First City Bancorporation of Texas died a couple of times with its boots on, most recently via bankruptcy in 1992, four years after it was recapitalized by an investor group led by noted banker A. Robert Abboud. But the company lives on under another name, FirstCity Financial Corp., which is eschewing the banking business. That's probably just as well, since it managed the ignoble distinction of going belly-up twice.

Houston-based FirstCity recently purchased Diversified Financial Systems, an Indiana-based company specializing in the acquisition and disposition of distressed loans and related assets, and an affiliate, Diversified Performing Assets. Diversified has assets of about $70 million and holds servicing rights on another S25 million in loans.

FirstCity president and chief operating officer James T. Sartain says the deal -further enhances FirstCity's position as a significant player in the distressed asset industry." One of the company's chief goals, he adds, is to grow through acquisitions in the troubled-asset area.

When First City Bancorp. emerged from bankruptcy reorganization several months ago. the new entity, First City Financial, dropped all claims the old entity had against the Federal Deposit Insurance Corp., which it charged had seized it prematurely three years ago. In return, FirstCity won release of $300 million in cash and other assets - money it used to acquire distressed assets from two other Texas banks, pay off bondholders and rejoin the living.

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