<PAGE>   1

                                   FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   (Mark one)


[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997

                                       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.)

  1021 Main, Suite 250, Houston, Texas                             77002
(Address of principal executive offices)                         (Zip Code)

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

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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:  As of July 31, 1997,
2,460,911 units of Class B Beneficial Interests and 738,273 units of Class C
Beneficial Interests were outstanding.
<PAGE>   2

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

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

<TABLE>
<CAPTION>
                                                                          JUNE 30,    DECEMBER 31,
                                                                            1997          1996   
                                                                          --------     --------
              Assets, at estimated fair value                            (unaudited)
              -------------------------------                       
<S>                                                                       <C>          <C>     
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . .     $  7,148     $ 36,129
Trust assets, net . . . . . . . . . . . . . . . . . . . . . . . . .         98,770       89,100
                                                                          --------     --------
       Total assets . . . . . . . . . . . . . . . . . . . . . . . . .      105,918      125,229
                                                                          --------     --------

              Less liabilities at face or estimated amount
              --------------------------------------------
Payables and accrued liabilities  . . . . . . . . . . . . . . . . . .        2,153        3,912
                                                                          --------     --------
       Total liabilities  . . . . . . . . . . . . . . . . . . . . . .        2,153        3,912
                                                                          --------     --------
Commitments and contingencies . . . . . . . . . . . . . . . . . . . .           --           --

              Trust net asset value attributable to:
              -------------------------------------
Class "A" Certificate, held by FirstCity Financial Corporation  . . .       24,265       53,617
Class "B" Certificate, 2,460,911 units outstanding  . . . . . . . . .       79,500       67,700
Class "C" Certificate, 738,273 units outstanding  . . . . . . . . . .           --           --
                                                                          --------     --------
       Total net asset value  . . . . . . . . . . . . . . . . . . . .     $103,765     $121,317
                                                                          ========     ========
</TABLE>

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

<TABLE>
<CAPTION>
                                               THREE MONTHS ENDED JUNE 30,    SIX MONTHS ENDED JUNE 30,
                                               --------------------------     -------------------------
                                                   1997           1996           1997           1996 
                                                ---------      ---------      ---------      ---------
<S>                                             <C>            <C>            <C>            <C>      
Changes in fair value of trust assets . . .     $  16,508      $  10,576      $  28,269      $  25,899
Interest income on short-term investments .           378            147            780            470
Interest expense  . . . . . . . . . . . . .            --            (96)          (155)          (111)
Administrative expense  . . . . . . . . . .        (1,351)        (3,589)        (9,273)        (6,914)
                                                ---------      ---------      ---------      ---------
       Net income . . . . . . . . . . . . .        15,535          7,038         19,621         19,344
                                                ---------      ---------      ---------      ---------
Net asset value, beginning of period  . . .       115,129        158,368        121,317        201,781

Distributions on Class "A" Certificate  . .       (26,899)        (2,178)       (37,173)       (57,897)
                                                ---------      ---------      ---------      ---------
Net asset value, end of period  . . . . . .     $ 103,765      $ 163,228      $ 103,765      $ 163,228
                                                =========      =========      =========      =========
</TABLE>

See accompanying notes to consolidated financial statements.




                                       2
<PAGE>   3
                  FIRSTCITY LIQUIDATING TRUST AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                       SIX MONTHS ENDED JUNE 30,  
                                                                       -------------------------
                                                                          1997          1996 
                                                                        --------      --------
<S>                                                                     <C>           <C>     
Cash flows from operating activities:
   Net income . . . . . . . . . . . . . . . . . . . . . . . . . . .     $ 19,621      $ 19,344
   Adjustments to reconcile net income to net cash provided
   by (used in) operating activities:
      Changes in fair value of trust assets . . . . . . . . . . . .      (28,269)      (25,899)
      Collections on trust assets, net of advances  . . . . . . .         22,938        80,016
      Capital improvements on trust assets  . . . . . . . . . . . .       (4,503)           --
      Decrease in estimated administrative claims . . . . . . . . .           --        (3,486)
      Decrease in payables and accrued liabilities  . . . . . . . .       (1,595)         (295)
                                                                        --------      --------
         Net cash provided by operating activities  . . . . . . . .        8,192        69,680
                                                                        --------      --------

Cash flows from investing activities:
   Repayment of advance to FirstCity Financial Corporation  . . . .           --         2,000
   Purchase of FirstCity senior subordinated notes  . . . . . . . .           --        (4,000)
   Redemption of FirstCity senior subordinated notes  . . . . . . .           --         2,000
                                                                        --------      --------
         Net cash provided by investing activities  . . . . . . . .           --            --
                                                                        --------      --------

Cash flows from financing activities:
   Borrowings under notes payable to banks  . . . . . . . . . . . .           --        19,800
   Payments of notes payable to banks . . . . . . . . . . . . . . .           --       (19,800)
   Distributions on Class "A" Certificate . . . . . . . . . . . . .      (37,173)      (56,897)
                                                                        --------      --------

         Net cash used in financing activities  . . . . . . . . . .      (37,173)      (56,897)
                                                                        --------      --------

   Net increase (decrease) in cash  . . . . . . . . . . . . . . . .     $(28,981)     $ 12,783
   Cash, beginning of period  . . . . . . . . . . . . . . . . . . .       36,129        11,260
                                                                        --------      --------
   Cash, end of period  . . . . . . . . . . . . . . . . . . . . . .     $  7,148      $ 24,043
                                                                        ========      ========
   Supplemental disclosure of cash flow information:
      Cash paid during the period for:
         Interest . . . . . . . . . . . . . . . . . . . . . . . . .     $    155      $    111
                                                                        ========      ========
      Non-cash financing activities:
         Cancellation of FirstCity senior subordinated notes  . . .     $     --      $  1,000


</TABLE>

See accompanying notes to consolidated financial statements.



                                       3
<PAGE>   4
                  FIRSTCITY LIQUIDATING TRUST AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                                 June 30, 1997


(A)      Basis of Presentation

         The unaudited consolidated financial statements of FirstCity
         Liquidating Trust (the "Trust") reflect, in the opinion of management,
         all adjustments, consisting only of normal and recurring adjustments,
         necessary to present fairly the Trust's net assets in liquidation at
         June 30, 1997, and its changes in net asset value in liquidation and
         cash flows for the three month and six month periods ended June 30,
         1997 and 1996.

         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 generally accepted accounting
         principles.  Actual results could differ from those estimates.

         Certain amounts in the financial statements for prior periods have
         been reclassified to conform with current financial statement
         presentation.

(B)      Trust Assets

         Trust assets are comprised of the following (dollars in thousands):

<TABLE>
<CAPTION>
                                                                         June 30,               December 31,
         Estimated Gross Cash Flow by Type of Asset                        1997                     1996  
         ------------------------------------------                     ---------                ---------
                                                                          (unaudited)
         <S>                                                            <C>                      <C>      
         Borrowers' obligation on outstanding balance of:
            Performing loans  . . . . . . . . . . . .                   $  60,041                $  68,551
            Nonperforming loans   . . . . . . . . . .                       3,157                    2,363
         Receivable from the FDIC   . . . . . . . . .                       2,000                    2,000
         Real estate and other assets   . . . . . . .                      52,524                   49,122
                                                                        ---------                ---------
            Total   . . . . . . . . . . . . . . . . .                     117,722                  122,036
                                                                        ---------                ---------

            Discount required to reflect trust assets at
              estimated fair value  . . . . . . . . .                     (18,952)                 (32,936)
                                                                        ---------                ---------

         Trust assets, net  . . . . . . . . . . . . .                   $  98,770                $  89,100
                                                                        =========                =========
</TABLE>

         For each asset, estimates of income, expense and net cash flow on a
         monthly basis through the expected final disposition date are
         prepared.  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 June 30, 1997 and  December 31, 1996, the projected monthly cash
         flows were discounted at 11% to reflect the Trust assets at estimated
         fair value.  The Trust assets are highly concentrated in Texas.




                                       4
<PAGE>   5
                  FIRSTCITY LIQUIDATING TRUST AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                                  (continued)


         (C)     Distribution Priorities

         The Trust is required to apply all proceeds from liquidation and
         disposition of the Trust's assets first to payment of normal operating
         expenses.  Second, Trust proceeds are distributed to FirstCity, the
         sole Class A Certificate holder, for payment of principal and interest
         on senior subordinated notes and redemption of special preferred
         stock.  Pursuant to a June 1997 agreement with FirstCity, the Trust
         will retire its obligation to FirstCity under the Class A Certificate
         by paying FirstCity $22.75 per share for the 1,923,481 outstanding
         special preferred shares at June 30, 1997, the 1997 second quarter
         dividend of $.7875 per share, and 15% interest from June 30, 1997, on
         the nominal stated value ($21.0 million) of shares not retired by June
         30, 1997.  The Trust distributed $105.7 million to FirstCity in 1996
         for the early redemption of senior subordinated notes and $1 million
         senior subordinated notes held by the Trust were canceled.  In
         addition, the Trust distributed $9.6 million to FirstCity in 1996 and
         $5.1 million through July 15, 1997 for accrued dividends on special
         preferred stock.  In 1997, the Trust, in cooperation with FirstCity,
         began making distributions to FirstCity for the purchase of FirstCity
         special preferred stock.  As of June 30, 1997, the Trust had
         distributed approximately $12.6 million to FirstCity for the
         repurchase by FirstCity of 537,430 shares (nominal stated value of
         $11.3 million) of special preferred stock.  On June 30, 1997, the
         Trust distributed $21.0 million to FirstCity related to 923,481
         special preferred shares under the June 1997 agreement discussed
         above.  In July 1997 the Trust distributed $15.5 million to FirstCity,
         reducing the Class A Certificate obligation to approximately $7.4
         million.

         The third order of distribution of Trust proceeds is payments pursuant
         to employment agreements with certain former employees of the Debtor.
         Fourth, Class B Certificate holders (and, pursuant to bonus
         agreements, certain former employees of the Debtor) are entitled to
         distributions up to the Pour-Over Level (as hereinafter defined).  The
         bonus pool and executive long-term incentive plan provides for the
         payment of $750,000 in bonuses to certain former employees of the
         Debtor after the Trust achieves approximately $275 million of net
         collections, the payment of  another $750,000 after approximately $30
         million of additional net  collections, and the payment of bonuses in
         the amount of 5% of all net collections in excess of $305 million.
         The Pour-Over Level (approximately $134 million at June 30, 1997) 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.  Lastly, Class C
         Certificate holders receive distributions, if any, after all required
         payments (approximately $54.32 per Class B Certificate unit at June
         30, 1997) to Class B Certificate holders.  No distributions to Class C
         Certificate holders are anticipated.




                                       5
<PAGE>   6
                  FIRSTCITY LIQUIDATING TRUST AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                                  (continued)


         The ultimate amounts to be distributed to the holders of the A, B and
         C Certificates will result from the cash flow actually realized from
         the liquidation of the non-cash Trust assets and contingent asset
         claims.  The determination of the net asset value of the Trust in the
         accompanying consolidated statements of net assets in liquidation 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)      Investment Management Agreement

         Pursuant to an investment management agreement, FirstCity managed the
         liquidation of Trust assets and the Trust paid FirstCity a 3%
         servicing fee on collections (as defined in the Investment Management
         Agreement) up to a specified level of collections.  Thereafter, the
         servicing fee percentage increased with additional levels of
         collections. In the first quarter of 1997, the Investment Management
         Agreement was terminated and, in consideration of this termination,
         the Trust paid FirstCity $6.8 million, plus interest at a rate of 10
         percent per annum from January 1, 1997 until paid. Administrative
         expense includes $6.8 million in the first six months of 1997 and $2.3
         million in the first six months of 1996, for servicing fees.

(E)      Contingencies

         The Trust is involved in various legal proceedings in the ordinary
         course of business.  In the opinion of management of the Trust, the
         resolution of such matters should not have a material adverse impact
         on the 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 will be required, among other things, to provide indemnity until
         March 31, 1999 to the FDIC against any known or unknown liabilities,
         obligations or actual expenses which may arise now or in the future
         associated with the receiverships, in an aggregate amount up to $12
         million.  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 financial position, results of
         operations or liquidity of the Trust.



                                       6
<PAGE>   7
Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations.

         The operations of the Trust for the second quarter and first six 
months of 1997 and 1996 are summarized below (dollars in thousands):


<TABLE>
<CAPTION>
                                                                                     Six Months Ended June 30,
                                                 Second Quarter   Second Quarter     -------------------------
                                                     1997             1996             1997             1996 
                                                   --------         --------         --------         --------
<S>                                                <C>              <C>              <C>              <C>     
Changes in fair value of trust assets . . .        $ 16,508         $ 10,576         $ 28,269         $ 25,899
Interest income on short-term investments .             378              147              780              470
Interest expense  . . . . . . . . . . . . .              --              (96)            (155)            (111)
Administrative expense  . . . . . . . . . .          (1,351)          (3,589)          (9,273)          (6,914)
                                                   --------         --------         --------         --------
       Net income . . . . . . . . . . . . .        $ 15,535         $  7,038         $ 19,621         $ 19,344
                                                   ========         ========         ========         ========
</TABLE>

              SECOND QUARTER 1997 COMPARED TO SECOND QUARTER 1996

              The estimated fair value of the Trust's assets increased $16.5
million in the second quarter of 1997 as compared to $10.6 million in the
second quarter of 1996, an increase attributable to several factors, including
approximately $7 million based on the contract sales price (expected to close
in the fourth quarter of 1997) of a large asset.  Other factors which
contributed to the enhancement of the net asset value of the Trust's assets in
the second quarters of 1997 and 1996 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 increased in the second
quarter of 1997 as compared to the second quarter of 1996 because more excess
funds were available.  Interest expense in the second quarter of 1996 resulted
from borrowings to facilitate the early redemption of FirstCity senior
subordinated notes.

              Administrative expense totaled $1.4 million in the second quarter
of  1997 as compared to $3.6 million in the second quarter of 1996.  In the
first quarter of 1997, the Investment Management Agreement was terminated;
therefore, there were no servicing fees in the second quarter of 1997.
Comparatively, servicing fees paid to FirstCity were $1.1 million in the second
quarter of 1996.  Professional fees totaled $.6 million in the second quarter
of 1997 as compared to $1.2 million in the second quarter of 1996.




                                       7
<PAGE>   8

   SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS ENDED JUNE 30, 1996

              The estimated fair value of the Trust's assets increased $28.3
million in the first six months of 1997 as compared to $25.9 million in the
first six months of 1996, an increase attributable to several factors,
including the elimination of servicing fees to FirstCity (which were netted
against future cash flows) because the Investment Management Agreement was
terminated and $7 million related to a contract sales price (discussed above).
The estimated fair value of the Trust's assets increased in the first six
months of 1996, in part due to loan recoveries that exceeded anticipated
recoveries by approximately $1.4 million and an increase in the estimated
residual value of the Trust's receivable from the FDIC of $3.5 million.  Other
factors which contributed to the enhancement of the net asset value of the
Trust's assets in the first six months of 1997 and 1996 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 increased in the first
six months of 1997 as compared to the first six months of 1996 because more
excess funds were available.  Interest expense in the first six months of 1997
resulted from the termination of the Investment Management Agreement, as
discussed below. In 1996, interest expense resulted from borrowings to
facilitate the early redemption of FirstCity senior subordinated notes.

              Administrative expense totaled $9.3 million in the first six
months of  1997 as compared to $6.9 million in the first six months of 1996.
In the first quarter of 1997, the Investment Management Agreement was
terminated and, in consideration of this termination, the Trust paid FirstCity
$6.8 million, plus interest at a rate of 10 percent per annum from January 1,
1997 until paid.  Comparatively, servicing fees paid to FirstCity were only
$2.3 million in the first six months of 1996.  Professional fees totaled $1.0
million in the first six months of 1997 as compared to $1.9 million in the
first six months of 1996.

              Pursuant to a June 1997 agreement with FirstCity, the Trust will
retire its obligation to FirstCity under the Class A Certificate by paying
FirstCity $22.75 per share for the 1,923,481 outstanding special preferred
shares at June 30, 1997, the 1997 second quarter dividend of $.7875 per share,
and 15% interest from June 30, 1997, on the nominal stated value ($21.0
million) of shares not retired by June 30, 1997.  At June 30, 1997, the net
asset value attributable to the Class A Certificate was $24.3 million,
representing the $22.8 million retirement price of FirstCity's special
preferred stock and $1.5 million of accrued dividends on special preferred
stock.

              The Trust distributed $5.1 million to FirstCity through July 15,
1997, for accrued dividends on special preferred stock. In the first six months
of 1997, the Trust, in cooperation with FirstCity, began making distributions
to FirstCity for the purchase by FirstCity of its special preferred stock.  As
of June 30, 1997, the Trust had distributed approximately $12.6 million to
FirstCity for the repurchase by FirstCity of 537,430 shares of special
preferred stock.  On June 30, 1997, the Trust distributed $21.0 million to
FirstCity related to 923,481 special preferred shares under the June 1997





                                       8
<PAGE>   9
agreement discussed above.  In July 1997 the Trust distributed $15.5 million to
FirstCity, reducing the Class A Certificate obligation to approximately $7.4
million.  These distributions were made possible principally by $22.9 million
in net collections on Trust assets in the first six months of  1997 and cash
held at December 31, 1996.  The Class B Beneficial Interests were valued at
$79.5 million at June 30, 1997.  Distributions to Class C Certificate holders
are not anticipated.

              Non-cash trust assets at June 30, 1997 and December 31, 1996 were
comprised of the following (dollars in thousands):

<TABLE>
<CAPTION>
                                                         June 30,        December 31,
Estimated Gross Cash Flow by Type of Asset                 1997              1996   
------------------------------------------              ---------         ---------
<S>                                                     <C>               <C>      
Borrowers' obligation on outstanding balance of:
   Performing loans . . . . . . . . . . .               $  60,041         $  68,551
   Nonperforming loans . . . . . . . . .                    3,157             2,363
Receivable from the FDIC  . . . . . . . . .                 2,000             2,000
Real estate and other assets  . . . . . . .                52,524            49,122
                                                        ---------         ---------
   Total  . . . . . . . . . . . . . . .                   117,722           122,036
                                                        ---------         ---------
   Discount required to reflect trust assets at
     estimated fair value   . . . . . . . .               (18,952)          (32,936)
                                                        ---------         ---------
Trust assets, net . . . . . . . . . . . .               $  98,770         $  89,100
                                                        =========         =========
</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
periodically reevaluates and revises its projected monthly cash flows on an
asset by asset basis.  At June 30, 1997 and December 31, 1996, the projected
monthly cash flows were discounted at 11% to reflect the Trust assets at
estimated fair value.

                 Two of the most significant assets of the Trust are a downtown
Houston office building and a 67% interest in a partnership which owns a second
downtown Houston office building.  Both assets are currently under contract for
sale.  The $79.5 million current valuation of the Class B Beneficial Interests
includes a $15 million valuation for the owned building, which is the
contracted sale price, and a $9 million valuation for the 67% partnership
interest.  In the second quarter of 1997, the Trust announced that the 67%
partnership interest was under a contract for sale for $18 million.  However,
the valuation for the partnership interest has been left at the lower amount of
$9 million, which reflects current book value, because the sale is a
complicated transaction involving other parties and it is difficult to predict
if and when the sale will be completed.  If the transaction closes, the Class B
Beneficial Interests valuation will increase by approximately $8 million.

                 At June 30, 1997, the Trust also held certain claims, such as
claims under fidelity bonds and judgments and deficiencies arising from charged
off loans to former borrowers of the Debtor's banks.  The estimated future cash
flows from which the net asset value of the Trust was derived include estimated
future collections which might be realized from such claims only when such




                                       9
<PAGE>   10
amounts are reasonably certain and estimable.  No value was assigned at June
30, 1997. In the first quarter of 1997, a claim (valued at $8 million on
December 31, 1996) against former directors and officers of the Debtor of
approximately $8 million was collected.




                                      10
<PAGE>   11
PART II - OTHER INFORMATION

Item 5.  Other Information.

                 The amounts of items of income, gain, loss, and deduction to
be allocated to each of the Class A, Class B, and Class C Certificate holders
for any taxable year will be based, in part, on the amount of income earned by
the assets in the Trust, including the assets held through partnerships, as
well as the amount of gain or loss recognized on the sale of such assets.
Because of the significant contingencies remaining as to what income, gain or
loss will be recognized, it is not possible to estimate at this time the amount
of income, gain or loss that will be allocated to any Certificate holder (and
consequently taken into account on such holder's own tax return).  The current
market price of a Class B Certificate is significantly in excess of the basis
of the assets held indirectly by the Trust attributable to such Certificate.
As a result of this excess, the Portfolio Committee instructed its advisors to
analyze the possible tax impact to Certificate holders under various pro forma
assumptions.  As a result of such preliminary analysis, the Portfolio Committee
determined that no tax election to defer any tax recognition to Certificate
holders should be made at the present time, subject to conclusion of the
analysis.




                                      11
<PAGE>   12
Item 6.  Exhibits and Reports on Form 8-K.

         (a)     Exhibits

<TABLE>
<CAPTION>
        Exhibit
          No.                     Description                                                                  
         ----     ----------------------------------------------------------------------------------------------------
         <S>     <C>
         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.

         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.

         4.1(1)  Form of Class B Certificate.

         4.2(1)  Form of Class C Certificate.

         10.1(1) Investment Management Agreement, dated as of July 3, 1995, by and between FirstCity, as Investment
                 Manager, and the Trust.

         10.2(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.

         10.3(1) Loan Agreement, dated as of July 11, 1995, among Loans, L.P., Fleet National Bank, as Agent and as
                 Lender, and NationsBank of Texas, N.A., as Lender.

         10.4(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.

         10.5(3) Conveyance and Indemnification Agreement, dated December 23, 1996, between FDIC-Corporate, the FDIC-
                 Receivers, FCLT Loans, L.P. and the Trust.

         10.6(3) Termination Agreement, dated March 24, 1997, by and between FirstCity and the Trust.
                                                                                                     

         10.7    New Special Preferred Stock Distribution Agreement, dated June 30, 1997, by and between FirstCity and
                 the Trust.

         21.1(1) Subsidiaries of the Trust.

         27.1    Financial Data Schedule.
</TABLE>

---------------
         (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 filed with the
                 Securities and Exchange Commission on March 28, 1997 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 June 30, 1997.



                                      12
<PAGE>   13
                                   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 thereunto duly authorized.


                                           STATE STREET BANK AND TRUST
                                           COMPANY, as Trustee



Date: August 12, 1997                      /s/ Susan T. Keller               
                                           ----------------------------------
                                           Name: Susan T. Keller             
                                                -----------------------------
                                           Title: Vice President             
                                                 ----------------------------



                                      13
<PAGE>   14
                              INDEX TO EXHIBITS

<TABLE>
<CAPTION>
        Exhibit
          No.                     Description                                                                  
         ----     ----------------------------------------------------------------------------------------------------
         <S>     <C>
         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.

         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.

         4.1(1)  Form of Class B Certificate.

         4.2(1)  Form of Class C Certificate.

         10.1(1) Investment Management Agreement, dated as of July 3, 1995, by and between FirstCity, as Investment
                 Manager, and the Trust.

         10.2(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.

         10.3(1) Loan Agreement, dated as of July 11, 1995, among Loans, L.P., Fleet National Bank, as Agent and as
                 Lender, and NationsBank of Texas, N.A., as Lender.

         10.4(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.

         10.5(3) Conveyance and Indemnification Agreement, dated December 23, 1996, between FDIC-Corporate, the FDIC-
                 Receivers, FCLT Loans, L.P. and the Trust.

         10.6(3) Termination Agreement, dated March 24, 1997, by and between FirstCity and the Trust.
                                                                                                     

         10.7    New Special Preferred Stock Distribution Agreement, dated June 30, 1997, by and between FirstCity and
                 the Trust.

         21.1(1) Subsidiaries of the Trust.

         27.1    Financial Data Schedule.
</TABLE>

---------------
         (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 filed with the
                 Securities and Exchange Commission on March 28, 1997 and
                 incorporated herein by reference.