (P/TBV) 1.00x Terminal Value $190.1 NPV (@ 20%) $76.4 Per Share Price1 $7.41 P/TBV EXIT MULTIPLE $7.41 0.80x 1.00x 1.20x 12.5% $8.19 $10.24 $12.28 15.0% 7.34 9.17 11.01 17.5% 6.59 8.24 9.88 20.0% 5.93 7.41 8.90 22.5% 5.35 6.69 8.02 25.0% 4.84 6.04 7.25 Implied LTM P/E at Exit 12.5x 15.6x 18.7x DISCOUNT RATE

($ in thousands, except per share amounts) (a) Net collections net of (following) repayment to all existing credit facilities including Bank of Scotland and Bank of America under the terms of the current facilities 9 P R O J E C T H O T S P U R S Hypothetical Liquidation Management Base Case Cash Flows @ 20.0% Discount Rate Net FC Invest. Net Cash FLBG Holdings Collections(a) Overhead Taxes Flows 2012 $9,859 $49,616 $59,475 ($17,512) -- $41,963 2013 4,543 40,876 45,418 (15,811) -- 29,607 2014 15,575 12,299 27,875 (8,250) ($3,834) 15,791 2015 29,797 7,393 37,190 (3,400) (13,178) 20,612 2016 30,934 2,841 33,775 (3,380) (11,854) 18,541 2016+ 9,187 34 9,221 (4) (3,595) 5,623 Total $99,895 $113,059 $212,954 ($48,357) ($32,461) $132,136 Share Price Sensitivities Premium/(Discount) to Current Share Price ($8.94) Case Case Mgmt. Mgmt. Extended Reduced Mgmt. Mgmt. Extended Reduced Base Downside WAL Cash Base Downside WAL Cash 12.5% $10.73 $9.93 $9.94 $9.44 20.1% 11.1% 11.2% 5.6% 15.0% 10.27 9.45 9.38 9.00 14.8% 5.8% 4.9% 0.6% 17.5% 9.83 9.02 8.86 8.59 10.0% 0.9% (0.9%) (4.0%) 20.0% 9.43 8.61 8.38 8.21 5.5% (3.7%) (6.2%) (8.2%) 22.5% 9.06 8.24 7.95 7.85 1.3% (7.8%) (11.1%) (12.1%) 25.0% 8.71 7.89 7.55 7.53 (2.6%) (11.7%) (15.6%) (15.8%) Net Cash Flows Lost - $ -- ($7.5) ($0.1) ($14.5) WAL 29.3 31.1 35.1 30.6 Implied Price/Tangible Book Value of $10.87 (12/31/11) Case Mgmt. Mgmt. Extended Reduced Base Downside WAL Cash 12.5% 0.99x 0.91x 0.91x 0.87x 15.0% 0.94 0.87 0.86 0.83 17.5% 0.90 0.83 0.81 0.79 20.0% 0.87 0.79 0.77 0.75 22.5% 0.83 0.76 0.73 0.72 25.0% 0.80 0.73 0.69 0.69 Discount Rate Discount Rate

Hypothetical Balance Sheet Fair Market Value a) Consolidated unaudited balance sheet as of 12/31/11 b) Based on 10,381,000 fully-diluted shares outstanding of as of 12/31/11 c) Assumes the following declines in value: 5% Portfolio Assets; 3% for SBA loans; 10% for other Loans Receivable 10% for Equity Investments; 15% for Equity Investments in Servicing Entities; 20% for Investment Securities AFS; 10% of Operating Assets; 10% for Assets Held for Sale; case-by-case percentage declines assumed for Other Assets. Non-controlling interest is adjusted by corresponding amounts for those assets that the Company consolidates but does not own 100%. d) Assumes the following declines in value: 15% Portfolio Assets; 10% for SBA Loans; 25 for other Loans Receivable; 20% for Equity Investments; 30% for Equity Investments in Servicing Entities; 50% for Investment Securities AFS; 20% for Operating Assets; 20% for Assets Held for Sale; case-by-case percentage declines assumed for Other Assets. Non-controlling interest is adjusted by corresponding amounts for those assets that the Company consolidates but does not own 100%. 10 ($000) Est. Est. Loss Loss Consolidated Rate Moderate Rate Contingent (12/31/11)a % Casec % Cased Assets Cash and cash equivalents $35,996 0% $35,996 0% $35,996 Restricted Cash 35 0% 35 0% 35 Portfolio Assets 123,946 (5%) 117,749 (15%) 105,354 Loans Receivable 45,947 (6%) 43,234 (16%) 38,493 Equity Investments 109,393 (12%) 96,607 (23%) 83,821 Investment Securities - AFS 3,798 (20%) 3,039 (13%) 3,298 Operating Entity Assets 15,703 (10%) 14,133 (20%) 12,562 Assets Held for Sale 9,900 (10%) 8,910 (20%) 7,920 Total Earning Assets 308,687 (8%) 283,671 (19%) 251,448 Other Assets 11,628 (13%) 10,102 (21%) 9,181 Total Assets 356,346 (7%) 329,804 (17%) 296,660 Liabilities Total Liabilities 218,943 0% 218,943.2 0% 218,943.2 Non-controlling Interest 25,427 (15%) 21,638.2 (32%) 17,281.5 Sub total 244,370 (2%) 240,581 (3%) 236,225 Shareholders' Equity 111,976 (20%) 89,223 (46%) 60,435 Book Value per Share $10.79 (20%) $8.59 (46%) $5.82 Premium / (Discount) to Current Book Value per Share ($2.19) ($4.96) Implied Price to Book Value per Share b 0.80x 0.54x Total Liabilities and Shareholders' Equity 356,346 329,804 296,660 P R O J E C T H O T S P U R S

Marketing Considerations and Selection Parameters Strategic motivation (platform vs. portfolio) Originate, service, manage, and resolve non-performing loans Asset class expertise Strategically linked or motivated to enter the asset class and sector or build upon an existing direct or indirect presence Long-term availability of capital Current situation - ability to pay Current liquidity / capital position No financing contingencies Demand for yield enhancement in low rate environment Revenue diversification 11 1 2 3 4 5 6 P R O J E C T H O T S P U R S

Alternative Asset Managers Origination, underwriting and special servicing capabilities Robert Bass (Keystone Group Inc.) P R O J E C T H O T S P U R S 12

Foreign Financial Institutions Asset valuation and servicing expertise Global expansion Deploy excess liquidity into higher yielding asset classes P R O J E C T H O T S P U R S 13

Non-bank Financial Institutions Unique product capabilities Internalize special servicing expertise P R O J E C T H O T S P U R S 14 Banks Non-traditional bank seeking higher yielding assets in a low rate environment Leucadia

15 P R O J E C T H O T S P U R S Legend Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9 Week 10 Week 11 Week 12 Week 13 Action Mar-12 Apr-12 May-12 Jun-12 Holiday M T W T F M T W T F M T W T F M T W T F M T W T F M T W T F M T W T F M T W T F M T W T F M T W T F M T W T F M T W T F M T W T F Key Events 26 27 28 29 30 2 3 4 5 6 9 10 11 12 13 16 17 18 19 20 23 24 25 26 27 30 1 2 3 4 7 8 9 10 11 14 15 16 17 18 21 22 23 24 25 28 29 30 31 1 4 5 6 7 8 11 12 13 14 15 18 19 20 21 22 1 Apollo / Perella Weinberg Stage One - Pre-Marketing 1 Authorization of target list 2 NDA 3 Process letter - first round - Draft 4 Stock purchase agreement - Draft 5 Data room - prep 6 Management presentations - refine 7 Management presentations - rehersal Stage Two - Launch through first round bid date 1 Marketing calls - initiate 2 NDAs - execute 3 Process letter - distribute 4 "Controlled" data room - open 5 Management presentations - onsite 6 Process letter - final round - draft 7 Bid date - first round 8 Review first round bids / notification to final round participants Stage Three - Final round participations through close 1 Final round process letter and SPA - distribution 2 "Full" data room - open 3 Follow up due diligence & onsite meetings 4 Bid date - final 5 Selection 6 Final due diligence and negotiations 7 Pre-signing announcement logistics 8 Sign and announce

16 Considerations Apollo / Perella Weinberg Clarify and confirm communication protocol Fulfillment of outstanding information requests <2 days (management estimate) Outstanding information requests: Legal - 3 Business / Tax - 8 Apollo / Perella Weinberg have requested conference calls for week of April 2 Finalize and confirm: Timeline Resources Target list Initiate / launch P R O J E C T H O T S P U R S