8-K/A

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): November 1, 2004

FIRSTCITY FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

Delaware
(State of incorporation) 033-19694
(Commission File No.) 76-0243729
(IRS Employer Identification No.)

6400 Imperial Drive
Waco, Texas 76712
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (254) 751-1750

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:

o  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

Unaudited Pro forma Financial Statements

This Amendment No. 1 to Form 8-K of FirstCity Financial Corporation (the “Company”) is being filed to amend the Company's Form 8-K filed on November 5, 2004 by correcting the outstanding balance as of November 1, 2004 under the revolving loan facilities with the Senior Lenders set forth under Item 2.01 hereto. The Company also added unaudited pro forma consolidated statements of operations for the years ended December 31, 2002 and 2001 set forth under Item 9.01 hereto.

Item 2.01 Completion of Acquisition or Disposition of Assets.

On November 1, 2004, FirstCity and certain of its subsidiaries completed the sale of a 31% beneficial ownership interest in Drive Financial Services LP and its general partner, Drive GP LLC, to IFA Drive GP Holdings LLC (“IFA-GP”), IFA Drive LP Holdings LLC (“IFA-LP”) and Drive Management LP (“MG-LP”) for a total purchase price of $108,478,300.00 in cash, which resulted in distributions and payments to FirstCity and Consumer Corp. in the aggregate amount of $86,800,000.00 in cash, from various sources.

Description of the Assets; Identity of Persons to Whom Assets Were Sold; Nature and Amount of Consideration; Formula or Principle Followed in Determining Amount of Consideration

     The Agreement. FirstCity, Consumer Corp., FirstCity Funding L.P. (“Funding LP”) and FirstCity Funding GP Corp. (“Funding GP”), entered into a Securities Purchase Agreement dated as of September 21, 2004 (the “Securities Purchase Agreement”), with IFA-GP, IFA-LP, MG-LP, Drive Management GP LLC (“MG-LLC”), Drive Holdings LP (“Drive Holdings”), Drive GP LLC (“Drive-GP”) and Drive Financial Services LP (“Drive”). The Securities Purchase Agreement was attached as Exhibit 10.1 to an 8-K filed by FirstCity on September 27, 2004.

     Sale of Limited Partnership Interests and Distribution by Limited Partnership and General Partner. Pursuant to the terms of the Securities Purchase Agreement, Funding LP sold to IFA-LP a 19.0053364% limited partnership interest in Drive (equivalent to 52.8999991% of Funding LP’s 35.9269125% limited partnership interest in Drive) for $57,339,103.00, and sold to MG-LP a 16.9215761% limited partnership interest in Drive (equivalent to 47.1000009% of Funding LP’s 35.9269125% limited partnership interest in Drive for $51,052,397.00. In connection with the assignment and sale of the limited partnership interests in Drive owned by Funding LP, IFA-LP and MG-LP assumed all of the duties, obligations and liabilities of Funding LP arising after the closing date under the agreement among owners and the partnership agreement. Following the receipt of the purchase price, Funding LP distributed the purchase price as follows: (i) $85,846,068.00 to Consumer Corp.; (ii) $21,461,517.00 to Drive Holdings; and (iii) $1,083,915.00 to Funding GP. Funding GP distributed its portion of the distribution of the purchase price from Funding LP as follows: (i) $867,132.00 to Consumer Corp.; and (ii) $216,783.00 to Drive Holdings.

     Sale of Membership Interests. Consumer Corp. sold to IFA-GP a 15.5% membership interest in Drive-GP (equivalent to 50.0% of Consumer Corp.’s membership interest in Drive-GP) for $43,400.00, and sold to MG-LP its remaining 15.5% membership interest in Drive-GP (equivalent to 50.0% of Consumer Corp.’s membership interest in Drive-GP) for $43,400.00. In connection with the assignment and sale of the membership interests in Drive-GP owned by Consumer Corp., IFA-GP and MG-LP assumed all of the duties, obligations and liabilities of Consumer Corp. arising after the closing date under the owners agreement and the operating agreement.

     Formula or Principle Used in Determining Consideration. IFA-GP, IFA-LP and MG-LP based their offer for the purchase of limited partnership interests in Drive and the membership interests in Drive-GP on the market value of Drive without reduction for the interests being minority interests. FirstCity and Consumer Corp. obtained a fairness opinion from Howard, Fraizer, Barker and Elliott, Inc. confirming the fairness to the common stockholders of FirstCity of the sale of the ownership interests pursuant to the terms of the Securities Purchase Agreement.

     Use of Proceeds and Escrow Deposit. The proceeds of $86,800,000.00 from the sale of the ownership interests in Drive and its general partner, Drive GP by FirstCity and Consumer Corp. were applied to payment of indebtedness of FirstCity and Consumer Corp. as described in the Nature of Material Relationship with IFA-GP, IFA-LP and MG-LP below in this Item 2.01 with the remaining balance of the proceeds held by the Bank of Scotland pursuant to the Escrow Letter to be held and applied as described in Item 1.01.

Nature of Material Relationship with IFA-GP, IFA-LP and MG-LP

IFA-GP and IFA-LP are wholly-owned subsidiaries of BoS (USA) (formerly known as IFA Incorporated) a wholly-owned subsidiary of Bank of Scotland. FirstCity has had a significant relationship with Bank of Scotland and BoS-UK or their subsidiaries since September 1997. FirstCity has entered into loan agreements with of Bank of Scotland, BoS (USA) and BoS-UK from time to time since 1997.

In December 2002 in connection with an exchange offer to the holders of FirstCity’s New Preferred Stock, BoS-UK provided a non-recourse loan in the amount of $16,000,000.00 to FirstCity, which was used to pay the cash portion of the exchange offer to the holders of the New Preferred Stock, to pay expenses of the exchange offer and recapitalization, and to reduce FirstCity’s debt to Bank of Scotland and BoS (USA) (the “Senior Lenders”). The $16,000,000.00 loan was secured by a 20% interest in Drive (64.51% of FirstCity’s remaining 31% interest in Drive) and other assets of Consumer Corp. as were necessary and only to the extent to allow BoS-UK to realize the security interest in the 20% interest in Drive. In connection with the $16,000,000.00 loan, FirstCity agreed to pay a contingent fee to BoS-UK equal to 20% of all amounts received by FirstCity and Consumer Corp. upon any sale of the 20% interest in Drive or any receipt of distributions from Drive related to the 20% ownership interest, once such payments exceeded $16,000,000.00 in the aggregate. The outstanding principal and accrued interest of $16,003,946.67 under the $16,000,000.00 loan was paid in full on November 1, 2004 in connection with the sale of the 31% beneficial interest in Drive. Pursuant to the Waiver Letters, FirstCity, Consumer Corp. and BoS-UK agreed to extend the time for payment of the $8,000,000.00 fee arising under the Fee Letter in connection with the sale of the ownership interests in Drive until 75 days following the consummation of the sale of the ownership interests in Drive and waived the requirement that the fee be paid contemporaneously with the consummation of the sale as contemplated in the Fee Letter. The Waiver Letters are attached hereto as Exhibit 10.1.

In December 2002, in connection with the recapitalization, the Senior Lenders refinanced the remainder of the Company’s existing debt facilities into a term debt facility. The term debt facility was secured by all of the assets of FirstCity and its wholly-owned subsidiaries. The outstanding principal, accrued interest and fees of $37,235,681.63 under the term debt facility were paid in full on November 1, 2004 in connection with the sale of the 31% beneficial interest in Drive.

Since December 2002, the Senior Lenders have also provided an additional loan facility consisting of (i) a revolving acquisition loan facility providing for a maximum principal balance of loans outstanding at any time of $45,000,000.00, and (ii) a revolving loan facility in the maximum principal amount of $5,000,000.00 for corporate purposes. These facilities had an outstanding balance of $40,605,658.90 as of October 31, 2004, of which the outstanding balance of $4,007,675.40 under the revolving loan facility was paid in full on November 1, 2004. This loan facility is secured by all of the assets of FirstCity and its wholly-owned subsidiaries.

BoS (USA) has a warrant to purchase 425,000 shares of the Company’s voting Common Stock at $2.3125 per share. BoS (USA) is entitled to additional warrants in connection with this existing warrant for 425,000 shares under certain specific situations to retain its ability to acquire approximately 4.86% of the Company’s voting Common Stock. The warrant will expire on August 31, 2010, if it is not exercised prior to that date.

Item 9.01 Financial Statements and Exhibits.

(b) Pro Forma Financial Information

An unaudited Pro forma consolidated balance sheet as of June 30, 2004 and statements of operations for the six months ended June 30, 2004 and the years ended December 31, 2003, 2002 and 2001 illustrating the effects of the Drive sale as if it had occurred as of the beginning of the periods are being furnished as Exhibit 99.1 to this Current Report on Form 8-K.

(c) Exhibits

* 10.1    Letter agreements dated as of November 1, 2004, between FirstCity, Consumer Corp. and BoS-UK relating to extension of time for and waiver related to payment of any fee under Fee Letter.

* 10.2    Letter agreement dated November 1, 2004 between Bank of Scotland, acting through its New York branch, and FirstCity providing for deposit of funds in cash collateral account.

99.1    Unaudited Pro forma consolidated balance sheet as of June 30, 2004 and statements of operations for the six months ended June 30, 2004 and the years ended December 31, 2003, 2002 and 2001 illustrating the effects of the Drive sale as if it had occurred as of the beginning of the periods.

* Previously filed.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	FIRSTCITY FINANCIAL CORPORATION
Date: November 18, 2004	By:	/s/ J. Bryan Baker
		J. Bryan Baker
		Senior Vice President and Chief Financial Officer

EXHIBIT INDEX

* 10.1    Letter agreements dated as of November 1, 2004, between FirstCity, Consumer Corp. and BoS-UK relating to extension of time for and waiver related to payment of any fee under Fee Letter.

* 10.2    Letter agreement dated November 1, 2004 between Bank of Scotland, acting through its New York branch, and FirstCity providing for deposit of funds in cash collateral account.

99.1    Unaudited Pro forma consolidated balance sheet as of June 30, 2004 and statements of operations for the six months ended June 30, 2004 and the years ended December 31, 2003, 2002 and 2001 illustrating the effects of the Drive sale as if it had occurred as of the beginning of the periods.

* Previously filed.

EX-99.1

Exhibit 99.1

FIRSTCITY FINANCIAL CORPORATION
PRO FORMA CONSOLIDATED BALANCE SHEET AT JUNE 30, 2004
(Dollars in thousands)
(Unaudited)

				Pro Forma Adjustments
	Historical			(A)			(B)			Other			Pro Forma
Assets
Assets:
Cash and cash equivalents	$	3,823		$	86,800		$	(85,148	)	$	(315	)(C)	$	5,160
Portfolio Assets, net		11,238			—			—			—			11,238
Loans receivable from Acquisition Partnerships held for investment		20,333			—			—			—			20,333
Equity investments		85,359			(25,824	)		—			—			59,535
Deferred tax asset, net		20,101			—			—			—			20,101
Service fees receivable from affiliates		1,033			—			—			—			1,033
Other assets, net		13,528			—			(800	)		(6,253	)(D)		6,475
Net assets of discontinued operations		5,527			—			—			—			5,527
Total Assets	$	160,942		$	60,976		$	(85,948	)	$	(6,568	)	$	129,402
Liabilities and Stockholders’ Equity
Liabilities:
Notes payable to affiliates	$	97,856		$	—		$	(79,854	)	$	—		$	18,002
Notes payable other		4,664			—			(3,944	)		—			720
Preferred stock subject to mandatory redemption		3,978			—			—			—			3,978
Minority interest		6,516			(5,160	)		—			—			1,356
Other liabilities		12,013			—			(337	)		—			11,676
Total Liabilities		125,027			(5,160	)		(84,135	)		—			35,732
Stockholders’ equity:
Common stock		112			—			—			—			112
Paid in capital		99,288			—			—			—			99,288
Accumulated deficit		(65,775	)		66,136			(1,813	)		(315	)(C)		(8,020	)
											(6,253	)(D)
Accumulated other comprehensive income		2,290			—			—			—			2,290
Total Stockholders’ Equity		35,915			66,136			(1,813	)		(6,568	)		93,670
Total Liabilities and Stockholders’ Equity	$	160,942		$	60,976		$	(85,948	)	$	(6,568	)	$	129,402

(A)	Record proceeds of sale of FirstCity’s 31% interest in Drive.
(B)	Record $83.8 million pay down of debt and interest, payment of $1.3 million of debt fees to Bank of Scotland and write-off $1.5 million of unamortized loan fees relating to the paid off debt (net of $.7 million on new loan fees capitalized).
(C)	Record $315 thousand estimated closing costs.
(D)	Record write-off remaining $6.3 million unamortized loan discount relating to the accrued participation liability owed to Bank of Scotland.

FIRSTCITY FINANCIAL CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 2004
(Dollars in thousands except per share data)
(Unaudited)

				Pro Forma
				Adjustments
	Historical			(A)			Pro Forma
Revenues:
Servicing fees from affiliates	$	6,748		$	—		$	6,748
Gain on resolution of Portfolio Assets		237			—			237
Equity in earnings of investments		16,969			(10,155	)		6,814
Interest income from affiliates		1,061			—			1,061
Interest income — other		136			—			136
Other income		1,782			—			1,782
Total revenues		26,933			(10,155	)		16,778
Expenses:
Interest and fees on notes payable to affiliates		4,797			(3,131	)		1,666
Interest and fees on notes payable — other		171			—			171
Interest on shares subject to mandatory redemption		133			—			133
Salaries and benefits		7,554			—			7,554
Provision for loan and impairment losses		22			—			22
Occupancy, data processing, communication and other		3,237			(4	)		3,233
Total expenses		15,914			(3,135	)		12,779
Earnings from continuing operations before income taxes and minority interest		11,019			(7,020	)		3,999
Provision for income taxes		(583	)		427			(156	)
Earnings from continuing operations before minority interest		10,436			(6,593	)		3,843
Minority interest		(2,038	)		2,029			(9	)
Earnings from continuing operations	$	8,398		$	(4,564	)	$	3,834
Earnings from continuing operations per common share are as follows:
Basic	$	0.75					$	0.34
Diluted	$	0.71					$	0.32
Weighted average common shares outstanding
Basic		11,216						11,216
Diluted		11,806						11,806

(A) To eliminate the results of operations from the consumer business segment that would not have been incurred if the transaction had been completed at the beginning of the period. The elimination of $3.1 million of additional interest and fees on notes payable includes interest savings from paydown of $83.8 million x average rate of 6.52% ÷ 2 = $2.7 million and amortization of loan fees of $.4 million.

FIRSTCITY FINANCIAL CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 2003
(Dollars in thousands except per share data)
(Unaudited)

				Pro Forma
				Adjustments
	Historical			(A)			Pro Forma
Revenues:
Servicing fees from affiliates	$	15,051		$	—		$	15,051
Gain on resolution of Portfolio Assets		1,380			—			1,380
Equity in earnings of investments		21,411			(7,237	)		14,174
Interest income from affiliates		2,794			—			2,794
Interest income — other		533			—			533
Other income		1,560			—			1,560
Total revenues		42,729			(7,237	)		35,492
Expenses:
Interest and fees on notes payable to affiliates		7,567			(6,353	)		1,214
Interest and fees on notes payable — other		155			—			155
Interest on shares subject to mandatory redemption		133			—			133
Salaries and benefits		15,875			—			15,875
Provision for loan and impairment losses		98			—			98
Occupancy, data processing, communication and other		7,518			(27	)		7,491
Total expenses		31,346			(6,380	)		24,966
Earnings from continuing operations before income taxes and minority interest		11,383			(857	)		10,526
Provision for income taxes		(240	)		55			(185	)
Earnings from continuing operations before minority interest		11,143			(802	)		10,341
Minority interest		(1,436	)		1,446			10
Earnings from continuing operations	$	9,707		$	644		$	10,351
Earnings from continuing operations per common share (B):
Basic	$	0.86					$	0.91
Diluted	$	0.85					$	0.90
Weighted average common shares outstanding
Basic		11,200						11,200
Diluted		11,349						11,349

(A)	To eliminate the results of operations from the consumer business segment that would not have been incurred if the transaction had been completed at the beginning of the period. The elimination of $6.4 million of additional interest and fees on notes payable includes interest savings from paydown of $83.8 million x average rate of 6.66% = $5.6 million and amortization of loan fees of $.8 million.
(B)	Earnings from continuing operations per common share include the effects of $133 thousand accumulated preferred dividends in arrears.

FIRSTCITY FINANCIAL CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 2002
(Dollars in thousands except per share data)
(Unaudited)

				Pro Forma
				Adjustments
	Historical			(A)			Pro Forma
Revenues:
Servicing fees from affiliates	$	12,665		$	—		$	12,665
Gain on resolution of Portfolio Assets		1,138			—			1,138
Equity in earnings of investments		8,680			532			9,212
Interest income from affiliates		4,060			—			4,060
Interest income — other		1,068			—			1,068
Gain on sale of interest in equity investments		1,779			—			1,779
Gain on sale of interest in subsidiary		4,000			(4,000	)		—
Other income		2,598			(1	)		2,597
Total revenues		35,988			(3,469	)		32,519
Expenses:
Interest and fees on notes payable to affiliates		6,456			(6,048	)		408
Interest and fees on notes payable — other		366			(358	)		8
Salaries and benefits		12,609			—			12,609
Provision for loan and impairment losses		295			—			295
Occupancy, data processing, communication and other		8,962			(14	)		8,948
Total expenses		28,688			(6,420	)		22,268
Earnings from continuing operations before income taxes and minority interest		7,300			2,951			10,251
Provision for income taxes		(153	)		—			(153	)
Earnings from continuing operations before minority interest		7,147			2,951			10,098
Minority interest		(1,204	)		(107	)		(1,311	)
Earnings from continuing operations	$	5,943		$	2,844		$	8,787
Earnings from continuing operations per common share (B):
Basic	$	0.40					$	0.74
Diluted	$	0.40					$	0.74
Weighted average common shares outstanding
Basic		8,500						8,500
Diluted		8,500						8,500

(A)

To eliminate the results of operations from the consumer business segment that would not have been incurred if the transaction had been completed at the beginning of the period. The elimination of $6.4 million of additional interest and fees on notes payable includes interest savings from paydown of $83.8 million x average rate of 6.12% = $5.1 million and amortization of loan fees of $1.3 million.

(B)

Earnings from continuing operations per common share include the effects of $2.5 million accumulated preferred dividends in arrears.

FIRSTCITY FINANCIAL CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 2001
(Dollars in thousands except per share data)
(Unaudited)

				Pro Forma
				Adjustments
	Historical			(A)			Pro Forma
Revenues:
Servicing fees from affiliates	$	9,580		$	—		$	9,580
Gain on resolution of Portfolio Assets		1,049			—			1,049
Equity in earnings of investments		16,694			(5,923	)		10,771
Interest income from affiliates		3,993			—			3,993
Interest income — other		1,892			(5	)		1,887
Gain on sale of interest in equity investments		3,316			—			3,316
Other income		1,887			(9	)		1,878
Total revenues		38,411			(5,937	)		32,474
Expenses:
Interest and fees on notes payable to affiliates		7,838			(7,199	)		639
Interest and fees on notes payable — other		939			(883	)		56
Salaries and benefits		10,606			—			10,606
Provision for loan and impairment losses		3,277			—			3,277
Occupancy, data processing, communication and other		11,200			(45	)		11,155
Total expenses		33,860			(8,127	)		25,733
Earnings from continuing operations before income taxes, minority interest and accounting change		4,551			2,190			6,741
Provision for income taxes		(15	)		16			1
Earnings from continuing operations before minority interest and accounting change		4,536			2,206			6,742
Minority interest		(2,061	)		1,124			(937	)
Cumulative effect of accounting change		(304	)		304			—
Earnings from continuing operations	$	2,171		$	3,634		$	5,805
Earnings (loss) from continuing operations before accounting change per common share (B):
Basic	$	(0.01	)				$	0.39
Diluted	$	(0.01	)				$	0.39
Cumulative effect of accounting change
Basic	$	(.04	)				$	—
Diluted	$	(.04	)				$	—
Weighted average common shares outstanding
Basic		8,374						8,374
Diluted		8,374						8,374

(A)

To eliminate the results of operations from the consumer business segment that would not have been incurred if the transaction had been completed at the beginning of the period. The elimination of $8.1 million of additional interest and fees on notes payable includes interest savings from paydown of $83.8 million x average rate of 8.20% = $6.9 million and amortization of loan fees of $1.2 million.

(B)

Earnings (loss) from continuing operations before accounting change includes the effects of $2.6 million accumulated preferred dividends in arrears.