##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 
 (Mark one)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from ______ to ______
 Commission file number: 333-126538
 
 TRIAD FINANCIAL CORPORATION
 (Exact name of registrant as specified in its charter)
 
 California(State of Incorporation)
    
    33-0356705(IRS Employer Identification No)7711 Center Avenue, Suite 200
Huntington Beach, California(Address of principal executive offices)
    
    92647(Zip Code)
 (714) 373-8300  (Registrants telephone number, including area code)
 
 þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
 o þ




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##### 



TRIAD FINANCIAL CORPORATION
INDEX TO FORM 10-Q
 PagePART I
    
    FINANCIAL INFORMATIONITEM 1.
    
    FINANCIAL STATEMENTS
    
    
    2CONSOLIDATED BALANCE SHEETS
    
    
    2CONSOLIDATED STATEMENTS OF OPERATIONS
    
    
    3CONSOLIDATED STATEMENTS OF CASH FLOWS
    
    
    4NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    
    
    5ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
    
    
    24ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    42ITEM 4.
    
    CONTROLS AND PROCEDURES
    
    
    43PART II
    
    OTHER INFORMATIONITEM 1.
    
    LEGAL PROCEEDINGS
    
    
    43ITEM 1A.
    
    RISK FACTORS
    
    
    44ITEM 2.
    
    UNREGISTERED SALES OF EQUITY SECUITIES AND USE OF PROCEEDS
    
    
    44ITEM 3.
    
    DEFAULTS UPON SENIOR SECURITIES
    
    
    44ITEM 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    44ITEM 5.
    
    OTHER INFORMATION
    
    
    44ITEM 6.
    

EXHIBIT
    
    
    45SIGNATURES
    
    
    48EXHIBIT 10.9EXHIBIT 10.10EXHIBIT 10.16EXHIBIT 10.17EXHIBIT 10.18EXHIBIT 10.19EXHIBIT 10.24EXHIBIT 10.25EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32
  ii




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Forward-Looking Statements
  
    
    our ability to make payments of principal and interest on, or refinance, our substantial
indebtedness;
    
    our reliance on our residual and other borrowing facilities and credit enhancement
arrangements;
    
    our ability to generate significant amounts of cash to service our debt and fund our
operations;
    
    loss of contractual servicing rights;
    
    general economic and business conditions, including wholesale auction values and interest
rates;
    
    our exposure to the risk of increases in defaults and prepayments of contracts
purchased and held by us;
    
    changes in the delinquency, default and loss rates on the receivables included in each
securitization trust;
    
    the high degree of risk associated with non-prime borrowers; and
    
    our ability to maintain the material licenses and permits required for our operations.
  1




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Part I. FINANCIAL INFORMATION
 
 Item 1. FINANCIAL STATEMENTS
 
 TRIAD FINANCIAL CORPORATION
Consolidated Balance Sheets
 June 30, 2008
    
    
    December 31, 2007(Unaudited)(Dollars in thousands)ASSETSCash and cash equivalents
    
    $
    44,102
    
    
    $
    52,505Cash  restricted
    
    
    270,626
    
    
    
    295,786Finance receivables held for investment, net
    
    
    2,567,915
    
    
    
    3,514,979Retained interest in securitized assets, net
    
    
    
    
    
    
    10,916Accounts receivable, net
    
    
    34,854
    
    
    
    46,965Fixed assets, net of accumulated depreciation of $26,864 in
2008 and $23,235 in 2007
    
    
    10,670
    
    
    
    15,222Collateral held for resale, net
    
    
    19,457
    
    
    
    29,383Capitalized financing costs, net of accumulated amortization
of $16,220 in 2008 and $13,369 in 2007
    
    
    8,451
    
    
    
    11,532Deferred tax asset, net
    
    
    56,119
    
    
    
    89,028Goodwill
    
    
    
    
    
    
    30,446Taxes receivable
    
    
    12,502
    
    
    
    8,054Other assets
    
    
    5,521
    
    
    
    2,736Total assets
    
    $
    3,030,217
    
    
    $
    4,107,552LIABILITIES AND STOCKHOLDERS EQUITYLiabilitiesRevolving credit facilities
    
    $
    
    
    
    $
    334,390Securitization notes payable
    
    
    2,506,159
    
    
    
    3,195,489Senior notes payable
    
    
    149,304
    
    
    
    149,256Other liabilities
    
    
    67,734
    
    
    
    71,826Total liabilities
    
    
    2,723,197
    
    
    
    3,750,961Commitments and contingencies (Note 12)Stockholders EquityCommon stock, no par value; authorized 9,069 shares; issued
and outstanding 9,069 shares at June 30, 2008 and December
31, 2007
    
    
    
    
    
    
    Additional paid in capital
    
    
    345,000
    
    
    
    345,000Retained (deficit) earnings
    
    
    (37,980
    )
    
    
    9,690Accumulated other comprehensive income
    
    
    
    
    
    
    1,901Total stockholders equity
    
    
    307,020
    
    
    
    356,591Total liabilities and stockholders equity
    
    $
    3,030,217
    
    
    $
    4,107,552
  2




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TRIAD FINANCIAL CORPORATION
Consolidated Statements of Operations
 Three Months
    
    
    Three Months
    
    
    Six Months
    
    
    Six MonthsEnded
    
    
    Ended
    
    
    Ended
    
    
    EndedJune 30, 2008
    
    
    June 30, 2007
    
    
    June 30, 2008
    
    
    June 30, 2007(Dollars in thousands)(Unaudited)Financing and other interest income
    
    $
    127,171
    
    
    $
    158,174
    
    
    $
    269,240
    
    
    $
    319,704Interest expense
    
    
    49,395
    
    
    
    55,711
    
    
    
    99,467
    
    
    
    110,574Net interest margin
    
    
    77,776
    
    
    
    102,463
    
    
    
    169,773
    
    
    
    209,130Provision for credit losses
    
    
    41,504
    
    
    
    60,225
    
    
    
    88,082
    
    
    
    122,855Net interest margin after
provision for credit losses
    
    
    36,272
    
    
    
    42,238
    
    
    
    81,691
    
    
    
    86,275Servicing income
    
    
    1,304
    
    
    
    2,071
    
    
    
    2,006
    
    
    
    5,048Other income
    
    
    13,122
    
    
    
    6,893
    
    
    
    2,761
    
    
    
    9,552Total other revenues
    
    
    14,426
    
    
    
    8,964
    
    
    
    4,767
    
    
    
    14,600Operating expenses:Compensation and employee
benefits
    
    
    24,573
    
    
    
    22,905
    
    
    
    46,123
    
    
    
    43,657Occupancy and equipment
    
    
    9,337
    
    
    
    3,907
    
    
    
    13,003
    
    
    
    8,049Systems and data processing
    
    
    2,887
    
    
    
    3,291
    
    
    
    6,181
    
    
    
    6,628Professional services
    
    
    4,260
    
    
    
    1,073
    
    
    
    6,178
    
    
    
    2,607Advertising
    
    
    1,678
    
    
    
    1,143
    
    
    
    2,610
    
    
    
    1,922Telecommunications
    
    
    864
    
    
    
    872
    
    
    
    1,735
    
    
    
    1,818Impairment charge on goodwill
    
    
    30,446
    
    
    
    
    
    
    
    30,446
    
    
    
    Other
    
    
    3,887
    
    
    
    3,045
    
    
    
    6,318
    
    
    
    6,525Total operating expenses
    
    
    77,932
    
    
    
    36,236
    
    
    
    112,594
    
    
    
    71,206(Loss) income before income taxes
    
    
    (27,234
    )
    
    
    14,966
    
    
    
    (26,136
    )
    
    
    29,669Provision for income taxes
    
    
    (21,365
    )
    
    
    (6,271
    )
    
    
    (21,534
    )
    
    
    (12,040
    )Net (loss) income
    
    $
    (48,599
    )
    
    $
    8,695
    
    
    $
    (47,670
    )
    
    $
    17,629
  3




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TRIAD FINANCIAL CORPORATION
Consolidated Statements of Cash Flows
 Six Months Ended
    
    
    Six Months EndedJune 30, 2008
    
    
    June 30, 2007(Dollars in thousands)(Unaudited)Cash flows from operating activitiesNet (loss) income
    
    $
    (47,670
    )
    
    $
    17,629Adjustments to reconcile net (loss) income to
net cash provided by operating activities:Depreciation and amortization
    
    
    11,426
    
    
    
    14,450Provision for credit losses
    
    
    88,082
    
    
    
    122,855Deferred income tax expense (benefit)
    
    
    34,149
    
    
    
    (16,758
    )Impairment of goodwill
    
    
    30,446
    
    
    
    Accretion of present value discount
    
    
    (4,410
    )
    
    
    (10,396
    )Amortization of purchase premium
    
    
    11,086
    
    
    
    17,620Loss on repurchase of receivables from gain
on sale trusts
    
    
    3,040
    
    
    
    2,864Loss on write-down of fixed assets
    
    
    3,375
    
    
    
    Loss on sale of receivables
    
    
    762
    
    
    
    Changes in operating assets and liabilitiesAccounts receivable
    
    
    6,849
    
    
    
    7,072Other assets
    
    
    (2,785
    )
    
    
    (2,192
    )Other liabilities
    
    
    (5,247
    )
    
    
    424Current tax receivable/payable
    
    
    (4,448
    )
    
    
    6,333Net cash provided by operating activities
    
    
    124,655
    
    
    
    159,901Cash flows from investing activitiesDistributions from gain on sale trusts
    
    
    28,032
    
    
    
    61,915Payments to Ford Motor Credit
    
    
    (14,511
    )
    
    
    Repurchases from gain on sale trusts
    
    
    (69,746
    )
    
    
    (93,712
    )Purchases of finance receivables held for
investment
    
    
    (352,017
    )
    
    
    (669,098
    )Sale of finance receivables
    
    
    615,263
    
    
    
    Collections on finance receivables held
for investment
    
    
    661,412
    
    
    
    762,467Change in restricted cash
    
    
    25,160
    
    
    
    (36,769
    )Purchases of fixed assets
    
    
    (2,452
    )
    
    
    (1,636
    )Net cash provided by investing activities
    
    
    891,141
    
    
    
    23,167Cash flows from financing activitiesNet change in warehouse credit facilities
    
    
    (280,390
    )
    
    
    (191,578
    )Net change in residual credit facilities
    
    
    (54,000
    )
    
    
    (35,000
    )Issuance of securitization notes
    
    
    
    
    
    
    775,100Payment on securitization notes
    
    
    (689,330
    )
    
    
    (697,152
    )Capitalized finance costs
    
    
    (479
    )
    
    
    (2,508
    )Redemption of preferred stock
    
    
    
    
    
    
    (30,000
    )Net cash used in financing activities
    
    
    (1,024,199
    )
    
    
    (181,138
    )Net (decrease) increase in cash and cash
equivalents
    
    
    (8,403
    )
    
    
    1,930Cash and cash equivalentsBeginning of period
    
    
    52,505
    
    
    
    60,367End of period
    
    $
    44,102
    
    
    $
    62,297Non-cash ActivityPreferred Stock dividend declared
    
    $
    
    
    
    $
    788Supplemental DisclosureInterest paid
    
    $
    103,682
    
    
    $
    111,553Income taxes (received) paid
    
    $
    (9,103
    )
    
    $
    22,468
  4




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Triad Financial Corporation
 Notes to Consolidated Financial Statements
 1. Organization and Nature of Business
         2. Accounting Policies
 Basis of Presentation
  5




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Cash Equivalents
  Restricted Cash
  Finance Receivables
    Sale of Receivables
   6




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Allowance for Credit Losses
   Charge-Off Policy
  Derivative Financial Instruments
 ,
 Fair Value Disclosures
  7




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
    
    Level 1 Inputs  Unadjusted quoted prices in active markets for identical assets or
liabilities that the reporting entity has the ability to access at the measurement date.
    
    Level 2 Inputs  Inputs other than quoted prices included in Level 1 that are observable
for the asset or liability, either directly or indirectly. These include quoted prices for similar
assets or liabilities in active markets, quoted prices for identical or similar assets or
liabilities in markets that are not active, inputs other than quoted prices that are observable
for the asset or liability (for example, interest rates, volatilities, prepayment speeds, loss
severities, credit risks and default rates) or inputs that are derived principally from or
corroborated by observable market data by correlation or other means.
    
    Level 3 Inputs  Significant unobservable inputs that reflect an entitys own assumptions
that market participants would use in pricing the assets or liabilities.
   Fair Value Measurement at June 30, 2008Level 1
    
    Level 2
    
    Level 3
    
    Total FairInputs
    
    Inputs
    
    Inputs
    
    Value(Dollars in thousands)Derivative financial instruments
    
    $
    
    
    
    $
    (11,413
    )
    
    $
    
    
    
    $
    (11,413
    )
 8




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Fixed Assets
   Equipment
    
    3-5 yearsSoftware
    
    3-5 yearsFurniture and fixtures
    
    5 years
    Goodwill
   Income Taxes
  9




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Stock-Based Compensation
  Use of Estimates
  3. Finance Receivables
  2008
    
    
    2007(Dollars in thousands)Finance receivables held for investment
    
    $
    2,310,644
    
    
    $
    3,124,036Premiums and discounts, net
    
    
    (2,959
    )
    
    
    (3,592
    )Deferred costs, net
    
    
    18,951
    
    
    
    25,767Finance receivables held for investment, gross
    
    
    2,326,636
    
    
    
    3,146,211Allowance for credit losses
    
    
    (169,840
    )
    
    
    (230,500
    )Finance receivables held for investment, net
    
    
    2,156,796
    
    
    
    2,915,711Predecessor finance receivables held for investment, net
    
    
    344,665
    
    
    
    475,296Finance receivables repurchased from gain on sale trusts, net
    
    
    66,454
    
    
    
    123,972Finance receivables, net
    
    $
    2,567,915
    
    
    $
    3,514,979
 10




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Contractual
    
    
    Nonaccretable
    
    
    Expected
    
    
    Accretable
    
    
    CarryingPayments
    
    
    Discount
    
    
    Payments
    
    
    Discount
    
    
    Value(Dollars in thousands)Balance, December 31, 2007
    
    $
    639,854
    
    
    $
    (105,391
    )
    
    $
    534,463
    
    
    $
    (59,167
    )
    
    $
    475,296Interest income
    
    
    (35,082
    )
    
    
    
    
    
    
    (35,082
    )
    
    
    25,493
    
    
    
    (9,589
    )Sale of receivables
    
    
    (375
    )
    
    
    48
    
    
    
    (327
    )
    
    
    (15
    )
    
    
    (342
    )Principal collections
    
    
    (120,700
    )
    
    
    
    
    
    
    (120,700
    )
    
    
    
    
    
    
    (120,700
    )Charge-offs, net of sales proceeds and recoveries
    
    
    (18,388
    )
    
    
    18,388
    
    
    
    
    
    
    
    
    
    
    
    Reclassifications
    
    
    
    
    
    
    11,868
    
    
    
    11,868
    
    
    
    (11,868
    )
    
    
    Change in cash flows
    
    
    (8,662
    )
    
    
    8,662
    
    
    
    
    
    
    
    
    
    
    
    Balance, June 30, 2008
    
    $
    456,647
    
    
    $
    (66,425
    )
    
    $
    390,222
    
    
    $
    (45,557
    )
    
    $
    344,665
 Contractual
    
    
    Nonaccretable
    
    
    Expected
    
    
    Accretable
    
    
    CarryingPayments
    
    
    Discount
    
    
    Payments
    
    
    Discount
    
    
    Value(Dollars in thousands)Balance, December 31, 2006
    
    $
    1,246,836
    
    
    $
    (253,238
    )
    
    $
    993,598
    
    
    $
    (144,352
    )
    
    $
    849,246Interest income
    
    
    (63,537
    )
    
    
    
    
    
    
    (63,537
    )
    
    
    48,034
    
    
    
    (15,503
    )Principal collections
    
    
    (194,368
    )
    
    
    
    
    
    
    (194,368
    )
    
    
    
    
    
    
    (194,368
    )Charge-offs, net of sales proceeds and recoveries
    
    
    (25,057
    )
    
    
    25,057
    
    
    
    
    
    
    
    
    
    
    
    Reclassifications
    
    
    
    
    
    
    1,817
    
    
    
    1,817
    
    
    
    (1,817
    )
    
    
    Change in cash flows
    
    
    (36,975
    )
    
    
    36,975
    
    
    
    
    
    
    
    
    
    
    
    Balance, June 30, 2007
    
    $
    926,899
    
    
    $
    (189,389
    )
    
    $
    737,510
    
    
    $
    (98,135
    )
    
    $
    639,375
  Contractual
    
    
    Nonaccretable
    
    
    Expected
    
    
    Accretable
    
    
    CarryingPayments
    
    
    Discount
    
    
    Payments
    
    
    Discount
    
    
    Value(Dollars in thousands)Balance, December 31, 2007
    
    $
    145,125
    
    
    $
    (12,852
    )
    
    $
    132,273
    
    
    $
    (8,301
    )
    
    $
    123,972Finance receivables repurchased
    
    
    80,191
    
    
    
    (7,471
    )
    
    
    72,720
    
    
    
    (5,565
    )
    
    
    67,155Interest income
    
    
    (8,839
    )
    
    
    
    
    
    
    (8,839
    )
    
    
    7,342
    
    
    
    (1,497
    )Sale of receivables
    
    
    (66,005
    )
    
    
    6,578
    
    
    
    (59,427
    )
    
    
    4,525
    
    
    
    (54,902
    )Principal collections
    
    
    (68,274
    )
    
    
    
    
    
    
    (68,274
    )
    
    
    
    
    
    
    (68,274
    )Charge-offs, net of sales proceeds and recoveries
    
    
    (1,622
    )
    
    
    1,622
    
    
    
    
    
    
    
    
    
    
    
    Reclassifications
    
    
    
    
    
    
    5,935
    
    
    
    5,935
    
    
    
    (5,935
    )
    
    
    Change in cash flows
    
    
    (21
    )
    
    
    21
    
    
    
    
    
    
    
    
    
    
    
    Balance, June 30, 2008
    
    $
    80,555
    
    
    $
    (6,167
    )
    
    $
    74,388
    
    
    $
    (7,934
    )
    
    $
    66,454
 11




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Contractual
    
    
    Nonaccretable
    
    
    Expected
    
    
    Accretable
    
    
    CarryingPayments
    
    
    Discount
    
    
    Payments
    
    
    Discount
    
    
    Value(Dollars in thousands)Balance, December 31, 2006
    
    $
    70,453
    
    
    $
    (4,137
    )
    
    $
    66,316
    
    
    $
    (3,657
    )
    
    $
    62,659Finance receivables repurchased
    
    
    103,295
    
    
    
    (8,011
    )
    
    
    95,284
    
    
    
    (5,795
    )
    
    
    89,489Interest income
    
    
    (9,420
    )
    
    
    
    
    
    
    (9,420
    )
    
    
    7,304
    
    
    
    (2,116
    )Principal collections
    
    
    (63,340
    )
    
    
    
    
    
    
    (63,340
    )
    
    
    
    
    
    
    (63,340
    )Charge-offs, net of sales proceeds and recoveries
    
    
    (2,155
    )
    
    
    2,155
    
    
    
    
    
    
    
    
    
    
    
    Reclassifications
    
    
    
    
    
    
    4,180
    
    
    
    4,180
    
    
    
    (4,180
    )
    
    
    Change in cash flows
    
    
    2,279
    
    
    
    (2,279
    )
    
    
    
    
    
    
    
    
    
    
    Balance, June 30, 2007
    
    $
    101,112
    
    
    $
    (8,092
    )
    
    $
    93,020
    
    
    $
    (6,328
    )
    
    $
    86,692
  4. Allowance For Credit Losses
  Three Months
    
    
    Three MonthsEnded
    
    
    EndedJune 30,
    
    
    June 30,2008
    
    
    2007(Dollars in thousands)Balance, beginning of period
    
    $
    206,705
    
    
    $
    208,077Receivables sold
    
    
    (22,504
    )
    
    
    Provision for credit losses
    
    
    41,504
    
    
    
    60,225Charge-offs
    
    
    (64,945
    )
    
    
    (55,018
    )Recoveries
    
    
    9,080
    
    
    
    6,217Balance, end of period
    
    $
    169,840
    
    
    $
    219,501
 Six Months
    
    
    Six MonthsEnded
    
    
    EndedJune 30,
    
    
    June 30,2008
    
    
    2007(Dollars in thousands)Balance, beginning of period
    
    $
    230,500
    
    
    $
    195,000Receivables sold
    
    
    (22,504
    )
    
    
    Provision for credit losses
    
    
    88,082
    
    
    
    122,855Charge-offs
    
    
    (145,656
    )
    
    
    (109,846
    )Recoveries
    
    
    19,418
    
    
    
    11,492Balance, end of period
    
    $
    169,840
    
    
    $
    219,501
   12




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##### Table of Contents



5. Sales of Receivables
 Servicing Portfolio
  Three Months
    
    
    Three MonthsEnded
    
    
    EndedJune 30,
    
    
    June 30,2008
    
    
    2007(Dollars in thousands)Balance, beginning of period
    
    $
    75,638
    
    
    $
    322,579Receivables called
    
    
    (69,746
    )
    
    
    Collections and charge-offs
    
    
    (5,892
    )
    
    
    (52,671
    )Balance, end of period
    
    $
    
    
    
    $
    269,908
 Six Months
    
    
    Six MonthsEnded
    
    
    EndedJune 30,
    
    
    June 30,2008
    
    
    2007(Dollars in thousands)Balance, beginning of period
    
    $
    94,097
    
    
    $
    484,818Receivables called
    
    
    (69,746
    )
    
    
    (93,712
    )Collections and charge-offs
    
    
    (24,351
    )
    
    
    (121,198
    )Balance, end of period
    
    $
    
    
    
    $
    269,908
   Retained Interest in Securitized Assets
  2008
    
    
    2007(Dollars in thousands)Restricted cash held for the benefit of securitizations
    
    $
    
    
    
    $
    14,731Overcollaterization receivable
    
    
    
    
    
    
    12,233Interest-only
    
    
    
    
    
    
    (447
    )Retained interest in securitized assets, gross
    
    
    
    
    
    
    26,517Payable to Ford Credit
    
    
    
    
    
    
    (15,601
    )Retained interest in securitized assets, net
    
    $
    
    
    
    $
    10,916
 13




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##### Table of Contents



Retained
    
    
    
    
    
    
    RetainedInterest
    
    
    
    
    
    
    Interest inRestricted
    
    
    Over-
    
    
    Interest-
    
    
    in Securitized
    
    
    Payable to
    
    
    SecuritizedCash
    
    
    Collateralization
    
    
    Only
    
    
    Assets, Gross
    
    
    Ford Credit
    
    
    Assets, Net(Dollars in thousands)Balance, December 31, 2007
    
    $
    14,731
    
    
    $
    12,233
    
    
    $
    (447
    )
    
    $
    26,517
    
    
    $
    (15,601
    )
    
    $
    10,916Distributions
    
    
    
    
    
    
    (2,400
    )
    
    
    172
    
    
    
    (2,228
    )
    
    
    
    
    
    
    (2,228
    )Residual interest income
    
    
    
    
    
    
    
    
    
    
    1,053
    
    
    
    1,053
    
    
    
    
    
    
    
    1,053Unrealized losses
    
    
    
    
    
    
    
    
    
    
    (236
    )
    
    
    (236
    )
    
    
    118
    
    
    
    (118
    )Payment to Ford Credit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,341
    
    
    
    1,341Balance, March 31, 2008
    
    $
    14,731
    
    
    $
    9,833
    
    
    $
    542
    
    
    $
    25,106
    
    
    $
    (14,142
    )
    
    $
    10,964Distributions
    
    
    (14,731
    )
    
    
    (9,833
    )
    
    
    (1,240
    )
    
    
    (25,804
    )
    
    
    
    
    
    
    (25,804
    )Residual interest income
    
    
    
    
    
    
    
    
    
    
    3,357
    
    
    
    3,357
    
    
    
    
    
    
    
    3,357Realized gains (losses)
    
    
    
    
    
    
    
    
    
    
    363
    
    
    
    363
    
    
    
    (182
    )
    
    
    181Unrealized losses
    
    
    
    
    
    
    
    
    
    
    (3,022
    )
    
    
    (3,022
    )
    
    
    
    
    
    
    (3,022
    )Payment to Ford Credit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,170
    
    
    
    13,170Transfer to other liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,154
    
    
    
    1,154Balance, June 30, 2008
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
 Retained
    
    
    
    
    
    
    RetainedInterest
    
    
    
    
    
    
    Interest inRestricted
    
    
    Over-
    
    
    Interest-
    
    
    in Securitized
    
    
    Payable to
    
    
    SecuritizedCash
    
    
    Collateralization
    
    
    Only
    
    
    Assets, Gross
    
    
    Ford Credit
    
    
    Assets, Net(Dollars in thousands)Balance, December 31, 2006
    
    $
    57,751
    
    
    $
    63,026
    
    
    $
    2,257
    
    
    $
    123,034
    
    
    $
    (20,503
    )
    
    $
    102,531Distributions
    
    
    (22,526
    )
    
    
    (21,091
    )
    
    
    (5,442
    )
    
    
    (49,059
    )
    
    
    
    
    
    
    (49,059
    )Residual interest income
    
    
    
    
    
    
    
    
    
    
    6,795
    
    
    
    6,795
    
    
    
    (583
    )
    
    
    6,212Realized losses
    
    
    
    
    
    
    
    
    
    
    (311
    )
    
    
    (311
    )
    
    
    156
    
    
    
    (155
    )Unrealized losses
    
    
    
    
    
    
    
    
    
    
    (1,797
    )
    
    
    (1,797
    )
    
    
    (589
    )
    
    
    (2,386
    )Balance, March 31, 2007
    
    $
    35,225
    
    
    $
    41,935
    
    
    $
    1,502
    
    
    $
    78,662
    
    
    $
    (21,519
    )
    
    $
    57,143Distributions
    
    
    
    
    
    
    (6,847
    )
    
    
    (6,009
    )
    
    
    (12,856
    )
    
    
    
    
    
    
    (12,856
    )Residual interest income
    
    
    
    
    
    
    
    
    
    
    5,056
    
    
    
    5,056
    
    
    
    (872
    )
    
    
    4,184Unrealized gains
    
    
    
    
    
    
    
    
    
    
    197
    
    
    
    197
    
    
    
    (1,123
    )
    
    
    (926
    )Balance, June 30, 2007
    
    $
    35,225
    
    
    $
    35,088
    
    
    $
    746
    
    
    $
    71,059
    
    
    $
    (23,514
    )
    
    $
    47,545
 14




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6. Revolving Credit Facilities
  2008
    
    
    2007(Dollars in thousands)Warehouse loan facilities
    
    $
    
    
    
    $
    280,390Residual loan facility
    
    
    
    
    
    
    54,000Total revolving credit facilities
    
    $
    
    
    
    $
    334,390
        15




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16




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##### Table of Contents



7. Securitization Notes Payable
  OriginalWeighted
    
    
    Collateral
    
    
    NoteOriginal
    
    
    Average
    
    
    Pledged
    
    
    BalanceNote
    
    
    Interest
    
    
    at
    
    
    atTransaction
    
    Amount
    
    
    Rate
    
    
    June 30, 2008
    
    
    June 30, 2008(Dollars in thousands)2005-A, due June 12, 2012(a)
    
    $
    1,104,000
    
    
    
    4.09
    %
    
    $
    233,885
    
    
    $
    219,6812005-B, due April 12, 2013(a)
    
    
    905,303
    
    
    
    4.32
    %
    
    
    218,180
    
    
    
    204,2312006-A, due April 12, 2013(a)
    
    
    822,500
    
    
    
    4.88
    %
    
    
    293,491
    
    
    
    269,3022006-B, due November 12, 2012(a)
    
    
    915,500
    
    
    
    5.50
    %
    
    
    388,927
    
    
    
    358,3902006-C, due May 13, 2013(a)
    
    
    1,092,200
    
    
    
    5.37
    %
    
    
    555,720
    
    
    
    505,4902007-A, due February 12, 2014(a)
    
    
    775,110
    
    
    
    5.34
    %
    
    
    528,895
    
    
    
    474,1542007-B, due July 14, 2014(a)
    
    
    598,330
    
    
    
    5.70
    %
    
    
    538,284
    
    
    
    474,911$
    6,212,943
    
    
    
    
    
    
    $
    2,757,382
    
    
    $
    2,506,159
 
 (a)
    
    Maturity date represents final legal maturity of securitization notes payable. Securitization
notes payable are expected to be paid based on amortization of the finance receivables pledged
to the Trusts.     17




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##### Table of Contents



8. Senior Notes Payable
    9. Preferred Stock
   10. Derivative Financial Instruments
  11. Income Taxes
   18




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12. Commitments and Contingencies
        19




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##### Table of Contents



(Dollars in thousands)Year ending December 31,2008
    
    $
    1,5632009
    
    $
    3,3512010
    
    $
    3,4492011
    
    $
    2,5282012
    
    $
    2,148
 13. Comprehensive Income
  Six Months
    
    
    Six MonthsEnded
    
    
    EndedJune 30,
    
    
    June 30,2008
    
    
    2007(Dollars in thousands)Net income
    
    $
    (47,670
    )
    
    $
    17,047Other comprehensive income (loss), net
Unrealized holding (loss) gains on
available for sale securities
(net of tax of $45 and $676)
    
    
    (73
    )
    
    
    1,036Net unrealized holding gains reclassified
into earnings (net of tax of $1,194 and $1,985)
    
    
    (1,828
    )
    
    
    (3,039
    )Total other comprehensive loss, net
    
    
    (1,901
    )
    
    
    (2,003
    )Comprehensive income
    
    $
    (49,571
    )
    
    $
    15,044
  Six Months
    
    
    Six MonthsEnded
    
    
    EndedJune 30,
    
    
    June 30,2008
    
    
    2007(Dollars in thousands)Balance, beginning of period
    
    $
    1,901
    
    
    $
    9,084Current period change
    
    
    (1,901
    )
    
    
    (2,003
    )Balance, end of period
    
    $
    
    
    
    $
    7,081
 14. Stock-Based Compensation
   20




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Weighted-AverageExerciseShares
    
    
    Price(Amounts in thousands exceptweighted-averageexercise price )Outstanding at March 31, 2008
    
    
    2,847
    
    
    $
    7.68Canceled
    
    
    (345
    )
    
    
    7.51Forfeited
    
    
    (185
    )
    
    
    7.54Outstanding at June 30, 2008
    
    
    2,317
    
    
    $
    7.64Outstanding at December 31, 2007
    
    
    2,867
    
    
    $
    7.68Canceled
    
    
    (353
    )
    
    
    7.51Forfeited
    
    
    (197
    )
    
    
    7.54Outstanding at June 30, 2008
    
    
    2,317
    
    
    $
    7.64Exercisable at June 30, 2008
    
    
    1,546
    
    
    $
    7.58Weighted-average remaining
contractual life in years
    
    
    
    
    
    
    7.57Outstanding at March 31, 2007
    
    
    3,038
    
    
    $
    7.62Granted
    
    
    12
    
    
    
    8.33Canceled
    
    
    (75
    )
    
    
    7.55Forfeited
    
    
    
    
    
    
    Outstanding at June 30, 2007
    
    
    2,975
    
    
    $
    7.63Outstanding at December 31, 2006
    
    
    2,988
    
    
    $
    7.58Granted
    
    
    212
    
    
    
    8.30Canceled
    
    
    (75
    )
    
    
    7.55Forfeited
    
    
    (150
    )
    
    
    7.59Outstanding at June 30, 2007
    
    
    2,975
    
    
    $
    7.63
 15. Revised Quarterly Financial Data
  21




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##### Table of Contents



Three months Ended June 30, 2007
    
    
    Six months Ended June 30, 2007Reported
    
    
    Adjustment
    
    
    Revised
    
    
    Reported
    
    
    Adjustment
    
    
    Revised(Dollars in thousands)Financing and other interest income
    
    $
    158,174
    
    
    $
    
    
    
    $
    158,174
    
    
    $
    319,704
    
    
    $
    
    
    
    $
    319,704Interest expense
    
    
    55,711
    
    
    
    
    
    
    
    55,711
    
    
    
    110,574
    
    
    
    
    
    
    
    110,574Net interest margin
    
    
    102,463
    
    
    
    
    
    
    
    102,463
    
    
    
    209,130
    
    
    
    
    
    
    
    209,130Provision for credit losses
    
    
    60,225
    
    
    
    
    
    
    
    60,225
    
    
    
    122,855
    
    
    
    
    
    
    
    122,855Net interest margin after
provision for credit losses
    
    
    42,238
    
    
    
    
    
    
    
    42,238
    
    
    
    86,275
    
    
    
    
    
    
    
    86,275Servicing income
    
    
    2,071
    
    
    
    
    
    
    
    2,071
    
    
    
    5,048
    
    
    
    
    
    
    
    5,048Other income
    
    
    5,937
    
    
    
    956
    
    
    
    6,893
    
    
    
    8,596
    
    
    
    956
    
    
    
    9,552Total other revenues
    
    
    8,008
    
    
    
    956
    
    
    
    8,964
    
    
    
    13,644
    
    
    
    956
    
    
    
    14,600Operating expensesCompensation and employee benefits
    
    
    22,905
    
    
    
    
    
    
    
    22,905
    
    
    
    43,657
    
    
    
    
    
    
    
    43,657Occupancy and equipment
    
    
    3,907
    
    
    
    
    
    
    
    3,907
    
    
    
    8,049
    
    
    
    
    
    
    
    8,049System and data processing
    
    
    3,291
    
    
    
    
    
    
    
    3,291
    
    
    
    6,628
    
    
    
    
    
    
    
    6,628Professional services
    
    
    1,073
    
    
    
    
    
    
    
    1,073
    
    
    
    2,607
    
    
    
    
    
    
    
    2,607Telecommunications
    
    
    872
    
    
    
    
    
    
    
    872
    
    
    
    1,818
    
    
    
    
    
    
    
    1,818Advertising
    
    
    1,143
    
    
    
    
    
    
    
    1,143
    
    
    
    1,922
    
    
    
    
    
    
    
    1,922Other
    
    
    3,045
    
    
    
    
    
    
    
    3,045
    
    
    
    6,525
    
    
    
    
    
    
    
    6,525Total operating expenses
    
    
    36,236
    
    
    
    
    
    
    
    36,236
    
    
    
    71,206
    
    
    
    
    
    
    
    71,206Income before income taxes
    
    
    14,010
    
    
    
    956
    
    
    
    14,966
    
    
    
    28,713
    
    
    
    956
    
    
    
    29,669Provision for income taxes
    
    
    (5,897
    )
    
    
    (374
    )
    
    
    (6,271
    )
    
    
    (11,666
    )
    
    
    (374
    )
    
    
    (12,040
    )Net income
    
    $
    8,113
    
    
    $
    582
    
    
    $
    8,695
    
    
    $
    17,047
    
    
    $
    582
    
    
    $
    17,629
 22




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##### Table of Contents



At June 30, 2007Reported
    
    
    Adjustment
    
    
    Revised(Dollars in thousands)AssetsCash and cash equivalents
    
    $
    62,297
    
    
    $
    
    
    
    $
    62,297Cash  restricted
    
    
    310,828
    
    
    
    
    
    
    
    310,828Finance receivables held for
investment, net
    
    
    3,634,730
    
    
    
    
    
    
    
    3,634,730Retained interest in
securitized assets, net
    
    
    47,545
    
    
    
    
    
    
    
    47,545Account receivable, net
    
    
    43,846
    
    
    
    
    
    
    
    43,846Fixed assets, net of
accumulated depreciation
    
    
    15,948
    
    
    
    
    
    
    
    15,948Collateral held for resale
    
    
    15,275
    
    
    
    
    
    
    
    15,275Capitalized financing
costs, net of accumulated
amortization
    
    
    13,549
    
    
    
    
    
    
    
    13,549Deferred tax assets, net
    
    
    81,798
    
    
    
    (374
    )
    
    
    81,424Goodwill
    
    
    30,446
    
    
    
    
    
    
    
    30,446Other assets
    
    
    4,066
    
    
    
    956
    
    
    
    5,022Total assets
    
    $
    4,260,328
    
    
    $
    582
    
    
    $
    4,260,910LiabilitiesRevolving credit facilities
    
    
    302,553
    
    
    
    
    
    
    
    302,553Securitization notes payable
    
    
    3,336,163
    
    
    
    
    
    
    
    3,336,163Senior notes payable
    
    
    149,210
    
    
    
    
    
    
    
    149,210Taxes payable
    
    
    9,458
    
    
    
    
    
    
    
    9,458Other liabilities
    
    
    72,529
    
    
    
    
    
    
    
    72,529Total liabilities
    
    
    3,869,913
    
    
    
    
    
    
    
    3,869,913Stockholders EquityCommon stock
    
    
    
    
    
    
    
    
    
    
    Additional paid-in-capital
    
    
    345,000
    
    
    
    
    
    
    
    345,000Retained earnings
    
    
    38,334
    
    
    
    582
    
    
    
    38,916Accumulated other
comprehensive earnings
    
    
    7,081
    
    
    
    
    
    
    
    7,081Total stockholders equity
    
    
    390,415
    
    
    
    582
    
    
    
    390,997Total liabilities and
stockholders equity
    
    $
    4,260,328
    
    
    $
    582
    
    
    $
    4,260,910
 23




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 From June 1999 through April 29, 2005, the Company was a wholly owned subsidiary of Fairlane
Credit, LLC, a wholly-owned subsidiary of Ford Motor Credit Company, or Ford Credit. On April 29,
2005, a newly formed entity, Triad Holdings Inc. and its wholly-owned subsidiary, Triad Acquisition
Corp., acquired all of the outstanding capital stock of the Company from Fairlane Credit, LLC, or
the Acquisition. As part of the Acquisition, Triad Acquisition Corp. was merged with and into
Triad Financial Corporation with the Company being the surviving corporation.
 In accordance with the guidelines for accounting for business combinations, the purchase price
paid by Triad Holdings Inc. plus related purchase accounting adjustments have been pushed-down and
recorded in our financial statements for the period subsequent to April 29, 2005. This has resulted
in a new basis of accounting reflecting the fair market value of our assets and liabilities for the
successor period beginning April 30, 2005.
 The statements in the discussion and analysis regarding our expectations regarding the
performance of our business, our liquidity and capital resources and other non-historical
statements are forward-looking statements. These forward-looking statements are subject to numerous
risks and uncertainties. Our actual results may differ materially from those contained in or
implied by any of these forward-looking statements.
 General
      24




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##### Table of Contents



Critical Accounting Policies and Use of Estimates
  Components of Revenues and Expenses
   25




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##### Table of Contents



Results of Operations
 Three Months Ended June 30, 2008 as Compared to Three Months Ended June 30, 2007
  
    
    $32.0 million charge to establish valuation allowance against our gross deferred tax
assets;
    
    $30.4 million goodwill impairment charge;
    
    $9.2 million of expense related to shutdown of the Indirect (Dealer) originations
channel;
    
    $2.2 million of expense related to potential sale of the Direct originations
channel;
    
    $2.1 million of legal and professional fees related to termination of existing
warehouse and residual lending facilities and establishment of alternative funding
sources;
    
    $0.8 million loss on sale of a $632 million portfolio of loans; and
    
    $11.5 million in gains on our derivative financial instruments.
 Net Interest Margin
  For the Three Months EndedJune 30,2008
    
    
    2007(Dollars in thousands)Average owned finance receivables, carrying value
    
    $
    3,145,677
    
    
    $
    3,878,415
    26




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##### Table of Contents



For the Three Months EndedJune 30,2008
    
    
    2007(Dollars in thousands)Financing income
    
    $
    121,912
    
    
    $
    150,608Other interest income
    
    
    5,259
    
    
    
    7,566Interest expense
    
    
    (49,395
    )
    
    
    (55,711
    )Net interest margin
    
    $
    77,776
    
    
    $
    102,463Annualized financing income as a
percentage of average owned finance
receivables
    
    
    15.5
    %
    
    
    15.5
    %
      Provision for Credit Losses
  27




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##### Table of Contents



Servicing Income
  Other Income
  For the Three Months EndedJune 30,2008
    
    
    2007(Dollars in thousands)Customer fees
    
    $
    3,949
    
    
    $
    4,550Gains on derivative financial instruments
    
    
    11,501
    
    
    
    1,981Other
    
    
    (2,328
    )
    
    
    362Other income
    
    $
    13,122
    
    
    $
    6,893
     Expenses
  
    
    $4.2 million charge to compensation and employee benefits representing severance
payments to employees impacted by the shutdown of the Indirect (Dealer) origination channel
and potential sale of the Direct originations channel;
    
    $3.4 million charge to occupancy and equipment representing the write-off of certain
fixed assets as a result of the shutdown of the Indirect (Dealer) originations channel and
potential sale of the Direct originations channel;
 28




---



##### Table of Contents




    
    $2.6 million charge to occupancy and equipment representing an accrual for future excess
facility capacity resulting from the shutdown of the Indirect (Dealer) originations channel
and the sale of $632 million of receivables;
    
    $2.1 million charge to professional services representing legal and professional fees
incurred in the termination of existing warehouse and residual lending facilities and the
establishment of alternative funding sources;
    
    $30.4 million goodwill impairment charge; and
    
    $1.2 million charge to other expenses representing the write-off of certain other assets
as a result of the shutdown of the Indirect (Dealer) origination channel.
 Income Taxes
  Six Months Ended June 30, 2008 as Compared to Six Months Ended June 30, 2007
   
    
    $32.0 million charge to establish valuation allowance against our gross deferred tax
assets;
    
    $30.4 million goodwill impairment charge;
    
    $9.2 million of expense related to shutdown of the Indirect (Dealer) originations
channel;
    
    $2.2 million of expense related to potential sale of the Direct originations
channel;
    
    $2.1 million of legal and professional fees related to termination of existing
warehouse and residual lending facilities and establishment of alternative funding
sources;
    
    $0.8 million loss on sale of a $632 million portfolio of loans; and
    
    $3.5 million in losses on our derivative financial instruments.
 Net Interest Margin
  For the Six Months EndedJune 30,2008
    
    
    2007(Dollars in thousands)Average owned finance receivables, carrying value
    
    $
    3,387,876
    
    
    $
    3,906,566
  29




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##### Table of Contents



For the Six Months EndedJune 30,2008
    
    
    2007(Dollars in thousands)Financing income
    
    $
    260,109
    
    
    $
    302,804Other interest income
    
    
    9,131
    
    
    
    16,900Interest expense
    
    
    (99,467
    )
    
    
    (110,574
    )Net interest margin
    
    $
    169,773
    
    
    $
    209,130Annualized financing income as a
percentage of average owned finance
receivables
    
    
    15.4
    %
    
    
    15.5
    %
      30




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##### Table of Contents



Provision for Credit Losses
  Servicing Income
  Other Income
  For the Six Months EndedJune 30,2008
    
    
    2007(Dollars in thousands)Customer fees
    
    $
    8,252
    
    
    $
    10,533Losses on derivative financial instruments
    
    
    (3,468
    )
    
    
    1,174Other
    
    
    (2,023
    )
    
    
    (2,155
    )Other income
    
    $
    2,761
    
    
    $
    9,552
     31




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##### Table of Contents



Expenses
  
    
    $4.2 million charge to compensation and employee benefits representing severance
payments to employees impacted by the shutdown of the Indirect (Dealer) origination
channel and potential sale of the Direct originations channel;
    
    $3.4 million charge to occupancy and equipment representing the write-off of certain
fixed assets as a result of the shutdown of the Indirect (Dealer) originations channel
and potential sale of Direct originations channel;
    
    $2.6 million charge to occupancy and equipment representing an accrual for future
excess facility capacity resulting from the shutdown of the Indirect (Dealer)
originations channel and the sale of $632 million of receivables;
    
    $2.1 million charge to professional services representing legal and professional
fees incurred in the termination of existing warehouse and residual lending facilities
and the establishment of alternative funding sources;
    
    $30.4 million goodwill impairment charge; and
    
    $1.2 million charge to other expenses representing the write-off of certain other
assets as a result of the shutdown of the Indirect (Dealer) origination channel and
potential sale of the Direct originations channel.
 Income Taxes
  Credit Quality
    At June 30,
    
    
    At December 31,2008
    
    
    2007(Dollars in thousands)Finance receivables held for investment
    
    $
    2,310,644
    
    
    $
    3,124,036Allowance for credit losses
    
    
    (169,840
    )
    
    
    (230,500
    )Finance receivables held for investment, net of allowance
    
    
    2,140,804
    
    
    
    2,893,536Allowance for credit losses as a percentage of receivables
    
    
    7.4
    %
    
    
    7.4
    %Predecessor finance receivables held for investment, net
    
    
    344,665
    
    
    
    475,296Finance receivables repurchased from gain on sale trusts, net
    
    
    66,454
    
    
    
    123,972Total owned finance receivables held for investment, net
    
    $
    2,551,923
    
    
    $
    3,492,804
 32




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##### Table of Contents



At June 30,
    
    
    At December 31,2008
    
    
    2007Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent(Dollars in thousands)Delinquent contracts:31 to 60 days
    
    $
    271,915
    
    
    
    9.8
    %
    
    $
    377,862
    
    
    
    10.0
    %Greater than 60 days
    
    
    87,975
    
    
    
    3.2
    
    
    
    156,036
    
    
    
    4.1359,890
    
    
    
    13.0
    
    
    
    533,898
    
    
    
    14.1In repossession
    
    
    19,457
    
    
    
    0.7
    
    
    
    29,383
    
    
    
    0.8$
    379,347
    
    
    
    13.7
    %
    
    $
    563,281
    
    
    
    14.9
    %
     At June 30,
    
    At December 31,2008
    
    2007Percent
    
    PercentNever extended
    
    
    60.6
    %
    
    
    73.2
    %Extended:1-2 times
    
    
    38.2
    %
    
    
    26.1
    %3-4 times
    
    
    1.2
    %
    
    
    0.7
    %Total extended
    
    
    39.4
    %
    
    
    26.8
    %Total
    
    
    100.0
    %
    
    
    100.0
    %
  33




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##### Table of Contents



For the Three Months EndedJune 30,2008
    
    
    2007(Dollars in thousands)Repossession charge-offs
    
    $
    97,560
    
    
    $
    90,790Less: Sales proceeds and recoveries
    
    
    (56,398
    )
    
    
    (57,593
    )Mandatory charge-offs(1)
    
    
    21,194
    
    
    
    27,245Net charge-offs(2)
    
    $
    62,356
    
    
    $
    60,442Annualized net charge-offs as a percentage of average total
owned receivables outstanding
    
    
    7.9
    %
    
    
    6.6
    %Sales proceeds and recoveries as a percentage of charge-offs
    
    
    47.5
    %
    
    
    48.8
    %
 For the Six Months EndedJune 30,2008
    
    
    2007(Dollars in thousands)Repossession charge-offs
    
    $
    216,631
    
    
    $
    181,810Less: Sales proceeds and recoveries
    
    
    (126,604
    )
    
    
    (116,921
    )Mandatory charge-offs(1)
    
    
    56,221
    
    
    
    60,677Net charge-offs(2)
    
    $
    146,248
    
    
    $
    125,566Annualized net charge-offs as a percentage of average total
owned receivables outstanding
    
    
    8.6
    %
    
    
    6.4
    %Sales proceeds and recoveries as a percentage of charge-offs
    
    
    46.4
    %
    
    
    48.2
    %
 
 (1)
    
    Mandatory charge-offs represent accounts charged-off in full with no recovery amounts
realized at time of charge-off.(2)
    
    Net charge-offs for our owned portfolio include charge-offs from our finance
receivables held for investment, our predecessor finance receivables held for investment
and our finance receivables repurchased from gain on sale trusts.  34




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##### Table of Contents



Total Managed Information
     For the Three Months EndedJune 30,2008
    
    
    2007(Dollars in thousands)Average owned finance receivables, carrying value
    
    $
    3,145,677
    
    
    $
    3,878,415Average sold finance receivables
    
    
    36,132
    
    
    
    296,565Average total managed finance receivables
    
    $
    3,181,809
    
    
    $
    4,174,980
 For the Six Months EndedJune 30,2008
    
    
    2007(Dollars in thousands)Average owned finance receivables, carrying value
    
    $
    3,387,876
    
    
    $
    3,906,566Average sold finance receivables
    
    
    60,266
    
    
    
    348,810Average total managed finance receivables
    
    $
    3,448,142
    
    
    $
    4,255,376
 Total Managed Net Interest Margin
  For the Three Months EndedJune 30,2008
    
    
    2007(Dollars in thousands)Financing income and customer fees
    
    $
    133,072
    
    
    $
    175,606Interest expense
    
    
    (49,531
    )
    
    
    (56,730
    )Net interest margin
    
    $
    83,541
    
    
    $
    118,876
 35




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##### Table of Contents



For the Six Months EndedJune 30,2008
    
    
    2007(Dollars in thousands)Financing income and customer fees
    
    $
    283,985
    
    
    $
    359,145Interest expense
    
    
    (101,875
    )
    
    
    (115,268
    )Net interest margin
    
    $
    182,110
    
    
    $
    243,877
  For the Three Months EndedJune 30,2008
    
    
    2007(Dollars in thousands)Net margin as reflected on the consolidated statements of income
    
    $
    77,776
    
    
    $
    102,463Other interest income
    
    
    (5,259
    )
    
    
    (7,566
    )Financing revenue on sold receivables
    
    
    953
    
    
    
    11,853Interest expense on sold receivables
    
    
    (137
    )
    
    
    (2,044
    )Gains (losses) on forward starting swaps agreements
    
    
    
    
    
    
    1,025Premium amortization
    
    
    6,259
    
    
    
    8,595Customer fees
    
    
    3,949
    
    
    
    4,550Total managed net interest margin
    
    $
    83,541
    
    
    $
    118,876
 For the Six Months EndedJune 30,2008
    
    
    2007(Dollars in thousands)Net margin as reflected on the consolidated statements of income
    
    $
    169,773
    
    
    $
    209,130Other interest income
    
    
    (9,131
    )
    
    
    (16,900
    )Financing revenue on sold receivables
    
    
    4,538
    
    
    
    28,188Interest expense on sold receivables
    
    
    (653
    )
    
    
    (4,912
    )Gains (losses) on forward starting swaps agreements
    
    
    (1,755
    )
    
    
    218Premium amortization
    
    
    11,086
    
    
    
    17,620Customer fees
    
    
    8,252
    
    
    
    10,533Total managed net interest margin
    
    $
    182,110
    
    
    $
    243,877
  For the Three MonthsEndedJune 30,2008
    
    2007Annualized finance income and customer fees
    
    
    16.7
    %
    
    
    16.8
    %Annualized interest expense
    
    
    (6.2
    )
    
    
    (5.4
    )Annualized net interest margin as a percentage of average total managed receivables
    
    
    10.5
    %
    
    
    11.4
    %
 For the Six MonthsEndedJune 30,2008
    
    2007Annualized finance income and customer fees
    
    
    16.5
    %
    
    
    16.9
    %Annualized interest expense
    
    
    (5.9
    )
    
    
    (5.4
    )Annualized net interest margin as a percentage of average total managed receivables
    
    
    10.6
    %
    
    
    11.5
    %
 36




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##### Table of Contents



Total Managed Credit Quality
   At June 30, 2008Owned
    
    
    Sold
    
    
    Total Managed(Dollars in thousands)Owned finance receivables, unpaid principal balance
    
    $
    2,763,944
    
    
    $
    
    
    
    $
    2,763,944Sold finance receivables
    
    
    
    
    
    
    
    
    
    
    Total managed finance receivables
    
    $
    2,763,944
    
    
    $
    
    
    
    $
    2,763,944Number of outstanding contracts
    
    
    257,719
    
    
    
    
    
    
    
    257,719Average principal amount of outstanding contracts
(in dollars)
    
    $
    10,725
    
    
    $
    
    
    
    $
    10,725
 At December 31, 2007Owned
    
    
    Sold
    
    
    Total Managed(Dollars in thousands)Owned finance receivables, unpaid principal balance
    
    $
    3,774,481
    
    
    $
    
    
    
    $
    3,774,481Sold finance receivables
    
    
    
    
    
    
    94,097
    
    
    
    94,097Total managed finance receivables
    
    $
    3,774,481
    
    
    $
    94,097
    
    
    $
    3,868,578Number of outstanding contracts
    
    
    271,384
    
    
    
    11,886
    
    
    
    283,270Average principal amount of outstanding contracts
(in dollars)
    
    $
    13,908
    
    
    $
    7,917
    
    
    $
    13,657
  At June 30, 2008Owned
    
    
    Sold
    
    
    Total ManagedDelinquent contracts:
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent(Dollars in thousands)31 to 60 days
    
    $
    271,915
    
    
    
    9.8
    %
    
    $
    
    
    
    
    
    
    
    $
    271,915
    
    
    
    9.8
    %Greater than 60 days
    
    
    87,975
    
    
    
    3.2
    
    
    
    
    
    
    
    
    
    
    
    87,975
    
    
    
    3.2359,890
    
    
    
    13.0
    
    
    
    
    
    
    
    
    
    
    
    359,890
    
    
    
    13.0In repossession
    
    
    19,457
    
    
    
    0.7
    
    
    
    
    
    
    
    
    
    
    
    19,457
    
    
    
    0.7$
    379,347
    
    
    
    13.7
    %
    
    $
    
    
    
    
    
    
    
    $
    379,347
    
    
    
    13.7
    %
 37




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##### Table of Contents



At December 31, 2007Owned
    
    
    Sold
    
    
    Total ManagedDelinquent contracts:
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent(Dollars in thousands)31 to 60 days
    
    $
    377,862
    
    
    
    10.0
    %
    
    $
    12,599
    
    
    
    13.4
    %
    
    $
    390,461
    
    
    
    10.1
    %Greater than 60 days
    
    
    156,036
    
    
    
    4.1
    
    
    
    5,168
    
    
    
    5.5
    
    
    
    161,204
    
    
    
    4.2533,898
    
    
    
    14.1
    
    
    
    17,767
    
    
    
    18.9
    
    
    
    551,665
    
    
    
    14.3In repossession
    
    
    29,383
    
    
    
    0.8
    
    
    
    1,768
    
    
    
    1.9
    
    
    
    31,151
    
    
    
    0.8$
    563,281
    
    
    
    14.9
    %
    
    $
    19,535
    
    
    
    20.8
    %
    
    $
    582,816
    
    
    
    15.1
    %
     At June 30, 2008Owned
    
    Sold
    
    Total ManagedNever extended
    
    
    60.6
    %
    
    
    
    
    
    
    60.6
    %Extended:1-2 times
    
    
    38.2
    %
    
    
    
    
    
    
    38.2
    %3-4 times
    
    
    1.2
    %
    
    
    
    
    
    
    1.2
    %Total extended
    
    
    39.4
    %
    
    
    
    
    
    
    39.4
    %Total
    
    
    100.0
    %
    
    
    
    
    
    
    100.0
    %
 At December 31, 2007Owned
    
    Sold
    
    Total ManagedNever extended
    
    
    73.2
    %
    
    
    46.1
    %
    
    
    72.6
    %Extended:1-2 times
    
    
    26.1
    %
    
    
    47.3
    %
    
    
    26.6
    %3-4 times
    
    
    0.7
    %
    
    
    6.6
    %
    
    
    0.8
    %Total extended
    
    
    26.8
    %
    
    
    53.9
    %
    
    
    27.4
    %Total
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
  38




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##### Table of Contents



For the Three Months EndedJune 30,2008
    
    
    2007(Dollars in thousands)Owned:Repossession charge-offs
    
    $
    97,560
    
    
    $
    90,790Less: Sales proceeds and recoveries
    
    
    (56,398
    )
    
    
    (57,593
    )Mandatory charge-offs(1)
    
    
    21,194
    
    
    
    27,245Net charge-offs(2)
    
    $
    62,356
    
    
    $
    60,442Sold:Charge-offs
    
    $
    1,098
    
    
    $
    9,494Less: Sales proceeds and recoveries
    
    
    (623
    )
    
    
    (5,394
    )Mandatory charge-offs(1)
    
    
    
    
    
    
    Net charge-offs
    
    $
    475
    
    
    $
    4,100Total Managed:Repossession charge-offs
    
    $
    98,658
    
    
    $
    100,284Less: Sales proceeds and recoveries
    
    
    (57,021
    )
    
    
    (62,897
    )Mandatory charge-offs(1)
    
    
    21,194
    
    
    
    27,245Net charge-offs
    
    $
    62,831
    
    
    $
    64,542Annualized net charge-offs as a percentage of average total
managed receivables outstanding
    
    
    7.9
    %
    
    
    6.2
    %Sales proceeds and recoveries as a percentage of charge-offs
    
    
    47.6
    %
    
    
    49.4
    %
 
 (1)
    
    Mandatory charge-offs represent accounts charged-off in full with no recovery amounts
realized at time of charge-off.(2)
    
    Net charge-offs for our owned portfolio include charge-offs from our finance receivables
held for investment, our predecessor finance receivables held for investment and our finance
receivables repurchased from gain on sale trusts. 39




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##### Table of Contents



For the Six Months EndedJune 30,2008
    
    
    2007(Dollars in thousands)Owned:Repossession charge-offs
    
    $
    216,631
    
    
    $
    181,810Less: Sales proceeds and recoveries
    
    
    (126,604
    )
    
    
    (116,921
    )Mandatory charge-offs(1)
    
    
    56,221
    
    
    
    60,677Net charge-offs(2)
    
    $
    146,248
    
    
    $
    125,566Sold:Charge-offs
    
    $
    5,538
    
    
    $
    23,133Less: Sales proceeds and recoveries
    
    
    (2,686
    )
    
    
    (12,533
    )Mandatory charge-offs(1)
    
    
    
    
    
    
    Net charge-offs
    
    $
    2,852
    
    
    $
    10,600Total Managed:Repossession charge-offs
    
    $
    222,169
    
    
    $
    204,943Less: Sales proceeds and recoveries
    
    
    (129,290
    )
    
    
    (129,454
    )Mandatory charge-offs(1)
    
    
    56,221
    
    
    
    60,677Net charge-offs
    
    $
    149,100
    
    
    $
    136,166Annualized net charge-offs as a percentage of average total
managed receivables outstanding
    
    
    8.6
    %
    
    
    6.4
    %Sales proceeds and recoveries as a percentage of charge-offs
    
    
    46.4
    %
    
    
    48.7
    %
 
 (1)
    
    Mandatory charge-offs represent accounts charged-off in full with no recovery amounts
realized at time of charge-off.(2)
    
    Net charge-offs for our owned portfolio include charge-offs from our finance receivables
held for investment, our predecessor finance receivables held for investment and our finance
receivables repurchased from gain on sale trusts.  Liquidity and Capital Resources
 General
   40




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##### Table of Contents



41




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##### Table of Contents



Contractual and Long-Term Debt Obligations
  Securitizations
  Off-Balance Sheet Arrangements
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Interest Rate Risk
 General
  Borrowing and Residual Credit Facility
  42




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##### Table of Contents



Interest Rate Swap Agreements
  
 ITEM 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
   Changes in Internal Control over Financial Reporting
  
 PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
   43




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##### Table of Contents



ITEM 1A. RISK FACTORS
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5. OTHER INFORMATION
  44




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##### Table of Contents



ITEM 6. EXHIBITS
 EXHIBIT INDEX
 ExhibitNo.
    
    Description2.1
    
    Stock Purchase Agreement, dated as of December 23, 2004, among Triad
Holdings Inc., Triad Acquisition Corp. and Fairlane Credit LLC
(incorporated herein by reference to Exhibit 2.1 to the Registration
Statement on Form S-4/A of Triad Financial Corporation, filed on
November 15, 2005 (File No. 333-126538)).3.1
    
    Third Amended and Restated Articles of Incorporation of Triad Financial
Corporation. (incorporated herein by reference to Exhibit 3.1 on Form
10-Q of Triad Financial Corporation, filed on August 11, 2006 (File No.
333-65107)).3.2
    
    Third Amended and Restated Bylaws of Triad Financial Corporation
(incorporated herein by reference to Exhibit 3.2 to the Registration
Statement on Form S-4 of Triad Financial Corporation, filed on July 12,
2005 (File No. 333-126538)).4.1
    
    Indenture, dated as of April 29, 2005, among Triad Acquisition Corp. and
JPMorgan Chase Bank, N.A., as Trustee (incorporated herein by reference
to Exhibit 4.1 to the Registration Statement on Form S-4 of Triad
Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).4.2
    
    Supplemental Indenture, dated as of April 29, 2005, among Triad
Financial Corporation and JPMorgan Chase Bank, N.A., as Trustee
(incorporated herein by reference to Exhibit 4.2 to the Registration
Statement on Form S-4 of Triad Financial Corporation, filed on July 12,
2005 (File No. 333-126538)).4.3
    
    Exchange and Registration Rights Agreement, dated as of April 29, 2005,
among Triad Acquisition Corp. and Goldman, Sachs & Co., and Citigroup
Global Markets Inc., as representatives of the several Purchasers
(incorporated herein by reference to Exhibit 4.3 to the Registration
Statement on Form S-4 of Triad Financial Corporation, filed on July 12,
2005 (File No. 333-126538)).4.4
    
    Form of Senior Note (attached as exhibit to Exhibit 4.1).10.1
    
    Employment Agreement, dated as of April 29, 2005, between the Company
and James M. Landy (incorporated herein by reference to Exhibit 10.1 to
the Registration Statement on Form S-4 of Triad Financial Corporation,
filed on July 12, 2005 (File No. 333-126538)).*10.2
    
    Employment Agreement, dated as of November 11, 2005, between the Company
and Chris A. Goodman (incorporated herein by reference to Exhibit 10.2
on Form 10-K of Triad Financial Corporation, filed on March 31, 2006
(File No. 333-126538)) and Amended and Restated Employment Agreement,
dated as of August 1, 2007, between the Company and Chris A. Goodman
(incorporated herein by reference to Exhibit 10.2 on Form 10-K of Triad
Financial Corporation, filed on March 28, 2007 (File No. 333-126538)). *10.3
    
    Employment Agreement, dated as of February 15, 2007, between the Company
and David A. Satterfield. (incorporated herein by reference to Exhibit
10.3 on Form 10-K of Triad Financial Corporation, filed on March 28,
2007 (File No. 333-126538)). *10.4
    
    Consulting Agreement dated as of July 31, 2007, between the Company and
Carl B. Webb (incorporated herein by reference to Exhibit 10.15 on Form
10-Q of Triad Financial Corporation, filed on November 9, 2007 (File No.
333-65107)) and the First Amendment to the Consulting Agreement, dated
as of February 12, 2008, between the Company and Carl B. Webb
(incorporated herein by reference to Exhibit 10.4 on Form 10-K of Triad
Financial Corporation, filed on March 28, 2007 (File No. 333-126538)). *10.5
    
    Management Agreement, dated as of April 29, 2005, among the Company,
Triad Holdings, LLC, Triad Holdings Inc. and Hunters Glen/Ford Ltd
(incorporated herein by reference to Exhibit 10.2 to the Registration
Statement on Form S-4 of Triad Financial Corporation, filed on July 12,
2005 (File No. 333-126538)).10.6
    
    Warehouse Lending Agreement, dated as of April 29, 2005, among the
Company, Triad Financial Warehouse Special Purpose LLC, Triad Automobile
Receivables Warehouse Trust, JPMorgan Chase Bank, as Collection Account
Bank and Citigroup Global Markets Realty Corp., as lender (incorporated
herein by reference to Exhibit 10.3 to the Registration Statement on
Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File
No. 333-126538)).
 45




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##### Table of Contents



ExhibitNo.
    
    Description10.7
    
    Warehouse Lending Agreement, dated as of April 29, 2005, among the
Company, Triad Financial Warehouse Special Purpose LLC, Triad Automobile
Receivables Warehouse Trust, JPMorgan Chase Bank, as Collection Account
Bank and Goldman Sachs Mortgage Company, as lender (incorporated herein
by reference to Exhibit 10.4 to the Registration Statement on Form S-4
of Triad Financial Corporation, filed on July 12, 2005 (File No.
333-126538)).10.8
    
    Warehouse Lending Agreement, dated as of January 10, 2008, among the
Company, Triad Financial Warehouse Special Purpose LLC, Triad Automobile
Receivables Warehouse Trust, The Bank of New York, as Collection Account
Bank, Sheffield Receivables Corporation, as Class A Lender, and Barclays
Bank PLC, as Class B Lender and Agent (incorporated herein by reference
to Exhibit 10.8 on Form 10-K of Triad Financial Corporation, filed on
March 28, 2007 (File No. 333-126538)).10.9
    
    Termination Agreement, dated as of May 30, 2008, among the Company,
Triad Financial Warehouse Special Purpose LLC, Triad Automobile
Receivables Warehouse Trust, The Bank of New York, as Collection Account
Bank, Sheffield Receivables Corporation, as Class A Lender, and Barclays
Bank PLC, as Class B Lender and Agent. +10.10
    
    Termination Agreement, dated as of June 20, 2008, among the Company,
Triad Financial Residual Special Purpose LLC, as residual facility
borrower, Triad Automobile Receivables Warehouse Trust, as warehouse
facility borrower, Triad Financial Warehouse Special Purpose LLC, The
Bank of New York (as successor-in-interest to JPMorgan Chase Bank,
National Association), as Collection Account Bank, Systems and Services
Technologies, Inc., as a Backup Servicer, and Citigroup Global Markets
Realty Corp., as lender. +10.11
    
    Master Residual Loan Agreement, dated as of April 29, 2005, among Triad
Financial Residual Special Purpose LLC, JPMorgan Chase Bank, N.A., as
Collection Account Bank and Citigroup Global Markets Realty Corp
(incorporated herein by reference to Exhibit 10.5 to the Registration
Statement on Form S-4 of Triad Financial Corporation, filed on July 12,
2005 (File No. 333-126538)).10.12
    
    Master Residual Loan Agreement, dated as of April 29, 2005, among Triad
Financial Residual Special Purpose LLC, JPMorgan Chase Bank, N.A., as
Collection Account Bank and Goldman Sachs Mortgage Company (incorporated
herein by reference to Exhibit 10.6 to the Registration Statement on
Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File
No. 333-126538)).10.13
    
    Registration Rights Agreement dated as of April 29, 2005 among Triad
Holdings Inc. and certain holders of common stock (incorporated herein
by reference to Exhibit 10.7 to the Registration Statement on Form S-4
of Triad Financial Corporation, filed on July 12, 2005 (File No.
333-126538)).10.14
    
    Stockholders Agreement, dated as of April 29, 2005, among Triad Holdings
Inc., Triad Holdings, LLC and James M. Landy (incorporated herein by
reference to Exhibit 10.8 to the Registration Statement on Form S-4 of
Triad Financial Corporation, filed on July 12, 2005 (File No.
333-126538)).10.15
    
    Limited Liability Company Agreement of Triad Holdings, LLC (incorporated
herein by reference to Exhibit 10.9 to the Registration Statement on
Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File
No. 333-126538)).10.16
    
    Amended and Restated Limited Liability Company Agreement of Triad
Holdings, LLC dated June 17, 2008. +10.17
    
    Senior Unsecured Demand Promissory Note dated as of May 11, 2008, by the
Company in favor of Hunters Glen/Ford Ltd. +10.18
    
    Senior Unsecured Demand Promissory Note dated as of June 17, 2008, by
the Company in favor of Hunters Glen/Ford Ltd. +10.19
    
    Senior Unsecured Demand Promissory Note dated as of June 17, 2008, by
the Company in favor of GTCR Fund VIII, L.P. , GTCR Fund VIII/B, L.P.
and GTCR Co-Invest II, L.P. +10.20
    
    HFI Loan and Security Agreement, dated as of April 29, 2005, between the
Company and Ford Motor Credit Company (incorporated herein by reference
to Exhibit 10.10 to the Registration Statement on Form S-4 of Triad
Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
 46




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##### Table of Contents



ExhibitNo.
    
    Description10.21
    
    Carl B. Webb Compensation Arrangement (incorporated herein by reference
to Exhibit 10.11 to the Registration Statement on Form S-4 of Triad
Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).*10.22
    
    Amendment No. 2, dated as of March 15, 2007, to the Warehouse Lending
Agreement, dated as of April 29, 2005, among the Company, Triad
Financial Warehouse Special Purpose LLC, Triad Automobile Receivables
Warehouse Trust, The Bank of New York (as successor-in-interest to
JPMorgan Chase Bank, N.A.), as Collection Account Bank, and Citigroup
Global Markets Realty Corp., as lender (incorporated herein by reference
to Exhibit 10.1 on Form 8-K of Triad Financial Corporation, filed on
March 20, 2007 (File No. 333-65107)).10.23
    
    Amendment No. 1, dated as of March 15, 2007, to the Master Residual Loan
Agreement, dated as of April 29, 2005, among Triad Financial Residual
Special Purpose LLC, The Bank of New York (as successor-in-interest to
JPMorgan Chase Bank, N.A.), as Collection Account Bank, and Citigroup
Global Markets Realty Corp (incorporated herein by reference to Exhibit
10.2 on Form 8-K of Triad Financial Corporation, filed on March 20, 2007
(File No. 333-65107)).10.24
    
    Letter Agreement, dated as of May 6, 2008, with respect to the
Warehouse Lending Agreement, dated as of April 29, 2005, among the
Company, Triad Financial Warehouse Special Purpose LLC, Triad
Automobile Receivables Warehouse Trust, and Citigroup Global Markets
Realty Corp. +10.25
    
    Letter Agreement, dated as of May 6, 2008, with respect to the
Master Residual Loan Agreement, dated as of April 29, 2005, among
Triad Financial Residual Special Purpose LLC, and Citigroup Global
Markets Realty Corp. +21.1
    
    Subsidiaries of the Company (incorporated herein by reference to Exhibit
21.1 to the Registration Statement on Form S-4 of Triad Financial
Corporation, filed on July 12, 2005 (File No. 333-126538)).31.1
    
    Certification of Chief Executive Officer (Section 302 Certification)+31.2
    
    Certification of Principal Financial Officer (Section 302 Certification)+32.
    
    Certification of Periodic Financial Report (Section 906 Certification)+
 
 *
    
    Management contract or compensatory plan or arrangement.+
    
    Filed herewith 47




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##### Table of Contents



SIGNATURES
  Date: August 14, 2008
    
    /s/ Daniel D. LeonardDaniel D. LeonardPresident & Chief Executive OfficerDate: August 14, 2008
    
    /s/ Mike L. WilhelmsMike L. WilhelmsSenior Vice President & Chief Financial Officer 48




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNo.
    
    Description2.1
    
    Stock Purchase Agreement, dated as of December 23, 2004, among Triad
Holdings Inc., Triad Acquisition Corp. and Fairlane Credit LLC
(incorporated herein by reference to Exhibit 2.1 to the Registration
Statement on Form S-4/A of Triad Financial Corporation, filed on
November 15, 2005 (File No. 333-126538)).3.1
    
    Third Amended and Restated Articles of Incorporation of Triad Financial
Corporation. (incorporated herein by reference to Exhibit 3.1 on Form
10-Q of Triad Financial Corporation, filed on August 11, 2006 (File No.
333-65107)).3.2
    
    Third Amended and Restated Bylaws of Triad Financial Corporation
(incorporated herein by reference to Exhibit 3.2 to the Registration
Statement on Form S-4 of Triad Financial Corporation, filed on July 12,
2005 (File No. 333-126538)).4.1
    
    Indenture, dated as of April 29, 2005, among Triad Acquisition Corp. and
JPMorgan Chase Bank, N.A., as Trustee (incorporated herein by reference
to Exhibit 4.1 to the Registration Statement on Form S-4 of Triad
Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).4.2
    
    Supplemental Indenture, dated as of April 29, 2005, among Triad
Financial Corporation and JPMorgan Chase Bank, N.A., as Trustee
(incorporated herein by reference to Exhibit 4.2 to the Registration
Statement on Form S-4 of Triad Financial Corporation, filed on July 12,
2005 (File No. 333-126538)).4.3
    
    Exchange and Registration Rights Agreement, dated as of April 29, 2005,
among Triad Acquisition Corp. and Goldman, Sachs & Co., and Citigroup
Global Markets Inc., as representatives of the several Purchasers
(incorporated herein by reference to Exhibit 4.3 to the Registration
Statement on Form S-4 of Triad Financial Corporation, filed on July 12,
2005 (File No. 333-126538)).4.4
    
    Form of Senior Note (attached as exhibit to Exhibit 4.1).10.1
    
    Employment Agreement, dated as of April 29, 2005, between the Company
and James M. Landy (incorporated herein by reference to Exhibit 10.1 to
the Registration Statement on Form S-4 of Triad Financial Corporation,
filed on July 12, 2005 (File No. 333-126538)).*10.2
    
    Employment Agreement, dated as of November 11, 2005, between the Company
and Chris A. Goodman (incorporated herein by reference to Exhibit 10.2
on Form 10-K of Triad Financial Corporation, filed on March 31, 2006
(File No. 333-126538)) and Amended and Restated Employment Agreement,
dated as of August 1, 2007, between the Company and Chris A. Goodman
(incorporated herein by reference to Exhibit 10.2 on Form 10-K of Triad
Financial Corporation, filed on March 28, 2007 (File No. 333-126538)). *10.3
    
    Employment Agreement, dated as of February 15, 2007, between the Company
and David A. Satterfield. (incorporated herein by reference to Exhibit
10.3 on Form 10-K of Triad Financial Corporation, filed on March 28,
2007 (File No. 333-126538)). *10.4
    
    Consulting Agreement dated as of July 31, 2007, between the Company and
Carl B. Webb (incorporated herein by reference to Exhibit 10.15 on Form
10-Q of Triad Financial Corporation, filed on November 9, 2007 (File No.
333-65107)) and the First Amendment to the Consulting Agreement, dated
as of February 12, 2008, between the Company and Carl B. Webb
(incorporated herein by reference to Exhibit 10.4 on Form 10-K of Triad
Financial Corporation, filed on March 28, 2007 (File No. 333-126538)). *10.5
    
    Management Agreement, dated as of April 29, 2005, among the Company,
Triad Holdings, LLC, Triad Holdings Inc. and Hunters Glen/Ford Ltd
(incorporated herein by reference to Exhibit 10.2 to the Registration
Statement on Form S-4 of Triad Financial Corporation, filed on July 12,
2005 (File No. 333-126538)).10.6
    
    Warehouse Lending Agreement, dated as of April 29, 2005, among the
Company, Triad Financial Warehouse Special Purpose LLC, Triad Automobile
Receivables Warehouse Trust, JPMorgan Chase Bank, as Collection Account
Bank and Citigroup Global Markets Realty Corp., as lender (incorporated
herein by reference to Exhibit 10.3 to the Registration Statement on
Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File
No. 333-126538)).




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##### Table of Contents



ExhibitNo.
    
    Description10.7
    
    Warehouse Lending Agreement, dated as of April 29, 2005, among the
Company, Triad Financial Warehouse Special Purpose LLC, Triad Automobile
Receivables Warehouse Trust, JPMorgan Chase Bank, as Collection Account
Bank and Goldman Sachs Mortgage Company, as lender (incorporated herein
by reference to Exhibit 10.4 to the Registration Statement on Form S-4
of Triad Financial Corporation, filed on July 12, 2005 (File No.
333-126538)).10.8
    
    Warehouse Lending Agreement, dated as of January 10, 2008, among the
Company, Triad Financial Warehouse Special Purpose LLC, Triad Automobile
Receivables Warehouse Trust, The Bank of New York, as Collection Account
Bank, Sheffield Receivables Corporation, as Class A Lender, and Barclays
Bank PLC, as Class B Lender and Agent (incorporated herein by reference
to Exhibit 10.8 on Form 10-K of Triad Financial Corporation, filed on
March 28, 2007 (File No. 333-126538)).10.9
    
    Termination Agreement, dated as of May 30, 2008, among the Company,
Triad Financial Warehouse Special Purpose LLC, Triad Automobile
Receivables Warehouse Trust, The Bank of New York, as Collection Account
Bank, Sheffield Receivables Corporation, as Class A Lender, and Barclays
Bank PLC, as Class B Lender and Agent. +10.10
    
    Termination Agreement, dated as of June 20, 2008, among the Company,
Triad Financial Residual Special Purpose LLC, as residual facility
borrower, Triad Automobile Receivables Warehouse Trust, as warehouse
facility borrower, Triad Financial Warehouse Special Purpose LLC, The
Bank of New York (as successor-in-interest to JPMorgan Chase Bank,
National Association), as Collection Account Bank, Systems and Services
Technologies, Inc., as a Backup Servicer, and Citigroup Global Markets
Realty Corp., as lender. +10.11
    
    Master Residual Loan Agreement, dated as of April 29, 2005, among Triad
Financial Residual Special Purpose LLC, JPMorgan Chase Bank, N.A., as
Collection Account Bank and Citigroup Global Markets Realty Corp
(incorporated herein by reference to Exhibit 10.5 to the Registration
Statement on Form S-4 of Triad Financial Corporation, filed on July 12,
2005 (File No. 333-126538)).10.12
    
    Master Residual Loan Agreement, dated as of April 29, 2005, among Triad
Financial Residual Special Purpose LLC, JPMorgan Chase Bank, N.A., as
Collection Account Bank and Goldman Sachs Mortgage Company (incorporated
herein by reference to Exhibit 10.6 to the Registration Statement on
Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File
No. 333-126538)).10.13
    
    Registration Rights Agreement dated as of April 29, 2005 among Triad
Holdings Inc. and certain holders of common stock (incorporated herein
by reference to Exhibit 10.7 to the Registration Statement on Form S-4
of Triad Financial Corporation, filed on July 12, 2005 (File No.
333-126538)).10.14
    
    Stockholders Agreement, dated as of April 29, 2005, among Triad Holdings
Inc., Triad Holdings, LLC and James M. Landy (incorporated herein by
reference to Exhibit 10.8 to the Registration Statement on Form S-4 of
Triad Financial Corporation, filed on July 12, 2005 (File No.
333-126538)).10.15
    
    Limited Liability Company Agreement of Triad Holdings, LLC (incorporated
herein by reference to Exhibit 10.9 to the Registration Statement on
Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File
No. 333-126538)).10.16
    
    Amended and Restated Limited Liability Company Agreement of Triad
Holdings, LLC dated June 17, 2008. +10.17
    
    Senior Unsecured Demand Promissory Note dated as of May 11, 2008, by the
Company in favor of Hunters Glen/Ford Ltd. +10.18
    
    Senior Unsecured Demand Promissory Note dated as of June 17, 2008, by
the Company in favor of Hunters Glen/Ford Ltd. +10.19
    
    Senior Unsecured Demand Promissory Note dated as of June 17, 2008, by
the Company in favor of GTCR Fund VIII, L.P. , GTCR Fund VIII/B, L.P.
and GTCR Co-Invest II, L.P. +10.20
    
    HFI Loan and Security Agreement, dated as of April 29, 2005, between the
Company and Ford Motor Credit Company (incorporated herein by reference
to Exhibit 10.10 to the Registration Statement on Form S-4 of Triad
Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).




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##### Table of Contents



ExhibitNo.
    
    Description10.21
    
    Carl B. Webb Compensation Arrangement (incorporated herein by reference
to Exhibit 10.11 to the Registration Statement on Form S-4 of Triad
Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).*10.22
    
    Amendment No. 2, dated as of March 15, 2007, to the Warehouse Lending
Agreement, dated as of April 29, 2005, among the Company, Triad
Financial Warehouse Special Purpose LLC, Triad Automobile Receivables
Warehouse Trust, The Bank of New York (as successor-in-interest to
JPMorgan Chase Bank, N.A.), as Collection Account Bank, and Citigroup
Global Markets Realty Corp., as lender (incorporated herein by reference
to Exhibit 10.1 on Form 8-K of Triad Financial Corporation, filed on
March 20, 2007 (File No. 333-65107)).10.23
    
    Amendment No. 1, dated as of March 15, 2007, to the Master Residual Loan
Agreement, dated as of April 29, 2005, among Triad Financial Residual
Special Purpose LLC, The Bank of New York (as successor-in-interest to
JPMorgan Chase Bank, N.A.), as Collection Account Bank, and Citigroup
Global Markets Realty Corp (incorporated herein by reference to Exhibit
10.2 on Form 8-K of Triad Financial Corporation, filed on March 20, 2007
(File No. 333-65107)).10.24
    
    Letter Agreement, dated as of May 6, 2008, with respect to the
Warehouse Lending Agreement, dated as of April 29, 2005, among the
Company, Triad Financial Warehouse Special Purpose LLC, Triad
Automobile Receivables Warehouse Trust, and Citigroup Global Markets
Realty Corp. +10.25
    
    Letter Agreement, dated as of May 6, 2008, with respect to the
Master Residual Loan Agreement, dated as of April 29, 2005, among
Triad Financial Residual Special Purpose LLC, and Citigroup Global
Markets Realty Corp. +21.1
    
    Subsidiaries of the Company (incorporated herein by reference to Exhibit
21.1 to the Registration Statement on Form S-4 of Triad Financial
Corporation, filed on July 12, 2005 (File No. 333-126538)).31.1
    
    Certification of Chief Executive Officer (Section 302 Certification)+31.2
    
    Certification of Principal Financial Officer (Section 302 Certification)+32.
    
    Certification of Periodic Financial Report (Section 906 Certification)+
 
 *
    
    Management contract or compensatory plan or arrangement.+
    
    Filed herewith