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HOUSTON — Coming off of record-setting performances in the
subprime auto lending space during its last two fiscal years, First Investors
Financial Services Group announced this morning that it has entered into a
definitive merger agreement.

First Investors indicated plans to merge with FIFS Holdings
Corp., a company controlled by Aquiline Capital Partners that is a New
York-based private equity firm investing in the financial services sector.

Under the merger agreement, officials said FIFS Holdings
will acquire all of the outstanding shares of First Investors common stock in
an all-cash transaction valuing the subprime lender at $100 million. They said
stockholders of First Investors will receive $13.87 for each share of First
Investors common stock they hold.

"The acquisition by Aquiline is the result of a thorough and
competitive process focused on maximizing value for our stockholders,"
explained Tommy Moore Jr., president and chief executive officer of First
Investors.

"Our board unanimously supports this transaction and
believes that the acquisition will continue to expand the company's leadership
position in the market it serves," Moore continued. "As a management team, we
are very excited to be partnering with Aquiline, a firm with an outstanding
reputation, valuable industry expertise and capital resources that will enhance
our ability to grow our company."

Aquiline CEO Jeff Greenberg stated, "We are excited to
partner with Tommy Moore and his management team.  They have an impeccable reputation and the
track record at First Investors is outstanding throughout their 23-year
history."

2012 Fiscal Year Performance

The merger announcement arrived not long after First
Investors claimed great success during its 2012 fiscal year, which wrapped up
on April 30.

The company reported net earnings of $2,268,202, or 33 cents
per fully diluted share, for the three months that ended April 30 and
$8,137,229, or $1.30 per fully diluted share, for the year wrapped up on the
same date.

First Investors declared the year-end figures represented company
records, tallies driven by growth in interest income, expansion of the company's
net interest margin and a lower provision for credit losses which resulted from
lower net charge-offs.

For reference, officials pointed out they generated net
earnings of $1,342,365, or 27 cents per fully diluted share, in the prior-year
quarter. During the previous fiscal year, the company's net earnings total came
in at $3,365,461, or 69 cents per fully diluted share.

First Investors indicated net interest income increased 21.6
percent during the most recent fiscal year due to a combination of growth in
the company's portfolio of receivables held for investment, the positive impact
provided by a portfolio of auto loans acquired by the company in October 2010
and a 60 basis point increase in net interest spread.

The company reported origination volume of $257.2 million
for the year, which represented a 79.2-percent increase over the $143.5 million
in loans originated during the 2011 fiscal year.

First Investors tabulated that the average principal balance
of receivables held for investment increased 14.4 percent to $375.8 million while
servicing revenue decreased 72.0 percent due to a decline in the average
balance of the third-party managed portfolio resulting from a combination of
principal amortization and the release of servicing rights in conjunction with
the sale of a third party client portfolio last September.

The company acknowledged its total operating expenses
increased 9.4 percent year-over-year due to an increase in salaries and
benefits and other operating costs, including postage and printing, credit
bureau fees and third-party costs associated with growth in origination volume
and in the average balance of receivables held for investment.

Officials tabulated that their portfolio of net receivables held
for investment stood at $424.6 million, a 27.6-percent increase above the
balance at the end of the 2011 fiscal year. They attributed the gain to the increase
in origination volume.

First Investors went on to point out its delinquency rate by
dollars of delinquent accounts increased from 1.8 percent as of April 30, 2011 to
2.0 percent as of the same date this year. Meanwhile its annual net charge-off
rate decreased from 5.3 percent to 3.3 percent over the same period.

Officials said the decrease in the net charge-off rate is
due to a combination of lower repossession rates and higher vehicle recovery
rates.

Assessing the fiscal year performance, Moore declared, "We
are extremely proud of our results for fiscal year 2012, a year in which we
generated record earnings, near record origination volume and a significant
improvement in our net charge-off rate.

"Growth in origination volume was driven by both our indirect
and direct lending channels," Moore continued. "Our indirect business volume
benefited from an 81.6-percent increase in the number of dealers we serve, as
we added 10 new dealer service managers to both existing and new markets. Our
effective yield increased from 13.8 percent to 14.8 percent as newer loans at
more favorable pricing replaced older vintage loans.

"From a credit quality perspective, we saw a $5.0 million
decrease in our net charge-offs due to lower repossessions and non-repossession
charge-offs and higher recovery rates," he went on to say. "This positively
impacted the provision for credit losses which declined 21.4 percent over the
period. During the fiscal year, we also completed two senior/subordinate
securitizations, issuing $250 million in asset-backed notes at attractive
pricing and enhancement levels.

"For fiscal year 2013, we will focus on growing our
receivables portfolio and continuing to achieve improvements in our credit
quality," he added.

More Details of Merger Agreement

First Investors indicated its merger agreement contains
customary representations, warranties and covenants for a transaction of this
type, including the company's agreement to conduct its business in the ordinary
course prior to the closing of the merger.

"Each party's obligation to consummate the merger is subject
to various customary closing conditions, including the approval of the company's
stockholders, the expiration or termination of applicable waiting periods under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the
continued employment of key members of senior management of the company, all of
whom have entered into employment agreements contingent upon the closing of the
merger," officials explained.

In addition, First Investors noted the merger agreement
provides a limited right of the company's board of directors to terminate the
agreement under certain circumstances in order to satisfy its fiduciary duties
consistent with applicable law — subject to the payment of a termination fee to
FIFS Holdings.

The parties anticipate closing the merger as soon as
practicable after receiving the approval of the company's stockholders and the
satisfaction or waiver of the other closing conditions.

The directors and certain officers and stockholders of First
Investors representing in the aggregate approximately 58 percent of the
outstanding common stock of First Investors have entered into an agreement to
vote their shares of First Investors common stock in favor of the merger,
including funds managed by and affiliates of Jacobs Asset Management, LLC, the company's
largest stockholder, with approximately 42 percent of the outstanding common
stock.

Keefe, Bruyette & Woods and FalconBridge Capital Markets
acted as financial advisers to First Investors, and KBW rendered a fairness
opinion to the company's board of directors in conjunction with this
transaction.

Thompson & Knight LLP acted as legal advisor to First
Investors.

Willkie Farr & Gallagher LLP acted as legal advisor and
Macquarie Capital acted as financial adviser to Aquiline.

Stockholders Meeting

The company expects to hold a special meeting of its
stockholders to consider and act upon the proposed transaction within the next 35
days. First Investors said details regarding the record date for, and date,
time and place of, the special meeting will be included in an announcement when
finalized. 

In anticipation of the stockholders meeting, the company
said it will mail to its stockholders a notice of the meeting and a proxy
statement relating to the transaction and the vote to be taken at the meeting.

"Stockholders are urged to carefully read the proxy
statement and any other documents accompanying it in their entirety because
they will contain important information about the company and the proposed
merger," the company concluded.