<PAGE>
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-K
(Mark one)
[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001

                                       or

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

                         Commission File Number: 0-20677

                           FIRSTCITY LIQUIDATING TRUST
             (Exact name of registrant as specified in its charter)

             Texas                                              06-6414468
(State or other jurisdiction of                              (I.R.S. Employer
 incorporation or organization)                              Identification No.)

 1001 Fannin, Suite 505, Houston, Texas                           77002
(Address of principal executive offices)                        (Zip Code)

       Registrant's telephone number, including area code: (713) 651-7841

Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:

                          Class B Beneficial Interests
                          Class C Beneficial Interests
                              (Title of Each Class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

As of February 28, 2002 there were 2,454,310 units of Class B Beneficial
Interests and 725,729 units of Class C Beneficial Interests outstanding.

Documents incorporated by reference: None

<PAGE>
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS

This Form 10-K includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. The opinions, forecasts,
projections, guidance or other statements other than statements of historical
fact, are forward-looking statements. These statements are based upon
assumptions that are subject to change and other risks. Although the Trust
believes that the expectations reflected in such forward-looking statements are
reasonable, it can give no assurance that such expectations will prove to have
been correct. Certain risks and uncertainties inherent in the Trust's business
are set forth in the filings of the Trust with the Securities and Exchange
Commission.

                                     Part I

Item 1.  Business.

         On July 3, 1995 (the "Effective Date"), the FirstCity Liquidating Trust
(the "Trust") and certain other entities were established pursuant to and upon
consummation of the Joint Plan of Reorganization, dated December 23, 1994, by
First City Bancorporation of Texas, Inc., a Delaware corporation (the "Debtor"),
Official Committee of Equity Security Holders (the "Equity Committee"), and
J-Hawk Corporation ("J-Hawk"), with the participation of Cargill Financial
Services Corporation, under Chapter 11 of Title 11 of the U.S. Code (the
"Bankruptcy Code"), Case No. 392-39474-HCA-11 (the "Plan"). The Plan was
confirmed by order of the U.S. Bankruptcy Court for the Northern District of
Texas, Dallas Division (the "Bankruptcy Court") entered on May 31, 1995.

         The Debtor was formed as a multi-bank holding company in 1988 for the
purpose of reorganizing First City Bancorporation of Texas, Inc., a Texas
corporation. Beginning in the summer of 1990, the financial condition of the
Debtor began to deteriorate and worsened progressively throughout 1990 and 1991.
On October 30, 1992, regulatory agencies closed the Debtor's banks. On October
31, 1992, certain of the Debtor's unsecured creditors filed an involuntary
Chapter 11 bankruptcy petition against the Debtor in the Bankruptcy Court. On
November 23, 1992, the Debtor consented to the entry of an order for relief
against it under Chapter 11 of the Bankruptcy Code. Until July 3, 1995, the
Debtor operated its remaining businesses and managed its property as
debtor-in-possession.

         The Plan was confirmed by the Bankruptcy Court by an order entered on
May 31, 1995, and became effective on July 3, 1995. Pursuant to the Plan and an
Agreement and Plan of Merger between the Debtor and J-Hawk, on July 3, 1995,
J-Hawk was merged (the "Merger") with and into the Debtor, with the Debtor as
the surviving entity. Pursuant to the Merger, (i) the former holders of common
stock of J-Hawk received, in the aggregate, approximately 49.9% of the
outstanding common stock of the surviving entity, in exchange for their shares
of J-Hawk common stock, (ii) approximately 50.1% of the outstanding common stock
of the surviving entity was distributed among former security holders of the
Debtor pursuant to the Plan and (iii) the name of the corporation was changed to
FirstCity Financial Corporation ("FirstCity").




                                        1
<PAGE>
         The Trust has not and, pursuant to the Liquidating Trust Agreement
dated as of July 3, 1995 by and between First City Bancorporation of Texas, Inc.
and State Street Bank and Trust Company, successor to Fleet National Bank and
Shawmut Bank Connecticut, National Association, as Trustee (the "Trust
Agreement"), may not engage in the conduct of a trade or business apart from the
liquidation of Trust assets and the winding up of the affairs of the Debtor and
its subsidiaries. Pursuant to Article VIII of the Trust Agreement, the Trust
shall terminate upon the date which is three (3) years and six (6) months after
the Effective Date; provided, however, that at least six (6) months prior to
such termination, the Portfolio Committee (as defined herein) may, with the
approval of the Bankruptcy Court, extend the term of the Trust if necessary to
the liquidating purpose thereof. Multiple extensions, if approved by the
Bankruptcy Court, are permissible, although the aggregate of all such extensions
shall not exceed five (5) years so that, in any event, the Trust shall terminate
no later than eight (8) years and six (6) months after the Effective Date. In
June 2001, the Bankruptcy Court extended the life of the Trust to January 3,
2004.

         Pursuant to the Plan, substantially all of the legal and beneficial
interest in the assets of the Debtor, other than $20 million in cash which was
contributed by the Debtor to FirstCity, were transferred to the Trust or to
subsidiaries of the Trust. Such assets have been and will continue to be
liquidated over the life of the Trust pursuant to the terms of the Plan and the
Trust Agreement. The non-cash assets of the Trust consist principally of
performing and non-performing loans, income producing real estate and interests
in real estate, and miscellaneous other assets and receivables transferred to
the Trust upon the consummation of the Plan.

         In connection with the sale of the Debtor's banks by the Federal
Deposit Insurance Corporation (the "FDIC") to certain other banks (the
"Loss-Sharing Banks"), the FDIC entered into certain agreements (the
"Loss-Sharing Agreements") to guarantee certain recoveries on loans acquired by
the Loss-Sharing Banks. On July 12, 1995, in order to reduce the uncertain
effect of the Loss-Sharing Agreements on future distributions to the Trust by
the FDIC, subsidiaries of the Trust purchased assets for approximately $206
million from the Loss-Sharing Banks (the "Loss-Sharing Settlement"). With the
purchase of these assets, the Loss-Sharing Banks released the FDIC from its
future obligations under the Loss-Sharing Agreements. The Loss-Sharing
Settlement was significant to the Trust because it allowed the FDIC to eliminate
the loss-sharing reserve that it had maintained to cover the FDIC's obligations
under the loss-sharing guarantees, thereby eliminating the uncertainty of future
reductions from the reserve and increasing the initial distribution made by the
FDIC to the Trust.

         In 1996, the FDIC closed the Receiverships of the Debtor's banks (the
"Receiverships") and distributed the surplus cash ($17.6 million on December 23,
1996) of the Receiverships to the Trust. In accordance with that certain
Conveyance and Indemnification Agreement (the "Conveyance and Indemnification
Agreement"), dated December 23, 1996 and extended in April 1999, the Trust is
required, among other things, to provide indemnity to the FDIC against any known
or unknown liabilities, obligations or actual expenses associated with the
Receiverships, in an aggregate amount up to $10 million until the termination of
the Trust.



                                        2
<PAGE>
Item 2.  Properties.

         The Trust does not have any material physical properties, except for
such properties that are held for sale.

Item 3.  Legal Proceedings.

         On March 15, 2002, two subsidiaries of the Trust settled all existing
litigation with UIDC Management, Inc. ("UIDC") et al in the U.S. District Court
for the Southern District of Texas, Houston Division. The Trust and UIDC are
partners in FC Tower Property Partners, L.P., an entity which owns the First
City Tower building in Houston, Texas. The dispute between the parties traces to
a "right of first refusal" issue occurring in 1997.

         The settlement allows the Trust to market its interest in the
partnership. UIDC will retain its right of first refusal and may exercise that
right at a discount from the purchase price. The discount is equal to 50% of the
amount by which a third party offer exceeds $31 million. The Trust's share of
any sale proceeds would be $31 million plus 50% of the price in excess of $31
million. Further, if the Trust is unsuccessful in (a) obtaining a qualified
offer within fifteen months and (b) executing on a sale of the interest within
twenty-one months, its 67% interest in the partnership will be reduced to 45%
and UIDC's 33% interest will increase to 55%.

         As a result of the settlement, the Trust has reduced the valuation of
its partnership interest from $45 million to $38 million. The net asset value of
the Trust, as reflected in the value of the Class B Certificates, decreased from
$44.2 million at September 30, 2001 to $36.9 million at December 31, 2001. The
consolidated statement of net assets in liquidation has never reflected any
value for the Class C Certificates and it is highly unlikely that the Class C
Certificates will have any value.

         The Trust is involved in various other legal proceedings in the
ordinary course of business. In the opinion of management of the Trust, the
resolution of such matters will not have a material adverse impact on the
consolidated financial position, results of operations or liquidity of the
Trust.

Item 4.  Submission of Matters to a Vote of Security Holders.

         As the Trust has no outstanding voting securities, no matters were
submitted to a vote of security holders during the fourth quarter ended December
31, 2001.

                                     Part II

Item 5.  Market For Registrant's Common Equity and Related Stockholder Matters.

         The Class A Certificate was held by FirstCity. Through December 31,
1997, the Trust had distributed $188 million to FirstCity as the sole Class A
Certificate holder, retiring the Class A Certificate in full.




                                        3
<PAGE>

         The Class B Beneficial Interests (traded under the symbol "FCFCL") and
Class C Beneficial Interests (traded under the symbol "FCFCZ") have been traded
over the counter since July 3, 1995. The number of Class B Certificate holders
and Class C Certificate holders of record as of December 31, 2001, was 57 and
816, respectively. High and low trade prices as compiled by Bloomberg Financial
Markets Services, an online service, are displayed in the following tables:

<Table>
<Caption>
                                                         Class B Beneficial Interests
                       ---------------------------------------------------------------------------------------------------
                                       2001                                                   2000
                       ---------------------------------------------       -----------------------------------------------
                             Market Price                                           Market Price
                       -------------------------  Cash Distributions       -------------------------    Cash Distributions
Quarter Ended             High           Low             Paid                  High          Low               Paid
                       -----------   -----------  ------------------       -----------   -----------    ------------------
<S>                    <C>           <C>          <C>                      <C>           <C>            <C>
March 31 .......       $     15.00   $     12.00     $      1.00           $     20.50   $     18.94    $      1.00
June 30 ........             15.00         12.00              --                 15.00         13.81           1.00
September 30 ...             14.00         11.00              --                 14.88         12.50           1.00
December 31 ....             13.75         11.25              --                 14.00         13.13           1.00
</Table>

<Table>
<Caption>
                         Class C Beneficial Interests
                   -----------------------------------------
                          2001                  2000
                   -------------------   -------------------
                      Market Price           Market Price
                   -------------------   -------------------
Quarter Ended        High       Low        High        Low
                   --------   --------   --------   --------
<S>                <C>        <C>        <C>        <C>
March 31 .......   $   2.00   $    .71   $    .08   $    .01
June 30 ........       2.40        .60        .15        .15
September 30 ...       2.40       1.40       1.50        .15
December 31 ....       1.50       1.40       1.50        .33
</Table>

         No distributions were made to Class B or Class C Certificate holders
through December 31, 1997. In 1998, $67.5 million, or $27.50 per Class B
Certificate, was distributed to Class B Certificate holders. In 1999, $23.3
million, or $9.50 per Class B Certificate, was distributed to Class B
Certificate holders. In 2000, $9.8 million, or $4.00 per Class B Certificate,
was distributed to Class B Certificate holders. In 2001, $2.5 million, or $1.00
per Class B Certificate, was distributed.

         The Trust is required to apply all proceeds from liquidation and
disposition of its assets first to the payment of normal operating expenses.
Second, Trust proceeds totaling $188 million were distributed to FirstCity to
retire the Class A Certificate in December 1997. The third order of distribution
of Trust proceeds is payments pursuant to employment and bonus agreements with
certain former employees of the Debtor. The bonus pool and executive long-term
incentive plan provides for the payment of bonuses equal to 4.76% of additional
distributions to Class B Certificate holders and (if any) Class C Certificate
holders.

         Fourth, Class B Certificate holders are entitled to distributions up to
the Pour-Over Level. The Pour-Over Level (approximately $52 million at December
31, 2001) is the liquidation preference on July 3, 1995 of the Debtor's Series B
and Series E preferred stock, less the nominal stated value of FirstCity special
preferred stock and the book value of FirstCity common stock issued to the
Series B and Series E holders, plus interest at an annual rate of 6.5% from July
3, 1995. The Pour-Over Level is reduced for distributions to Class B Certificate
holders.



                                       4
<PAGE>
         Lastly, Class C Certificate holders receive distributions (if any)
after any remaining payments to Class B Certificate holders up to the Pour-Over
Level (approximately $21.07 per unit as of December 31, 2001).

Item 6.  Selected Financial Data.

<Table>
<Caption>
                                                            Year Ended December 31,
                                             -----------------------------------------------------
(Dollars in thousands)                         2001        2000       1999       1998       1997
                                             --------    --------   --------   --------   --------
<S>           <C>                            <C>         <C>        <C>        <C>        <C>
Income (loss)(1) .........................   $ (4,968)   $  5,952   $ 24,323   $ 38,534   $ 45,079
Expenses .................................      1,778       2,679      3,844      6,859     12,427
Net income (loss)(1) .....................     (6,746)      3,273     20,479     31,675     32,652
Distributions on Class "A" Certificate ...         --          --         --         --     62,669
Distributions on Class "B" Certificate ...      2,454       9,817     23,316     67,494         --

At year end:
        Total assets .....................     38,581      48,028     54,421     57,489     93,963
        Class "B" Certificate ............     36,900      46,100     52,400     55,300     91,300
</Table>

----------

(1)      Net of $7 million reduction in value of 67% partnership interest in
         First City Tower in 2001.


Item 7.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations.

         The operations of the Trust are summarized below:

<Table>
<Caption>
                                                    Year Ended December 31,
                                               --------------------------------
(Dollars in thousands)                           2001        2000        1999
                                               --------    --------    --------
<S>                                            <C>         <C>         <C>
Changes in fair value of trust assets ......   $ (5,077)   $  5,719    $ 24,036
Interest income on short-term investments ..        109         233         287
Administrative expense .....................     (1,778)     (2,679)     (3,844)
                                               --------    --------    --------
         Net income (loss) .................   $ (6,746)   $  3,273    $ 20,479
                                               ========    ========    ========
</Table>

                              2001 COMPARED TO 2000

         The estimated fair value of the Trust's assets decreased $5.1 million
in 2001 as compared to an increase of $5.7 million in 2000. The 2001 decrease
was attributable to a $7 million reduction in value of the 67% partnership
interest in First City Tower. Offsetting factors which contributed to the
enhancement of the net asset value of the Trust's assets in 2001 include (i) the
appreciation in value of certain assets attributable to a favorable interest
rate environment and the effect of such favorable interest rates on the
marketability of real estate and (ii) the increase in the estimated market value
of the Trust's assets that naturally occurs as the remaining life of the Trust
(and concomitantly the discount factor applied in calculating net asset value)
decreases.



                                       5
<PAGE>
         Interest income on short-term investments decreased in 2001 as compared
to 2000 because less excess funds were available.

         Administrative expense totaled $1.8 million in 2001 as compared to $2.7
million in 2000. A $112,000 bonus, based on distributions to Class B Certificate
holders, was paid to certain former employees of the Debtor in 2001 as compared
to a $.4 million bonus paid to such employees in 2000. Professional fees totaled
$.6 million in 2001 as compared to $.7 million in 2000.

         In 2001, the Trust distributed $2.5 million, or $1.00 per Certificate,
to Class B Certificate holders. This distribution was made possible principally
by $4.1 million in net collections on Trust assets in 2001 and cash held at
December 31, 2000. The Class B Beneficial Interests were valued at $36.9 million
at December 31, 2001.

         Non-cash trust assets at December 31, 2001 and 2000 were comprised of
the following (dollars in thousands):

<Table>
<Caption>
                                                              December 31,
                                                       --------------------------
Estimated Gross Cash Flow by Type of Asset                2001           2000
------------------------------------------             -----------    -----------
<S>                                                    <C>            <C>
Borrowers' obligation on outstanding balance of:
    Performing loans ...............................   $     1,867    $     2,718
    Nonperforming loans ............................            32             81
Real estate and other assets .......................        38,651         47,142
                                                       -----------    -----------
    Total ..........................................        40,550         49,941
                                                       -----------    -----------
    Discount required to reflect trust assets at
         estimated fair value ......................        (5,234)        (5,469)
                                                       -----------    -----------
Trust assets, net ..................................   $    35,316    $    44,472
                                                       ===========    ===========
</Table>

         For each asset, estimates of income, expense and net cash flow on a
monthly basis through the expected final disposition date are prepared by
management of the Trust. The individual asset budget is developed based upon
factors which include physical inspection of the asset or the collateral
underlying the related loan, local market conditions, contractual payments or
rents, and discussions with the relevant borrower. The Trust's management and
the Portfolio Committee periodically reevaluate and revise projected monthly
cash flows on an asset by asset basis. At December 31, 2001 and 2000, the
projected monthly cash flows were discounted at 7% to reflect the Trust assets
at estimated fair value. The Trust assets are highly concentrated in Texas.

         On March 15, 2002, two subsidiaries of the Trust settled all existing
litigation with UIDC Management, Inc. ("UIDC") et al. The Trust and UIDC are
partners in FC Tower Property Partners, L.P., an entity which owns the First
City Tower building in Houston, Texas. The dispute between the parties traces to
a "right of first refusal" issue occurring in 1997.

         The settlement allows the Trust to market its interest in the
partnership. UIDC will retain its right of first refusal and may exercise that
right at a discount from the purchase price. The discount is equal to 50% of the
amount by which a third party offer exceeds $31 million. The Trust's share of
any sale proceeds would be $31 million plus 50% of the price in excess of $31
million. Further, if the Trust is unsuccessful in (a) obtaining a qualified
offer within fifteen months and (b) executing




                                       6
<PAGE>

on a sale of the interest within twenty-one months, its 67% interest in the
partnership will be reduced to 45% and UIDC's 33% interest will increase to 55%.

         As a result of the settlement, the Trust has reduced the valuation of
its partnership interest from $45 million to $38 million. The net asset value of
the Trust, as reflected in the value of the Class B Certificates, decreased from
$44.2 million at September 30, 2001 to $36.9 million at December 31, 2001. The
consolidated statement of net assets in liquidation has never reflected any
value for the Class C Certificates and it is highly unlikely that the Class C
Certificates will have any value.

         In June 2001, the Bankruptcy Court extended the life of the Trust from
January 3, 2002 to January 3, 2004 in order to continue the orderly disposal of
assets and the settlement of claims and obligations of the Trust.

                              2000 COMPARED TO 1999

         The estimated fair value of the Trust's assets increased $5.7 million
in 2000 as compared to $24.0 million in 1999. Factors which contributed to the
enhancement of the net asset value of the Trust's assets in 2000 include (i) the
appreciation in value of certain assets attributable to a favorable interest
rate environment and the effect of such favorable interest rates on the
marketability of real estate and (ii) the increase in the estimated market value
of the Trust's assets that naturally occurs as the remaining life of the Trust
(and concomitantly the discount factor applied in calculating net asset value)
decreases.

         Interest income on short-term investments decreased in 2000 as compared
to 1999 because less excess funds were available.

         Administrative expense totaled $2.7 million in 2000 as compared to $3.8
million in 1999. A $.4 million bonus, based on distributions to Class B
Certificate holders, was paid to certain former employees of the Debtor in 2000
as compared to a $1.1 million bonus paid to such employees in 1999. Professional
fees were flat year to year.

         In 2000, the Trust distributed $9.8 million, or $4.00 per Certificate,
to Class B Certificate holders. This distribution was made possible principally
by $10.4 million in net collections on Trust assets in 2000 and cash held at
December 31, 1999.

                          CRITICAL ACCOUNTING POLICIES

         The Trust believes the following represent its critical accounting
policies. The Trust determined that these accounting policies were significant
due to their impact on the presentation of the consolidated financial
statements, the impact on the operating results and financial position of the
Trust, and the estimates inherent in the policies.




                                       7
<PAGE>
         Valuation of Trust Assets

         The net assets of the Trust are carried at estimated fair values which
are the results of discounting, at appropriate discount rates, the currently
estimated cash flows projected to be realized from the collection, liquidation
and disposition of the non-cash assets held by the Trust. Such assets consist
principally of performing and non-performing loans, income producing real estate
and interests in real estate, and miscellaneous other assets and receivables
transferred to the Trust upon the consummation of the Plan of Reorganization.
The estimates of the future cash flows from which the net asset values of the
Trust were derived are made under the direction of the management of the Trust
and the Portfolio Committee based upon information available and are believed to
be reliable. There can be no assurance, however, that the estimates resulting
from such reviews or the net asset values derived from such estimates will
ultimately be realized due to the highly judgmental assumptions which were made
in developing estimates of the amount and timing of future cash flows to be
realized upon the liquidation of the types of assets such as those held by the
Trust.

         Use of Estimates

         Management of the Trust has made certain estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare the consolidated financial
statements in conformity with accounting principles generally accepted in the
United States of America. Actual results could differ from those estimates.


Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

         The Trust does not engage in trading market risk sensitive instruments
and does not purchase as investments, as hedges, or for purposes "other than
trading" instruments that are likely to expose the Trust to market risk, whether
it be from interest rate, foreign currency exchange, commodity price or equity
price risk. The Trust has issued no debt instruments, entered into no forward or
futures contracts, purchased no options and entered into no swaps.




                                       8
<PAGE>
Item 8.  Financial Statements and Supplementary Data.

                  FIRSTCITY LIQUIDATING TRUST AND SUBSIDIARIES
              CONSOLIDATED STATEMENTS OF NET ASSETS IN LIQUIDATION
                             (DOLLARS IN THOUSANDS)

<Table>
<Caption>
                                                                        DECEMBER 31,
                                                                 -------------------------
                                                                    2001          2000
                                                                 -----------   -----------
<S>                                                              <C>           <C>
               Assets, at estimated fair value

Cash and cash equivalents ....................................   $     3,265   $     3,556
Trust assets, net ............................................        35,316        44,472
                                                                 -----------   -----------
       Total assets ..........................................        38,581        48,028
                                                                 -----------   -----------

               Less liabilities at face or estimated amount

Payables and accrued liabilities .............................         1,681         1,928
                                                                 -----------   -----------
       Total liabilities .....................................         1,681         1,928
                                                                 -----------   -----------
Commitments and contingencies ................................            --            --

               Trust net asset value attributable to:

Class "B" Certificate, 2,454,310 units outstanding ...........        36,900        46,100
Class "C" Certificate, 725,729 units outstanding .............            --            --
       Total net asset value .................................   $    36,900   $    46,100
                                                                 ===========   ===========
</Table>

See accompanying notes to consolidated financial statements.



                    CONSOLIDATED STATEMENTS OF OPERATIONS AND
                    CHANGES IN NET ASSET VALUE IN LIQUIDATION
                             (DOLLARS IN THOUSANDS)

<Table>
<Caption>
                                                        YEAR ENDED DECEMBER  31,
                                               -----------------------------------------
                                                  2001           2000           1999
                                               -----------    -----------    -----------
<S>                                            <C>            <C>            <C>
Changes in fair value of trust assets ......   $    (5,077)   $     5,719    $    24,036
Interest income on short-term investments ..           109            233            287
Administrative expense .....................        (1,778)        (2,679)        (3,844)
                                               -----------    -----------    -----------
       Net income (loss) ...................        (6,746)         3,273         20,479
                                               -----------    -----------    -----------
Net asset value, beginning of period .......        46,100         52,400         55,300
Distributions on Class "B" Certificate .....        (2,454)        (9,830)       (23,379)
Eliminate liability for distributions on
  unsurrendered Class "B" Certificates .....            --            257             --
                                               -----------    -----------    -----------
Net asset value, end of period .............   $    36,900    $    46,100    $    52,400
                                               ===========    ===========    ===========
</Table>

See accompanying notes to consolidated financial statements.



                                       9
<PAGE>
                  FIRSTCITY LIQUIDATING TRUST AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)



<Table>
<Caption>
                                                                                YEAR ENDED DECEMBER  31,
                                                                       -----------------------------------------
                                                                          2001           2000           1999
                                                                       -----------    -----------    -----------
<S>                                                                    <C>            <C>            <C>
Cash flows from operating activities:
    Net income (loss) ..............................................   $    (6,746)   $     3,273    $    20,479
    Adjustments to reconcile net income (loss) to net cash
    provided by operating activities:
       Changes in fair value of trust assets .......................         5,077         (5,719)       (24,036)
       Collections on trust assets, net of advances ................         4,063         10,382         18,787
       Increase (decrease) in payables and accrued liabilities .....          (231)           166           (117)
                                                                       -----------    -----------    -----------
          Net cash provided by operating activities ................         2,163          8,102         15,113
                                                                       -----------    -----------    -----------

Cash flows from financing activities:
    Distributions on Class "B" Certificate .........................        (2,454)        (9,817)       (23,316)
                                                                       -----------    -----------    -----------

          Net cash used in financing activities ....................        (2,454)        (9,817)       (23,316)
                                                                       -----------    -----------    -----------

    Net decrease in cash and cash equivalents ......................   $      (291)   $    (1,715)   $    (8,203)
    Cash and cash equivalents, beginning of period .................         3,556          5,271         13,474
                                                                       -----------    -----------    -----------
    Cash and cash equivalents, end of period .......................   $     3,265    $     3,556    $     5,271
                                                                       ===========    ===========    ===========
</Table>

See accompanying notes to consolidated financial statements.



                                       10
<PAGE>
                  FIRSTCITY LIQUIDATING TRUST AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                        December 31, 2001, 2000 and 1999

(A)      Summary of Significant Accounting Policies

         (1)      Description of Business

         The Joint Plan of Reorganization by First City Bancorporation of Texas,
         Inc. (the "Debtor"), Official Committee of Equity Security Holders, and
         J-Hawk Corporation ("J-Hawk"), with the participation of Cargill
         Financial Services Corporation, under Chapter 11 of the United States
         Bankruptcy Code, Case No. 392-39474-HCA-11 (the "Plan of
         Reorganization"), was confirmed by the Bankruptcy Court for the
         Northern District of Texas, Dallas Division (the "Bankruptcy Court"),
         by an order entered on May 31, 1995, and became effective on July 3,
         1995. Pursuant to the Plan of Reorganization, and an Agreement and Plan
         of Merger between the Debtor and J-Hawk, on July 3, 1995, J-Hawk was
         merged (the "Merger") with and into First City Bancorporation of Texas,
         Inc., and the name of the corporation was changed to FirstCity
         Financial Corporation ("FirstCity").

         Pursuant to the Plan, substantially all of the legal and beneficial
         interests in the assets of the Debtor, other than $20 million in cash
         contributed to FirstCity, were transferred to FirstCity Liquidating
         Trust (the "Trust"), or to subsidiaries of the Trust. Such assets will
         be liquidated over the life of the Trust pursuant to the terms thereof.
         In June 2001, the Bankruptcy Court extended the life of the Trust to
         January 3, 2004. FirstCity, as the sole holder of the Class A
         Certificate under the Trust, received from the Trust amounts sufficient
         to retire the Class A Certificate in December 1997. Additional
         distributions shall be paid to certain of the former security holders
         of the Debtor pursuant to the terms of the Class B and the Class C
         certificates of beneficial interests in the Trust. The Trust is
         administered by a four-person portfolio committee (the "Portfolio
         Committee"). The net assets of the Debtor transferred to the Trust on
         July 3, 1995, consisted of the following (dollars in thousands):

<Table>
<S>                                                                    <C>
                  Cash and cash equivalents.........................   $ 135,360
                  Trust assets......................................      61,514
                  Estimated claims and accrued liabilities..........     (14,002)
                                                                       ---------
                                                                       $ 182,872
                                                                       =========
</Table>

In connection with the sale of the Debtor's banks by the FDIC to third-party
acquirers (the "Loss-Sharing Banks"), the FDIC guaranteed certain recoveries on
loans acquired by the Loss-Sharing Banks. (These agreements are referred to as
"Loss-Sharing Agreements".) On July 12, 1995, in order to reduce the uncertain
effect of the Loss-Sharing Agreements on future distributions to the Trust by
the FDIC, subsidiaries of the Trust purchased assets (the "Loss-Sharing
Settlement") for approximately $206 million from the Loss-Sharing Banks. With
the purchase of these assets, the Loss-Sharing Banks released the FDIC from its
future obligations under the Loss-Sharing Agreements.



                                       11
<PAGE>
                  FIRSTCITY LIQUIDATING TRUST AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                                   (continued)

         By order of the Bankruptcy Court, unsurrendered securities of the
         Debtor were required to be submitted for exchange into Class B or Class
         C Certificates by May 31, 2000. As of that date, securities
         representing 2,454,310 Class B Certificates and 725,729 Class C
         Certificates had been exchanged. Prior to May 31, 2000, Certificates
         outstanding were assumed equal to an exchange of all Debtor securities.
         Accordingly, in the second quarter of 2000, a liability for
         distributions on the unsurrendered Class B Certificates was reversed.
         Holders of the remaining unsurrendered securities of the Debtor will
         have no rights to receive any distributions on Trust securities.

         (2)      Principles of Consolidation

         The accompanying consolidated financial statements include the accounts
         of FirstCity Liquidating Trust and its subsidiaries (collectively
         referred to as the "Trust"). All significant intercompany transactions
         and balances have been eliminated in consolidation. Certain amounts in
         the financial statements for prior periods have been reclassified to
         conform with current financial statement presentation.

         (3)      Cash Equivalents

         For purposes of the consolidated statements of cash flows, the Trust
         considers all highly liquid debt instruments with original maturities
         of three months or less to be cash equivalents. At December 31, 2001
         and 2000, substantially all cash balances were in excess of federally
         insured limits. In accordance with the Liquidating Trust Agreement, all
         cash balances are maintained at institutions with at least $100 million
         of capital stock and surplus and whose short-term debt obligations are
         rated by at least two nationally recognized rating agencies in one of
         the two highest categories.

         (4)      Trust Assets

         The net assets of the Trust are carried at estimated fair values which
         are the results of discounting, at appropriate discount rates, the
         currently estimated cash flows projected to be realized from the
         collection, liquidation and disposition of the non-cash assets held by
         the Trust. Such assets consist principally of performing and
         non-performing loans, income producing real estate and interests in
         real estate, and miscellaneous other assets and receivables transferred
         to the Trust upon the consummation of the Plan of Reorganization. The
         estimates of the future cash flows from which the net asset values of
         the Trust were derived are made under the direction of the management
         of the Trust and the Portfolio Committee based upon information
         available and are believed to be reliable. There can be no assurance,
         however, that the estimates resulting from such reviews or the net
         asset values




                                       12
<PAGE>
                  FIRSTCITY LIQUIDATING TRUST AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                                   (continued)


         derived from such estimates will ultimately be realized due to the
         highly judgmental assumptions which were made in developing estimates
         of the amount and timing of future cash flows to be realized upon the
         liquidation of the types of assets such as those held by the Trust.

         Trust assets are revalued at least quarterly and adjustments to
         estimated fair values are included in operating results in the period
         in which they become known. Loans are considered performing if debt
         service payments are made in accordance with the original or
         restructured terms of the notes. Interest on loans is recognized as
         part of the proceeds from disposition of trust assets. Impairment of
         loans is measured based on the present value of the expected future
         cash flows discounted at the loan's effective interest rate, or the
         fair value of the collateral, less estimated selling costs, if the loan
         is collateral dependent and foreclosure is probable.

         Foreclosed assets acquired in settlement of notes are recorded at
         estimated fair value. Costs relating to the development and improvement
         of property and holding costs are considered in the development of
         estimated fair values.

         (5)      Income Taxes

         Under current federal and state laws, the Trust shall be treated as a
         grantor trust owned by the beneficiaries holding beneficial interest
         therein. For tax purposes, any item of income or loss is allocated
         among the certificate holders. Therefore, no provision has been made
         for income taxes in the accompanying consolidated financial statements.

         (6)      Use of Estimates

         Management of the Trust has made certain estimates and assumptions
         relating to the reporting of assets and liabilities and the disclosure
         of contingent assets and liabilities to prepare these consolidated
         financial statements in conformity with accounting principles generally
         accepted in the United States of America. Actual results could differ
         from those estimates.


                                       13
<PAGE>
                  FIRSTCITY LIQUIDATING TRUST AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                                   (continued)

(B)      Trust Assets

         Trust assets are comprised of the following:

         (Dollars in thousands)
<Table>
<Caption>
                                                                      December 31,
                                                               --------------------------
         Estimated Gross Cash Flow by Type of Asset               2001           2000
                                                               -----------    -----------
<S>                                                            <C>            <C>
         Borrowers' obligation on outstanding balance of:
             Performing loans ..............................   $     1,867    $     2,718
             Nonperforming loans ...........................            32             81
         Real estate and other assets ......................        38,651         47,142
                                                               -----------    -----------
             Total .........................................        40,550         49,941
                                                               -----------    -----------

             Discount required to reflect trust assets at
                  estimated fair value .....................        (5,234)        (5,469)
                                                               -----------    -----------

         Trust assets, net .................................   $    35,316    $    44,472
                                                               ===========    ===========
</Table>

         For each asset, estimates of income, expense and net cash flow on a
         monthly basis through the expected final disposition date are prepared
         by management of the Trust. The individual asset budget is developed
         based upon factors which include physical inspection of the asset or
         the collateral underlying the related loan, local market conditions,
         contractual payments or rents, and discussions with the relevant
         borrower. The Trust's management and the Portfolio Committee
         periodically reevaluate and revise projected monthly cash flows on an
         asset by asset basis. At December 31, 2001 and 2000, the projected
         monthly cash flows were discounted at 7% to reflect the Trust assets at
         estimated fair value. The Trust assets are highly concentrated in
         Texas.

         On March 15, 2002, two subsidiaries of the Trust settled all existing
         litigation with UIDC Management, Inc. ("UIDC") et al. The Trust and
         UIDC are partners in FC Tower Property Partners, L.P., an entity which
         owns the First City Tower building in Houston, Texas. The dispute
         between the parties traces to a "right of first refusal" issue
         occurring in 1997.

         The settlement allows the Trust to market its interest in the
         partnership. UIDC will retain its right of first refusal and may
         exercise that right at a discount from the purchase price. The discount
         is equal to 50% of the amount by which a third party offer exceeds $31
         million. The Trust's share of any sale proceeds would be $31 million
         plus 50% of the price in excess of $31 million. Further, if the Trust
         is unsuccessful in (a) obtaining a qualified offer within fifteen
         months and (b) executing on a sale of the interest within twenty-one
         months, its 67% interest in the partnership will be reduced to 45% and
         UIDC's 33% interest will increase to 55%.




                                       14
<PAGE>
                  FIRSTCITY LIQUIDATING TRUST AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                                   (continued)


         As a result of the settlement, the Trust has reduced the valuation of
         its partnership interest from $45 million to $38 million (based on an
         estimated sale price of $45 million). The net asset value of the Trust,
         as reflected in the value of the Class B Certificates, decreased from
         $44.2 million at September 30, 2001 to $36.9 million at December 31,
         2001. The consolidated statement of net assets in liquidation has never
         reflected any value for the Class C Certificates and it is highly
         unlikely that the Class C Certificates will have any value.

(C)      Distribution Priorities

         The Trust is required to apply all proceeds from liquidation and
         disposition of its assets first to payment of normal operating
         expenses. Second, Trust proceeds totaling $188 million were distributed
         to FirstCity to retire the Class A Certificate in December 1997. The
         third order of distribution of Trust proceeds is payments pursuant to
         employment and bonus agreements with certain former employees of the
         Debtor. The bonus pool and executive long-term incentive plan provides
         for the payment of bonuses equal to 4.76% of additional distributions
         to Class B Certificate holders and (if any) Class C Certificate
         holders.

         Fourth, Class B Certificate holders are entitled to distributions up to
         the Pour-Over Level. The Pour-Over Level (approximately $52 million at
         December 31, 2001) is the liquidation preference on July 3, 1995 of the
         Debtor's Series B and Series E preferred stock, less the nominal stated
         value of FirstCity special preferred stock and the book value of
         FirstCity common stock issued to the Series B and Series E holders,
         plus interest at an annual rate of 6.5% from July 3, 1995. The
         Pour-Over Level is reduced for distributions to Class B Certificate
         holders. In 2001, $2.5 million, or $1.00 per Certificate, was
         distributed to Class B Certificate holders and a $112,000 bonus was
         paid to certain former employees of the Debtor. In 2000, $9.8 million,
         or $4.00 per Certificate, was distributed to Class B Certificate
         holders and a $.4 million bonus was paid to certain former employees of
         the Debtor. In 1999, $23.3 million, or $9.50 per Certificate, was
         distributed to Class B Certificate holders and a $1.1 million bonus was
         paid to certain former employees of the Debtor. In 1998, $67.5 million,
         or $27.50 per Certificate, was distributed to Class B Certificate
         holders and a $2.6 million bonus was paid to certain former employees
         of the Debtor.

         Lastly, Class C Certificate holders receive distributions (if any)
         after any remaining payments to Class B Certificate holders up to the
         Pour-Over Level (approximately $21.07 per unit as of December 31,
         2001).

         The ultimate amounts to be distributed to the holders of the B and C
         Certificates will result from the cash flow actually realized from the
         liquidation of the non-cash Trust assets (principally the partnership
         interest discussed in Note B). The determination of the net asset value
         of the Trust in the accompanying consolidated statements of net assets
         in liquidation




                                       15
<PAGE>
                  FIRSTCITY LIQUIDATING TRUST AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                                   (continued)


         is based upon estimates of future cash flows. The actual cash flows and
         the timing of such cash flows may vary significantly from those
         estimates, thus affecting the final distributions to the Certificate
         holders.

(D)      Commitments and Contingencies

         The Trust is involved in various other legal proceedings in the
         ordinary course of business. In the opinion of management of the Trust,
         the resolution of such matters will not have a material adverse impact
         on the consolidated financial position, results of operations or
         liquidity of the Trust.

         In 1996, the FDIC closed the receiverships of the Debtor's banks and
         distributed the remaining surplus of those receiverships to the Trust.
         In accordance with a conveyance and indemnification agreement, the
         Trust is required, among other things, to provide indemnity to the FDIC
         against any known or unknown liabilities, obligations or actual
         expenses associated with the receiverships, in an aggregate amount up
         to $10 million until the termination of the Trust. Management of the
         Trust does not believe that, to the extent the Trust is obligated to
         pay certain claims or expenses associated with the past obligations of
         the Debtor's banks, such payments will have a material adverse impact
         on the consolidated financial position, results of operations, or
         liquidity of the Trust.




                                       16
<PAGE>
                          INDEPENDENT AUDITORS' REPORT




The Portfolio Committee and Certificate Holders
FirstCity Liquidating Trust:

         We have audited the accompanying consolidated statements of net assets
in liquidation of FirstCity Liquidating Trust and subsidiaries (the "Trust") as
of December 31, 2001 and 2000, and the related consolidated statements of
operations and changes in net asset value in liquidation, and cash flows for
each of the years in the three-year period ended December 31, 2001. These
consolidated financial statements are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

         We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

         In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of FirstCity
Liquidating Trust and subsidiaries as of December 31, 2001 and 2000, and the
results of their operations and changes in net asset value in liquidation and
cash flows for each of the years in the three-year period ended December 31,
2001, in conformity with accounting principles generally accepted in the United
States of America.





                                                   KPMG LLP


Houston, Texas
January 31, 2002, except
as to Note B, which is as
of March 15, 2002




                                       17
<PAGE>
                           FIRSTCITY LIQUIDATING TRUST
                   SELECTED UNAUDITED QUARTERLY FINANCIAL DATA
                             (DOLLARS IN THOUSANDS)
<Table>
<Caption>
                                              2001                                                2000
                               ------------------------------------------------    ------------------------------------------------
                               First         Second        Third       Fourth       First        Second       Third        Fourth
                               Quarter       Quarter      Quarter      Quarter      Quarter      Quarter      Quarter      Quarter
                               ---------    ---------    ---------    ---------    ---------    ---------    ---------    ---------
<S>                            <C>          <C>          <C>          <C>          <C>          <C>          <C>          <C>
Changes in fair value of
    trust assets(1) .........  $     926    $     499    $     289    $  (6,791)   $   1,715    $   1,436    $   1,290    $   1,278
Interest income on
   short-term investments ...         49           23           20           17           45           72           65           51
Administrative
expense .....................       (621)        (322)        (309)        (526)        (599)        (647)        (658)        (775)
                               ---------    ---------    ---------    ---------    ---------    ---------    ---------    ---------
Net income (loss)(1) ........  $     354    $     200    $      --    $  (7,300)   $   1,161    $     861    $     697    $     554
                               =========    =========    =========    =========    =========    =========    =========    =========
</Table>

----------

(1)      Net of $7 million reduction in value of 67% partnership interest in
         First City Tower in fourth quarter of 2001.

Item 9.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure.

         None.

                                    Part III

Item 10. Directors and Executive Officers of the Registrant.

         Role of the Portfolio Committee

         Pursuant to Article IV of the Trust Agreement, except where expressly
limited by the terms of the Trust Agreement, all of the management and executive
authority over the Trust resides in the four-member Portfolio Committee (subject
to increase and reduction). The Trust Agreement provides that such four members
are initially Rick R. Hagelstein (the "Chief Credit Officer Member Position"),
Robert W. Brown (the "Robert W. Brown Member Position"), and Richard E. Bean and
R. David Palmer, as the two members designated by the Equity Committee (the
"Equity Committee Member Positions"). All have been members of the Portfolio
Committee since the Effective Date. Mr. Hagelstein resigned in the second
quarter of 1998 and Joe S. Greak was appointed to replace Mr. Hagelstein.
Background information and the employment histories of Messrs. Bean, Brown,
Greak and Palmer are set forth below.

         Richard E. Bean, 58, has been Executive Vice President and Chief
Financial Officer of Pearce Industries, Inc. since 1976, which company, through
its subsidiaries, markets a variety of oilfield equipment and machinery. Prior
to the Effective Date, Mr. Bean was Chairman of the Equity Committee. Mr. Bean
is currently a director of FirstCity.

         Robert W. Brown, 53, has been President of FCLT Loans Asset Corp. since
the Effective Date. As of the Effective Date, Mr. Brown served as Executive Vice
President and



                                       18
<PAGE>

Secretary of FirstCity. After the Effective Date he resigned from FirstCity to
devote substantially all of his time to the Trust. Mr. Brown was Chief Financial
Officer of the Debtor beginning in 1991. He served as Executive Vice President
of the Debtor from 1990 to 1992, became a member of the Debtor's Board of
Directors in 1992 and served as President of the Debtor from 1993 through the
Effective Date. Mr. Brown was a director and officer of the Debtor when the
Debtor filed a plan of reorganization under the Federal bankruptcy laws in
December 1994.

         Joe S. Greak, 53, has been Senior Vice President and Tax Director of
FirstCity since the Effective Date. Mr. Greak was the Tax Manager of the Debtor
from 1993 to the Effective Date.

         R. David Palmer, 59, has been a private investor for the past 25 years.
Prior to the Effective Date, Mr. Palmer was a member of the Equity Committee.
From 1970 to 1995, Mr. Palmer was a Professor of Philosophy at the State
University of New York, Fredonia, New York. Mr. Palmer is currently a director
of Sensatex, Inc.

         Officers and Others

         Jerry D. Thompson, 46, has been Vice President of FCLT Loans Asset
Corp. since February 1997. Prior thereto, Mr. Thompson was Vice President of FCB
Real Estate Services, Inc., a subsidiary of the Trust and the Debtor.

         C. Ivan Wilson, 74, was Chairman of the Board and Chief Executive
Officer of the Debtor from 1991 until the Effective Date and has been Vice
Chairman of the Board of FirstCity since that date.

         Role of the Trustee

         Although all of the management and executive authority over the Trust
resides in the Trustee, the Trustee functions as a directed Trustee under the
sole and absolute discretion of the Portfolio Committee and may not exercise
discretion in the management and conduct of the liquidation of the Trust assets.
The Trustee has no authority or right to refuse to act when so ordered or
directed to do so by the Portfolio Committee. The Trustee is State Street Bank
and Trust Company, formerly Fleet National Bank and Shawmut Bank Connecticut,
N.A. There have been no changes in the Trustee through the date of this Form
10-K.

Item 11. Executive Compensation.

         Compensation of the Trustee

         The compensation paid by the Trust to the Trustee consisted of
administrative fees aggregating $20,500 in each of 2001, 2000 and 1999. Unless
renegotiated, annual administrative fees to be paid to the Trustee shall remain
constant.



                                       19
<PAGE>
         Compensation of the Portfolio Committee

         Pursuant to the terms of Article X of the Trust Agreement, the
Portfolio Committee consists of the following four members: Joe S. Greak in the
Chief Credit Officer Member Position, Robert W. Brown in the Robert W. Brown
Member Position, and two members as designated by the Equity Committee, who at
present are Richard E. Bean and R. David Palmer. Pursuant to Section 10.1.1 of
the Trust Agreement, Messrs. Bean and Palmer, or their respective successors,
each receives compensation for his services as a member of the Portfolio
Committee in an amount equal to $12,000 per annum, payable in $3,000 increments
on the first day of each calendar quarter. In addition, pursuant to a resolution
of the Board of Directors of Loans Asset Corp., Messrs. Bean and Palmer each
receive $1,000 for each Portfolio Committee meeting which they attend. The other
two members are not separately compensated for their services as members of the
Portfolio Committee.

         Compensation of Executive Officers and Others

         Executive officers and others of the Trust received compensation during
the last three years as set forth in the following table:

<Table>
<Caption>
                                               ANNUAL COMPENSATION(1)
         NAME AND                             ------------------------
    PRINCIPAL POSITION            YEAR          SALARY         BONUS
    ------------------            ----        ---------      ---------
<S>                               <C>         <C>            <C>
Robert W. Brown                   2001        $ 250,000      $ 39,225
-     President of FCLT           2000          250,000       155,040
      Loans Asset Corp.           1999          250,000       385,460

C. Ivan Wilson                    2001        $      --      $ 39,225
-     Vice Chairman of            2000               --       155,040
      FirstCity                   1999               --       385,460

Joe S. Greak                      2001        $      --      $ 19,495
-     Senior Vice President of    2000               --        77,055
      FirstCity                   1999               --       191,577

Jerry D. Thompson                 2001        $ 100,000      $  2,725
-     Vice President of FCLT      2000          100,000        10,770
      Loans Asset Corp.           1999          100,000        36,774
</Table>

----------

(1)      Amounts reported for Mr. Wilson and Mr. Greak relate only to Exhibit O
         of the Plan.

         Mr. Brown's compensation is determined as set forth in that certain
employment agreement (the "Brown Employment Agreement"), effective as of July 3,
1995, as amended May 1, 1996, by and between FCLT Loans Asset Corp. and Mr.
Brown. The Brown Employment Agreement provides for Mr. Brown's employment with
FCLT Loans Asset Corp. and his duties to the Trust for a term commencing on July
3, 1995 and terminating on dissolution of the Trust. Mr. Brown's duties include
his membership on the Portfolio Committee of the Trust, the management and
payment of creditor claims and the liquidation of the assets of the Trust
pursuant to the terms of the Trust Agreement. In compensation for such services,
Mr. Brown is paid an annual salary of $250,000. Through December 31, 2001, Mr.
Brown was paid $1.5 million in performance-oriented bonuses pursuant to Exhibit
O to the Plan. The Brown Employment Agreement provides for a




                                       20
<PAGE>
conditional bonus in an amount equal to 1.67% of all additional aggregate
payments to the holders of the Class B Certificates and the Class C
Certificates. The payment of such conditional bonus to Mr. Brown is to be
determined by the Portfolio Committee. In the event that the Brown Employment
Agreement is terminated by the Portfolio Committee prior to the termination date
of the Trust, or upon the death or disability of Mr. Brown, Mr. Brown or his
estate is entitled to continue to receive certain bonuses pursuant to the terms
set forth in the Brown Employment Agreement. Mr. Brown's unpaid bonuses will be
forfeited in the event that he terminates the Brown Employment Agreement or is
terminated for cause by FCLT Loans Asset Corp. prior to the date of the
expiration of the Brown Employment Agreement.

                  Pursuant to Section 9.8 of the Plan, Mr. Brown (as described
in the previous paragraph), along with C. Ivan Wilson, Joe S. Greak, former
employees of the Debtor and certain employees of the Trust, share in a bonus
pool and executive long-term incentive plan, the provisions of which are set
forth in Exhibit O to the Plan. In 2001, bonuses totaling $112,000 ($39,225 to
Mr. Brown) were paid pursuant to Exhibit O. In 2000, bonuses totaling $.4
million ($.1 million to Mr. Brown) were paid pursuant to Exhibit O. In 1999,
bonuses totaling $1.1 million ($.4 million to Mr. Brown) were paid pursuant to
Exhibit O. In 1998, bonuses totaling $2.6 million ($.9 million to Mr. Brown)
were paid pursuant to Exhibit O.

Item 12. Security Ownership of Certain Beneficial Owners and Management.

         (a) Since the Trust has no outstanding "voting securities" within the
meaning of the Exchange Act and the regulations thereunder, the disclosure
requirements of Form 10-K pertaining to 5% holders of voting securities are not
applicable.

         (b) The following table sets forth certain information with respect to
the beneficial ownership of the Class B and Class C Beneficial Interests, as of
January 31, 2002, by the members of the Portfolio Committee and executive
officers. The Trustee is not the beneficial owner of any Class B or Class C
Beneficial Interests.

<Table>
<Caption>
                                               NUMBER OF CLASS B BENEFICIAL INTERESTS
                                                   AND PERCENTAGE OF OUTSTANDING
                                                    CLASS B BENEFICIAL INTERESTS
                                                       AS OF JANUARY 31, 2002
                                               --------------------------------------
                                                    BENEFICIAL         PERCENT
NAME OF OWNER OR IDENTITY OF GROUP                  OWNERSHIP         OF CLASS
                                               -----------------   ------------------
<S>                                            <C>                 <C>
Robert W  Brown ..............................                --                --
Richard E  Bean ..............................            98,100               4.0
Joe S  Greak .................................                --                --
R  David Palmer ..............................                --                --
Jerry D  Thompson ............................               200                 *
C  Ivan Wilson ...............................                --                --

All Portfolio Committee members and
  executive officers as a group (6 persons) ..            98,300               4.0
</Table>

----------

*  Less than 1%



                                       21
<PAGE>

<Table>
<Caption>
                                             NUMBER OF CLASS C BENEFICIAL INTERESTS
                                                 AND PERCENTAGE OF OUTSTANDING
                                                 CLASS C BENEFICIAL INTERESTS
                                                    AS OF JANUARY 31, 2002
                                             ---------------------------------------
                                                    BENEFICIAL     PERCENT
NAME OF OWNER OR IDENTITY OF GROUP                  OWNERSHIP      OF CLASS
                                             -----------------   -------------------
<S>                                          <C>                 <C>
Robert W  Brown ...........................                197             *
Richard E  Bean ...........................                 --            --
Joe S  Greak ..............................                 --            --
R  David Palmer ...........................                 --            --
Jerry D  Thompson .........................              1,269             *
C  Ivan Wilson ............................                 15             *

All Portfolio Committee members and
   executive officers as a group
   (6 persons) ............................              1,481             *
</Table>

----------

*  Less than 1%

         (c) Pursuant to the terms of the Trust Agreement, all of the management
and executive authority over the Trust resides in the four-member Portfolio
Committee. The Trust has no knowledge of any arrangements which may result in a
change of control of the Trust. However, in the event that the position on the
Portfolio Committee held by Robert W. Brown is vacated for any reason, the
number of Portfolio Committee members will be permanently reduced to three. In
such instance, two of the three current remaining members of the Portfolio
Committee will be affiliated with FirstCity and, as a result, FirstCity may be
deemed to have some control over Portfolio Committee decisions.

Item 13. Certain Relationships and Related Transactions.

         None.

                                     Part IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

    (a)  1. Financial Statements

         The consolidated financial statements of the Trust are incorporated by
         reference to Item 8 "Financial Statements and Supplementary Data" of
         this report.

         2. Financial Statement Schedules

         Financial statement schedules have been omitted because the information
         is either not required, not applicable, or is included in Item 8 -
         "Financial Statements and Supplementary Data."



                                       22
<PAGE>

         3.      Exhibits

         Exhibit
           No.    Description
         -------  -----------

         2.1(1)   Joint Plan of Reorganization for First City Bancorporation of
                  Texas, Inc., as modified, under Chapter 11 of the United
                  States Bankruptcy Code, as confirmed by the U.S. Bankruptcy
                  Court for the Northern District of Texas, Dallas Division, on
                  May 31, 1995.

         2.2(5)   Order To Extend Term of FirstCity Liquidating Trust, dated
                  June 11, 2001.

         3.1(1)   The Liquidating Trust Agreement, dated as of July 3, 1995, by
                  and between First City Bancorporation of Texas, Inc. and
                  Shawmut Bank Connecticut, National Association (subsequently
                  Fleet National Bank, now State Street Bank and Trust Company),
                  as Trustee.

         10.1(3)  Employment Agreement, effective as of July 3, 1995, by and
                  between FCLT Loans Asset Corp. and Robert W. Brown, as amended
                  May 1, 1996. 10.2(2) Settlement Agreement, dated as of June
                  22, 1994, as amended as of January 30, 1995, by and among
                  FDIC-Corporate, the FDIC-Receivers and the First City Parties.

         10.2(2)  Settlement Agreement, dated as of June 22, 1994, as amended as
                  of January 30, 1995, by and among FDIC-Corporate, the
                  FDIC-Receivers and the First City Parties.

         10.3(3)  Conveyance and Indemnification Agreement, dated December 23,
                  1996, between FDIC-Corporate, the FDIC-Receivers, FCLT Loans,
                  L.P. and the Trust.

         10.4(4)  Extension of Conveyance and Indemnification Agreement, dated
                  in April 1999, between FDIC-Corporate, the FDIC-Receivers,
                  FCLT Loans, L.P. and the Trust.

      -----------------

         (1)      Filed as the exhibit indicated to the Registration Statement
                  on Form 10 filed with the Securities and Exchange Commission
                  on May 1, 1996 and incorporated herein by reference.

         (2)      Filed as the exhibit indicated to the Registration Statement
                  on Form 10/A filed with the Securities and Exchange Commission
                  on July 10, 1996 and incorporated herein by reference.

         (3)      Filed as the exhibit indicated to the Form 10-K for the fiscal
                  year ended December 31, 1996 filed with the Securities and
                  Exchange Commission and incorporated herein by reference.

         (4)      Filed as the exhibit indicated to the Form 10-Q for the
                  quarter ended March 31, 1999 filed with the Securities and
                  Exchange Commission and incorporated herein by reference.

         (5)      Filed as the exhibit indicated to the Form 10-Q for the
                  quarter ended June 30, 2001 filed with the Securities and
                  Exchange Commission and incorporated herein by reference.

(b)      Reports on Form 8-K. No report on Form 8-K was filed by the Registrant
         with the Commission during the quarterly period ended December 31,
         2001.



                                       23
<PAGE>
                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.


                                            STATE STREET BANK AND TRUST COMPANY,
                                            as Trustee



Date:  March 25, 2002                       /s/ Cauna Silva
                                            ------------------------------------
                                            Name: Cauna Silva
                                                 -------------------------------
                                            Title: Vice President
                                                  ------------------------------