**UNITED
      STATES**




**SECURITIES
      AND EXCHANGE COMMISSION**




**Washington,
      D. C. 20549**




**FORM
      10-K**




x Annual
      report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
      1934




**For
      the fiscal year ended December 31, 2005**




o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
      Act
      of 1934




Commission
      file number: **000-51493**




**White
      River Capital, Inc.**


(Exact
      name of registrant as specified in its charter)




**Indiana**
            **35-1908796**(State
                or other jurisdiction of incorporation or organization)
            (I.R.S.
                Employer Identification No.)







**1445
      Brookville Way, Suite I**


**Indianapolis,
      Indiana 46239**




(Address
      of principal executive offices/zip code)




Registrant’s
      telephone number, including area code: **(317)
      806-2166**







Securities
                registered pursuant to section 12(g) of the Act:(Title
                of class)Common
                Stock, no par value





Indicate
                by check mark if the registrant is a well-known seasoned issuer,
                as defied
                in Rule 405 of the Securities Act.
            
            oYesxNo








Indicate
                by check mark if the registrant is not required to file reports pursuant
                to Section 13 or Section 15(d) of the Act.
            
            oYesxNo








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.
            
            oYesxNo

















Indicate
                by check mark if disclosure of delinquent filers pursuant to Item
                405 of
                Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be
                contained, to the best of registrant’s knowledge, in definitive proxy or
                information statements incorporated by reference in Part II of this
                Form
                10-K or any amendment to this Form 10-K.
            
            x








Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer. See definition of “accelerated
      filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check
      one):




Large
                accelerated filer
            o
            Accelerated
                filer
            o
            Non-accelerated
                filer
            x








Indicate
                by check mark whether the registrant is a shell company (as defined
                in
                Rule 12b-2 of the Exchange Act).
            
            oYesxNo








As
      of
      March 28, 2005, the aggregate market value of the voting common stock held
      by
      non-affiliates of the registrant, computed by reference to the average last
      sale
      price reported in the Pink Sheets as of the close of business on March 28,
      2005,
      was approximately $36.6 million. Registrant does not have any non voting common
      equity securities.




Indicate
      the number of shares outstanding of each of the registrant’s classes of common
      stock, as of the latest practicable date. As
      of
      March 28, 2006, there were 3,813,155 shares outstanding of the issuer’s Common
      Stock, without par value.




DOCMENTS
      INCORPORATED BY REFERENCE




The
      information required by Items 10, 11, 12, 13 and 14 of Part III of this Annual
      Report on Form 10-K will be found in the Company’s definitive proxy statement
      for its 2006 Annual Meeting of Shareholders, to be filed pursuant to Regulation
      14A under the Securities Exchange Act of 1934, as amended, and such information
      is incorporated herein by this reference













**-
      INDEX -**





**PAGE****PART
                I****Item
                1.**
            **Business**
            **1****Item
                1A.**
            **Risk
                Factors**
            **15****Item
                1B.**
            **Unresolved
                Staff Comments**
            **24****Item
                2.**
            **Properties**
            **24****Item
                3.**
            **Legal
                Proceedings**
            **25****Item
                4.**
            **Submission
                of Matters to a Vote of Security Holders**
            **25****PART
                II****Item
                5.**
            **Market
                for Registrant’s Common Equity and Related Stockholder
                Matters**
            **26****Item
                6.**
            **Selected
                Financial Data**
            **31****Item
                7.**
            **Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operation**
            **33****Item
                7A.**
            **Quantitative
                and Qualitative Discloses About Market Risk**
            **57****Item
                8.**
            **Financial
                Statements and Supplementary Data**
            **58****Audited
                Consolidated Balance Sheets as of December 31, 2005 and
                2004**
            **59****Audited
                Consolidated Statements of Operations for the Years Ended December
                31,
                2005, 2004 and 2003**
            **60****Audited
                Consolidated Statements of Cash Flows for the Years Ended December
                31,
                2005, 2004 and 2003**
            **61****Audited
                Consolidated Statements of Shareholders’ Equity (Deficit) for the Years
                Ended December 31, 2005, 2004 and 2003**
            **62**





i








**Notes
                to Audited Consolidated Financial Statements**
            **63****Item
                9.**
            **Changes
                in and Disagreements with Accountants on Accounting and Financial
                Disclosure**
            **89****Item
                9A.**
            **Controls
                and Procedures**
            **89****Item
                9B.**
            **Other
                Information**
            **89****PART
                III****Item
                10.**
            **Directors
                and Executive Officers of the Registrant**
            **90****Item
                11.**
            **Executive
                Compensation**
            **90****Item
                12.**
            **Security
                Ownership of Certain Beneficial Owners and Management**
            **90****Item
                13.**
            **Certain
                Relationships and Related Transactions**
            **90****Item
                14.**
            **Principal
                Accounting Fees and Services**
            **90****PART
                IV****Item
                15.**
            **Exhibits
                and Financial Statement Schedules**
            **91****SIGNATURES**
            
            **95**










ii










**PART
      I**





**ITEM
      1.   BUSINESS**




**Overview**





White
      River Capital, Inc. (“White River”) is a holding company for specialized
      indirect auto finance businesses, with two principal operating subsidiaries.
      Coastal Credit LLC (“Coastal Credit”) based in Virginia Beach, Virginia, is a
      specialized sub-prime auto finance company engaged primarily in (1) acquiring
      retail installment sales contracts from both franchised and independent
      automobile dealers which have entered into contracts with purchasers of used
      and, to a much lesser extent, new cars and light trucks, and (2) servicing
      its
      contract portfolio. Coastal Credit operates in seventeen states. Union
      Acceptance Company LLC (“UAC”) based in Indianapolis holds and oversees its
      portfolio of approximately $197.7 million in non-prime auto receivables, as
      of
      December 31, 2005. Its portfolio is held approximately 41.6% in off-balance
      sheet securitizations, 58.2% through subsidiary non-recourse financings and
      0.2%
      directly or by subsidiaries not subject to financing. UAC operates under a
      confirmed Second Amended and Restated Plan of Reorganization under Chapter
      11 of
      the U.S. Bankruptcy Code (the “Plan”) under which net proceeds from its residual
      interest in its receivables portfolios and other bankruptcy estate assets must
      be paid to creditors holding notes and claims under the plan. During 2005,
      White
      River purchased and owns directly approximately 90% of such notes and
      claims.




**2005
      Recapitalization Transactions**




White
      River was formed in December 2004. During 2005, White River became the holding
      company of UAC, purchased the majority of outstanding notes and claims under
      UAC’s plan of reorganization and purchased Coastal Credit in a series of
      transactions that included:




·
            the
                buyout of substantially all of the UAC restructured senior notes
                (“Senior
                Notes”), restructured subordinated notes (“Subordinated Notes”), and their
                accompanying accrual notes (“Accrual Notes”) that were issued by UAC under
                the Plan;


·
            a
                share exchange for White River common shares by UAC common shareholders
                (“Share Exchange”);


·
            a
                $35 million subscription rights equity offering by White River to
                UAC
                shareholders and standby investors;


·
            a
                $15 million note issuance by White River;
                and


·
            the
                acquisition of Coastal Credit for $50.8 million, including
                expenses.





On
      February 15, 2005, UAC, White River, and the Plan Committee representing the
      UAC
      creditors under the Plan of Reorganization entered into a memorandum of
      understanding providing for the proposed buyout of the remaining outstanding
      UAC
      Senior Notes, Subordinated Notes and Accrual Notes payable. This agreement
      stipulated that White River, as the proposed parent of UAC, would offer to
      pay
      100% of the principal value of the Senior Notes and 13% of the face value of
      the
      Subordinated Notes for the tender of these notes and their accompanying Accrual
      Notes to White River. Additional amounts may be paid by White River to the
      former Subordinated Note holders in the future if either of two events occurs,
      namely (i) the passing of federal legislation which would allow UAC to carry
      back federal income tax net operating loss carryforwards to recover income
      taxes
      previously paid in 2000 and (ii) recovery by UAC on a particular unresolved
      pending claim. This purchase offer was accepted by 100% of the Senior Note
      holders and holders of 89.1% of the Subordinated Notes in February 2005. During
      June 2005, the Senior Notes of UAC were purchased by White River and
      simultaneously paid in full and White River completed the buyout of 89.1% of
      the
      Subordinated Notes of UAC using bridge funding provided by Castle Creek Capital
      Partners Fund IIa, LP
      and
      Castle Creek Capital Partners Fund IIb, LP (collectively the “Funds”). During
      September 2005, White River concluded its offer to purchase claims from the
      general unsecured creditors of UAC. White River acquired approximately 57.3%
      of
      the general unsecured claims of UAC as a result of this offer.







1







On
      August
      9, 2005, the share exchange between White River and UAC became effective upon
      the filing of Articles of Share Exchange with the State of Indiana. The
      outstanding shares of common stock of UAC were exchanged for shares of common
      stock of White River, at an exchange rate of one share of White River common
      stock for 100 shares of UAC common stock. White River exchanged 310,155 shares
      of its common stock for the outstanding shares of UAC. White River became the
      parent holding company of UAC.




On
      August
      31, 2005, White River completed its $35 million subscription offering. In this
      offering, White River issued 3,500,000 shares of common stock at the
      subscription price of $10.00 per share. White River also completed the placement
      of a $15 million note due 2010, bearing interest at 10.75% secured by the
      ownership interest in Coastal Credit. The net proceeds of this subscription
      offering and secured note were used to acquire Coastal Credit, to repay the
      secured bridge note payable to the Funds, to pay transaction costs and for
      ongoing operations. Of the $50.0 million purchase price for Coastal Credit,
      $45.0 million was paid to the sellers at closing and $3.8 million, net of a
      $1.2
      million receivable from the previous owners,  was
      held
      back until March 31, 2006 and payable with interest at the rate of 10% per
      annum.




***COASTAL
      CREDIT***




**General**




Coastal
      Credit is a subprime finance company engaged primarily in (1) acquiring retail
      installment sales contracts from both franchised and independent automobile
      dealers which have entered into contracts with purchasers of used and, to a
      much
      lesser extent, new cars and light trucks, and (2) servicing its contract
      portfolio. Coastal Credit commenced operations in Virginia in 1987. It conducts
      business in seventeen states - Arizona, California, Delaware, Florida, Georgia,
      Louisiana, Maryland, Mississippi, Nevada, North Carolina, Ohio, Oklahoma,
      Pennsylvania, Tennessee, Texas, Virginia and Washington - through its seventeen
      branch locations.




Coastal
      Credit provides financing programs to automobile dealers whose purchasers meet
      Coastal Credit’s credit standards, but who may not meet the credit standards of
      traditional lenders, such as banks and credit unions. Unlike these traditional
      lenders, Coastal Credit acquires contracts from dealers for vehicle purchases
      made by borrowers who typically have limited or impaired credit histories or
      who
      are purchasing older model and higher mileage automobiles. This is typically
      referred to as the subprime automobile finance market.




A
      significant number of contracts acquired by Coastal Credit are contracts made
      with borrowers who are in the United States military. Coastal Credit believes
      that having in its portfolio a significant percentage of contracts for which
      the
      borrowers are United States military personnel contributes to lower payment
      delinquency and higher collection personnel efficiencies. Coastal Credit
      requests all borrowers who are in the military to use the military allotment
      system to make payments on their contracts. Under this allotment system, the
      borrower authorizes the military to make a payroll deduction for the amount
      of
      the borrower’s monthly contract payment and to direct this deduction payment to
      Coastal Credit on behalf of the borrower. Delinquency of payments on contracts
      paid by allotment historically has been less than delinquency of payments on
      contracts not paid by allotment. As a result, the collection effort associated
      with the military contracts requires substantially less time, allowing Coastal
      Credit’s collection staff to focus on an increased number of civilian sector
      contracts.




Coastal
      Credit’s executive offices are located at 3852 Virginia Beach Boulevard,
      Virginia Beach, Virginia 23452.







2










**Acquisition
      of Automobile Finance Contracts**




Coastal
      Credit currently conducts its automobile finance programs in seventeen states
      through a total of seventeen branches, with two branches in each of Florida,
      Georgia, Mississippi, Ohio and Virginia, and one branch in each of California,
      Delaware, Louisiana, Nevada, Oklahoma, Pennsylvania and Texas. Each branch
      acquires, processes and services contracts in its geographic area.




Coastal
      Credit’s branch managers develop and maintain relationships with automobile
      dealers in the branches’ geographic areas. Coastal Credit enters into
      non-exclusive dealer agreements with these dealers for the acquisition of
      individual contracts. The dealer agreement provides Coastal Credit with recourse
      to the dealer in cases of dealer fraud or breach of the dealer’s representations
      and warranties. As of December 31, 2005, Coastal Credit had non-exclusive
      agreements with approximately 1,500 dealers, of which approximately 500 are
      active. Coastal Credit considers a dealer agreement to be active if Coastal
      Credit has acquired a contract under the dealer agreement in the last nine
      months. After Coastal Credit acquires a contract from a dealer, the dealer
      is no
      longer involved in the relationship between Coastal Credit and the borrower,
      other than through the existence of limited representations and warranties
      of
      the dealer.




Borrowers
      under the contracts typically make down payments, in the form of cash or
      trade-in, ranging from 5% to 20% of the sale price of the vehicle financed.
      The
      balance of the purchase price of the vehicle plus taxes, title fees and, if
      applicable, premiums for “add-on” products (described below), are generally
      financed over a period of 32 to 60 months.




Coastal
      Credit acquires each contract from the automobile dealer at a negotiated price
      that is less than the original principal amount being financed by the purchaser
      of the automobile. The amount of the variance depends upon factors such as
      the
      creditworthiness of the borrower and the age and value of the automobile.
      Coastal Credit will pay more for contracts as the credit risk of the borrower
      improves. Coastal Credit typically acquires contracts at purchase prices that
      range from 80% to 90% of the original principal amount of the contract. In
      addition, Coastal Credit typically charges dealers a processing fee ranging
      from
      $50 to $295 per contract acquired. See “-Pricing of Contracts”
below.




As
      of
      December 31, 2005, Coastal Credit’s contract portfolio consisted exclusively of
      contracts acquired by Coastal Credit without credit recourse to the dealer.
      Although all the contracts in Coastal Credit’s contract portfolio were acquired
      without credit recourse, each dealer remains liable to Coastal Credit for
      liabilities arising from certain representations and warranties made by the
      dealer with respect to compliance with applicable federal and state laws and
      valid title to the vehicle.




Coastal
      Credit’s policy is to only acquire a contract after the dealer has provided
      Coastal Credit with the requisite proof that Coastal Credit will have a first
      priority lien on the financed vehicle, that the borrower has obtained the
      required collision insurance naming Coastal Credit as loss payee and that the
      contract has been fully and accurately completed and validly executed. Once
      Coastal Credit has received and approved all required documents, Coastal Credit
      purchases the contract and begins servicing the contract.




Both
      Coastal Credit and the dealers with which it does business offer purchasers
      of
      vehicles certain other “add-on” products. These products are offered by the
      dealer on Coastal Credit’s behalf or by the dealer on behalf of the automobile
      dealership at the time of sale. The add-on products consist of the
      following:




·
            Extended
                warranty protection - covers the cost of certain repairs after the
                vehicle’s warranty expires;





3








·
            Gap
                insurance - pays an amount between what the borrower owes and the
                primary
                insurance cash value of a vehicle if the vehicle is stolen or destroyed;
                and


·
            Collateral
                protection insurance - pays the cost to repair or the value of the
                vehicle
                if the vehicle is stolen, damaged or
                destroyed.





At
      the
      borrower’s option, the cost of these products may be included in the amount
      financed under the contract.




**Underwriting
      Guidelines**




Coastal
      Credit’s typical borrower has a credit history that may fail to meet the lending
      standards of most banks, credit unions and captive automobile finance companies.
      Substantially all of Coastal Credit’s automobile contracts involve loans made to
      individuals with limited or impaired credit histories. Coastal Credit believes
      that its borrower credit profile is similar to that of its direct competitors
      in
      the subprime automobile finance business. Coastal Credit also believes that
      its
      underwriting criteria and branch network management system coupled with close
      senior management supervision enhances its risk management and collection
      functions.




In
      deciding whether to acquire a particular contract, Coastal Credit considers
      various factors, including:




·
            the
                applicant’s length of residence;


·
            the
                applicant’s current and prior job status;


·
            the
                applicant’s history in making other installment loan
                payments;


·
            the
                applicant’s payment record on previous automobiles
                loans;


·
            the
                applicant’s current income and discretionary spending ability;


·
            the
                applicant’s credit history;


·
            the
                value of the automobile in relation to the purchase
                price;


·
            the
                term of the contract;


·
            the
                automobile make and mileage; and


·
            Coastal
                Credit’s prior experience with contracts acquired from the
                dealer.





For
      applicants who are military personnel, Coastal Credit also considers the
      applicant’s rank and the time remaining on his or her enlistment contract. These
      factors affect not only whether Coastal Credit will acquire the contract, but
      also the purchase price Coastal Credit will be willing to pay the dealer to
      acquire the contract.





As
      part
      of the approval process, Coastal Credit receives a credit application completed
      by the prospective borrower. The application contains information relating
      to
      the applicant’s background, employment and credit history. Coastal Credit also
      obtains a credit report from an independent credit reporting service and
      verifies the applicant’s employment history, income and residence. In certain
      cases, a Coastal Credit application processor interviews the applicant by
      telephone. After reviewing the information submitted in the credit application
      (which includes years at employer, years at residence and income), any telephone
      interview and the credit report, a Coastal Credit representative approves or
      rejects the application according to company guidelines.




The
      branch manager of each branch is responsible for underwriting and purchasing
      automobile contracts and providing servicing and collections. However, the
      branch network is closely managed and supervised by Coastal Credit’s senior
      management. Coastal Credit believes that its branch network operations enable
      branch managers to develop strong relationships with its automobile dealers.
      Coastal Credit,
      through its branches, provides a high level of service to its dealers by
      providing consistent credit decisions and frequent management contact. Coastal
      Credit has established internal buying guidelines to be used by its underwriters
      when acquiring contracts. Although the buying guidelines vary from branch to
      branch, Coastal Credit’s branch managers or senior management must approve any
      contract that does not meet a branch’s guidelines in advance of purchasing any
      such contract. Coastal Credit has seventeen branch managers, each charged with
      managing the specific branches in a defined geographic area. In addition to
      a
      variety of administrative duties, the branch managers are responsible for
      monitoring their assigned branches’ compliance with Coastal Credit’s
      underwriting standards. On a regular basis, either a branch manager or senior
      management reviews every newly purchased contract.







4







To
      further ensure compliance with its underwriting guidelines, Coastal Credit
      performs on-site reviews of its branches. The branch reviews are performed
      on a
      schedule that varies from branch to branch, depending on the size of the branch,
      the length of time the branch has been open, the current tenure of the branch
      manager and the branch’s current and historical profitability. Coastal Credit
      believes that the branch review is key to ensuring that credit quality is not
      sacrificed for asset growth.




**Pricing
      of Contracts**




Coastal
      Credit’s management believes that a key to its consistent profitability has been
      its ability to effectively price the contracts it acquires to fully cover all
      future losses on the contracts. Pricing has two components: (1) the interest
      rate the borrower pays on the amount financed and (2) the purchase price paid
      to
      the dealer. To determine the pricing for a particular contract, Coastal Credit
      considers the same factors it considers in determining whether to acquire the
      contract. As a result of its disciplined underwriting guidelines, Coastal Credit
      generally only purchases approximately twelve contracts for every 100 automobile
      loan applications reviewed. These factors are discussed above under
“-Underwriting Guidelines.”




To
      ensure
      its ability to continue to effectively price the contracts it acquires, Coastal
      Credit’s branch managers and senior management analyze various reports on a
      monthly and quarterly basis to identify any trends that will influence pricing.
      These reports help management compare the performance of contracts by branch,
      by
      dealer, by contract age, by borrower’s income and by borrower’s credit history.




**Geographic
      Concentration**




Coastal
      Credit operates its business and acquires its contracts in various regions
      as
      follows:




Region
      #1
      - Florida, Georgia, North Carolina, Tennessee and Virginia.


Region
      #2
      - Delaware, Maryland, Ohio and Pennsylvania.


Region
      #3
      - Louisiana, Mississippi, Nevada, Oklahoma and Texas.


Region
      #4
      - Arizona, California and Washington.





Coastal
      Credit’s level of contract acquisitions in each state may fluctuate
      significantly over time depending on competitive conditions and other factors
      in
      those areas. In considering potential areas for expansion, Coastal Credit
      carefully reviews the regulatory and competitive environment and economic and
      demographic factors, including the availability of qualified underwriters and
      managers and the number of dealerships in the potential expansion area. Because
      a significant number of Coastal Credit’s contracts have been with borrowers who
      are in the military, Coastal Credit also considers the proximity of military
      bases. To ensure successful branch expansion, Coastal Credit focuses on hiring
      and developing local, experienced branch-level management.







5










**Servicing,
      Monitoring and Enforcement of Contracts**




Coastal
      Credit acts as servicer for the contracts it acquires. As servicer, Coastal
      Credit collects payments due from borrowers, monitors collections and pursues
      the collection of delinquent accounts, including the liquidation of collateral
      securing defaulted contracts. Coastal Credit uses integrated computer systems
      to
      enhance its ability to respond to borrower inquiries and to monitor the
      performance of its contract portfolio and the performance of individual
      borrowers under contracts. All of Coastal Credit’s personnel, including
      personnel at its branch offices, have instant, simultaneous access to
      information from a single shared database.




To
      protect its collateral in financed vehicles, Coastal Credit requires all
      borrowers to obtain and maintain collision insurance covering damage to the
      vehicle and naming Coastal Credit as the loss payee. The insurance must have
      a
      deductible typically of not more than $500. Failure to maintain insurance
      constitutes a default under the contract, and Coastal Credit may, at its
      discretion, repossess the vehicle. Coastal Credit does not “force-place”
insurance ( *i.e* .,
      purchase insurance on behalf of borrowers whose policies have lapsed and add
      the
      cost and applicable finance charges to the balance of the
      contract).




Coastal
      Credit uses a number of methods to monitor compliance by borrowers with their
      obligations under contracts and to pursue collections of delinquent accounts.
      In
      addition to Coastal Credit’s collections staff, branch managers and senior
      management receive a daily delinquency report. The delinquency report is an
      aging report that provides basic information regarding each account and
      indicates accounts that are past due. The report includes information that
      enables the senior management, branch managers and collection staff to identify
      and access delinquent accounts. The report includes such information as the
      borrower’s name, account number, outstanding balance, date of last payment, next
      due date, past due days by recency and contractually, and the delinquency status
      by aging category.




In
      most
      cases, a collection representative begins the process of contacting the borrower
      by telephone or mail on the first day that the account is past due. The
      collection representative also mails future reminders and late notices. If
      the
      collection representative is able to make contact with the borrower and the
      borrower is able to provide Coastal Credit with an acceptable explanation for
      the delinquency, to display the willingness and the ability to make payment,
      and
      to commit to a plan to return the account to current status, the information
      is
      entered in Coastal Credit’s database and is used to generate a “promises
      report.” Coastal Credit’s collection staff uses the promises report for further
      account monitoring. Generally, the same collection representative will pursue
      the account until it is brought current or charged off.




If
      the
      collection representative is not able to make contact with the borrower or
      if
      the borrower is unable to make payment arrangements acceptable to Coastal
      Credit, the collection representative will refer the account to the collection
      manager or the branch manager to determine whether to repossess the financed
      vehicle. Coastal Credit’s branch managers and senior management review all
      repossession determinations and have the authority to override such
      determinations.




Coastal
      Credit prepares a repossession report that provides information regarding
      repossessed vehicles and aids Coastal Credit in disposing of repossessed
      vehicles. In addition to information regarding the borrower, this report
      provides information regarding the date of repossession, the date the vehicle
      was sold, the number of days it was held in inventory prior to sale, the year,
      make and model of the vehicle, the vehicle’s mileage, the payoff amount on the
      contract, the value of the vehicle indicated in standard industry publications,
      the suggested sale price, the location of the vehicle, the original dealer,
      the
      condition of the vehicle, and notes and other information. This data provides
      Coastal Credit with relevant information that may affect future credit
      decisions.







6





Once
      a
      branch manager or senior management has approved a repossession request, a
      repossession firm repossesses the vehicle and delivers it to a secure location
      specified by Coastal Credit. Coastal Credit maintains relationships with several
      licensed repossession firms that repossess vehicles for fees that typically
      range from $225 to $375 for each vehicle repossessed. As required by applicable
      state law, Coastal Credit notifies the borrower by certified letter that the
      vehicle has been repossessed and that, to regain the vehicle, he or she must
      make arrangements satisfactory to Coastal Credit and pay the amount owed under
      the contract within the statutory redemption period allowed by the applicable
      state law after delivery of the letter. If satisfactory arrangements for return
      of the vehicle are not made within the statutory period, Coastal Credit then
      sends title to the vehicle to the applicable state title transfer department,
      which then registers the vehicle in Coastal Credit’s name. Coastal Credit then
      sells the vehicle by public auction. On average, approximately 45 days lapse
      between the time Coastal Credit takes possession of a vehicle and the time
      it is
      sold at auction.




When
      a
      repossessed vehicle has been sold and/or a contract has been charged off, if
      Coastal Credit determines that there is a reasonable likelihood of recovering
      part or all of any deficiency against the borrower under the contract, Coastal
      Credit will pursue all legal remedies available to it. States have different
      collection laws, but legal remedies may include lawsuits, judgment liens and
      wage garnishments.




In
      addition, the branch managers and Coastal Credit’s senior management review each
      account that is 60 days past due to determine whether the contract should be
      charged off. Coastal Credit requires mandatory charge off of all contracts
      when
      60 days have passed since the most recent payment and the contract is 180 days
      delinquent per the contract terms. All charged off loans are transferred to
      a
      Profit and Loss (P&L) Department. The P&L Department attempts to collect
      the contract until the borrower has paid the contract or all legal remedies
      have
      been exhausted. Historically, Coastal Credit has recovered approximately 25%
      of
      deficiencies from such borrowers. Proceeds from the disposition of the vehicles
      are not included in calculating the foregoing percentage range.




**Marketing
      and Advertising**




Coastal
      Credit’s marketing efforts are directed toward automobile dealers. Coastal
      Credit attempts to meet dealers’ needs by offering highly-responsive,
      cost-competitive, locally-based and service-oriented financing programs. Coastal
      Credit relies on its marketing and branch managers to solicit agreements for
      the
      acquisition of contracts with automobile dealers located within each branch’s
      geographic area. The branch manager provides dealers with information regarding
      Coastal Credit and the general terms upon which Coastal Credit is willing to
      acquire contracts.




**Competition**




The
      subprime automobile finance industry is highly fragmented and highly
      competitive. There are numerous financial service companies that provide
      subprime credit in the markets served by Coastal Credit, including credit
      unions, other consumer finance companies and captive finance companies owned
      by
      automobile manufacturers and retailers. Many of these companies have
      significantly greater resources and market presence than Coastal Credit. Coastal
      Credit does not believe that increased competition for the acquisition of
      contracts will cause a material reduction in the interest rate payable by the
      purchaser of the automobile. However, increased competition for the acquisition
      of contracts will enable automobile dealers to shop for the best price. Coastal
      Credit’s management believes that its effective pricing has been a key factor in
      its consistent, historical profitability, and, therefore, Coastal Credit will
      forego acquisition of a contract if it believes that meeting the competitor’s
      pricing would compromise its underwriting guidelines.




Coastal
      Credit’s target market consists of persons who are generally unable to obtain
      traditional used car financing because of their credit history or the vehicle’s
      mileage or age. Coastal Credit has been able to expand its automobile finance
      business in the subprime credit market by offering to acquire contracts on
      terms
      that are competitive with those of other companies that acquire automobile
      receivables in that market







7





segment.
      As a result of the daily contact that many of Coastal Credit’s employees have
      with automobile dealers located throughout the market areas Coastal Credit
      serves, Coastal Credit is generally aware of the terms upon which its
      competitors are offering to acquire contracts. Coastal Credit’s policy is to
      modify its terms, if necessary, to remain competitive. However, Coastal Credit
      will not sacrifice credit quality, its purchasing criteria or prudent business
      practices to meet the terms offered by its competitors.




Coastal
      Credit’s ability to compete effectively with other companies offering similar
      financing arrangements depends upon its maintaining current and developing
      new
      business relationships with auto dealers in each branch’s geographic area.




**Regulation**




Coastal
      Credit’s financing and collection operations are subject to regulation,
      supervision and licensing under various federal, state and local statutes and
      ordinances. Additionally, the procedures that Coastal Credit must follow in
      connection with the repossession of vehicles securing contracts are regulated
      by
      each of the states in which Coastal Credit does business. The laws of the
      following states, as well as applicable federal law, govern Coastal Credit’s
      operations:




·
            the
                following states where it currently has branches: California, Delaware,
                Florida, Georgia, Louisiana, Mississippi, Nevada, Ohio, Oklahoma,
                Pennsylvania, Texas and Virginia.





Compliance
      with existing laws and regulations has not had a material adverse effect on
      Coastal Credit’s operations to date. Coastal Credit’s management believes that
      Coastal Credit maintains all requisite licenses and permits and is in material
      compliance with all applicable local, state and federal laws and regulations.
      Coastal Credit periodically reviews its branch office practices in an effort
      to
      ensure such compliance. The following constitute certain of the federal, state
      and local statutes and ordinances with which Coastal Credit must comply:




·
            *State
                consumer regulatory agency requirements*.
                Pursuant to the regulations of various states, the appropriate state
                regulatory agency may periodically conduct on-site audits of Coastal
                Credit’s branches in Florida, Delaware, Louisiana, Mississippi and
                Oklahoma. These regulations govern, among other matters, licensure
                requirements, requirements for maintenance of proper records, payment
                of
                required fees, maximum interest rates that may be charged on loans
                to
                finance used vehicles and proper disclosure to customers regarding
                financing terms.





8





*State
      licensing requirements* .
      Coastal
      Credit maintains the following licenses:




**State**
            **License**Arizona
            Sales
                Finance Company LicenseDelaware
            Motor
                Vehicle Sales Finance LicenseFlorida
            Sales
                Finance Company LicenseIllinois
            Sales
                Finance Agency LicenseLouisiana
            Sales
                Finance Company LicenseMaryland
            Sales
                Finance LicenseMississippi
            Motor
                Vehicle Sales Finance LicenseOklahoma
            Supervised
                Lender LicensePennsylvania
            Sales
                Finance Company LicenseTexas
            Motor
                Vehicle Sales Finance License





·
            *Fair
                Debt Collection Act*.
                The Fair Debt Collection Act and applicable state law counterparts
                prohibit Coastal Credit from contacting customers during certain
                times and
                at certain places, from using certain threatening practices and from
                making false implications when attempting to collect a
                debt.





·
            *Truth
                in Lending Act*.
                The Truth in Lending Act requires Coastal Credit and the dealers
                with whom
                Coastal Credit does business to make certain disclosures to customers,
                including the terms of repayment, the total finance charge and the
                annual
                percentage rate charged on each
                contract.





·
            *Equal
                Credit Opportunity Act*.
                The Equal Credit Opportunity Act prohibits Coastal Credit from
                discriminating against loan applicants on the basis of race, color,
                sex,
                age or marital status. Pursuant to Regulation B promulgated under
                the
                Equal Credit Opportunity Act, Coastal Credit is required to make
                certain
                disclosures regarding consumer rights and advise consumers whose
                credit
                applications are not approved of the reasons for the
                rejection.





·
            *Fair
                Credit Reporting Act*.
                The Fair Credit Reporting Act requires Coastal Credit to provide
                certain
                information to consumers whose credit applications are not approved
                on the
                basis of a report obtained from a consumer reporting
                agency.





·
            *Gramm-Leach-Bliley
                Act*.
                The Gramm-Leach-Bliley Act requires Coastal Credit to maintain privacy
                with respect to certain consumer data in its possession and to
                periodically communicate with consumers on privacy
                matters.





·
            *Servicemembers'
                Civil Relief Act*.
                Formerly called the Soldiers’ and Sailors’ Civil Relief Act, the
                Servicemembers’ Civil Relief Act provides certain protections to borrowers
                who,subsequent
                to entering into a contract, have joined or enlisted, or been called
                to
                active duty with, the military. Coastal Credit is prohibited from
                repossessing the vehicles of such borrowers and from terminating
                the
                contracts with such borrowers for breach. In addition, Coastal Credit
                is
                required to reduce the interest rate charged on each loan to such
                borrowers to 6% if the borrower’s military duty affects the borrower’s
                ability to pay his or her contract.





9








·
            *Electronic
                Funds Transfer Act*.
                The Electronic Funds Transfer Act prohibits Coastal Credit from requiring
                its customers to repay a loan or other credit by electronic funds
                transfer, except in limited situations, which do not apply to Coastal
                Credit. Coastal Credit is also required to provide certain documentation
                to its customers when an electronic funds transfer is initiated and
                to
                provide certain notifications to its customers with regard to
                preauthorized payments.





·
            *Bankruptcy*.
                Federal bankruptcy and related state laws may interfere with or affect
                Coastal Credit’s ability to recover collateral or enforce a deficiency
                judgment.





**Employees**




Coastal
      Credit’s executive management and various support functions are centralized at
      its corporate headquarters in Virginia Beach, Virginia. As of December 31,
      2005,
      Coastal Credit employed a total of 125 persons. None of Coastal Credit’s
      employees is subject to a collective bargaining agreement, and Coastal Credit
      considers its relations with its employees generally to be
      excellent.




***UNION
      ACCEPTANCE*** ***COMPANY
      LLC***




**Historical
      Business of UAC**




UAC
      is a
      specialized finance company that, prior to the Bankruptcy Case, was engaged
      in
      the business of acquiring and servicing automobile retail installment sales
      contracts and installment loan agreements. UAC would acquire retail installment
      sales contracts originated by a network of over 5,500 automobile dealerships
      affiliated with major domestic and foreign manufacturers, nationally recognized
      rental car outlets and used car superstores. UAC’s receivables acquisition
      strategy focused on acquiring receivables from automobile purchasers who
      exhibited a favorable credit profile purchasing late model used and, to a lesser
      extent, new automobiles.




Generally,
      after acquiring receivables, UAC would temporarily hold the receivables in
      short-term “warehouse” financing arrangements through its subsidiaries.
      Periodically, UAC would pool the receivables and sell interests in the pooled
      portfolio as asset-backed securities through securitization transactions. A
      “securitization” is the process through which receivables are pooled and sold to
      an entity (in UAC’s case, a trust) that issues asset-backed securities to
      investors. “Asset-backed securities” is a general reference to securities that
      are backed by financial assets such as automobile receivables. UAC would remain
      the servicer for the receivables it securitized. A “servicer” in respect of a
      portfolio of consumer finance receivables is generally responsible for
      monitoring and reporting collections of payments on the receivables, remitting
      those payments to appropriate entities and pursuing the collection of delinquent
      receivables, including liquidation of collateral securing defaulted
      receivables.




UAC,
      through its wholly owned special purpose subsidiary, UAC Securitization
      Corporation, continues to hold the rights to the retained interest in the
      securitizations that it had sponsored prior to the petition date and subsequent
      non-recourse financings of previously securitized receivables. The “retained
      interest” refers to the net cash flows that become available from
      securitizations after obligations required to be satisfied by these
      securitizations and non-recourse financings are paid. The retained interest
      is
      discussed in more detail under the heading “-The Retained Interest-Cash Flows
      from Securitizations” below.







10










**The
      UAC Bankruptcy Case**




On
      October 31, 2002, UAC filed a voluntary petition for relief under Chapter 11
      of
      the United States Bankruptcy Code in the United States Bankruptcy Court for
      the
      Southern District of Indiana (the “Bankruptcy Case”). Shortly after the
      commencement of the Bankruptcy Case, UAC discontinued acquisition of new
      automobile receivables, but continued to act as servicer with respect to its
      securitized portfolios of receivables and receivables owned directly by UAC
      or
      indirectly by its subsidiaries.




On
      April
      17, 2003, with approval by the bankruptcy court, UAC sold substantially all
      of
      the assets related to its receivable servicing business to Systems &
Services Technologies Inc. (“SST”), a subsidiary of J.P. Morgan Chase & Co.
      SST was appointed as servicer with respect to the securitized receivables and
      the receivables held directly by UAC or its subsidiaries. SST continues to
      serve
      in that capacity.




On
      August
      8, 2003, the Bankruptcy Court confirmed UAC’s Second Amended and Restated Plan
      of Reorganization. Pursuant to the Plan of Reorganization, UAC, as “Reorganized
      Debtor,” is obligated to carry out the terms and provisions of the Plan of
      Reorganization. Generally, UAC is obligated to continue to collect cash as
      it
      becomes available from prescribed assets of the bankruptcy estate (see “-The
      Retained Interest-Cash Flows from Securitizations” below) and to distribute such
      cash to the creditors of the bankruptcy estate who made claims in the Bankruptcy
      Case and whose claims were allowed by the bankruptcy court. The Plan of
      Reorganization refers to these creditors as holders of “Allowed Claims.” The
      Plan of Reorganization provides that payments to holders of Allowed Claims
      be
      made only from prescribed assets, mostly from cash flows deriving from the
      retained interest in prior securitizations. The Plan of Reorganization is
      further summarized under the heading “-The Plan of Reorganization-Distributions
      to Creditors” below.




When
      the
      Plan of Reorganization was confirmed, UAC expected that the net estate proceeds
      that would be available (mostly from cash flows deriving from the retained
      interest in prior securitizations) to make distributions on Allowed Claims
      over
      time would be sufficient to pay all Allowed Claims in full, and that cash flows
      that would benefit UAC’s shareholders would be generated from the retained
      interest in excess of the amount necessary to pay Allowed Claims. Since the
      Plan
      of Reorganization was confirmed, the cash flows from the retained interest
      have
      not materialized as projected. Loss rates on the securitized portfolio increased
      substantially following the transition of servicing to SST. The impact of SST’s
      transitioning of servicing as well as overall performance of the portfolio
      amid
      challenging economic times and other factors have substantially reduced the
      cash
      flows expected from the securitizations. The sources of funds available to
      make
      distributions to the holders of Allowed Claims were sufficient to pay the
      holders of the Restructured Senior Notes issued under the Plan of
      Reorganization, but such funds are not expected to be sufficient to pay the
      remaining amounts due holders of Class 2A (general unsecured) claims, holders
      of
      the Restructured Subordinated Notes issued under the Plan of Reorganization
      and
      the holders of the Accrual Notes issued under the Plan of Reorganization.
      However, White River, UAC’s parent, has purchased the substantial majority of
      UAC’s outstanding notes and claims. Amounts available for distribution upon such
      notes and claims owned by White River will be paid by UAC to White River, in
      accordance with the Plan of Reorganization, as further described
      below.




**The
      Retained Interest - Cash Flows from Securitizations**




Pursuant
      to the Plan of Reorganization, UAC, as “reorganized debtor,” is obligated to
      continue to collect cash as it becomes available from prescribed assets of
      the
      bankruptcy estate, mostly from cash flows deriving from the retained interest
      in
      prior securitizations. UAC’s obligation to distribute such cash to holders of
      Allowed Claims is discussed further under the heading “-The Plan of
      Reorganization-Distributions to Creditors” below.







11










UAC,
      through its wholly owned special purpose subsidiary, UAC Securitization
      Corporation, continues to hold the rights to the retained interest in the
      securitizations that it had sponsored prior to the petition date and the
      non-recourse financings effectuated since confirmation of the Plan of
      Reorganization. The “retained interest” refers to the net cash flows that become
      available from these securitizations and non-recourse financings after
      obligations required to be satisfied by the securitization trusts or under
      the
      financings are paid. Generally, each securitization or financing represents
      a
      pool of receivables that serves as collateral for issued notes, the outstanding
      balance of which is equal to the balance of receivables in the related pool.
      The
      interest payments on the receivables are greater than interest payments owed
      on
      the notes, and each transaction is structured such that the cash flows from
      interest payments are expected to be sufficient to absorb losses from defaults,
      pay interest and principal due on the notes, and pay servicing and
      administrative expenses, with any cash flows remaining after those obligations
      are satisfied payable to UAC Securitization Corporation as the holder of the
      equity interest or retained interest in the trust or as the owner of the
      financed receivables (subject to the arrangements described below).




In
      connection with the transfer of servicing to SST, UAC and its subsidiaries
      entered into agreements with SST, MBIA Insurance Corporation (the surety
      provider which has issued policies that ensure timely payments on the notes
      issued by the securitization trusts) (“MBIA”) and other interested parties.
      Under these agreements, SST was appointed as servicer of the UAC receivables
      portfolio and standards for SST’s performance and provisions for SST’s
      compensation were established. In addition, a Master Trust Account was created
      pursuant to a Master Trust Account Agreement. The Master Trust Account serves
      effectively to cross-collateralize the securitization trusts and non-recourse
      financings of UAC receivables. The residual cash flows from the securitizations
      are to be paid through the Master Trust Account. Amounts held in the Master
      Trust Account are available to pay certain fees and expenses of the servicer,
      the securitization trustees, MBIA, the master trustee, and to make
      distributions to meet cash distribution obligations to security holders
      of the securitizations, to the extent cash otherwise available to that
      securitization is insufficient for such purpose. Cash deposited to the Master
      Trust Account, to the extent not used for the foregoing purposes, accumulates
      and, to the extent it exceeds prescribed levels, becomes available for
      distribution to UAC Securitization Corporation (for the benefit of holders
      of
      Allowed Claims in the Bankruptcy Case).




The
      Master Trust Account Agreement established an initial amount of approximately
      $12.5 million in the aggregate to be distributed from time to time from the
      Master Trust Account under prescribed conditions. That amount had been released
      by October 10, 2005. After that point, the Master Trust Account continues to
      accumulate cash until the total cash collateral of the securitizations and
      the
      Master Trust Account is equal to 8% of the outstanding securitization
      obligations. Once that occurs, UAC Securitization Corporation will receive
      distributions equal to 50.0% of surplus funds each month until total cash
      collateral equals 12% of the outstanding securitization obligations. After
      that
      point, UAC Securitization Corporation will receive distributions each month
      equal to 100% of surplus funds, provided that a declining minimum dollar amount
      of cash is retained in the securitization collateral accounts and the Master
      Trust Account until the securitizations are liquidated.




These
      distribution thresholds are subject to adjustment if the securitization
      portfolio does not perform within the parameters stipulated by the Master Trust
      Account Agreement. The agreement sets forth net loss ratio triggers and
      cumulative net loss triggers for future periods that were determined by
      increasing UAC’s estimated future portfolio losses by a specified margin. If
      these triggers are breached (until the portfolio is restored to compliance)
      no
      distributions will be made to UAC Securitization Corporation until total cash
      collateral is at least 15% of outstanding Securitization Obligations and exceeds
      increased minimum dollar levels. As of December 31, 2005, the rolling 12
      month net losses were below the Level 1 and Level 2 triggers. While the
      cumulative net losses were below the Level 2 trigger as of December 31, 2005,
      they did exceed the Level 1 trigger.







12










**The
      Plan of Reorganization - Distributions to Creditors**




Pursuant
      to the Plan of Reorganization, UAC, as “Reorganized Debtor,” is obligated to
      distribute to the holders of Allowed Claims cash as it is received from
      prescribed sources. Holders of Allowed Claims were separated into several
      classes based on their priority of payment and treatment under the Plan. Set
      forth below is a summary of the approximate outstanding balances and
      classification of Allowed Claims as of August 8, 2003, the Plan of
      Reorganization confirmation date (other than certain administrative and priority
      claims that were paid in full):







**Class/Type
                of Claim or Equity Interest**
            
            **Balance
                at August 8, 2003**
              (in
                millions)
            
            **Plan
                Treatment of Class**Class 2A
                - General Unsecured Claims
            
            $2.8
            
            Partial
                payment at Plan confirmation with continued distributions until paid
                in
                full with interest.Class 3
                - Senior Notes Claims
            
            $55.3
            
            Claims
                exchanged at Plan confirmation for partial payment, Restructured
                Senior
                Notes and Accrual Notes of UAC.Class 4
                - Subordinated Notes Claims
            
            $46.4
            
            Claims
                exchanged at Plan confirmation for Restructured Subordinated Notes
                and
                Accrual Notes. Restructure Subordinated Notes are payable following
                completion of payment of all obligations to holders of Restructured
                Senior
                Notes.





Although
      UAC projected that no cash flows from estate assets set aside to pay Allowed
      Claims would remain for the benefit of UAC’s shareholders, the Plan of
      Reorganization provides that the equity interests in UAC were unimpaired and
      provides that payments would be made to holders of Allowed Claims only from
      prescribed assets. The principal reason for these provisions limiting the
      recourse of holders of Allowed Claims under the Plan of Reorganization to these
      specific assets was to afford the holders of UAC’s equity interests the
      opportunity, through new investment, to continue business operations that would
      be protected from recourse by holders of Allowed Claims against
      UAC.




**The
      Creditor Buyout**




On
      February 15, 2005, UAC, White River, and the Plan Committee representing the
      UAC
      creditors under the Plan of Reorganization entered into a memorandum of
      understanding providing for the proposed buyout of the remaining outstanding
      UAC
      Senior Notes, Subordinated Notes and Accrual Notes payable. This agreement
      stipulated that White River, as the proposed parent of UAC, would offer to
      pay
      100% of the principal value of the Senior Notes and 13% of the face value of
      the
      Subordinated Notes for the tender of these notes and their accompanying Accrual
      Notes to White River. Additional amounts may be paid by White River to the
      former Subordinated Note holders in the future if either of two events occurs,
      namely (i) the passing of federal legislation which would allow UAC to carry
      back federal income tax net operating loss carryforwards to recover income
      taxes
      previously paid in 2000 and (ii) recovery by UAC on a particular unresolved
      pending claim against SST. This purchase offer was accepted by 100% of the
      Senior Note holders and holders of 89.1% of the Subordinated Notes in February
      2005. During June 2005, the Senior Notes of UAC were purchased by White River
      and simultaneously paid in full and White River completed the buyout of 89.1%
      of
      the Subordinated Notes of UAC using bridge funding provided by the Funds. During
      September 2005, White River concluded its offer to purchase claims from the
      general unsecured creditors of UAC. White River acquired approximately 57.3%
      of
      the general unsecured claims of UAC as a result of this offer. White River
      may
      pay additional amounts to former holders of general unsecured claims upon the
      same events that may trigger additional payments to former holders of
      Subordinated Notes.







13





In
      connection with UAC’s Plan of Reorganization and distributions and as a result
      of White River’s acquisition of UAC’s general unsecured claims and Subordinated
      Notes, UAC’s creditor notes payable (in thousands) are as follows
      at:







**December
                31, 2005**
            
            **December
                31, 2004****Carrying**
              **Value**
            
            **Contractual**
              **Remaining
                Debt Not**
              **Owned
                by**
              **White
                River**
            
            **Total**
              **Contractual**
              **Remaining**
              **Debt**
            
            **Carrying**
              **Value**
            
            **Contractual**
              **Remaining**
              **Debt
                Not**
              **Owned
                by**
              **White
                River**
            
            **Total**
              **Contractual**
              **Remaining**
              **Debt**Restructured
                debt:Class
                2A general unsecured claims
            
            $
            164
            
            $
            405
            
            $
            1,330
            
            $
            656
            
            $
            1,599
            
            $
            1,599Class
                2A1 general unsecured claims
            
            
            -
            
            
            -
            
            
            -
            
            
            1
            
            
            125
            
            
            125Restructured
                senior notes
            
            
            -
            
            
            -
            
            
            -
            
            
            3,206
            
            
            3,207
            
            
            3,207Restructured
                subordinated notes
            
            
            1,296
            
            
            5,041
            
            
            46,383
            
            
            7,580
            
            
            46,383
            
            
            46,383Senior
                accrual notes
            
            
            -
            
            
            -
            
            
            4,106
            
            
            1
            
            
            4,106
            
            
            4,106Subordinated
                accrual notes
            
            
            1
            
            
            431
            
            
            3,964
            
            
            1
            
            
            3,964
            
            
            3,964Total
                creditor notes payable
            
            $
            1,461
            
            $
            5,877
            
            $
            55,783
            
            $
            11,445
            
            $
            59,384
            
            $
            59,384








At
      the
      time it agreed to purchase the UAC Senior, Subordinated and Accrual Notes,
      in
      February 2005, White River and UAC projected that future cash flows that would
      inure from UAC estate assets in respect of such notes over time would be
      somewhat less than the cash price White River agreed to pay, and that the price
      offered for the Subordinated Notes and related Accrual Notes reflected a
      reasonable premium. Over the course of 2005, however, cash flows from the
      remaining UAC securitizations have been consistently more favorable than what
      had been projected in early 2005. White River now projects that the
      distributions that will be available over time from UAC in respect of the UAC
      Subordinated Notes that White River purchased will materially exceed the price
      White River paid for such notes. See Part II, Item 7, “Management’s Discussion
      and Analysis of Financial Condition and Results of Operations.”




**UAC
      Continuing Operations**




Since
      confirmation of the plan, UAC has continued to administer the receipt and
      distribution of the cash flows from the bankruptcy estate and to carry out
      the
      Plan of Reorganization. UAC currently has a staff of four employees, while
      UAC’s
      President, Mark R. Ruh, is employed by Castle Creek, and its Chief
      Financial Officer is employed by White River. UAC’s current principal activities
      are the following:




·
            overseeing
                collection and distribution of cash flows from receivable portfolios
                and
                other assets in accordance with the Plan of
                Reorganization;


·
            collecting
                automobile dealer premium rebates contractually
                due;


·
            providing
                administrative services to support the securitization paying agent
                with
                cash management and accounting functions for all outstanding
                securitizations;


·
            executing
                on-balance sheet securitizations of receivables available from the
                clean-up call of available outstanding off-balance sheet
                securitizations;


·
            supporting
                deficiency account collections by third party collection agencies;


·
            managing
                deficiency account collections requiring legal action;
                and


·
            holding
                (directly or indirectly through its securitization subsidiary) portfolios
                of automobile receivables that it had initially acquired prior to
                the
                bankruptcy.





14





At
      December 31, 2005, UAC’s consolidated receivable portfolios were as set forth
      below:






**UAC
                  Receivables Outstanding at December 31, 2005**
                **(in
                  thousands)*****Union
                  Acceptance Corporation***(1)
              
              $
              336***UAC
                  Securitization Corporation***(2)UACSC
                  2005-C
              
              
              35,717UACSC
                  2005-B
              
              
              25,405UACSC
                  2005-A
              
              
              19,042UACSC
                  2004-C
              
              
              16,837UACSC
                  2004-B
              
              
              5,356UACSC
                  2004-A-2
              
              
              4,712UACSC
                  2004-A-1
              
              
              3,795UACSC2003-A
              
              
              4,167***Off-Balance
                  Sheet Securitizations***UACSC
                  2002-A Owner Trust
              
              
              34,548UACSC
                  2001-C Owner Trust
              
              
              35,009UACSC
                  2001-B(3)
              
              
              12,743***Total
                  of all portfolios:***
              
              $
              197,667


(1)
      Receivables that are owned directly by UAC and are not leveraged.


(2)
      On-balance sheet portfolios held by UAC Securitization Corporation as collateral
      for non-recourse asset-backed notes.


(3)
      The
      2001-B transaction represents a separate issuance of notes, or a separate
      tranche, under the UACSC 1999 Master Owner Trust.





UAC,
      as
      Reorganized Debtor and as a subsidiary of White River, will continue to comply
      with the Plan of Reorganization and collect and distribute to the holders of
      Allowed Claims all funds to which they are properly entitled under the Plan.
      Pending resolution of remaining claims and closure of the Bankruptcy Case,
      White
      River will be entitled to receive the large majority of subsequent interim
      distributions under the Plan as a holder of such notes and claims. However,
      the
      formation of White River as UAC’s parent company allows UAC to carry its
      business forward with a clear segregation of the assets and liabilities of
      UAC
      from the assets and liabilities of White River, while allowing White River
      to
      operate UAC and new businesses, such as Coastal Credit.




**Item
      1A.   RISK FACTORS**




Investors
      should consider carefully the following factors that could cause White River’s
      operating results and financial condition to be materially adversely affected.
      New risks may emerge at any time, and White River cannot predict those risks
      or
      estimate the extent to which they may affect White River’s businesses or
      financial performance.







15








***Coastal
      Credit Business***


***White
      River shareholders are substantially dependent on the operations of Coastal
      Credit.***




White
      River is a holding company with no independent operations. Its profitability
      and
      ability to pay dividends to its shareholders are dependent on the operations
      of
      its subsidiaries, UAC and Coastal Credit. UAC’s activities consist of
      administering the receipt and distribution of the cash flows from the bankruptcy
      estate and carrying out the Plan of Reorganization. White River has purchased
      substantially all claims of creditors under UAC’s Plan of Reorganization. While
      related future cash flows from UAC may benefit White River, UAC does not
      presently expect to be profitable in the future. Thus, if Coastal Credit does
      not generate profits and make distributions to White River, the value of White
      River common stock will be diminished.




***White
      River’s profitability and future growth depend on Coastal Credit’s continued
      access to bank and subordinated debt financing.***




The
      profitability and growth of Coastal Credit’s business depends on its ability to
      access bank debt at competitive rates. Coastal Credit currently depends on
      an
      $80 million line of credit facility with a financial institution to finance
      its
      acquisition of contracts. This line of credit will increase to $100 million
      in
      July 2006. The maturity date for the line of credit is December 31, 2009 and
      is
      secured by substantially all of the contracts held by Coastal Credit. At
      December 31, 2005, Coastal Credit had $51.5 million outstanding under the line
      of credit and $28.5 million available for additional borrowing. Coastal also
      relies on subordinated debt as a principal part of its capital structure to
      provide long-term capital. As of December 31, 2005, the amount of outstanding
      subordinated debt was $7.7 million. The debentures are subject to a
      Subordination and Intercreditor Agreement with Coastal Credit’s principal
      lender. The debentures have maturity dates in March 2007. Coastal Credit will
      continue to depend on the availability of its line of credit, replacement
      subordinated financing, together with cash from operations, to finance its
      future operations. The availability of the credit facility depends, in part,
      on
      factors outside of Coastal Credit’s control, including regulatory capital
      treatment for unfunded bank lines of credit and the availability of bank loans
      in general. Therefore, this credit facility may not continue to be available
      beyond the current maturity date on reasonable terms or at all. If Coastal
      Credit were unable to renew or replace the credit facility or find alternative
      financing at reasonable rates, Coastal Credit could be unable to grow by
      acquiring contracts or could be forced to liquidate.




***The
        terms of Coastal Credit’s indebtedness impose significant restrictions on it.***
  Coastal
        Credit’s existing outstanding indebtedness restricts its ability to, among other
        things:


§
            encumber
                collateral;




§
            allow
                change of ownership or control;




§
            sell
                or transfer assets;




§
            incur
                additional debt;




§
            repay
                other debt;




§
            pay
                dividends;




§
            make
                certain investments or
                acquisitions;




§
            repurchase
                or redeem capital stock;




§
            engage
                in mergers or consolidations; and




§
            engage
                in certain transactions with subsidiaries and
                affiliates.







16










In
      addition, Coastal Credit’s line of credit facility requires it to comply with
      certain financial ratios and covenants. Coastal Credit’s ability to continue to
      meet these financial ratios could be affected by events beyond its control.
      Failure to meet any of these covenants, financial ratios or financial tests
      could result in an event of default under Coastal Credit’s credit facility. If
      an event of default occurs under its line of credit facility, the lender may
      take one or more of the following actions:




§
            increase
                Coastal Credit’s borrowing costs;




§
            restrict
                Coastal Credit’s ability to obtain additional borrowings under the
                facility;




§
            accelerate
                all amounts outstanding under the facility;
                or




§
            enforce
                its interests against collateral pledged under the
                facility.




If
      Coastal Credit’s lender accelerates its debt payments, Coastal Credit’s assets
      may not be sufficient to fully repay the debt.




***Coastal
      Credit will require a significant amount of cash to service its indebtedness
      and
      meet its other liquidity needs.***




Coastal
      Credit’s ability to make payments on or to refinance its indebtedness and to
      fund its operations and planned capital expenditures depends on its future
      operating performance. Coastal Credit’s primary cash requirements
      include:




§
            the
                funding of contract acquisitions;




§
            interest
                payments under its line of credit facility and other
                indebtedness;




§
            capital
                expenditures for technology and
                facilities;




§
            ongoing
                operating expenses;




§
            planned
                expansions by opening additional branch offices;
                and




§
            any
                required tax payments.




In
      addition, because Coastal Credit expects to continue to require substantial
      amounts of cash for the foreseeable future, Coastal Credit may seek additional
      debt financing. The type, timing and terms of the financing Coastal Credit
      selects will be dependent upon its cash needs, the availability of other
      financing sources and the prevailing conditions in the financial markets. These
      sources may not be available to Coastal Credit at any given time or the terms
      on
      which these sources may be available may not be favorable. Coastal Credit’s
      inability to obtain such additional financing could adversely impact its ability
      to grow.




***Coastal
      Credit’s substantial indebtedness could adversely affect its financial
      condition.***




Coastal
      Credit currently has a substantial amount of outstanding indebtedness. In
      connection with White River’s acquisition of Coastal Credit, Coastal Credit
      agreed to guarantee an additional $15 million of White River indebtedness on
      a
      subordinated basis. Coastal Credit’s ability to make payments on, or to
      refinance, its indebtedness will depend on its future operating performance,
      including its ability to access additional debt or equity financing, which,
      to a
      certain extent, is subject to economic, financial, competitive and other factors
      beyond Coastal Credit’s control.







17










Coastal
      Credit’s high level of indebtedness could have important consequences for its
      business. For example, Coastal Credit:




§
            may
                be unable to satisfy its obligations under its outstanding
                indebtedness;




§
            may
                find it more difficult to fund future needs for working capital,
                capital
                expenditures, or acquisitions;




§
            may
                need to dedicate a substantial portion of its cash resources to the
                payments on its outstanding indebtedness, thereby reducing the funds
                available for operations and future business opportunities;
                and




§
            may
                be more vulnerable to adverse general economic and industry
                conditions.




Coastal
      Credit may incur substantial additional debt in the future. If new debt is
      added
      to Coastal Credit’s current levels, the risks described above could intensify.




***Coastal
      Credit may experience higher than normal delinquency and charge-off rates in
      its
      loan portfolios, which could reduce its
      profitability.***




Coastal
      Credit’s profitability depends, to a material extent, on the performance of
      contracts that it acquires. Historically, Coastal Credit has experienced higher
      delinquency and charge-off rates than traditional financial institutions because
      a large portion of its loans are to subprime borrowers, who may be unable to
      obtain financing from traditional sources due to their credit history. Although
      Coastal Credit attempts to mitigate these high credit risks with its
      underwriting standards, pricing and collection procedures, these standards
      and
      procedures may not offer adequate protection against the risk of default. In
      the
      event of a default, the collateral value of the financed vehicle usually does
      not cover the outstanding loan balance and costs of recovery. Higher than
      anticipated delinquencies and defaults on Coastal Credit’s contracts would
      reduce its profitability.




***Coastal
      Credit depends upon its relationships with its
      dealers.***




Coastal
      Credit’s business depends in large part upon its ability to establish and
      maintain relationships with automobile dealers who originate the contracts
      Coastal Credit acquires. Although Coastal Credit believes it has been successful
      in developing and maintaining such relationships, such relationships are not
      exclusive, and many of them are not longstanding. Coastal Credit may not be
      successful in maintaining such relationships or increasing the number of dealers
      with whom it does business. Coastal Credit’s existing dealer base may not
      continue to generate or refer to Coastal Credit a volume of contracts comparable
      to the volume of such contracts historically generated or referred by such
      dealers.




***Coastal
      Credit’s success depends upon its ability to implement its business strategy.***




Coastal
      Credit’s financial position depends on its management’s ability to execute its
      business strategy. Key factors involved in the execution of its business
      strategy include the use of effective pricing, achievement of the desired
      contract acquisition volume, risk management techniques and collection methods,
      continued investment in technology to support operating efficiency and continued
      access to significant funding and liquidity sources. Coastal Credit’s failure or
      inability to execute any element of its business strategy could materially
      adversely affect Coastal Credit’s financial condition.







18










***Coastal
      Credit’s business is highly dependent upon general economic conditions.***




During
      periods of economic slowdown or recession, delinquencies, defaults,
      repossessions and losses generally increase. These periods also may be
      accompanied by decreased consumer demand for automobiles and declining values
      of
      automobiles securing outstanding loans, which weakens collateral coverage on
      Coastal Credit’s loans and increases the amount of a loss Coastal Credit would
      experience in the event of default. Significant increases in the inventory
      of
      used automobiles during periods of economic recession may also depress the
      prices at which repossessed automobiles are sold or delay the timing of these
      sales. Because Coastal Credit focuses on subprime borrowers, the actual rates
      of
      delinquencies, defaults, repossessions and losses on these loans are higher
      than
      those experienced in the general automobile finance industry and could be more
      significantly affected by a general economic downturn. In addition, during
      an
      economic slowdown or recession, Coastal Credit’s servicing and collection costs
      may increase without a corresponding increase in its income. While Coastal
      Credit seeks to manage the higher risk inherent in loans made to subprime
      borrowers through its underwriting criteria, pricing and collection methods,
      these criteria or methods may not afford adequate protection against these
      risks. Any sustained period of increased delinquencies, defaults, repossessions
      or losses or increased servicing and collection costs could adversely affect
      Coastal Credit’s financial condition.




***Decreased
      auction proceeds resulting from the depressed prices at which used automobiles
      may be sold during periods of economic slowdown or recession will reduce Coastal
      Credit’s profitability.***




If
      Coastal Credit repossesses a vehicle securing a contract, Coastal Credit
      typically has it transported to an automobile auction for sale. Auction proceeds
      from the sale of repossessed vehicles and other recoveries are usually not
      sufficient to cover the outstanding balance of the contract, and the resulting
      deficiency is charged off. In addition, there is, on average, approximately
      a
      45-day lapse between the time Coastal Credit repossesses a vehicle and the
      time
      it is sold at public auction. Furthermore, depressed wholesale prices for used
      automobiles may result from significant liquidations of rental or fleet
      inventories, and from increased volume of trade-ins due to promotional financing
      programs offered by new vehicle manufacturers. During periods of economic
      slowdown or recession, decreased auction proceeds resulting from the depressed
      prices at which used automobiles may be sold will result in Coastal Credit
      experiencing higher credit losses.




***An
      increase in market interest rates may reduce Coastal Credit’s profitability.***




Coastal
      Credit’s long-term profitability may be directly affected by the level of and
      fluctuations in interest rates. Sustained, significant increases in interest
      rates may adversely affect Coastal Credit’s liquidity and profitability by
      reducing the interest rate spread between the rate of interest Coastal Credit
      receives on its contracts and interest rates that Coastal Credit pays under
      its
      outstanding line of credit facility. As interest rates increase, the gross
      interest rate spread on new originations will generally decline since the rates
      charged on the contracts acquired from dealers generally are limited by
      statutory maximums and competitive market conditions restricting Coastal
      Credit’s opportunity to pass on increased interest costs.




***Coastal
      Credit’s growth depends upon its ability to retain and attract a sufficient
      number of qualified employees.***




To
      a
      large extent, Coastal Credit’s growth strategy depends on the opening of new
      offices that will focus primarily on acquiring contracts in markets Coastal
      Credit has not previously served. Future expansion of Coastal Credit’s office
      network depends upon its ability to attract and retain qualified and experienced
      office managers and the ability of such managers to develop relationships with
      dealers that serve those markets. Coastal Credit generally does not open new
      offices until it has located and hired a qualified and experienced individual
      to
      manage the office. Typically, this individual would be familiar with local
      market conditions and have existing relationships with dealers in the area
      to be
      served. Although Coastal Credit believes that it can attract
      and retain qualified and experienced personnel as Coastal Credit proceeds with
      planned expansion into new markets, Coastal Credit may not be successful in
      doing so. Competition to hire personnel possessing the skills and experience
      required by Coastal Credit could contribute to an increase in its employee
      turnover rate. High turnover or an inability to attract and retain qualified
      personnel could have an adverse effect on Coastal Credit’s origination,
      delinquency, default and net loss rates and, ultimately, its financial
      condition.







19







***The
      loss of one of Coastal Credit’s key executives could have a material adverse
      effect on its business.***




Coastal
      Credit’s growth and development to date have been largely dependent upon the
      services of William E. McKnight, who established Coastal Credit and serves
      as
      its President. Coastal Credit does not maintain a key-man life insurance policy
      on Mr. McKnight. Although Coastal Credit believes that it has sufficient
      additional experienced management personnel to accommodate the loss of any
      key
      executive, the loss of services of Mr. McKnight could have a material adverse
      effect on Coastal Credit.




***Coastal
      Credit is subject to risks associated with
      litigation.***




As
      a
      consumer finance company, Coastal Credit is subject to various consumer claims
      and litigation seeking damages and statutory penalties, based upon, among other
      things:




§
            usury
                laws;




§
            disclosure
                inaccuracies;




§
            wrongful
                repossession;




§
            violations
                of bankruptcy stay provisions;




§
            certificate
                of title disputes;




§
            fraud;




§
            breach
                of contract; and




§
            discriminatory
                treatment of credit applicants.




Some
      litigation against Coastal Credit could take the form of class action complaints
      by consumers. As the assignee of contracts originated by dealers, Coastal Credit
      may also be named as a co-defendant in lawsuits filed by consumers principally
      against dealers. The damages and penalties claimed by consumers in these types
      of actions can be substantial. The relief which may be requested by the
      plaintiffs varies but may include requests for compensatory, statutory and
      punitive damages. Coastal Credit may experience material financial losses in
      the
      future as a result of litigation and other legal proceedings.




***Coastal
      Credit is subject to many laws and governmental regulations, and any material
      violations of or changes in these laws or regulations could have a material
      adverse effect on Coastal Credit’s financial condition and business operations.***




Coastal
      Credit’s financing operations are subject to regulation, supervision and
      licensing under various federal, state and local statutes and ordinances.
      Additionally, the procedures that Coastal Credit must follow in connection
      with
      the repossession of vehicles securing contracts are regulated by each of the
      states in which Coastal Credit does business. The various federal, state and
      local statutes, regulations and ordinances





20








applicable
      to Coastal Credit’s business govern, among
      other things:




§
            licensing
                requirements;




§
            requirements
                for maintenance of proper records;




§
            payment
                of required fees to certain states;




§
            maximum
                interest rates that may be charged on loans to finance new and used
                vehicles;




§
            interest
                rates on loans to customers serving in the
                military;




§
            debt
                collection practices;




§
            proper
                disclosure to customers regarding financing
                terms;




§
            privacy
                regarding certain customer data;
                and




§
            collection
                of debts from loan customers who have filed
                bankruptcy.




Coastal
      Credit believes that it maintains all material licenses and permits required
      for
      its current operations and is in substantial compliance with all applicable
      local, state and federal regulations. Coastal Credit’s failure, or failure by
      dealers who originate the contracts Coastal Credit acquires, to maintain all
      requisite licenses and permits, and to comply with other regulatory
      requirements, could result in consumers having rights of rescission and other
      remedies that could have a material adverse effect on Coastal Credit’s financial
      condition. Furthermore, any changes in applicable laws, rules and regulations
      may make Coastal Credit’s compliance therewith more difficult or expensive or
      otherwise adversely affect its financial condition.




***Coastal
      Credit’s ability to pay cash distributions is restricted by its line of credit.***




While
      Coastal Credit is not restricted by its charter from making distributions,
      its
      line of credit restricts the payment of cash distributions without written
      approval from its lender. Coastal Credit’s ability to receive the necessary
      approval is largely dependent upon its portfolio performance, and Coastal Credit
      may not be able to obtain the necessary approvals in the future for
      distributions to White River that would enable White River to pay cash dividends
      to its shareholders.




***Coastal
      Credit operates in a competitive market.***




The
      subprime consumer-finance industry is highly competitive. There are numerous
      financial service companies that provide consumer credit in the markets served
      by Coastal Credit, including banks, credit unions, other consumer finance
      companies and captive finance companies owned by automobile manufacturers and
      retailers. Many of these competitors have substantially greater financial
      resources than Coastal Credit. In addition, Coastal Credit’s competitors often
      provide financing on terms more favorable to automobile purchasers or dealers
      than Coastal Credit offers. Many of these competitors also have long-standing
      relationships with automobile dealerships and may offer dealerships or their
      customers other forms of financing, including dealer floor-plan financing and
      leasing, which Coastal Credit does not provide. Providers of subprime consumer
      financing have traditionally competed primarily on the basis of:




§
            interest
                rates charged;




§
            the
                quality of credit accepted;




§
            the
                flexibility of loan terms offered;
                and




§
            the
                quality of service provided.







21










Coastal
      Credit’s ability to compete effectively with other companies offering a similar
      financing arrangement depends on maintaining close relationships with dealers
      of
      new and used vehicles. Coastal Credit may not be able to compete successfully
      in
      this market or against these competitors.




Coastal
      Credit has focused on a segment of the market composed of consumers who
      typically do not meet the more stringent credit requirements of traditional
      consumer financing sources and whose needs, as a result, have not been addressed
      consistently by such financing sources. If, however, other providers of consumer
      financing were to assert a significantly greater effort to penetrate Coastal
      Credit’s targeted market segment, Coastal Credit may have to reduce its interest
      rates and fees in order to maintain its market share. Any reduction in Coastal
      Credit’s interest rates or fees could have an adverse impact on its
      profitability.




***Coastal
      Credit may experience problems with its integrated computer systems or be unable
      to keep pace with developments in technology.***




Coastal
      Credit uses various technologies in its business, including telecommunication,
      data processing and integrated computer systems. Technology changes rapidly.
      Coastal Credit’s ability to compete successfully with other financing companies
      may depend on its ability to exploit technological changes. Coastal Credit
      may
      not be able to exploit technological changes, and any investment it makes may
      not make Coastal Credit more profitable.




Coastal
      Credit uses integrated computer systems to respond to customer inquiries and
      to
      monitor the performance of its contract portfolios and the performance of
      individual customers under its contracts. Problems with the operation of Coastal
      Credit’s systems could adversely impact its ability to monitor its portfolios or
      collect amounts due under its contracts and direct loans, which could have
      a
      material adverse effect on its financial condition.




***UAC’s
      Business***


***Our
      recovery of projected cash flows from UAC is dependent on the performance of
      UAC
      receivable portfolios.***




UAC's
      beneficial interest in Master Trust reflected on our balance sheet reflects
      the
      discounted value of projected cash flows that UAC expects to receive from its
      outstanding securitizations and non-recourse financings of its portfolios of
      auto finance receivables.  White River, as owner of the substantial
      majority of UAC's notes and claims outstanding under the Plan of Reorganization,
      will become entitled to distribution of the substantial majority of these
      cash flows as they are realized by UAC.  However, the
      realization of such projected cash flows is dependent upon the
      performance of the underlying auto receivable portfolios and the effective
      servicing of such receivables.  In particular, if gross defaults,
      recoveries on defaulted receivables or prepayments on such receivables are
      less
      favorable than the rates projected by management, UAC's realization of such
      cash flows will be reduced or delayed relative to such projections. 
Such reduction may be material. Factors summarized above in relation to
      Coastal Credit's operations regarding the risk of default on auto finance
      contracts, susceptibility to adverse changes in economic conditions and the
      adverse effects declines in used car values may have upon receivable recoveries
      may also materially and adversely impact the performance of UAC's auto finance
      receivable portfolios.







22










***Transfer
      Restrictions***


***There
      are restrictions on transfer of shares of White River common stock that may
      delay or prevent takeover bids by third parties and may delay or frustrate
      any
      attempt by shareholders to replace or remove the current
      management.***




All
      shares of White River common stock are subject to certain transfer restrictions.
      The transfer restrictions on White River common stock are complex and directed
      toward preserving the value of UAC’s tax net operating loss carryforwards for
      the benefit of shareholders. The transfer restrictions will require any person
      attempting to acquire a significant interest in White River to negotiate with
      White River’s board of directors. The transfer restrictions also may make it
      more difficult to effect a merger or similar transaction perceived by
      shareholders to be favorable to White River by requiring any person seeking
      to
      enter into such a transaction with White River to negotiate with White River’s
      board of directors. Finally, the transfer restrictions may make it more
      difficult for shareholders to replace current management because no single
      shareholder may cast votes for more than 5% of White River’s outstanding shares
      of common stock, unless that shareholder held more than 5% of our common stock
      before the Share Exchange or the acquisition of the shares is otherwise approved
      by the board of directors.




***If
      the transfer restrictions are not effective in preventing an ownership change
      from occurring, our ability to use the NOLs will be severely
      limited.***




Although
      the transfer restrictions are authorized under Indiana law, we are not aware
      of
      any published court decisions enforcing similar transfer restrictions. Thus,
      a
      transfer could occur that would violate the transfer restrictions and White
      River might not be able to enforce the transfer restrictions. Even if a court
      did enforce the transfer restrictions in the case of such a transfer, the
      Internal Revenue Service might not agree that the transfer restrictions provide
      a sufficient remedy with respect to any ownership change resulting from the
      prohibited transfer. In either of these cases, despite the implementation of
      the
      transfer restrictions, an ownership change could occur that would severely
      limit
      White River’s ability to use the tax benefits associated with our NOLs.




***Beneficial
      Use of the NOLs***


***The
      benefits of the NOLs are uncertain and could be reduced or lost if challenged
      by
      the Internal Revenue Service.***




Based
      on
      a current maximum federal corporate income tax rate of 35%, UAC’s NOLs could
      provide significant future tax savings benefits to UAC’s and White River’s
      consolidated group. However, the ability to use these tax benefits in future
      years will depend upon a number of factors, including the amount of White
      River’s otherwise consolidated taxable income and favorable interpretations and
      treatment from the Internal Revenue Service consistent with our interpretation
      of complex tax regulations. The Internal Revenue Service could challenge White
      River’s calculation of the amount of NOLs or White River’s determinations as to
      when or whether a prior change in ownership occurred for purposes of these
      tax
      regulations. Other provisions of the Internal Revenue Code may limit White
      River’s ability to carry forward the NOLs to offset taxable income in future
      years. If the Internal Revenue Service were successful with respect to any
      such
      challenge, the potential tax benefit of the NOLs to White River could be
      substantially reduced or lost.




***Concentration
      of*** **Ownership**


***Because
      ownership of White River’s common stock is concentrated, certain shareholders
      can exert significant influence over shareholders’ decisions.***




As
      of
      December 31, 2005, John M. Eggemeyer, III, the Chairman of the Board and Chief
      Executive Officer of White River, by virtue of his relationship with Castle
      Creek and the Funds managed by Castle Creek, owned or controlled 19.1% of White
      River’s outstanding shares of common stock. Mr. Eggemeyer has
      significant influence on the outcome of shareholder votes, including votes
      concerning, among other things, the election of directors; the adoption or
      amendment of provisions in White River’s Articles of Incorporation; and the
      approval of other significant corporate transactions, including mergers and
      reorganizations. This level of concentrated ownership by a single entity may
      have the effect of delaying or preventing a change in the management or voting
      control of White River.







23







***Your
      ability to resell your shares may be limited.***




Following
      the reorganization transactions in 2005, shares of White River common stock
      began trading over-the-counter and reported under the symbol “WRVC” on the OTC
      Pink Sheets, a centralized quotation service operated by Pink Sheets, L.L.C.
      that collects and publishes market maker quotes for over-the-counter securities.
      These quotations represent bid and asked prices between dealers and do not
      include retail markup, markdown or commissions and may not represent actual
      transactions. We cannot predict the extent to which an active public market
      for
      White River’s common stock will develop or be sustained. Consequently, White
      River’s shareholders may not be able to trade in White River’s shares or
      otherwise liquidate their investment in the event of an emergency or at any
      time. An active trading market in White River’s shares may not be established.
      Furthermore, such market, if established, may not be sufficiently liquid to
      enable holders of shares of White River’s common stock to liquidate their
      investment at the volumes, prices, or times that they desire.




**Item
      1B.   UNRESOLVED STAFF COMMENTS**




Not
      applicable.




**ITEM** **2.   PROPERTIES**




White
      River and its subsidiaries lease its headquarters and branch office facilities.
      White River’s Corporate Headquarters, located at 1445 Brookville Way, Suite I,
      in Indianapolis, Indiana, consists of approximately 1,800 square feet of office
      space. UAC and its subsidiaries share this space with White River. The current
      lease relating to this space expires August 31, 2006.




Coastal
      Credit leases its corporate headquarters and branch office facilities. Its
      headquarters, located at 3852 Virginia Beach Boulevard, in Virginia Beach,
      Virginia, consist of approximately 9,340 square feet of office space. The
      current lease relating to this space expires in September 2006.




Coastal
      Credit’s seventeen branch offices located in California, Delaware, Florida,
      Georgia, Louisiana, Mississippi, Nevada, Ohio, Oklahoma, Pennsylvania, Texas
      and
      Virginia range in size from approximately 885 square feet to 6,700 square feet,
      with a typical size of 1,600 to 2,000 square feet. These offices are located
      in
      office parks, shopping centers or strip malls and are occupied pursuant to
      leases with an initial term of from one to five years. Coastal Credit believes
      that these facilities and additional or alternate space available to it are
      adequate to meet its needs for the foreseeable future.




In
      addition, Coastal Credit’s subsidiary, Bayshore Auto Sales, L.L.C., leases
      property for automobile sales, storage and reconditioning at 3535 North Military
      Highway, Norfolk, Virginia.







24










**ITEM** **3.  
      LEGAL PROCEEDINGS**




White
      River and its subsidiaries, as consumer finance companies, are subject to
      various consumer claims and litigation seeking damages and statutory penalties,
      based upon, among other thins, usury, disclosure inaccuracies, wrongful
      repossession, violations of bankruptcy stay provisions, certificate of title
      disputes, fraud, breach of contract and discriminatory treatment of credit
      applicants. Some litigation against White River and its subsidiaries could
      take
      the form of class action complaints by consumers. As the assignee of finance
      contracts originated by dealers, White River and its subsidiaries may also
      be
      named as a co-defendant in lawsuits filed by consumers principally against
      dealers. The damages and penalties claimed by consumer in these types of matters
      can be substantial. The relief requested by the plaintiffs varies but can
      include requests for compensatory, statutory and punitive damages. White River
      and its subsidiaries believe that it has taken prudent steps to address and
      mitigate the litigation risks associated with its business
      activities.




On
      February 1, 2005, American Bankers Insurance Company of Florida, American
      Bankers Life Assurance Company (successor to Voyager Life Insurance Company
      and
      Voyager Life & Health Insurance Company), and Voyager Property &
Casualty Insurance Company instituted arbitration proceedings against Coastal
      Credit in Fort Worth, Texas asserting breach of contract claims in connection
      with deficit clauses under contingent compensation schedules to an alleged
      Agency Agreement between the claimants and Coastal Credit. The claimants seek
      damages in the amount of $757,792, plus pre-judgment interest, in connection
      with the termination of the Agency Agreement by claimants on July 15, 2003.
      The
      matter is now pending before the American Arbitration Association pursuant
      to an
      arbitration clause in the Agency Agreement. Coastal Credit believes the claims
      are without merit and intends to vigorously defend against these
      claims.




UAC
      and
      its subsidiaries filed an adversary proceeding within UAC’s bankruptcy case on
      July 25, 2005 in the U.S. Bankruptcy Court for the Southern District of Indiana
      against SST seeking unspecified damages for deficiencies in SST’s servicing of
      securitized and unsecuritized receivables. On February 17, 2006 the U.S.
      Bankruptcy Court for the Southern District of Indiana granted SST’s motion to
      dismiss for lack of subject matter jurisdiction. In response to this decision,
      UAC and its subsidiaries re-filed substantially the same complaint against
      SST
      on February 17, 2006 in the U.S. District Court for the Southern District of
      Indiana. An answer to this complaint was filed on March 15, 2006 by SST. The
      answer included counterclaims alleging fraud in the initial sale of the
      servicing platform to SST and underpayment of certain servicing fees. UAC
      believes the counterclaims are without merit and intends to vigorously defend
      against them. See also “Business - Union Acceptance Company LLC - The UAC
      Bankruptcy Case”, under Part 1, Item 1, above.









**ITEM** **4.  
      SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**




Not
      applicable.







25





**PART
      II**







**ITEM** **5.  
      MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
      MATTERS**




White
      River’s common stock trades on the OTC Pink Sheets under the symbol WRVC. As of
      March 8, 2006, there were 3,813,155 shares of common stock outstanding and
      approximately 103 shareholders of record (assuming all unexchanged certificates
      for shares of UAC common stock are exchanged for certificates representing
      White
      River shares). White River’s common stock was held by approximately 685
      beneficial owners as of such date.




The
      following table sets forth the range of the high, low and closing sale prices
      for White River’s common stock as reported on the OTC Pink Sheets. The share
      prices prior to the August 9, 2005 Share Exchange, are based on the UAC trading
      prices which have been adjusted to reflect the Share Exchange.







**High**
            
            **Low**
            
            **Close****Fiscal
                year ended December 31, 2004**First
                Quarter
            
            $
            9.50
            
            $
            5.50
            
            $
            7.00Second
                Quarter
            
            
            8.00
            
            
            7.00
            
            
            8.00Third
                Quarter
            
            
            11.00
            
            
            7.00
            
            
            10.25Fourth
                Quarter
            
            
            19.50
            
            
            9.70
            
            
            15.00**Fiscal
                year ended December 31, 2005**First
                Quarter
            
            $
            20.00
            
            $
            14.00
            
            $
            15.00Second
                Quarter
            
            
            16.00
            
            
            12.00
            
            
            15.00Third
                Quarter
            
            
            20.00
            
            
            9.00
            
            
            10.80Fourth
                Quarter
            
            
            16.00
            
            
            10.50
            
            
            15.00








White
      River has never paid cash dividends on its common stock. White River presently
      intends to retain future earnings, if any, for use in the operation and
      expansion of the business and does not anticipate paying any cash dividends
      in
      the foreseeable future.




**Summary
      of Transfer Restrictions and Related Provisions**





***General***





The
      following is a summary of the material transfer restrictions set forth in
      Article 10 of White River’s articles of incorporation. The following summary is
      not complete. The transfer restrictions apply to transfers of White River’s
      common stock and any other instrument that would be treated as “stock,” as
      determined under applicable Treasury Regulations. The transfer restrictions
      will
      apply until the earlier of:




§
            the
                repeal by the Internal Revenue Service of the NOL carryforward limitations
                in the Code if White River’s board of directors determines the transfer
                restrictions are no longer necessary for the preservation of the
                tax
                benefits; and




§
            the
                beginning of a taxable year of White River to which White River’s board
                determines that no tax benefits may be carried forward.




However,
      White River’s board of directors will have the power to extend the expiration
      date of the transfer restrictions if it determines in writing that such action
      is reasonably necessary or desirable to preserve the
      tax
      benefits or to accelerate the expiration date if it determines in writing that
      the continuation of the transfer restrictions is no longer reasonably necessary
      for the preservation of the tax benefits. This power is vested in White River’s
      board of directors to ensure that White River retains the power to make, in
      light of all relevant circumstances, including positions that might be taken
      by
      tax authorities and contested by White River, the complex determination whether
      the tax benefits have been fully used or are otherwise available.







26










***Prohibited
      Transfers***





The
      transfer restrictions generally prohibit any conveyance, from one person to
      another, by any means, of legal or beneficial ownership, directly or indirectly,
      of any class of White River stock including indirect transfers of White River
      stock, accomplished by transferring interests in other entities that own White
      River stock, to the extent that the transfer, if effective:




§
            would
                create a new “public group” of White River. For example, the transfer of
                stock by an existing 5-percent shareholder to the public would be
                deemed
                to result in the creation of a separate, segregated “public group” that
                would be a new 5-percent shareholder;




§
            would
                give rise to a “prohibited ownership percentage,” which is defined by
                reference to complex federal tax laws and regulations, but generally
                means
                any direct or indirect ownership that would cause any person, including
                a
                “public group” as defined in the NOL carryforward limitations, to be
                considered a 5-percent shareholder of White River. By way of example,
                if
                shareholder A owns 4% of White River’s outstanding shares of common stock,
                and shareholder B attempted to sell 2% of White River’s outstanding shares
                to shareholder A, the transfer restrictions would prohibit the sale
                of
                approximately 1.1% of the shares out of the 2% attempted to be sold;
                or




§
            would
                increase the ownership percentage of any person, including a public
                group
                that is already a 5-percent shareholder of White River. Therefore,
                no
                shareholder will be permitted to sell any shares to 5-percent holders
                or
                their affiliates without board approval.




White
      River will be entitled to require, as a condition to the registration of any
      transfer of stock, that the proposed transferee furnish to White River all
      information reasonably requested by it with respect to all the direct and
      indirect legal or beneficial ownership interest in, or options to acquire,
      stock
      of the proposed transferee and its affiliates. White River’s Articles and Code
      of By-laws provide for specific shareholder ownership disclosure procedures
      as
      an additional measure available to White River to protect against prohibited
      transfers.







***Exemptive
      Power of White River’s Board***





White
      River’s board of directors will have the power to approve any otherwise
      prohibited transfer, conditionally or unconditionally, if it determines, in
      its
      discretion, that a specific proposed transaction will not jeopardize White
      River’s full use of the tax benefits. In addition, White River’s board of
      directors will have the power to waive any of the transfer restrictions in
      any
      instance where it determines that a waiver would be in the best interests of
      White River despite the effect of the waiver on the tax benefits. White River’s
      articles of incorporation will not prohibit transfers occurring as a result
      of
      White River’s issuance of shares in the subscription offering.







27








***Consequences
      of Purported Prohibited Transfer***





Unless
      approved by White River’s board of directors, any attempted transfer in excess
      of the shares of White River stock that could be transferred without restriction
      will be void and will not be effective to transfer ownership of such excess
      shares. Further, the purported acquiror of the excess shares will not be
      entitled to any rights as a shareholder of White River with respect to the
      excess shares.




In
      the
      case of an attempted transfer that creates a new 5-percent shareholder,
      increases the ownership of an existing 5-percent shareholder, or causes a person
      or public group to become a new 5-percent shareholder, White River will have
      the
      right to demand that the new 5-percent shareholder or existing 5-percent
      shareholder, as the case may be, transfer any certificate or other evidence
      of
      purported ownership of the prohibited shares within the party’s possession or
      control, along with any dividends or other distributions received on the
      prohibited shares from White River, to an agent designated by White River who
      will be required to sell the prohibited shares in an arm’s-length transaction,
      in the public market, if possible, but in any event consistent with applicable
      law. The agent will be required to pay the sale proceeds in excess of the sum
      of
      the agent’s expenses plus the purchase price paid by the purported acquiror for
      the prohibited shares (or the fair market value of the prohibited shares if
      they
      were the subject of a gift or inheritance in favor of the purported acquiror),
      as well as all prohibited distributions, to a tax-exempt charitable organization
      designated by White River. If the purported acquiror has sold the prohibited
      shares to an unrelated party in an arm’s-length transaction, the purported
      acquiror will be deemed to have done so for the agent, who will have the right
      to allow the purported acquiror to retain a portion of the resale proceeds
      not
      exceeding the amount that the agent would have been required to remit to the
      purported acquiror out of the proceeds of a resale by the agent. Any purported
      transfer of the prohibited shares by the purported acquiror, other than a
      transfer that is described in the preceding sentences of this paragraph and
      that
      does not itself violate the transfer restrictions, will not be effective to
      transfer any ownership of the prohibited shares.




In
      addition to the powers of White River’s board of directors described above, if
      the board determines that a purported prohibited transfer or other action in
      violation of the transfer restrictions has occurred or is proposed, it may
      take
      such action as it deems advisable to prevent or refuse to give effect to such
      purported transfer or other action, including refusing to give effect to the
      purported transfer or other action on White River’s books or instituting
      injunctive proceedings.




If
      any
      person knowingly violates the transfer restrictions or knowingly causes any
      entity under such person’s control to do so, such person and, if applicable, the
      controlled entity will be jointly and severally liable to White River in such
      amount as will put White River in the same financial position, on an after-tax
      basis, as it would have been had such violation not occurred.




With
      respect to any conveyance of White River common stock that does not involve
      a
      transfer of “securities” of White River within the meaning of the Indiana
      Business Corporation Law, but that would create a new 5-percent shareholder,
      increase the ownership of an existing 5-percent shareholder or create a new
      public group, the following procedure will apply. The person or group will
      not
      be required to dispose of any interest that is not a security of White River,
      but will be deemed to have disposed of, and will be required to dispose of,
      sufficient shares, simultaneously with the transfer, to cause the person or
      group not to be in violation of the transfer restrictions. The shares will
      be
      disposed of through the agent under the provisions summarized above, with the
      maximum amount payable to the prohibited party from the proceeds of sale by
      the
      agent being the fair market value of the prohibited shares at the time of the
      prohibited transfer.







28








***Other
      Powers of White River’s Board***





White
      River’s board of directors has the power:




§
            to
                accelerate or extend the expiration date of the transfer restrictions,
                modify the definitions of any terms set forth in White River’s articles of
                incorporation with respect to the transfer restrictions or conform
                certain
                provisions to make them consistent with any future changes in federal
                tax
                law, in the event of a change in law or regulation or if it otherwise
                believes such action is in the best interests of White River, provided
                White River’s board of directors determines in writing that such action is
                reasonably necessary or desirable to preserve the tax benefits or
                that
                continuation of the transfer restrictions is no longer reasonably
                necessary for the preservation of the tax benefits;




§
            to
                adopt by-laws, regulations and procedures, not inconsistent with
                the
                transfer restrictions, for purposes of determining whether any acquisition
                of White River common stock would jeopardize the ability of White
                River to
                preserve and use the tax benefits and for the orderly application,
                administration and implementation of the transfer restrictions; and




§
            to
                administer, interpret and make calculations under the transfer
                restrictions, which power it may delegate in whole or in part to
                a
                committee of White River’s board of directors, and which actions shall be
                final and binding on all parties if made in good faith.







***Disclosure
      Procedures***





The
      following is a summary of the shareholder disclosure and ownership procedures
      adopted by White River’s board of directors and set forth in Article III,
      Section 14 of White River’s Code of By-laws, in accordance with authority and
      direction granted in Section 6.08 of White River’s Articles of Incorporation.
      The following is a summary and does not completely restate the provisions of
      Article III, Section 14 of the Code of By-laws. You should read Article III,
      Section 14 of the Code of By-laws in its entirety.




The
      shareholder disclosure and ownership procedures have the following purposes:




§
            to
                preserve important characteristics of White River for federal income
                tax
                purposes and, in particular, the NOLs;




§
            to
                protect White River and its shareholders against undisclosed efforts
                to
                assume or influence control of White River, its operations and policies;
                and




§
            to
                facilitate communication among White River and its shareholders.







The
      disclosure and ownership procedures apply to all holders and beneficial owners
      of White River’s outstanding shares of common stock. “Beneficial owner”
generally refers to a person to whom the economic value of the shares of common
      stock ultimately inures and who has the power directly or indirectly to dispose
      of the shares of common stock.




From
      the
      date shares of common stock were first issued by White River until December
      31,
      2015, every beneficial owner of more than 4.5% of the outstanding shares of
      common stock within thirty (30) days after the end of each fiscal quarter,
      shall
      give written notice to White River stating the name and address of such owner,
      the number of shares beneficially owned and a description of the manner in
      which
      such shares are held. In addition, each such beneficial owner must provide
      additional ownership information reasonably requested by White River in order
      to
      determine the effect, if any, of such beneficial ownership on White River’s
      federal income tax characteristics (including ownership changes that have
      occurred or may occur for purposes of Section 382 of the Code), or on control
      of
      White River’s outstanding shares, or to ensure compliance with the Code of
      By-laws.







29










The
      disclosure procedures also require each person who is a beneficial owner of
      shares and, to the extent permitted by law, each person (including the
      shareholder of record) holding shares for a beneficial owner or as nominee
      to
      provide or confirm to White River such information relating to a beneficial
      owner’s present and past beneficial ownership of shares or changes in that
      ownership to the extent the information is in the person’s possession or can be
      acquired without unreasonable expense. White River may request this information,
      in good faith, in order to determine the effect, if any, on White River’s
      federal income tax characteristics (including ownership changes that have
      occurred or may occur for purposes of Section 382 of the Code) or on control
      of
      White River’s outstanding shares, or to determine compliance with requirements
      of any taxing authority or governmental authority, or to determine compliance
      with White River’s Articles of Incorporation or Code of By-laws.




The
      procedures do not require information to be reported that a beneficial owner
      has
      previously reported to White River or that has been previously reported on
      the
      beneficial owner’s behalf. If there has been no change in information previously
      reported, a person does not need to report it again unless White River requests
      confirmation. The procedures also will not require the disclosure of the names
      of the beneficial owners of a private trust created in good faith and not for
      the purpose of circumventing the White River Articles of Incorporation or Code
      of By-laws.







***Disclosure
      Compliance***





To
      ensure
      compliance with the disclosure procedures, the following sanctions are available
      to White River:




*Distributions
      Withheld.* White
      River shall withhold payment of any dividend or distribution otherwise payable
      in respect of shares (or property or securities into which such shares may
      be
      converted or for which they may be exchanged in a merger or share exchange
      transaction) if the beneficial owner of the shares has failed, or White River
      reasonably believes it has failed, to comply with these disclosure procedures.
      Such distributions or property shall be payable only at such time as the subject
      beneficial owner has complied with the disclosure procedures. However, if the
      distribution is to be made with respect to subscription rights or similar
      time-sensitive rights that required action or exercise by the beneficial owner
      before a time that has passed or elapsed, such rights shall be deemed expired
      and the beneficial owner shall be deemed to have elected to forfeit such rights.




*Vote
      Disregarded.* White
      River shall disregard the affirmative vote on any action by shareholders on
      any
      matter, whether at a meeting or by written consent, purported to be cast in
      respect of shares if the holder or beneficial owner of the shares has failed,
      or
      White River reasonably believes it has failed, to comply with these disclosure
      procedures, unless such vote is cast in a manner consistent with a
      recommendation of the board of directors in respect of such matter. These shares
      will still be counted, however, in determining the presence of a quorum if
      the
      shares are represented in person or by proxy at a meeting of shareholders.




*Remedial
      Transfer.* If a
      beneficial owner fails to comply with the disclosure procedures, and White
      River
      delivers a compliance demand notice to the nominee or holder of record of the
      shares, then at or before the close of business on the date ten (10) business
      days following delivery of the notice, the nominee or holder of record shall
      effect the disposition of beneficial ownership by the non-compliant beneficial
      owner of the shares and deliver a “Disposition Certificate” to White River. The
      Disposition Certificate certifies to White River that the interest of the
      non-compliant beneficial owner has been effectively transferred and that
      everything required to be disclosed has been disclosed. If the disposition
      of
      shares is not effected or a Disposition Certificate is not timely delivered,
      then White River may require the nominee or record holder of such shares to
      whom
      the compliance demand notice was delivered to effect a remedial transfer whereby
      the affected shares would be sold by an independent agent.







30










*Additional
      Remedies.* The
      board of directors of White River is also authorized to take any other action
      it
      deems necessary or advisable to protect White River and the interests of its
      shareholders, including actions to protect and preserve White River’s status
      under Section 382 of the Code. This action may include a decision to exclude
      any
      shareholder the board reasonably believes has failed to comply with the
      disclosure procedures from any offering of White River securities that is
      otherwise made available to shareholders.







***Anti-Takeover
      Effect of Transfer Restrictions and Disclosure Procedures***





The
      transfer restrictions:




§
            may
                have the effect of impeding the attempt of a person or entity to
                acquire a
                significant or controlling interest in White River;




§
            may
                render it more difficult to effect a merger or similar transaction
                even if
                such transaction is favored by a majority of the independent shareholders
                of White River; and




§
            may
                serve to entrench management.




In
      addition to the transfer restrictions and disclosure procedures, White River
      will be subject to certain other provisions of White River’s articles of
      incorporation, to which we are currently subject, that may have the effect
      of
      discouraging a takeover or similar transaction, including the authority, vested
      in White River’s board of directors, to issue up to three million shares of
      preferred stock and to fix the preferences and rights thereof.




The
      purpose of the transfer restrictions and disclosure procedures is to help
      preserve the tax benefits rather than to have an anti-takeover effect, which
      is
      an incidental result.









**ITEM** **6.  
      SELECTED FINANCIAL DATA**




The
      following table summarized selected financial information. For additional
      information refer to the audited consolidated financial statements and notes
      thereto in Item 8., Financial Statements and Supplementary Data.







31








**For
                The Years Ended December 31,**
            
            **Six
                Months Ended**
            
            **Year
                  Ended****For
                The Years Ended December 31,**
            
            **2005**
            
            **2004**
            
            **2003**
            
            **2002**
            
            **December
                31, 2001**
            
            **June
                30, 2001**Total
                interest income
            
            $
            37,333
            
            $
            14,013
            
            $
            15,716
            
            $
            54,704
            
            $
            20,552
            
            $
            72,413Interest
                expense
            
            
            (15,204
            )
            
            (13,108
            )
            
            (15,171
            )
            
            (20,555
            )
            
            (8,790
            )
            
            (33,794
            )Net
                interest margin
            
            
            22,129
            
            
            905
            
            
            545
            
            
            34,149
            
            
            11,762
            
            
            38,619Recovery
                (provision) for estimated credit losses
            
            
            1,465
            
            
            (11,025
            )
            
            (874
            )
            
            (6,725
            )
            
            (2,466
            )
            
            (3,240
            )Net
                interest margin (deficiency) after provision for estimated credit
                losses
            
            
            23,594
            
            
            (10,120
            )
            
            (329
            )
            
            27,424
            
            
            9,296
            
            
            35,379Total
                other revenues, net
            
            
            1,767
            
            
            7,419
            
            
            66,999
            
            
            33,206
            
            
            27,212
            
            
            58,688Total
                other expenses (a)
            
            
            8,851
            
            
            4,561
            
            
            60,996
            
            
            250,810
            
            
            72,893
            
            
            85,750Net
                income (loss)
            
            $
            16,510
            
            $
            (7,262
            )
            $
            5,674
            
            $
            (183,433
            )
            $
            (23,152
            )
            $
            4,195Basic
                earnings per share
            
            $
            11.08
            
            $
            (23.41
            )
            $
            18.29
            
            $
            (591.97
            )
            $
            (74.89
            )
            $
            29.69Diluted
                earnings per share
            
            $
            11.02
            
            $
            (23.41
            )
            $
            18.29
            
            $
            (591.97
            )
            $
            (74.89
            )
            $
            29.69Diluted
                weighted average shares
            
            
            1,498,549
            
            
            310,191
            
            
            310,191
            
            
            309,869
            
            
            309,157
            
            
            141,278**December
                31,****2005**
            
            
            **2004**
            
            
            **2003**
            
            
            **2002**
            
            
            **2001**Securitized
                finance receivables, net
            
            $
            109,506
            
            $
            115,165
            
            $
            93,089
            
            $
            -
            
            $
            -Finance
                receivables, net
            
            
            70,784
            
            
            -
            
            
            -
            
            
            -
            
            
            -Receivables
                held for sale, net (a)
            
            
            269
            
            
            499
            
            
            805
            
            
            303,423
            
            
            176,511Retained
                interest / Beneficial interest in Master Trust
            
            
            13,968
            
            
            3,677
            
            
            4,619
            
            
            37,243
            
            
            198,251Total
                assets
            
            
            266,994
            
            
            150,930
            
            
            130,093
            
            
            426,630
            
            
            437,156Collateralized
                financings
            
            
            122,293
            
            
            132,257
            
            
            102,234
            
            
            -
            
            
            -Line
                of Credit
            
            
            51,500
            
            
            -
            
            
            -
            
            
            -
            
            
            -Secured
                note payable
            
            
            15,000
            
            
            -
            
            
            -
            
            
            -
            
            
            -Subordinated
                debentures
            
            
            7,700
            
            
            -
            
            
            -
            
            
            -
            
            
            -Note
                payable - Coastal Credit purchase holdback
            
            
            3,840
            
            
            -
            
            
            -
            
            
            -
            
            
            -Creditor
                notes payable
            
            
            1,461
            
            
            11,445
            
            
            17,087
            
            
            -
            
            
            -Notes
                payable (a)
            
            
            -
            
            
            -
            
            
            -
            
            
            294,780
            
            
            100,300Term
                debt(a)
            
            
            -
            
            
            -
            
            
            -
            
            
            100,330
            
            
            133,000Total
                liabilities
            
            
            213,633
            
            
            159,232
            
            
            133,076
            
            
            437,320
            
            
            262,456Shareholder's
                equity (deficit)
            
            
            53,361
            
            
            (8,302
            )
            
            (2,983
            )
            
            (10,690
            )
            
            174,700(a)
                As discussed in Item 1. Business, UAC filed for bankruptcy protection
                on
                October 31, 2002.From November 2002 through August 2003, UAC took
                several
                steps with the approval of the bankruptcy court: i. UAC sold a majority
                of
                the receivables held for sale and used the proceeds to pay in full
                the
                notes payable, secured by such receivables, ii. UAC discontinued
                originating loans and sold its servicing platform thus reducing operating
                expenses, and iii. the UAC bankruptcy plan of reorganization was
                approved
                and the UAC liabilities were converted to creditor notes
                payable.











32










**ITEM** **7.  
      MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS**






**General**




White
      River is an Indiana corporation incorporated on December 30, 2004, for the
      purpose of acting as a holding company and effecting a recapitalization
      transaction proposed by the board of directors of UAC




On
      August
      9, 2005, the share exchange between White River and UAC became effective upon
      the filing of Articles of Share Exchange with the State of Indiana. The
      outstanding shares of common stock of UAC were exchanged for shares of common
      stock of White River, at an exchange rate of one share of White River common
      stock for 100 shares of UAC common stock. White River exchanged 310,155 shares
      of its common stock for the outstanding shares of UAC. On August 31, 2005,
      White
      River completed the acquisition of 100% of the ownership interest in Coastal
      Credit with an aggregate purchase price of $50.8 million, including direct
      costs
      of acquisition. $45.0 million was paid at closing and $3.8 million, net of
      a
      $1.2 million receivable from the previous owners, was held back (subject to
      offsetting adjustments) until March 31, 2006 and payable with interest at the
      rate of 10% per annum. Upon completion of these transactions, White River became
      the parent holding company of UAC and Coastal Credit.




On
      August
      31, 2005, White River completed a $35 million subscription offering. In this
      offering, White River issued 3,500,000 shares of common stock at the
      subscription price of $10.00 per share. The net proceeds of this subscription
      offering were used to acquire Coastal Credit, to repay the secured bridge note
      payable to Castle Creek, to pay transaction costs, and for ongoing
      operations.






**C** **ritical
      Accounting Policies**




The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America requires management to make
      significant estimates and assumptions that affect the reported amounts of assets
      and liabilities and disclosures of contingent assets and liabilities at the
      date
      of the financial statements and the reported amounts of revenue and expenses
      during the reporting period. White River believes that the following represents
      the material critical accounting policies used in the preparation of its
      consolidated financial statements. Actual results could differ significantly
      from estimates.




***Net
      Assets of Collateralized Financings***




UAC
      Securitization Corporation has purchased receivables from off-balance sheet
      securitizations that were eligible for clean-up calls. These receivables were
      re-securitized through non-recourse collateralized financing issuances. The
      associated future cash flows from these receivables are subject to the same
      Master Trust Account provisions as the securitizations called.




To
      finance the securitized receivable acquisitions, collateralized financings
      are
      used, secured by the respective portfolios of the acquired receivables and
      related restricted cash accounts. Timely payments of principal and interest
      on
      the non-recourse collateralized financings are insured by surety policies.
      Such
      obligations are also cross-collateralized through the Master Trust Agreement.
      Net interest cash flows in excess of expense are payable to the Master Trust
      Account and expensed as charge to Master Trust, net.







33





***Valuation
      of Beneficial Interest in Master Trust***




The
      Master Trust Agreement established that all excess cash from securitizations
      is
      to be deposited in the Master Trust Account. Once prescribed cash reserve levels
      are met, cash will be released to UAC from the Master Trust Account. This future
      cash flow is reported as beneficial interest in Master Trust. In determining
      the
      fair value of the beneficial interest in Master Trust, estimates must be made
      for the future prepayments, rates of gross credit losses and credit loss
      severity, and delinquencies as they impact the amount and timing of the
      estimated cash flows from the Master Trust. The average of the interest rates
      on
      the receivables exceeds the interest rates on the securities issued in the
      securitization. This excess cash is held by the Master Trust Account and
      released based on reserve requirements of the Master Trust. These estimated
      cash
      flows from the Master Trust are then discounted to reflect the present
      value.




***Income
      Recognition - Finance Receivables***




Finance
      charge income is recognized for financial reporting purposes using the interest
      method. Initial fees earned on add-on products such as collateral protection
      insurance, credit life insurance, road service plans and warranty products
      are
      recorded in income using the interest method. Late charges and deferment charges
      on contracts are recorded in income as collected. Cash received from loans
      that
      have previously been charged off is applied directly to the allowance for loan
      losses in the consolidated balance sheets. Discounts and fees, which consist
      primarily of non-refundable dealer acquisition discounts, are deferred and
      amortized over the term of the related finance receivables using the interest
      method and are removed from the balance sheet when the related finance
      receivables are charged off or paid in full.




***Finance
      Receivables***




Finance
      receivables are recorded at cost, net of unearned finance charges, discounts
      and
      fees. Coastal Credit purchases finance contracts from auto dealers without
      recourse, and accordingly, the dealer usually has no liability to Coastal Credit
      if the consumer defaults on the contract.




Coastal
      Credit does not have any off-balance-sheet credit exposure related to its
      contract portfolio.




***Allowance
      for Loan Losses - Finance Receivables***




Provisions
      for loan losses are charged to operations in amounts sufficient to maintain
      the
      allowance for loan losses at a level considered adequate to cover probable
      credit losses inherent in finance receivables.




The
      allowance for loan losses is established systematically by management based
      on
      the determination of the amount of probable credit losses inherent in the
      finance receivables as of the reporting date. Coastal Credit reviews charge
      off
      experience factors, delinquency reports, historical collection rates and other
      information in order to make the necessary judgments as to probable credit
      losses inherent in the portfolio as of the reporting date. Assumptions regarding
      probable credit losses are reviewed quarterly and may be impacted by actual
      performance of finance receivables and changes in any of the factors discussed
      above. Should the credit loss assumptions increase, there could be an increase
      in the amount of allowance for loan losses required, which could decrease the
      net carrying value of finance receivables and increase the provision for loan
      losses recorded on the consolidated statements of operations. Coastal Credit
      believes that the existing allowance for loan losses is sufficient to absorb
      all
      probable finance receivable losses.




***Charge
      off Policy - Finance Receivables***




The
      policy is to charge off finance receivables against the allowance for loan
      losses in the month in which the installment contract becomes 60 days delinquent
      under recency terms and 180 days delinquent under contractual terms, if the
      vehicle has not been repossessed. If the vehicle has been repossessed, the
      receivable is charged off in the month the repossessed automobile is disposed
      of
      at public auction unless cash collections on the receivable are foreseeable
      in
      the near future. Receivables that are deemed uncollectible prior to the maximum
      charge off period are charged off immediately.







34










If
      contact is not made with a delinquent borrower or if the borrower is unable
      to
      make acceptable payment arrangements, a repossession firm repossesses the
      vehicle and delivers it to a secure location specified by Coastal Credit. As
      required by applicable state law, Coastal Credit notifies the borrower by
      certified letter that the vehicle has been repossessed and that, to regain
      the
      vehicle, he or she must make arrangements satisfactory to Coastal Credit and
      pay
      the amount owed under the contract within the statutory redemption period
      allowed by the applicable state law after delivery of the letter. If
      satisfactory arrangements for return of the vehicle are not made within the
      statutory period, Coastal Credit then sends the title to the vehicle to the
      applicable state title transfer department, which then registers the vehicle
      in
      Coastal Credit’s name. Coastal Credit then sells the vehicle by public auction.
      On average, approximately 45 days lapse between the times Coastal Credit takes
      possession of a vehicle and the time it is sold at auction.




All
      charged off loans are transferred to a Profit and Loss (P&L) Department. The
      P&L Department attempts to collect the contract until the borrower has paid
      the contract or all legal remedies have been exhausted. These collections are
      netted against collection expenses and recorded as other income.




***Income
      Taxes***




Deferred
      tax assets and liabilities are recognized for the future tax consequences
      attributable to differences between the financial statement carrying amounts
      of
      existing assets and liabilities and their respective tax basis. Deferred tax
      assets and liabilities are measured using enacted tax rates expected to apply
      to
      taxable income in the years in which those temporary differences are expected
      to
      be recovered or settled. The effect on deferred tax assets and liabilities
      of a
      change in tax rates is recognized in income in the period that includes the
      enactment date.




The
      ultimate realization of the deferred tax asset depends on White River’s ability
      to generate sufficient taxable income in the future and their ability to not
      allow an ownership change to occur for tax purposes. The valuation allowance
      has
      been determined pursuant to the provisions of FASB Statement No. 109, Accounting
      for Income Taxes ,
      including White River’s estimation of future taxable income, and reduces the
      total deferred tax asset to an amount that will more likely than not be realized
      (see Note 14).




On
      August
      31, 2005, White River acquired Coastal Credit, an established, profitable
      operating business within UAC’s historical line of business. With this
      acquisition, it is now likely that at least a portion of the deferred tax assts
      will be realized by White River. As part of the acquisition purchase accounting,
      the taxable income of Coastal Credit was estimated and partially offset by
      the
      taxable loss of UAC and corporate expenses of White River for remainder of
      tax
      year 2005 and the following five years. The results of these estimates were
      a
      reduction in the valuation allowance of $4.7 million at August 31, 2005. This
      adjustment to the valuation allowance was offset by a reduction to goodwill
      as
      part of the purchase of Coastal Credit.




In
      the
      future, White River will annually review the valuation allowance based on the
      estimated taxable income for the next five years and will make adjustments
      as
      required. These future adjustments will be recorded as income tax expense
      (benefit).




**Results
      of Operations**




***Executive
      Summary***




As
      a
      result of the Share Exchange, management’s discussion and analysis of results of
      operations include results of UAC and White River as though they always
      coexisted. With the acquisition of Coastal Credit on August 31, 2005, results
      of
      operations include results of Coastal Credit for the four months ended December
      31, 2005.







35







*The
      Year* *Ended
      December 31, 2005 Compared to the Year Ended December 31, 2004*




Net
      income was $16.5 million, or $11.02 per diluted share, for the year ended
      December 31, 2005, compared to net loss of $(7.3) million, or $(23.41) per
      diluted share, for the year ended December 31, 2004. The improvement from the
      prior year is primarily due to the following:




§
            an
                increase in accretion income from beneficial interest in Master Trust,




§
            elimination
                of a substantial portion of the accretion and interest expense from
                creditor notes payable resulting from the purchase by White River
                of
                general unsecured claims and Subordinated Notes of UAC,




§
            the
                acquisition of Coastal Credit on August 31, 2005 contributed $2.4
                million,




§
            a
                one time gain of $11.4 million from extinguishment of debt related
                to the
                purchase by White River of general unsecured claims and Subordinated
                Notes
                of UAC.






*The
      Year* *Ended
      December 31, 2004 Compared to the Year Ended December 31, 2003*




Net
      loss
      was $(7.3) million, or $(23.41) per diluted share, for the year ended December
      31, 2004, compared to net income of $5.7 million, or $18.29 per diluted share,
      for the year ended December 31, 2003. The decrease to a net loss from the net
      income of the prior year is primarily due to the change in operations and other
      activity related to the bankruptcy filing of UAC on October 31, 2002. These
      changes resulted in the elimination of servicing fee income and one time gains
      on fair valuation of creditor liabilities and sale of servicer platform and
      equipment-net during 2003. This income was partially offset by the one time
      impairment of retained interest/beneficial interest in Master Trust during
      2003,
      bankruptcy cost reduction during 2004 as compared to 2003 related to the
      bankruptcy plan confirmation during 2003 and reduction of operating expenses
      related to the elimination of servicing activities during 2003. In addition,
      the
      provision for estimated credit losses was $11.0 million for the year ended
      December 31, 2004 compared to $0.9 million for the year ended December 31,
      2003.







36










**Discussion
      of Results**




The
      following table presents consolidated financial information for White River
      for
      the periods indicated:







**Years
                Ended December 31,****2005**
            
            **2004**
            
            **2003**INTEREST:Interest
                on receivables
            
            $
            28,803
            
            $
            12,985
            
            $
            9,799Accretion
                and other interest
            
            
            8,530
            
            
            1,028
            
            
            5,917Total
                interest income
            
            
            37,333
            
            
            14,013
            
            
            15,716Interest
                expense
            
            
            (15,204
            )
            
            (13,108
            )
            
            (15,171
            )Net
                interest margin
            
            
            22,129
            
            
            905
            
            
            545Recovery
                (provision) for estimated credit losses
            
            
            1,465
            
            
            (11,025
            )
            
            (874
            )Net
                interest margin (deficit) after recovery (provision) for estimated
                credit
                losses
            
            
            23,594
            
            
            (10,120
            )
            
            (329
            )OTHER
                REVENUES:Servicing
                fee income
            
            
            -
            
            
            -
            
            
            5,355Credit
                (charge) to Master Trust—net
            
            
            (10,253
            )
            
            4,485
            
            
            (178
            )Gain
                from extinguishment of debt
            
            
            11,352
            
            
            -
            
            
            -Gain
                on fair valuation of creditor liabilities
            
            
            -
            
            
            -
            
            
            51,604Gain
                on sale of servicing platform and equipment—net
            
            
            -
            
            
            -
            
            
            6,582Other
                income
            
            
            668
            
            
            2,934
            
            
            3,636Total
                other revenues, net
            
            
            1,767
            
            
            7,419
            
            
            66,999OTHER
                EXPENSES:Salaries
                and benefits
            
            
            2,462
            
            
            434
            
            
            4,260Operating
                expenses
            
            
            2,770
            
            
            1,126
            
            
            7,768Third
                party servicing expense
            
            
            3,323
            
            
            2,344
            
            
            637Impairment
                of retained interest/beneficial interest in Master Trust
            
            
            -
            
            
            -
            
            
            39,154Valuation
                loss on receivables held for sale—net
            
            
            -
            
            
            -
            
            
            280Bankruptcy
                costs
            
            
            296
            
            
            657
            
            
            8,897Total
                other expenses
            
            
            8,851
            
            
            4,561
            
            
            60,996INCOME
                (LOSS) BEFORE INCOME TAXES
            
            
            16,510
            
            
            (7,262
            )
            
            5,674INCOME
                TAXES
            
            
            -
            
            
            -
            
            
            -NET
                INCOME (LOSS)
            
            $
            16,510
            
            $
            (7,262
            )
            $
            5,674





***The
      Year Ended December 31, 2005 Compared to the Year Ended December 31, 2004 -
      Consolidated***




Interest
      on receivables increased 121.8% to $28.8 million compared to $13.0 million
      for
      the years ended December 31, 2005 and 2004, respectively. UAC contributed $7.0
      million to the increase due to a larger average securitized finance receivable
      balance of $143.5 million during the year ended December 31, 2005 as compared
      to
      $96.9 million during the year ended December 31, 2004 from the repurchase of
      securitization receivables that occurred after December 31, 2004. Since the
      acquisition of Coastal Credit on August 31, 2005, Coastal Credit contributed
      $8.8 million to the increase.




Accretion
      and other interest increased 729.8% to $8.5 million compared to $1.0 million
      for
      the years ended December 31, 2005 and 2004, respectively. UAC contributed $7.5
      million to this increase from an increase in accretion income of the beneficial
      interest in Master Trust. The fair value of beneficial interest in Master Trust
      has increased between the periods primarily as a result of reductions in
      estimated securitized finance receivable net losses. As an increase in the
      fair
      value of beneficial interest in Master Trust is recorded, an adjustment is
      recorded to increase







37





accumulated
      other comprehensive income in the shareholders’ equity section of the
      consolidated balance sheet. The accumulated other comprehensive income is
      accreted over time as interest income resulting in an increase in accretion
      income.




Interest
      expense increased 16.0% to $15.2 million compared to $13.1 million for the
      years
      ended December 31, 2005 and 2004, respectively. UAC interest expense decreased
      by $0.2 million due to the decrease in interest expense and accretion expense
      from the UAC creditor notes payable purchased by White River which was partially
      offset by the increase in the average collateralized financings of $152.8
      million during the year ended December 31, 2005 compared to $106.5 million
      during the same period ended December 31, 2004. The UAC interest expense
      decrease offset the interest expense from Coastal Credit and Corporate and
      Other. Since the acquisition of Coastal Credit on August 31, 2005, Coastal
      Credit interest expense was $1.5 million. Interest expense of Corporate and
      Other was $0.7 million which is primarily related to the secured note
      payable.




Recovery
      (provision) for estimated credit losses was a recovery of $1.5 million compared
      to a provision of $(11.0) million for the years ended December 31, 2005 and
      2004, respectively. UAC contributed $14.1 million to the recovery from estimated
      credit losses due to the improved performance of the securitized finance
      receivable portfolio during 2005 and the reduction of the allowance for credit
      losses from reduced securitized receivable balances at December 31, 2005 and
      the
      change in the assumptions used to estimate the allowance. This recovery was
      partially offset by $1.6 million provision at Coastal Credit for the four months
      ended December 31, 2005.




The
      credit (charge) to Master Trust, net was a $(10.3) million charge for the year
      ended December 31, 2005 compared to a $4.5 million credit for the year ended
      December 31, 2004. Charge to Master Trust is expense related to future transfers
      of funds to the Master Trust from securitized finance receivables of UAC. As
      additional securitized finance receivables were purchased and the projected
      losses of UAC’s securitized finance receivables decreased during 2005, interest
      income increased, and thus the amounts related to future transfers of funds
      to
      the Master Trust increased, resulting in an increase in the charge to Master
      Trust. UAC is the only segment that reports this activity.




Gain
      from
      extinguishment of debt was $11.4 million for the year ended December 31, 2005.
      This gain is related to the purchase by White River of a portion of UAC’s
      general unsecured claims and Subordinated Notes during 2005. No such activity
      occurred during 2004.




Other
      income was $0.7 million compared to $2.9 million for the years ended December
      31, 2005 and 2004, respectively. UAC contributed $2.2 million to this decrease
      from a decline in refunds of dealer rebates from charged-off and prepaid finance
      contracts and amounts collected on previously charged-off balances net of
      expenses.




Salaries
      and benefits increased to $2.5 million for the year ended December 31, 2005
      compared to $0.4 million for the year ended December 31, 2004. There was no
      significant change in salaries and benefits for UAC during these periods. Since
      the acquisition of Coastal Credit on August 31, 2005, Coastal Credit contributed
      $2.1 million to the increase. Corporate and Other contributed $0.1 million
      to
      the increase in salaries and benefits.




Operating
      expenses increased to $2.8 million for the year ended December 31, 2005 compared
      to $1.1 million for the year ended December 31, 2004. UAC operating expenses
      decreased $0.2 million between these periods. Since the acquisition of Coastal
      Credit on August 31, 2005, Coastal Credit contributed $1.1 million to the
      increase in operating expense. Corporate and Other contributed $0.7 million
      to
      the increase in operating expense between these periods. These Corporate and
      Other expenses were primarily professional fees.







38










Third
      party servicing expenses increased 41.8% to $3.3 million for the year ended
      December 31, 2005 compared to $2.3 million for the year ended December 31,
      2004.
      UAC is the only segment that incurs this expense. This increase is the result
      of
      additional receivables repurchased by UAC from off-balance sheet securitizations
      during 2004 and 2005. UAC pays a monthly servicing fee per active receivable.
      As
      the number of receivables increased from each repurchase of receivables from
      off-balance sheet securitizations, the third party servicing expense
      increased.




Bankruptcy
      costs are professional fees and expenses associated with the bankruptcy
      proceedings of UAC. These costs were $0.3 million and $0.7 million for the
      years
      ended December 31, 2005 and 2004, respectively. UAC is the only segment that
      incurs these costs which were for the purpose of assisting the reorganized
      company in complying with its bankruptcy plan.




Any
      income tax provision (benefit) in the year was offset by an increase (decrease)
      in the valuation allowance against deferred tax assets.




As
      of
      December 31, 2005, White River had net operating loss carryforwards for income
      tax purposes of $112.8 million. Net operating losses may be carried forward
      up
      to 20 years for federal income tax purposes. White River’s earliest net
      operating losses available for carryforward were generated in the tax year
      ended
      June 30, 2003, and will expire if not used prior to the tax year ending December
      31, 2022. White River changed its tax year to December 31 during 2005. With
      the
      acquisition of Coastal Credit on August 31, 2005, White River has a historically
      profitable subsidiary that will enable White River to recognize a portion of
      the
      net operating loss (“NOL”) carryforwards.




The
      availability of these tax benefits would be jeopardized if an ownership change
      (as defined in IRS regulations governing NOL carryforward limitations) were
      to
      occur in the future with respect to White River. In general, an ownership change
      occurs when, as of any testing date, the aggregate of the increase in percentage
      points of the total amount of a corporation's stock owned by each 5-percent
      shareholder within the meaning of the NOL carryforward limitations whose
      percentage ownership of the stock has increased as of such date over the lowest
      percentage of the stock owned by each such 5-percent shareholder at any time
      during the three-year period preceding such date, is more than 50 percentage
      points. In general, persons who own 5% or more of a corporation's stock are
      5-percent shareholders, and all other persons who own less than 5% of a
      corporation's stock are treated together, as a single, public group 5-percent
      shareholder, regardless of whether they own an aggregate of 5% of a
      corporation's stock. Calculating whether an ownership change has occurred is
      subject to inherent uncertainty. This uncertainty results from the complexity
      and ambiguity of the NOL carryforward limitations as well as the limitations
      on
      the knowledge of a publicly-traded corporation concerning the ownership of,
      and
      transactions in, its securities.  White River is not aware of any
      facts indicating that an ownership change has occurred with respect to White
      River.






**The
      Year Ended December 31, 2004 Compared to the Year Ended December 31, 2003 -
      Consolidated**




Interest
      on receivables increased 32.5% to $13.0 million compared to $9.8 million for
      the
      years ended December 31, 2004 and 2003, respectively. The increase was due
      to a
      larger average securitized finance receivable balance of $96.9 million during
      the year ended December 31, 2004 compared $34.3 million during the year ended
      December 31, 2003 from the repurchase of securitization receivables that
      occurred after December 31, 2003. This increase was partially offset by the
      reduction of interest on receivables related to the UAC held for sale loans
      which were sold during 2003 as part of the bankruptcy process.







39










Accretion
      and other interest decreased to $1.0 million compared to $5.9 million for the
      years ended December 31, 2004 and 2003, respectively. The decrease was from
      a
      decrease in accretion income of the retained interest/beneficial interest in
      Master Trust. The fair value of beneficial interest in Master Trust had
      decreased between the periods primarily as a result of increase in estimated
      securitized finance receivable net losses. As a result, an impairment of
      retained interest/beneficial interest in Master Trust was recorded during 2003.
      Due to this impairment, future accretion of the retained interest was also
      reduced.




Interest
      expense decreased 13.6% to $13.1 million compared to $15.2 million for the
      years
      ended December 31, 2004 and 2003, respectively. The UAC decrease is primarily
      due to the repayment in full of the warehouse facility and reduction of creditor
      notes payable during 2003 partially offset by the increase in interest expense
      related to increased collateralized financings during 2004.




Provision
      for estimated credit losses increased to $11.0 million compared to $0.9 million
      for the years ended December 31, 2004 and 2003, respectively. The increase
      in
      provision for estimated credit losses was due to the increase in the receivables
      repurchased by UAC during 2004.




Servicing
      fee income was $5.4 million for the year ended December 31, 2003. Until April
      2003, UAC received base servicing fees and related ancillary fees such as late
      fees for the servicing of retail automobile installment sales contracts which
      had been securitized. Effective April 17, 2003, in connection with the sale
      of
      its servicing business and related assets, UAC no longer received this servicing
      income or the ancillary fees.




The
      credit (charge) to Master Trust, net was a $4.5 million credit for the year
      ended December 31, 2004 compared to a $(0.2) million charge for the year ended
      December 31, 2003. Charge to Master Trust is expense related to future transfers
      of funds to the Master Trust from securitized finance receivables of UAC. As
      additional securitized finance receivables were purchased during 2004, provision
      for estimated losses exceeded interest income thus the amounts related to future
      transfers of funds to the Master Trust decreased resulting in a credit to Master
      Trust. UAC is the only segment that reports this activity.




UAC
      recorded a one time gain on fair valuation of creditor liabilities of $51.6
      million during 2003. Under SOP 90-7, paragraph 41 specifies that
      entities emerging from Chapter 11 (that do not meet the criteria to qualify
      for fresh-start accounting) should state liabilities at the “present value of
      amounts to be paid, determined at appropriate current interest rates.” Based on
      this present value calculation, UAC recognized the gain on fair valuation of
      creditor liabilities.




UAC
      recorded a one time gain on sale of servicing platform and equipment, net of
      $6.6 million during 2003. Effective April 17, 2003, UAC, with the Court’s
      approval, sold its servicing platform and related assets to SST for
      approximately $8.1 million, which resulted in the net gain.




Other
      income was $2.9 million compared to $3.6 million for the years ended December
      31, 2004 and 2003, respectively. This decline is a result of the sale of
      receivables during 2003 resulting in a reduction of monies collected on
      previously charged-off loans.




Salaries
      and benefits decreased to $0.4 million for the year ended December 31, 2004
      compared to $4.3 million for the year ended December 31, 2003. Salaries and
      benefits of UAC decreased due to the sale of the servicing platform to SST
      effective April 17, 2003.




Operating
      expenses decreased to $1.1 million compared to $7.8 million for the years ended
      December 31, 2004 and 2003, respectively. This reduction was primarily a result
      of the sale of the servicing platform to SST during 2003 thus eliminating most
      of the operating expenses of UAC.







40










Third
      party servicing expenses increased to $2.3 million for the year ended December
      31, 2004 compared to $0.6 million for the year ended December 31, 2003. This
      increase is the result of UAC’s sale of its servicing platform in April 2003 and
      additional receivables repurchased by UAC from off-balance sheet securitizations
      during 2004. UAC pays a monthly servicing fee per active receivable. As the
      number of receivables increased from each repurchase of receivables from
      off-balance sheet securitizations, the third party servicing expense recorded
      on
      the operating statement increased.




UAC
      recorded a one time impairment of retained interest/beneficial interest in
      Master Trust of $39.2 million during 2003. The fair value of retained
      interest/beneficial interest in Master Trust had decreased during 2003 primarily
      as a result of reductions in estimated securitized finance receivable net
      losses. As a decrease in the fair value of retained interest/beneficial interest
      in Master Trust is recorded, an impairment is recorded. See “Discussion of
      Forward-Looking Statements.”




Bankruptcy
      costs are professional fees and expenses associated with the bankruptcy
      proceedings of UAC. These costs were $0.7 million compared to $8.9 million
      for
      the years ended December 31, 2004 and 2003, respectively. These costs were
      significantly reduced after the UAC bankruptcy plan was confirmed on August
      8,
      2003. UAC continues to record bankruptcy costs related to professional fees
      in
      connection with the bankruptcy plan.




Any
      income tax provision (benefit) was offset by an increase (decrease) in the
      valuation allowance against deferred tax assets.










41








**Discussion
      of Results of Operations of UAC**




The
      following table presents consolidated financial information for UAC for the
      periods indicated:







**Years
                Ended December 31,****2005**
            
            **2004**
            
            **2003**INTEREST:Interest
                on receivables
            
            $
            19,993
            
            $
            12,985
            
            $
            9,799Accretion
                and other interest
            
            
            8,512
            
            
            1,028
            
            
            5,917Total
                interest income
            
            
            28,505
            
            
            14,013
            
            
            15,716Interest
                expense
            
            
            (12,939
            )
            
            (13,108
            )
            
            (15,171
            )Net
                interest margin
            
            
            15,566
            
            
            905
            
            
            545Recovery
                (provision) for estimated credit losses
            
            
            3,078
            
            
            (11,025
            )
            
            (874
            )Net
                interest margin (deficit) after recovery (provision) for estimated
                credit
                losses
            
            
            18,644
            
            
            (10,120
            )
            
            (329
            )OTHER
                REVENUES:Servicing
                fee income
            
            
            -
            
            
            -
            
            
            5,355Credit
                (charge) to Master Trust—net
            
            
            (10,253
            )
            
            4,485
            
            
            (178
            )Gain
                from extinguishment of debt
            
            
            11,352Gain
                on fair valuation of creditor liabilities
            
            
            -
            
            
            -
            
            
            51,604Gain
                on sale of servicing platform and equipment—net
            
            
            -
            
            
            -
            
            
            6,582Other
                income
            
            
            740
            
            
            2,934
            
            
            3,636Total
                other revenues, net
            
            
            1,839
            
            
            7,419
            
            
            66,999OTHER
                EXPENSES:Salaries
                and benefits
            
            
            353
            
            
            434
            
            
            4,260Operating
                expenses
            
            
            917
            
            
            1,126
            
            
            7,768Third
                party servicing expense
            
            
            3,323
            
            
            2,344
            
            
            637Impairment
                of retained interest/beneficial interest in Master Trust
            
            
            -
            
            
            -
            
            
            39,154Valuation
                loss on receivables held for sale—net
            
            
            -
            
            
            -
            
            
            280Bankruptcy
                costs
            
            
            296
            
            
            657
            
            
            8,897Total
                other expenses
            
            
            4,889
            
            
            4,561
            
            
            60,996INCOME
                (LOSS) BEFORE INCOME TAXES
            
            
            15,594
            
            
            (7,262
            )
            
            5,674INCOME
                TAXES
            
            
            -
            
            
            -
            
            
            -NET
                INCOME (LOSS)
            
            $
            15,594
            
            $
            (7,262
            )
            $
            5,674





***The
      Year Ended December 31, 2005 Compared to the Year Ended December 31, 2004 -
      UAC***




Interest
      on receivables increased 54.0% to $20.0 million compared to $13.0 million for
      the years ended December 31, 2005 and 2004, respectively. This increase is
      attributable to a larger average securitized finance receivable balance of
      $143.5 million during the year ended December 31, 2005 as compared to $96.9
      million during the year ended December 31, 2004 from the repurchase of
      securitization receivables that occurred after December 31, 2004.




Accretion
      and other interest increased 728.0% to $8.5 million compared to $1.0 million
      for
      the years ended December 31, 2005 and 2004, respectively. This increase is
      from
      an increase in accretion income of the beneficial interest in Master Trust.
      The
      fair value of beneficial interest in Master Trust has increased between the
      periods primarily as a result of reductions in estimated securitized finance
      receivable net losses. As an increase in the fair value of beneficial interest
      in Master Trust is recorded, an adjustment is recorded as accumulated other
      comprehensive income in the shareholders’ equity section of the consolidated
      balance sheet. This accumulated other comprehensive income is accreted over
      time
      as interest income resulting in the increase in accretion income. See
“Discussion of Forward-Looking Statements.” The individual components of
      accretion and







42




other
      interest income are shown in the following table
      (in thousands):


**Years
                Ended December 31,****2005**
            
            **2004**UAC
                discount accretion for beneficial interest in Master Trust
            
            $
            7,696
            
            $
            757UAC
                interest on restricted cash balances
            
            
            816
            
            
            271UAC
                other interest income
            
            $
            8,512
            
            $
            1,028





Interest
      expense decreased 1.3% to $12.9 million compared to $13.1 million for the years
      ended December 31, 2005 and 2004, respectively. This decrease in interest
      expense of $0.2 million is due to the decrease in interest expense and accretion
      expense from the UAC creditor notes payable that were acquired by White River
      partially offset by the increase in the average collateralized financings of
      $152.8 million during the year ended December 31, 2005 compared to $106.5
      million during the same period ended December 31, 2004.




Recovery
      (provision) for estimated credit losses was a recovery of $3.1 million compared
      to a provision of $(11.0) million for the years ended December 31, 2005 and
      2004, respectively. The $14.1 million change in provision for estimated credit
      losses is due to stronger than projected cash flows from recoveries on defaulted
      receivables during 2005. Management expects this trend to continue and has
      made
      a refinement in the methodology for estimating future losses, effective December
      31, 2005, as discussed in Note 6 of Item 8, Financial Statements and
      Supplementary Data.




The
      credit (charge) to Master Trust, net was a $(10.3) million charge for the year
      ended December 31, 2005 compared to a $4.5 million credit for the year ended
      December 31, 2004. Charge to Master Trust is expense related to future transfers
      of funds to the Master Trust from securitized finance receivables of UAC. As
      additional securitized finance receivables were purchased and the projected
      losses of UAC’s securitized finance receivables decreased during 2005, interest
      income increased, and thus the amounts related to future transfers of funds
      to
      the Master Trust increased, resulting in an increase in the charge to Master
      Trust.




Gain
      from
      extinguishment of debt was $11.4 million for the year ended December 31, 2005.
      This gain is related to the purchase by White River of a portion of UAC’s
      general unsecured claims and Subordinated Notes during 2005. No such activity
      occurred during 2004.




Other
      income was $0.7 million compared to $2.9 million for the years ended December
      31, 2005 and 2004, respectively. This decrease is the result of a decline in
      refunds of dealer rebate from charged-off and prepaid finance contracts and
      amounts collected on previously charged-off balances net of expenses.




Salaries
      and benefits decreased to $353,000 for the year ended December 31, 2005 compared
      to $434,000 for the year ended December 31, 2004. Staffing levels and costs
      have
      been relatively consistent for these periods.




Operating
      expenses decreased to $0.9 million for the year ended December 31, 2005 compared
      to $1.1 million for the year ended December 31, 2004. These expenses are
      primarily the result of professional fees.




Third
      party servicing expenses increased 41.8% to $3.3 million for the year ended
      December 31,
      2005
      compared to $2.3 million for the year ended December 31, 2004. This increase
      is
      the result of additional receivables repurchased by UAC from off-balance sheet
      securitizations during 2004 and 2005. UAC pays a monthly servicing fee per
      active receivable. As the number of receivables increased from each repurchase
      of receivables from off-balance sheet securitizations, the third party servicing
      expense recorded on the operating statement increased.







43







Bankruptcy
      costs are professional fees and expenses associated with the bankruptcy
      proceedings of UAC. These costs were $0.3 million and $0.7 million for the
      years
      ended December 31, 2005 and 2004, respectively.









**The
      Year Ended December 31, 2004 Compared to the Year Ended December 31, 2003 -
      UAC**




Interest
      on receivables increased 32.5% to $13.0 million compared to $9.8 million for
      the
      years ended December 31, 2004 and 2003, respectively. The $3.2 million increase
      was due to a larger average securitized finance receivable balance of $96.9
      million during the year ended December 31, 2004 compared $34.3 million during
      the year ended December 31, 2003 from the repurchase of securitization
      receivables that occurred after December 31, 2003. This increase was partially
      offset by the reduction of interest on receivables related to the UAC held
      for
      sale loans which were sold during 2003 as part of the bankruptcy
      process.




Accretion
      and other interest decreased to $1.0 million compared to $5.9 million for the
      years ended December 31, 2004 and 2003, respectively. The decrease was a result
      from a decrease in accretion income of the retained interest/beneficial interest
      in Master Trust. The fair value of beneficial interest in Master Trust had
      decreased between the periods primarily as a result of increase in estimated
      securitized finance receivable net losses. As a result, an impairment of
      retained interest/beneficial interest in Master Trust was recorded during 2003.
      Due to this impairment, future accretion of the retained interest was also
      reduced. See “Discussion of Forward-Looking Statements.” The individual
      components of accretion and other interest income are shown in the following
      table (in thousands):







**Years
                Ended December 31,****2004**
            
            **2003**UAC
                discount accretion for beneficial interest in Master Trust
            
            $
            757
            
            $
            4,230UAC
                interest on restricted cash balances
            
            
            271
            
            
            1,687UAC
                other interest income
            
            $
            1,028
            
            $
            5,917





Interest
      expense decreased 13.6% to $13.1 million compared to $15.2 million for the
      years
      ended December 31, 2004 and 2003, respectively. The decrease is primarily due
      to
      the repayment in full of the warehouse facility during 2003 and principal
      payments of creditor notes payable during 2004 and 2003 partially offset by
      the
      increase in interest expense related to increased collateralized financings
      during 2004.




Provision
      for estimated credit losses increased to $11.0 million compared to $0.9 million
      for the years ended December 31, 2004 and 2003, respectively. The increase
      in
      provision for estimated credit losses was due to the increase in securitized
      finance receivables and the decline in performance of the securitized finance
      receivable portfolio during 2003 and 2004.







44










Servicing
      fee income was $5.4 million for the year ended December 31, 2003. Until April
      2003, UAC received base servicing fees and related ancillary fees such as late
      fees for the servicing of retail automobile installment sales contracts, which
      had been securitized. Effective April 17, 2003, in connection with the sale
      of
      its servicing business and related assets, UAC no longer received this servicing
      income or the ancillary fees.




The
      credit (charge) to Master Trust, net was a $4.5 million credit for the year
      ended December 31, 2004 compared to a $(0.2) million charge for the year ended
      December 31, 2003. Charge to Master Trust is expense related to future transfers
      of funds to the Master Trust from securitized finance receivables of UAC. As
      additional securitized finance receivables were purchased during 2004, provision
      for estimated losses exceeded interest income thus the amounts related to future
      transfers of funds to the Master Trust decreased resulting in a credit to Master
      Trust.




UAC
      recorded a one time gain on fair valuation of creditor liabilities of $51.6
      million during 2003. Under SOP 90-7 entities emerging from Chapter 11
      (that do not meet the criteria to qualify for fresh-start accounting) should
      state liabilities at the “present value of amounts to be paid, determined at
      appropriate current interest rates.” Based on this present value calculation,
      UAC recognized the gain on fair valuation of creditor liabilities.




UAC
      recorded a one time gain on sale of servicer platform and equipment, net of
      $6.6
      million during 2003. Effective April 17, 2003, UAC, with the Court’s
      approval, sold its servicing platform and related assets to SST for
      approximately $8.1 million, which resulted in the net gain.




Other
      income was $2.9 million compared to $3.6 million for the years ended December
      31, 2004 and 2003, respectively. This decline is a result of the sale of
      receivables during 2003 resulting in a reduction of monies collected on
      previously charged-off loans.




Salaries
      and benefits decreased to $0.4 million for the year ended December 31, 2004
      compared to $4.3 million for the year ended December 31, 2003. Salaries and
      benefits of UAC decreased due to the sale of the servicing platform to SST
      effective April 17, 2003. SST retained substantially all of UAC’s remaining
      employees and continued operations at UAC’s existing facility in Indianapolis
      through May 28, 2004.




Operating
      expenses decreased to $1.1 million compared to $7.8 million for the years ended
      December 31, 2004 and 2003, respectively. This reduction was primarily a result
      of the sale of the servicing platform to SST during 2003 thus eliminating most
      of the operating expenses of UAC.




Third
      party servicing expenses increased to $2.3 million for the year ended December
      31, 2004 compared to $0.6 million for the year ended December 31, 2003. This
      increase is the result of UAC’s sale of its servicing platform in April 2003 and
      additional receivables repurchased by UAC from off-balance sheet securitizations
      during 2004. UAC pays a monthly servicing fee per active receivable. As the
      number of receivables increased from each repurchase of receivables from
      off-balance sheet securitizations, the third party servicing expense recorded
      on
      the operating statement increased.




UAC
      recorded a one time impairment of retained interest/beneficial interest in
      Master Trust of $39.2 million during 2003. The fair value of retained
      interest/beneficial interest in Master Trust had decreased during 2003 primarily
      as a result of reductions in estimated securitized finance receivable net
      losses. As a decrease in the fair value of retained interest/beneficial interest
      in Master Trust is recorded, impairment is recorded. See “Discussion of
      Forward-Looking Statements.”







45










Bankruptcy
      costs are professional fees and expenses associated with the bankruptcy
      proceedings of UAC. These costs were $0.7 million compared to $8.9 million
      for
      the years ended December 31, 2004 and 2003, respectively. These costs were
      significantly reduced after the UAC bankruptcy plan was confirmed on August
      8,
      2003. UAC continues to record bankruptcy costs related to professional fees
      in
      connections with bankruptcy plan.




**Discussion
      of Results of Operations of Coastal Credit**




The
      following table presents financial information for Coastal Credit for the period
      indicated:










**Four
                Months Ended****December
                31,****2005**INTEREST:Interest
                on receivables
            
            $
            8,810Interest
                expense
            
            
            (1,545
            )Net
                interest margin
            
            
            7,265Provision
                for estimated credit losses
            
            
            (1,613
            )Net
                interest margin after provision for estimated credit
                losses
            
            
            5,652OTHER
                REVENUES:Other
                income
            
            
            (85
            )Total
                other revenues (charges), net
            
            
            (85
            )OTHER
                EXPENSES:Salaries
                and benefits
            
            
            2,056Operating
                expenses
            
            
            1,147Total
                other expenses
            
            
            3,203INCOME
                BEFORE INCOME TAXES
            
            
            2,364INCOME
                TAXES
            
            
            -NET
                INCOME
            
            $
            2,364





***Four*** **Months Ended December 31, 2005 - Coastal Credit**




Net
      income at Coastal Credit was $2.4 million for the four months ended December
      31,
      2005.




Interest
      on receivables was $8.8 million for the four months ended December 31, 2005.
      This was attributable to an average finance receivable, net balance of $69.5
      million. In addition, Coastal Credit acquires contracts from automobile dealers
      at a negotiated price that is less than the original principal amount being
      financed by the purchaser of the automobile. Accordingly, dealer acquisition
      discounts and fees reduce the carrying value of finance receivables and are
      accreted as an adjustment to yield over the life of the loans.




Interest
      expense was $1.5 million for the four months ended December 31, 2005. This
      was
      attributable to an average line of credit balance and subordinated debentures
      of
      $52.4 million and $7.9 million, respectively, for the four months ended December
      31, 2005.







46







Provision
      for estimated credit losses is charged to income to bring Coastal Credit’s
      allowance for estimated credit losses to a level which management considers
      adequate to absorb probable credit losses inherent in the portfolio of finance
      receivables. The provision for estimated credit losses was $1.6 million for
      the
      four months ended December 31, 2005.




**Discussion
      of Results of Operations of Corporate and Other**




The
      following table presents financial information for Corporate and Other for
      the period indicated:







**Year
                Ended December 31,****2005**INTEREST:Interest
                on receivables
            
            $
            -Accretion
                and other interest
            
            
            18Total
                interest income
            
            
            18Interest
                expense
            
            
            (720
            )Net
                interest margin
            
            
            (702
            )Provision
                for estimated credit losses
            
            
            -Net
                interest margin (deficiency) after provision for estimated credit
                losses
            
            
            (702
            )OTHER
                REVENUES:Total
                other revenues, net
            
            
            13OTHER
                EXPENSES:Salaries
                and benefits
            
            
            53Operating
                expenses
            
            
            706Total
                other expenses
            
            
            759LOSS
                BEFORE INCOME TAXES
            
            
            (1,448
            )INCOME
                TAXES
            
            
            -NET
                LOSS
            
            $
            (1,448
            )





***The
      Year*** **Ended December, 2005 - Corporate and Other**




Accretion
      and other interest was $18,000 for the year ended December 31, 2005. This amount
      represents interest income related to interest bearing cash accounts.




Interest
      expense was $720,000 for the year ended December 31, 2005. This interest is
      primarily related to the secured note payable and notes payable-Coastal Credit
      purchase holdback.




Total
      other expenses were $759,000 for the year ended December 31, 2005. This expense
      is primarily professional fees incurred by the holding company.







47










**Financial
      Condition as of** **December
      31, 2005 and 2004**




***Securitized
      Finance Receivables, Net***




Securitized
      finance receivables, net balance is 8.6% less at December 31, 2005 compared
      to
      December 31, 2004. This decrease is attributable to the normal runoff of the
      portfolio partially offset by the continued repurchasing of receivables from
      previous off-balance sheet securitizations during 2005.The collateralized
      financing for securitization 2003-A has been paid in full during the first
      quarter of 2006. At that time, the 2003-A receivables were released from
      collateral arrangements and, accordingly, will be recorded in future periods
      as
      receivables held for sale, net. Principal balances of securitized finance
      receivables, net and the off-balance sheet securitization portfolios are
      summarized in the following table (in thousands):







**December
                31,****2005**
            
            **December
                31,****2004****Securitized
                Finance Receivables (1)**2003-A
            
            $
            4,167
            
            $
            27,4132004-A1
            
            
            3,795
            
            
            15,7862004-A2
            
            
            4,712
            
            
            16,6682004-B
            
            
            5,356
            
            
            17,5912004-C
            
            
            16,837
            
            
            48,4082005-A
            
            
            19,042
            
            
            -2005-B
            
            
            25,405
            
            
            -2005-C
            
            
            35,717
            
            
            -115,031
            
            
            125,866**Off-Balance
                Sheet Securitizations**2000-C
            
            
            -
            
            
            51,0352000-D
            
            
            -
            
            
            62,1412001-A
            
            
            -
            
            
            80,6962001-B
            
            
            12,743
            
            
            27,5982001-C
            
            
            35,009
            
            
            70,4112002-A
            
            
            34,548
            
            
            69,37382,300
            
            
            361,254Total
                Securitization Portfolios
            
            $
            197,331
            
            $
            487,120(1)
                On-balance sheet portfolios held by UAC Securitization Corporation
                for
                collateralized financings.





***Finance
      Receivables, Net***




Finance
      receivables, net were acquired as part of the acquisition of Coastal Credit
      on
      August 31, 2005. Finance receivables, net generally have original terms ranging
      from 32 to 48 months and are secured by the related vehicles.







48










A
      significant number of contracts acquired by Coastal Credit are contracts made
      with borrowers who are in the United States military. Coastal Credit believes
      that having in the portfolio a significant percentage of contracts for which
      the
      borrowers are United States military personnel contributes to lower payment
      delinquency and greater collection personnel efficiencies. Coastal Credit
      requests that all borrowers who are in the military use the military allotment
      system to make payments on their contracts. Under this allotment system, the
      borrower authorizes the military to make a payroll deduction for the amount
      of
      the borrower’s monthly contract payment and to direct this deduction payment to
      Coastal Credit on behalf of the borrower. Delinquency of payments on contracts
      paid by allotment historically has been less than delinquency of payments on
      contracts not paid by allotment. As a result, the collection effort associated
      with the military contracts requires substantially less time, allowing Coastal
      Credit’s collection staff to focus on an increasing number of non-military
      contracts.




As
      of
      December 31, 2005, Coastal Credit’s finance receivables consisted exclusively of
      contracts acquired by Coastal Credit without credit recourse to the dealer.
      Although all the contracts in Coastal Credit’s portfolio were acquired without
      credit recourse, each dealer remains liable to Coastal Credit for liabilities
      arising from certain representations and warranties made by the dealer with
      respect to compliance with applicable federal and state laws and valid title
      to
      the vehicle.




Coastal
      Credit’s policy is to only acquire a contract after the dealer has provided
      Coastal Credit with the requisite proof that Coastal Credit will have a first
      priority lien on the financed vehicle, that the borrower has obtained the
      required collision insurance naming Coastal Credit as loss payee and that the
      contract has been fully and accurately completed and validly executed. Coastal
      Credit typically buys contracts on an individual basis and occasionally
      considers portfolio acquisitions as part of its growth strategy.




***Beneficial
      Interest in Master Trust***




Beneficial
      interest in Master Trust increased to $14.0 million at December 31, 2005
      compared to $3.7 million at December 31, 2004. This increase is due to
      refinements in assumptions used to project the future cash flows from the Master
      Trust Account, principally a decrease in projected credit losses and partially
      offset by the receipt of funds from the Master Trust Account. UAC implemented
      such refinements because net credit losses on the UAC finance receivables
      underlying the Master Trust interest during 2005 had trended lower than
      projected under the prior methodology. UAC used a 15% discount rate to value
      the
      beneficial interest in Master Trust as of December 31, 2005 and 2004. See Note
      6
      of Item 8, Financial Statements and Supplementary Data.




UAC
      continually assesses the adequacy of its beneficial interest in Master Trust
      cash flow model and, as necessary, adjusts both its cash flow model and the
      balance of the beneficial interest in Master Trust accordingly. Adjustments
      to
      beneficial interest in Master Trust are recorded as accumulated other
      comprehensive income in the shareholders’ equity section of the consolidated
      balance sheet and are accreted over time as accretion and other interest. The
      anticipated amortization period of the accumulated other comprehensive income
      is
      based on the estimated cash flows from the Master Trust which is projected
      to be
      completed by 2010. Accumulated other comprehensive income was $13.3 million
      and
      $1.9 million at December 31, 2005 and 2004, respectively.




***Collateralized
      Financings***




Collateralized
      financings were $122.3 million at December 31, 2005, compared to $132.3 million
      at December 31, 2004. The decrease was the result of principal payments to
      note
      holders that correspond to the principal reduction of securitized finance
      receivable-net partially offset by additional collateralized financings in
      2005.







49










UAC
      may
      continue to call its off-balance sheet securitizations as the opportunity arises
      where funding and surety arrangements can be established to accomplish such
      transactions and reduce interest expense. UAC currently does not have a
      commitment from the surety of the securitizations for additional collateralized
      financings.




***Accrued
      Interest Payable***




Accrued
      interest payable was $2.1 million at December 31, 2005, compared to $7.1 million
      at December 31, 2004. The decrease was the result of (i) the extinguishment
      of
      debt, for accounting purposes, in accordance with SFAS 140, Accounting for
      Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,
      when White River purchased a significant portion of UAC’s general unsecured
      claims and Subordinated Notes and (ii) continued repayment of interest. The
      decrease in accrued interest payable was partially offset by accrued interest
      from debt related to the acquisition of Coastal Credit on August 31, 2005.
      This
      debt includes the line of credit and subordinated debentures related to Coastal
      Credit, the secured note payable and the notes payable-Coastal Credit purchase
      holdback.




***Creditor
      Notes Payable***




Creditor
      notes payable was $1.5 million at December 31, 2005, compared to $11.4 million
      at December 31, 2004. The decrease was the result of (i) the extinguishment
      of
      debt, for accounting purposes, in accordance with SFAS No. 140 when White River
      purchased a significant portion of UAC’s general unsecured claims and
      Subordinated Notes and (ii) continued repayment of principal in accordance
      with
      the bankruptcy plan partially offset by the accretion of the valuation
      discount.




***Contractual
      Obligations***




The
      following table represents the estimated future contractual obligations of
      White
      River and its subsidiaries (in thousands). The long term debt obligations
      represent the estimated principal and interest obligations related to
      collateralized financing, line of credit, secured note payable, subordinated
      debentures, creditor notes payable and note payable - Coastal Credit purchase
      holdback. The future obligations for the line of credit assumes the line of
      credit balance at December 31, 2005 remains constant through the remaining
      term
      of the agreement and monthly interest and fees are calculated using this balance
      for purposes of creating the following table.







**Total**
            
            **Less
                than**
              **1
                Year**
            
            **1-3
                Years**
            
            **3-5
                Years**
            
            **More
                than 5 Years****Contractual
                Obligations****Long-term
                debt obligations**Coastal
                Credit
            
            $
            75,986
            
            $
            4,649
            
            $
            16,099
            
            $
            55,238
            
            $
            -UAC
            
            
            129,107
            
            
            97,188
            
            
            31,811
            
            
            107
            
            
            -White
                River
            
            
            23,298
            
            
            7,527
            
            
            9,616
            
            
            6,154
            
            
            -Total
                long-term debt obligations
            
            
            228,391
            
            
            109,365
            
            
            57,527
            
            
            61,499
            
            
            -**Operating
                lease obligations**
            
            
            842
            
            
            501
            
            
            299
            
            
            42
            
            
            -**Total**
            
            $
            229,233
            
            $
            109,866
            
            $
            57,827
            
            $
            61,541
            
            $
            -











50












**Liquidity
      and Capital Resources for the** **Years
      Ended December 31, 2005 and 2004**




Net
      cash
      used in operating activities was $(0.3) million for the year ended December
      31,
      2005 compared to net cash provided by operating activities of $9.8 million
      for
      the year ended December 31, 2004. The decrease in net cash flows from operating
      activities was primarily from the payment of UAC creditor note payable accrued
      interest of $6.4 million and $0.8 million during the years ended December 31,
      2005 and 2004, respectively, and net income (loss) activity during the periods.




Net
      cash
      used in investing activities was $28.5 million and $36.2 million for the years
      ended December 31, 2005 and 2004, respectively. Included in the net cash used
      in
      investing activities for the year ended December 31, 2005 was $41.8 million
      related to the acquisition of Coastal Credit, including direct acquisition
      costs, the purchase and subsequent collection of securitized finance receivables
      and finance receivables, and to changes in restricted cash.




Net
      cash
      provided by financing activities was $31.9 million and $21.5 million for the
      years ended December 31, 2005 and 2004, respectively. Net cash flows provided
      by
      financing activities for the year ended December 31, 2005 primarily resulted
      from the completion of the $35.0 million subscription offering of White River,
      the issuance of a $15.0 million secured note payable and net collateralized
      financing activities during the period. Net cash provided by financing
      activities for the year ended December 31, 2004 primarily resulted from net
      proceeds from collateralized financings of $136.7 million partially offset
      by
      the principal payment on UAC collateralized financings of $106.6 million and
      principal payments on UAC creditor notes payable of $8.6 million.




At
      December 31, 2005, White River and its subsidiaries had cash and cash
      equivalents of $6.9 million compared to $3.7 million at December 31, 2004.
      White
      River and its subsidiaries have ongoing cash flow requirements to support their
      operations.




Coastal
      Credit has a revolving credit facility from a lending institution with a maximum
      borrowing limit of $80.0 million. This facility will increase to $100 million
      in
      July 2006. The maturity date is December 31, 2009. As of December 31, 2005,
      Coastal Credit had $51.5 million of indebtedness outstanding under this
      facility. The credit facility is secured by substantially all of the assets
      of
      Coastal Credit. In addition, White River has provided an unconditional corporate
      guaranty. Coastal Credit must maintain specified financial ratios within
      guidelines established by the lender. Interest is paid monthly at a variable
      rate, based on meeting certain financial criteria. At December 31, 2005, the
      rate was the London Interbank Offered Rate (“LIBOR”) plus 2.85% (7.14% at
      December 31, 2005). There is an annual commitment fee of 1/8 of 1% on the
      average daily unused commitment. In the event of a significant pay down or
      an
      earlier retirement of the revolver commitment, Coastal Credit would sustain
      certain prepayment penalties. This facility limits distributions Coastal Credit
      may make to White River to 50% of Coastal Credit’s net income in addition to
      permitted payments on subordinated debt (including Whiter River debt guaranteed
      by Coastal Credit.)




Coastal
      Credit has $7.7 million in subordinated debentures outstanding at December
      31,
      2005. Interest on the notes is payable quarterly at a fixed rate of interest
      of
      12% per annum. At December 31, 2005, approximately 73% the holders of
      subordinated debentures were related parties. All of the subordinated debt
      matures in 2007 and is subordinated to the line of credit and White River’s
      secured note payable.




UAC’s
      sources of liquidity are limited and consist of cash on hand, escrowed cash
      for
      operations, funds from consolidated operations and distributions from the Master
      Trust. UAC's beneficial interest in Master Trust reflected on the balance
      sheet reflects the discounted value of projected cash flows that UAC expects
      to
      receive from its outstanding securitizations and non-recourse financings of
      its
      portfolios of auto finance receivables.  White River, as owner of the
      substantial majority of UAC's notes and claims outstanding under the Plan of
      Reorganization,
      will become entitled to distribution of the substantial majority of these
      cash flows as they are realized by UAC.  However, the
      realization of such projected cash flows is dependent upon the
      performance of the underlying auto receivable portfolios and the effective
      servicing of such receivables.  In particular, if gross defaults,
      recoveries on defaulted receivables or prepayments on such receivables are
      less
      favorable than the rates projected by management, UAC's realization of such
      cash flows will be reduced or delayed relative to such projections. 
Such reduction may be material.







51







White
      River, as the parent company, has $3.8 million, net of a $1.2 million receivable
      from the previous owners, payable related to the acquisition of Coastal Credit.
      Interest on this obligation is at a fixed rate of 10% per annum and is payable
      when the note matures on March 31, 2006.




White
      River has outstanding $15 million in a secured note at December 31, 2005.
      Interest on the note is payable quarterly in arrears at a fixed rate of 10.75%
      per annum. The secured note payable is secured by White River’s ownership
      interest in Coastal Credit and is guaranteed by Coastal Credit, but subordinate
      to the revolving credit facility. Principal will be payable in sixteen quarterly
      installments of $937,500 commencing July 1, 2006. Prepayment of the note is
      allowed beginning July 1, 2007. There is a 2% prepayment penalty if prepayment
      occurs between July 1, 2007 and June 30, 2008. This prepayment is 1% if
      prepayment occurs between July 1, 2008 and June 30, 2009. There is no penalty
      if
      the prepayment occurs after June 30, 2009.




White
      River’s sources of liquidity, as the parent company, are limited and consist of
      cash on hand, payments by UAC on the UAC creditor notes payable owned by White
      River and distributions by Coastal Credit (subject to restrictions under Coastal
      Credit’s credit facility).




White
      River currently intends to retain its earnings to finance the growth and
      development of its businesses and has no present intention of paying any cash
      dividends in the foreseeable future.






**Liquidity
      and Capital Resources for the** **Years
      Ended December 31, 2004 and 2003**




Net
      cash
      provided by operating activities was $9.8 million for the year ended December
      31, 2004 compared to net cash provided by operating activities of $307.7 million
      for the year ended December 31, 2003. The net cash flows provided by operating
      activities were primarily from the payment of UAC creditor note payable accrued
      interest $0.8 million during the year ended December 31, 2004 and net income
      (loss) activity during the period. The net cash provided by operating activities
      for the year ended December 31, 2003 were primarily from the sale of whole
      loans
      of $278.2 million and income tax refunds of $23.5 million.




Net
      cash
      used in investing activities was $36.2 million and $97.3 million for the years
      ended December 31, 2004 and 2003, respectively. The purchase and subsequent
      collection of securitized finance receivables and finance receivables in
      addition to changes in restricted cash contribute to the net cash used in
      investing activities.




Net
      cash
      provided by financing activities was $21.5 million for the year ended December
      31, 2004 compared to net cash used in financing activities of $238.5 million
      for
      the year ended December 31, 2003. Net cash provided by financing activities
      primarily resulted from net proceeds from collateralized financings of $136.7
      million partially offset by the principal payment on UAC creditor notes payable
      of $106.6 million for the year ended December 31, 2004. Net cash used in
      financing activities primarily resulted from the repayment of the warehouse
      credit facilities of $294.8 million offset by proceeds from collateralized
      financings.




At
      December 31, 2004, UAC had cash and cash equivalents of $3.7 million compared
      to
      $8.7 million at December 31, 2003. Sources of liquidity are limited and consist
      of cash on hand, escrowed cash for operations, funds from operations and
      distributions from the Master Trust. Cash distributions are controlled by its
      Plan of Reorganization.







52









**Asset
      Quality**




Set
      forth
      below is certain information concerning the credit loss experiences on the
      fixed
      rate retail automobile receivables of White River. There can be no assurance
      that future net credit loss experience on the receivables will be comparable
      to
      that set forth below. See “Discussion of Forward-Looking
      Statements.”




***Securitized
      Finance Receivables***




Selected
      information about active UAC securitizations (in thousands):







**Current
                Transaction**
            
            **Initial
                Transaction**
            
            **Original
                Amount of Initial Transaction**
            
            **Remaining
                Balance at December 31, 2005**
            
            **Remaining
                Balance as a Percentage of Original Amount**
            
            **Net
                Loss Incurred to Original Amount at December 31,
                2005**On
                Balance Sheet Securitized Finance Receivables:2003-A
            
            
            Note
                1
            
            $
            1,813,648
            
            $
            4,167
            
            
            0.23
            %
            
            7.39
            %2004-A1
            
            
            1999-C
            
            
            364,792
            
            
            3,795
            
            
            1.04
            %
            
            9.56
            %2004-A2
            
            
            1999-D
            
            
            302,693
            
            
            4,712
            
            
            1.56
            %
            
            11.06
            %2004-B
            
            
            2000-A
            
            
            282,721
            
            
            5,356
            
            
            1.89
            %
            
            9.11
            %2004-C
            
            
            2000-B
            
            
            534,294
            
            
            16,837
            
            
            3.15
            %
            
            11.68
            %2005-A
            
            
            2000-C
            
            
            499,999
            
            
            19,042
            
            
            3.81
            %
            
            9.72
            %2005-B
            
            
            2000-D
            
            
            510,000
            
            
            25,405
            
            
            4.98
            %
            
            10.31
            %2005-C
            
            
            2001-A
            
            
            573,000
            
            
            35,717
            
            
            6.23
            %
            
            9.40
            %4,881,147
            
            
            115,031Off
                Balance Sheet Securitized Finance Receivables:2001-B
            
            
            
            
            
            150,002
            
            
            12,743
            
            
            8.50
            %
            
            7.57
            %2001-C
            
            
            
            
            
            330,000
            
            
            35,009
            
            
            10.61
            %
            
            7.02
            %2002-A
            
            
            
            
            
            300,000
            
            
            34,548
            
            
            11.52
            %
            
            5.17
            %780,002
            
            
            82,300Total
            
            
            
            
            $
            5,661,149
            
            $
            197,331
            
            
            3.49
            %
            
            8.75
            %Note
                1: 1998-1, 1998-A, 1998-B, 1998-C, 1998-D, 1999-A and
                1999-B








Securitized
      finance receivables displayed seasonal trends with decreases in delinquency
      and
      net losses during the period January to May 2005. Increases in delinquency
      and
      net losses occurred during the period June to December 2005. Management believes
      the increase in delinquency and net losses are mainly from seasonal trends
      and
      were exacerbated by the significant increase in bankruptcy filings resulting
      from the recent change in bankruptcy legislation which became effective on
      October 17, 2005. Recoveries from on balance sheet and off balance sheet
      securitizations during 2005 have trended higher than projections under the
      prior
      methodology. See “Discussion of Forward-Looking Statements.”







53










Delinquency
      experience of securitized finance receivables at UAC (in
      thousands):










**December
                31, 2005**
            
            **December
                31, 2004****Securitized
                finance receivables principal balance**
            
            $
            115,031
            
            $
            125,866Delinquencies:30-59
                days
            
            
            7,703
            
            
            6,75160-89
                days
            
            
            2,390
            
            
            2,28390+
                days
            
            
            1,271
            
            
            1,252Total
                delinquencies
            
            $
            11,364
            
            $
            10,286Delinquencies
                as a percentage of securitized finance receivables
            
            
            9.9
            %
            
            8.2
            %**Off-balance
                sheet finance receivables principal balance**
            
            $
            82,300
            
            $
            361,253Delinquencies:30-59
                days
            
            
            2,737
            
            
            11,37460-89
                days
            
            
            859
            
            
            4,10790+
                days
            
            
            553
            
            
            1,784Total
                delinquencies
            
            $
            4,149
            
            $
            17,265Delinquencies
                as a percentage of securitized finance receivables
            
            
            5.0
            %
            
            4.8
            %





Provisions
      are made for estimated net credit losses of securitized finance receivables
      in
      conjunction with each repurchase of an off-balance sheet securitization. The
      cumulative credit loss assumptions used for the pools of receivables repurchased
      as of December 31, 2005 ranged from 7.34% to 11.87%, compared to a range of
      7.55% to 12.68% as of December 31, 2004. At December 31, 2005, UAC implemented
      refinements in the methodology and assumptions used to estimate net credit
      losses and projected recoveries on securitized finance receivables because
      net
      credit losses on these receivables had trended lower and recoveries trended
      higher than projected under the prior methodology. See “Discussion of
      Forward-Looking Statements.”









54





Allowance
        for loan losses of securitized finance receivables at UAC ($ in
        thousands):







**Years
                Ended December 31,****2005**
            
            **2004**Balance
                at the beginning of period
            
            $
            11,722
            
            $
            5,006Allowance
                at purchase
            
            
            5,163
            
            
            3,604Charge-offs
            
            
            (21,637
            )
            
            (17,453
            )Recoveries
            
            
            14,333
            
            
            9,540Provision
                (recovery) for estimated credit losses
            
            
            (3,078
            )
            
            11,025Balance
                at the end of the period
            
            $
            6,503
            
            $
            11,722Net
                charge offs
            
            $
            7,304
            
            $
            7,913Securitized
                finance receivables
            
            $
            115,031
            
            $
            125,866Allowance
                for loan losses as a percent of securitized finance
                receivables
            
            
            5.65
            %
            
            9.31
            %Annualized
                net charge offs as a percent of securitized finance
                receivables
            
            
            6.35
            %
            
            6.29
            %Allowance
                for loan losses as a percent of net charge offs
            
            
            89.03
            %
            
            148.14
            %





***Finance
      Receivables***




Delinquency
      experience of finance receivables at Coastal Credit, including unearned interest
      ($ in thousands):







**December
                31,****2005**Finance
                receivables - gross balance
            
            $
            97,820Delinquencies:30-59
                days
            
            
            1,12460-89
                days
            
            
            76890+
                days
            
            
            878Total
                delinquencies
            
            $
            2,770Delinquencies
                as a percentage of finance receivables - gross balance
            
            
            2.8
            %





As
      a
      result of the nature of the customers in Coastal Credit’s portfolio, Coastal
      Credit considers the establishment of an adequate allowance for loan losses
      to
      be critical to its continued profitability. Coastal Credit has an allowance
      for
      loan losses that is calculated independent of the aggregate acquisition
      discounts and fees on finance receivables. Coastal Credit’s allowance for loan
      losses is based upon the historical rate at







55





which
      (1)
      current loans, (2) contracts in a 30, 60 and 90+ day delinquency state and
      (3)
      loans ineligible for its borrowing line will default. These historical rates
      are
      evaluated and revised on a quarterly basis. See “Discussion of Forward-Looking
      Statements.”




Allowance
      for loan losses of finance receivables ($ in thousands):










**Four**
              **Months
                Ended****December
                31,****2005**Balance
                at August 31, 2005
            
            $
            5,200Charge-offs,
                net of recoveries (1)
            
            
            (782
            )Provision
                for estimated credit losses
            
            
            1,613Balance
                at the end of the period
            
            $
            6,031Net
                charge offs
            
            $
            782Finance
                receivables, net of unearned finance charges
            
            $
            87,952Allowance
                for loan losses as a percent of finance receivables, net of unearned
                finance charges
            
            
            6.86
            %Annualized
                net charge offs as a percent of finance receivables, net of unearned
                finance charges
            
            
            2.67
            %Allowance
                for loan losses as a percent of annualized net charge offs
            
            
            257.08
            %





(1)
      Charge-offs do not include the portion of loans subject to SOP 03-3 that were
      charged off and attributable to the non-accretable discount during the four
      months ended December 31, 2005.






**D** **iscussion
      of Forward-Looking Statements**




The
      preceding Management’s Discussion and Analysis contains forward-looking
      statements within the meaning of The Private Securities Litigation Reform Act
      of
      1995. Forward-looking statements are also made elsewhere in this report. 
White River publishes other forward-looking statements from time to time.
      Statements that are not historical in nature, including the words “anticipate,”
“estimate,” “should,” “expect,” “believe,” “intend,” and similar expressions,
      are intended to identify forward-looking statements. We caution you to be aware
      of the speculative nature of “forward-looking statements.” Although these
      statements reflect White River’s good faith belief based on current
      expectations, estimates and projections about (among other things) the industry
      and the markets in which White River operates, they are not guarantees of future
      performance. Whether actual results will conform to management’s expectations
      and predictions is subject to a number of known and unknown risks and
      uncertainties, including:




§
            the
                risks and uncertainties discussed in this Annual Report on Form 10-K;







56










§
            general
                economic, market, or business conditions;




§
            changes
                in interest rates, the cost of funds, and demand for White River’s
                financial services;




§
            changes
                in White River’s competitive position;




§
            White
                River’s ability to manage growth;




§
            the
                opportunities that may be presented to and pursued by White River;




§
            competitive
                actions by other companies;




§
            changes
                in laws or regulations;




§
            changes
                in the policies of federal or state regulators and agencies; and




§
            other
                circumstances, many of which are beyond White River’s control.




Consequently,
      all of White River’s forward-looking statements are qualified by these
      cautionary statements. White River may not realize the results anticipated
      by
      management or, even if White River substantially realizes the results management
      anticipates, the results may not have the consequences to, or effects on, White
      River or its business or operations that management expects. Such differences
      may be material. Except as required by applicable laws, White River does not
      intend to publish updates or revisions of any forward-looking statements
      management makes to reflect new information, future events or
      otherwise.






**ITEM** **7A.  
      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**




Fluctuations
      in market interest rates impact Coastal Credit’s line of credit facility.
      Coastal Credit’s gross interest rate spread, which is the difference between
      interest earned on its finance receivables and interest paid, is affected by
      changes in interest rates.






**Line
      of Credit** ****




Finance
      receivables purchased by the Coastal Credit and pledged to secure borrowings
      under its line of credit bear fixed interest rates. Amounts borrowed under
      Coastal Credit’s line of credit facility bear interest at variable rates that
      are subject to frequent adjustments to reflect prevailing market interest rates.







57








**ITEM** **8.  
      FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA**





**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**





To
      the
      Board of Directors and Shareholders of


White
      River Capital, Inc.


Indianapolis,
      Indiana





We
      have
      audited the accompanying consolidated balance sheets of White River Capital,
      Inc. and subsidiaries (the “Company”) as of December 31, 2005 and 2004, and the
      related consolidated statements of operations, shareholders' equity, and cash
      flows for each of the three years in the period ended December 31, 2005. These
      financial statements are the responsibility of the Company's management. Our
      responsibility is to express an opinion on these financial statements based
      on
      our audits.





We
      conducted our audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. The Company is not required to
      have, nor were we engaged to perform, an audit of its internal control over
      financial reporting. Our audits included consideration of internal control
      over
      financial reporting as a basis for designing audit procedures that are
      appropriate in the circumstances, but not for the purpose of expressing an
      opinion on the effectiveness of the Company's internal control over financial
      reporting. Accordingly, we express no such opinion. An audit also includes
      examining, on a test basis, evidence supporting the amounts and disclosures
      in
      the financial statements, assessing the accounting principles used and
      significant estimates made by management, as well as evaluating the overall
      financial statement presentation. We believe that our audits provide a
      reasonable basis for our opinion.





In
      our
      opinion, such consolidated financial statements present fairly, in all material
      respects, the financial position of White River Capital, Inc. and subsidiaries
      as of December 31, 2005 and 2004, and the results of their operations and their
      cash flows for each of the three years in the period ended December 31, 2005,
      in
      conformity with accounting principles generally accepted in the United States
      of
      America.








/s/
        Deloitte & Touche LLP


Indianapolis,
      Indiana


March
      29,
      2006











58








**WHITE
                RIVER CAPITAL, INC. AND SUBSIDIARIES****CONSOLIDATED
                BALANCE SHEETS****(Dollars
                in thousands)****ASSETS**
            
            **December
                31, 2005**
            
            **December
                31, 2004**Cash
                and cash equivalents
            
            $
            6,878
            
            $
            3,745Restricted
                cash
            
            
            22,739
            
            
            23,530Securitized
                finance receivables—net
            
            
            109,506
            
            
            115,165Finance
                receivables—net
            
            
            70,784
            
            
            -Beneficial
                interest in Master Trust
            
            
            13,968
            
            
            3,677Deferred
                costs
            
            
            -
            
            
            634Goodwill
            
            
            35,097
            
            
            -Deferred
                tax assets
            
            
            4,707
            
            
            -Other
                assets
            
            
            3,315
            
            
            4,179TOTAL
            
            $
            266,994
            
            $
            150,930**LIABILITIES
                AND SHAREHOLDERS’ EQUITY (DEFICIT)**LIABILITIES:Collateralized
                financing
            
            $
            122,293
            
            $
            132,257Line
                of credit
            
            
            51,500
            
            
            -Secured
                note payable
            
            
            15,000
            
            
            -Subordinated
                debentures
            
            
            7,700
            
            
            -Note
                payable - Coastal Credit purchase holdback
            
            
            3,840
            
            
            -Accrued
                interest
            
            
            2,131
            
            
            7,100Amounts
                due to Master Trust
            
            
            7,417
            
            
            6,640Creditor
                notes payable
            
            
            1,461
            
            
            11,445Due
                to Castle Creek
            
            
            -
            
            
            634Other
                payables and accrued expenses
            
            
            2,291
            
            
            1,156Total
                liabilities
            
            
            213,633
            
            
            159,232SHAREHOLDERS’
                EQUITY (DEFICIT):Preferred
                Stock, without par value, authorized3,000,000
                shares; none issued and outstanding
            
            
            -
            
            
            -Common
                Stock, without par value, authorized20,000,000
                shares; 3,810,155 and 310,191issued
                and outstanding at December 31, 2005and
                2004, respectively
            
            
            179,157
            
            
            145,900Warrants
            
            
            534
            
            
            -Accumulated
                other comprehensive income
            
            
            13,305
            
            
            1,943Accumulated
                deficit
            
            
            (139,635
            )
            
            (156,145
            )Total
                shareholders’ equity (deficit)
            
            
            53,361
            
            
            (8,302
            )TOTAL
            
            $
            266,994
            
            $
            150,930See
                notes to consolidated financial statements.








59







**WHITE
                  RIVER CAPITAL, INC.****AND SUBSIDIARIES****CONSOLIDATED
                  STATEMENTS OF OPERATIONS****(Dollars
                  in thousands, except per share amounts)****Years
                  Ended December 31,****2005**
              
              **2004**
              
              **2003**INTEREST:Interest
                  on receivables
              
              $
              28,803
              
              $
              12,985
              
              $
              9,799Accretion
                  and other interest
              
              
              8,530
              
              
              1,028
              
              
              5,917Total
                  interest income
              
              
              37,333
              
              
              14,013
              
              
              15,716Interest
                  expense
              
              
              (15,204
              )
              
              (13,108
              )
              
              (15,171
              )Net
                  interest margin
              
              
              22,129
              
              
              905
              
              
              545Recovery
                  (provision) for estimated credit losses
              
              
              1,465
              
              
              (11,025
              )
              
              (874
              )Net
                  interest margin (deficit) after recovery (provision) for estimated
                  credit
                  losses
              
              
              23,594
              
              
              (10,120
              )
              
              (329
              )OTHER
                  REVENUES:Servicing
                  fee income
              
              
              -
              
              
              -
              
              
              5,355Credit
                  (charge) to Master Trust—net
              
              
              (10,253
              )
              
              4,485
              
              
              (178
              )Gain
                  from extinguishment of debt
              
              
              11,352
              
              
              -
              
              
              -Gain
                  on fair valuation of creditor liabilities
              
              
              -
              
              
              -
              
              
              51,604Gain
                  on sale of servicing platform and equipment—net
              
              
              -
              
              
              -
              
              
              6,582Other
                  income
              
              
              668
              
              
              2,934
              
              
              3,636Total
                  other revenues, net
              
              
              1,767
              
              
              7,419
              
              
              66,999OTHER
                  EXPENSES:Salaries
                  and benefits
              
              
              2,462
              
              
              434
              
              
              4,260Operating
                  expenses
              
              
              2,770
              
              
              1,126
              
              
              7,768Third
                  party servicing expense
              
              
              3,323
              
              
              2,344
              
              
              637Impairment
                  of retained interest/beneficial interest in master trust
              
              
              -
              
              
              -
              
              
              39,154Valuation
                  loss on receivables held for sale—net
              
              
              -
              
              
              -
              
              
              280Bankruptcy
                  costs
              
              
              296
              
              
              657
              
              
              8,897Total
                  other expenses
              
              
              8,851
              
              
              4,561
              
              
              60,996INCOME
                  (LOSS) BEFORE INCOME TAXES
              
              
              16,510
              
              
              (7,262
              )
              
              5,674INCOME
                  TAXES
              
              
              -
              
              
              -
              
              
              -NET
                  INCOME (LOSS)
              
              $
              16,510
              
              $
              (7,262
              )
              $
              5,674NET
                  INCOME (LOSS) PER COMMON SHARE (BASIC)
              
              $
              11.08
              
              $
              (23.41
              )
              $
              18.29NET
                  INCOME (LOSS) PER COMMON SHARE (DILUTED)
              
              $
              11.02
              
              $
              (23.41
              )
              $
              18.29BASIC
                  WEIGHTED AVERAGE NUMBEROF
                  COMMON SHARES OUTSTANDING
              
              
              1,489,607
              
              
              310,191
              
              
              310,191DILUTED
                  WEIGHTED AVERAGE NUMBEROF
                  COMMON SHARES OUTSTANDING
              
              
              1,498,549
              
              
              310,191
              
              
              310,191See
                  notes to consolidated financial statements.


60














**WHITE
                  RIVER CAPITAL,
                  INC.****AND
                  SUBSIDIARIES****CONSOLIDATED
                STATEMENTS OF CASH FLOWS****(Dollars
                in thousands)****Years
                Ended December 31,****2005**
            
            **2004**
            
            **2003**CASH
                FLOWS FROM OPERATING ACTIVITIES:Net
                income (loss)
            
            $
            16,510
            
            $
            (7,262
            )
            $
            5,674Adjustments
                to reconcile net income (loss) to net cash provided by (used in)
                operating
                activities:Accretion
                of discount
            
            
            (7,696
            )
            
            (756
            )
            
            (4,630
            )Provision
                (recovery) for estimated credit losses
            
            
            (1,465
            )
            
            11,025
            
            
            874Valuation
                loss on receivables held for sale—net
            
            
            -
            
            
            -
            
            
            281Gain
                on sale of servicing platform and equipment—net
            
            
            -
            
            
            -
            
            
            (6,582
            )Amortization
                and depreciation
            
            
            181
            
            
            28
            
            
            1,967Amortization
                of discount and interest accrued on creditor notes payable
            
            
            5,171
            
            
            8,642
            
            
            5,476Impairment
                of retained interest/beneficial interest in Master Trust
            
            
            -
            
            
            -
            
            
            39,154Gain
                on fair valuation of creditor liabilities
            
            
            -
            
            
            -
            
            
            (51,604
            )Gain
                from extinguishment of debt
            
            
            (11,352
            )
            
            -
            
            
            -Changes
                in assets and liabilities:Principal
                and recovery collections on receivables held for sale—net
                ofsecuritized
                receivables repurchased
            
            
            -
            
            
            -
            
            
            24,716Proceeds
                from whole loan sales
            
            
            -
            
            
            -
            
            
            278,190Accrued
                interest receivable and other assets
            
            
            3,170
            
            
            2,725
            
            
            8,582Refundable
                and deferred income taxes
            
            
            -
            
            
            -
            
            
            23,470Amounts
                due to Master Trust
            
            
            777
            
            
            (2,032
            )
            
            (6,939
            )Payment
                of creditor notes payable accrued interest
            
            
            (6,390
            )
            
            (849
            )
            
            (276
            )Increase
                in interest payable on prepetition liabilities
            
            
            -
            
            
            -
            
            
            8,070Other
                payables and accrued expenses
            
            
            752
            
            
            (1,706
            )
            
            (18,743
            )Net
                cash provided by (used in) operating activities
            
            
            (342
            )
            
            9,815
            
            
            307,680CASH
                FLOWS FROM INVESTING ACTIVITIES:Acquisition
                of Coastal Credit, LLC, net of cash acquired
            
            
            (41,804
            )
            
            -
            
            
            -Purchase
                of securitized finance receivables
            
            
            (149,333
            )
            
            (138,935
            )
            
            (119,420
            )Principal
                collections and recoveries on securitized finance
                receivables
            
            
            156,746
            
            
            104,974
            
            
            24,698Purchase
                of finance receivables
            
            
            (18,204
            )
            
            -
            
            
            -Collections
                on finance receivables
            
            
            14,562
            
            
            -
            
            
            -Collections
                on beneficial interest in Master Trust
            
            
            8,767
            
            
            3,641
            
            
            -Proceeds
                from sale of servicing platform and equipment
            
            
            42
            
            
            -
            
            
            8,111Change
                in restricted cash
            
            
            791
            
            
            (5,866
            )
            
            (10,644
            )Capital
                expenditures
            
            
            (32
            )
            
            (11
            )
            
            (51
            )Net
                cash used in investing activities
            
            
            (28,465
            )
            
            (36,197
            )
            
            (97,306
            )CASH
                FLOWS FROM FINANCING ACTIVITIES:Proceeds
                from issuance of common stock, net of costs
            
            
            33,524
            
            
            -
            
            
            -Proceeds
                from collateralized financings
            
            
            153,359
            
            
            136,671
            
            
            120,327Principal
                payments on collateralized financings
            
            
            (163,323
            )
            
            (106,648
            )
            
            (18,093
            )Proceeds
                from secured note payable
            
            
            15,000
            
            
            -
            
            
            -Principal
                payments on creditor notes payable
            
            
            (3,460
            )
            
            (8,557
            )
            
            (45,915
            )Principal
                payments on line of credit
            
            
            (2,000
            )
            
            -
            
            
            -Payment
                of debt issuance costs related to secured note payable
            
            
            (210
            )
            
            -
            
            
            -Net
                change in warehouse credit facility
            
            
            -
            
            
            -
            
            
            (294,780
            )Proceeds
                from notes payable to Castle Creek
            
            
            2,375
            
            
            -
            
            
            -Principal
                payments on notes payable to Castle Creek
            
            
            (2,375
            )
            
            -
            
            
            -Principal
                payments on subordinated debentures
            
            
            (950
            )
            
            -
            
            
            -Net
                cash provided by (used in) financing activities
            
            
            31,940
            
            
            21,466
            
            
            (238,461
            )INCREASE
                (DECREASE) IN CASH AND CASH EQUIVALENTS
            
            
            3,133
            
            
            (4,916
            )
            
            (28,087
            )CASH
                AND CASH EQUIVALENTS—Beginning of year
            
            
            3,745
            
            
            8,661
            
            
            36,748CASH
                AND CASH EQUIVALENTS—End of year
            
            $
            6,878
            
            $
            3,745
            
            $
            8,661SUPPLEMENTAL
                DISCLOSURES OF CASH FLOW INFORMATION:Income
                tax refunds
            
            $
            73
            
            $
            83
            
            $
            22,906Interest
                paid
            
            $
            12,651
            
            $
            4,906
            
            $
            3,719Interest
                payable exchanged for creditor notes payable
            
            $
            -
            
            $
            -
            
            $
            8,070Issuance
                of warrants
            
            $
            534
            
            $
            -
            
            $
            -See
                notes to consolidated financial statements.











61








**WHITE
                RIVER CAPITAL, INC. AND SUBSIDIARIES****CONSOLIDATED
                STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)****YEARS
                ENDED DECEMBER 31, 2005, 2004 AND 2003****(Dollars
                in thousands)****Number
                of**
              **Common**
              **Shares**
              **Outstanding**
            
            **Common**
              **Stock**
            
            **Warrants**
            
            **Accumulated**
              **Other**
              **Comprehensive**
              **Income
                (Loss)**
            
            **Accumulated**
              **Deficit**
            
            **Total**
              **Shareholders’**
              **Equity**
              **(Deficit)**BALANCE—January
                1, 2003
            
            
            310,191
            
            $
            145,900
            
            $
            -
            
            $
            (2,033
            )
            $
            (154,557
            )
            $
            (10,690
            )Comprehensive
                loss:Net
                income
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            5,674
            
            
            5,674Net
                unrealized loss on retainedinterest
                in securitized assets—net
                of income taxes
            
            
            
            
            
            
            
            
            
            
            
            2,033
            
            
            
            
            
            2,033Total
                comprehensive income
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            7,707BALANCE—December
                31, 2003
            
            
            310,191
            
            
            145,900
            
            
            -
            
            
            -
            
            
            (148,883
            )
            
            (2,983
            )Comprehensive
                loss:Net
                loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (7,262
            )
            
            (7,262
            )Net
                unrealized gain on beneficialinterest
                in Master Trust
            
            
            
            
            
            
            
            
            
            
            
            1,943
            
            
            
            
            
            1,943Total
                comprehensive loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (5,319
            )BALANCE—December
                31, 2004
            
            
            310,191
            
            
            145,900
            
            
            -
            
            
            1,943
            
            
            (156,145
            )
            
            (8,302
            )Comprehensive
                income:Net
                income
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            16,510
            
            
            16,510Net
                unrealized gain on beneficialinterest
                in Master trust
            
            
            
            
            
            
            
            
            
            
            
            11,362
            
            
            
            
            
            11,362Total
                comprehensive income
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            27,872UAC
                fractional shares adjustment as a result of share exchange
            
            
            (36
            )Issuance
                of warrants
            
            
            
            
            
            
            
            
            534
            
            
            
            
            
            
            
            
            534Issuance
                of common stock, net of costs of $1,743
            
            
            3,500,000
            
            
            33,257
            
            
            
            
            
            
            
            
            
            
            
            33,257BALANCE—December
                31, 2005
            
            
            3,810,155
            
            $
            179,157
            
            $
            534
            
            $
            13,305
            
            $
            (139,635
            )
            $
            53,361See
                notes to consolidated financial statements.











62





**WHITE
      RIVER CAPITAL, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**YEARS
      ENDED DECEMBER 31, 2005, 2004 AND 2003**




**1.**  **GENERAL
      DISCUSSION**




White
      River Capital, Inc. (“White River”) is a holding company for specialized
      indirect auto finance businesses, with two principal operating subsidiaries,
      Coastal Credit LLC (“Coastal Credit”) and Union Acceptance Company LLC (”UAC”).
      Coastal Credit based in Virginia Beach, Virginia, is a specialized sub-prime
      auto finance company engaged primarily in (1) acquiring retail installment
      sales
      contracts from both franchised and independent automobile dealers which have
      entered into contracts with purchasers of used and, to a much lesser extent,
      new
      cars and light trucks, and (2) servicing its contract portfolio. Coastal Credit
      operates in seventeen states. UAC, based in Indianapolis, Indiana, holds and
      oversees its portfolio of approximately $197.7 million in non-prime auto
      receivables, as of December 31, 2005. Its portfolio is held approximately 41.6%
      in off-balance sheet securitizations, 58.2% through subsidiary non-recourse
      collateralized financings and 0.2% directly or by subsidiaries not subject
      to
      financing. UAC operates under a confirmed Second Amended and Restated Plan
      of
      Reorganization under Chapter 11 of the U.S. Bankruptcy Code (the “Plan”) under
      which net proceeds from its residual interest in its receivables portfolios
      and
      other bankruptcy estate assets must be paid to creditors holding notes and
      claims under the plan. During 2005, White River purchased and owns directly
      approximately 90% of such notes and claims.




**2005
      Recapitalization Transactions**




White
      River was formed in December 2004. During 2005, White River became the holding
      company of UAC, purchased the majority of outstanding notes and claims under
      UAC’s plan of reorganization and purchased Coastal Credit in a series of
      transactions that included:




·
            the
                buyout of substantially all of the UAC restructured senior notes
                (“Senior
                Notes”), restructured subordinated notes (“Subordinated Notes”), and their
                accompanying accrual notes (“Accrual Notes”) that were issued by UAC under
                the Plan;


·
            a
                Share Exchange for White River common shares by UAC common
                shareholders;


·
            a
                $35 million subscription rights equity offering by White River to
                UAC
                shareholders and standby investors;


·
            a
                $15 million note issuance by White River;
                and


·
            the
                acquisition of Coastal Credit for $50.8 million, including
                expenses.





On
      February 15, 2005, UAC, White River, and the Plan Committee representing the
      UAC
      creditors under the Plan of Reorganization entered into a memorandum of
      understanding providing for the proposed buyout of the remaining outstanding
      UAC
      Senior Notes, Subordinated Notes and Accrual Notes payable. This agreement
      stipulated that White River, as the proposed parent of UAC, would offer to
      pay
      100% of the principal value of the Senior Notes and 13% of the face value of
      the
      Subordinated Notes for the tender of these notes and their accompanying Accrual
      Notes to White River. Additional amounts may be paid by White River to the
      former Subordinated Note holders in the future if certain prescribed events
      occur including but not limited to recovery by UAC on a particular unresolved
      pending claim. This purchase offer was accepted by 100% of the Senior Note
      holders and holders of 89.1% of the Subordinated Notes in February 2005. During
      June 2005, the Senior Notes of UAC were purchased by White River and
      simultaneously paid in full and White River completed the buyout of 89.1% of
      the
      Subordinated Notes of UAC using bridge funding provided by Castle Creek Capital
      Partners Fund IIa, LP and Castle Creek Capital Partners Fund IIb, LP
      (collectively the “Funds”). During September 2005, White River concluded its
      offer to purchase claims from the general unsecured creditors of UAC. White
      River acquired approximately 57.3% of the general unsecured claims of UAC as
      a
      result of this offer.




In
      accordance with SFAS No. 140, Accounting for Transfers and Servicing of
      Financial Assets and Extinguishments of Liabilities, UAC’s carrying value for
      the portion of the creditor notes payable owned by White River was netted
      against the amount paid by White River for the creditor notes resulting in
      a net
      gain from extinguishment of debt of $11.4 million.







63








On
      March
      8, 2005, the board of directors of White River reviewed and authorized the
      following transactions and UAC’s board of directors approved the following
      actions subject to shareholder approval:




1.
            the
                share exchange agreement between UAC and White
                River;


2.
            the
                acquisition of Coastal Credit;


3.
            the
                issuance of a warrant to purchase White River common stock to the
                Funds,
                which advanced funds in connection with the described transactions
                and the
                general partner of which, Castle Creek Capital LLC (“Castle Creek”),
                assisted in developing, structuring and implementing the transactions;
                and


4.
            the
                $15 million note placement
                agreement.




The
      share
      exchange agreement was executed on March 9, 2005 by UAC and White River. A
      purchase agreement (to effect the acquisition of Coastal Credit), the note
      purchase agreement and the warrant issuance agreement were also executed on
      March 9, 2005 by White River.





On
      August
      9, 2005, the Share Exchange became effective upon the filing of Articles of
      Share Exchange with the State of Indiana. The outstanding shares of common
      stock
      of UAC were exchanged for shares of common stock of White River, at an exchange
      rate of one share of White River common stock for 100 shares of UAC common
      stock
      (the “Share Exchange”). White River exchanged 310,155 shares of its common stock
      for the outstanding shares of UAC. White River became the parent holding company
      of UAC.




For
      purposes of the consolidated financial statements and in accordance with
      Financial Accounting Standards Board (“FASB”) Statement No. 141, Business
      Combinations (“SFAS No. 141”), the form of the Share Exchange points to UAC as
      the predecessor to White River. Therefore, the consolidated financial statements
      include results of UAC and White River as though they always coexisted, also
      referred to as predecessor accounting.




On
      August
      31, 2005, White River completed a $35 million subscription offering. In this
      offering, White River issued 3,500,000 shares of common stock at the
      subscription price of $10.00 per share. The net proceeds of this subscription
      offering and the debt issuance of $15 million were used to acquire Coastal
      Credit, to repay a secured bridge note payable to the Funds, to pay transaction
      costs, and for ongoing operations.




On
      August
      31, 2005, warrants were issued by White River to the Funds to purchase 150,000
      shares of White River common stock at an exercise price of $10 per share. The
      term of the warrant is three years and 90 days and is exercisable beginning
      September 1, 2008.




Also
      on
      August 31, 2005, White River completed the acquisition of 100% of the ownership
      interests in Coastal Credit for an aggregate purchase price of $50.8 million,
      including direct costs of acquisition. $45.0 million was paid to the sellers
      at
      closing and $3.8 million, net of a $1.2 million receivable from the previous
      owner, was held back until March 31, 2006 and payable with interest at the
      rate
      of 10% per annum.




In
      connection with UAC’s Plan of Reorganization and distributions and as a result
      of White River’s purchase of the majority of UAC’s





64





general
      unsecured claims and Subordinated Notes, UAC’s
      creditor notes payable principle amounts (in thousands) are as follows
      at:





**December
                31, 2005**
            
            **December
                31, 2004****Carrying**
              **Value**
            
            **Contractual**
              **Remaining**
              **Debt
                Not**
              **Owned
                by**
              **White
                River**
            
            **Total**
              **Contractual**
              **Remaining**
              **Debt**
            
            **Carrying**
              **Value**
            
            **Contractual**
              **Remaining**
              **Debt
                Not**
              **Owned
                by**
              **White
                River**
            
            **Total**
              **Contractual**
              **Remaining**
              **Debt**Restructured
                debt:Class
                2A general unsecured claims
            
            $
            164
            
            $
            405
            
            $
            1,330
            
            $
            656
            
            $
            1,599
            
            $
            1,599Class
                2A1 general unsecured claims
            
            
            -
            
            
            -
            
            
            -
            
            
            1
            
            
            125
            
            
            125Restructured
                senior notes
            
            
            -
            
            
            -
            
            
            -
            
            
            3,206
            
            
            3,206
            
            
            3,207Restructured
                subordinated notes
            
            
            1,296
            
            
            5,041
            
            
            46,383
            
            
            7,580
            
            
            46,383
            
            
            46,383Senior
                accrual notes
            
            
            -
            
            
            -
            
            
            4,106
            
            
            1
            
            
            4,106
            
            
            4,106Subordinated
                accrual notes
            
            
            1
            
            
            431
            
            
            3,964
            
            
            1
            
            
            3,964
            
            
            3,964Total
                creditor notes payable
            
            $
            1,461
            
            $
            5,877
            
            $
            55,783
            
            $
            11,445
            
            $
            59,384
            
            $
            59,384








**UAC
      History**




UAC
      had
      historically been engaged primarily in the business of acquiring, securitizing
      and servicing retail automobile installment sales contracts originated by
      dealerships.




UAC
      had
      historically operated as a specialized finance company, engaged in
      (1) acquiring receivables in the form of retail installment sales contracts
      and installment loan agreements for the purchase of automobiles primarily from
      automobile dealerships and used car superstores (the “Receivables Acquisitions”)
      and (2) the servicing of such receivables by collecting payments due,
      remitting those payments to appropriate entities and collecting delinquent
      and
      defaulted accounts (“Servicing”).




On
      October 31, 2002, UAC filed a voluntary petition for reorganization under
      Chapter 11 of the United States Bankruptcy Code in the United States
      Bankruptcy Court for the Southern District of Indiana, Indianapolis Division
      (the “Court”). This proceeding did not include UAC’s wholly owned subsidiaries.
      On November 7, 2002, UAC announced it would discontinue receivable
      acquisitions because it was not able to establish timely arrangements for
      further acquisition funding. UAC continued to manage its business as a
      debtor-in-possession as it prepared for reorganization under bankruptcy
      law.




On
      January 14, 2003, UAC implemented, with the Court’s approval, an Employee
      Retention Plan (“ERP”). This plan covered all remaining full time employees.
      Under the provisions of the ERP, UAC was authorized to compensate all full
      time
      employees based on respective classifications of job importance.




On
      March 19, 2003, UAC made the requisite filings with the Securities and
      Exchange Commission (the “SEC”) to deregister its securities under the
      Securities Exchange Act of 1934 (the “Act”). UAC was no longer obligated to file
      periodic reports under such Act.







65










In
      March
      and April 2003, UAC sold, with the Court’s approval, the majority of its
      receivables held for sale. The principal payments received and proceeds from
      these sales of receivables were utilized to extinguish the outstanding amounts
      of the credit facilities and related derivative liability.




Effective
      April 17, 2003, UAC, with the Court’s approval, sold its servicing platform
      and related assets to Systems & Services Technologies, Inc. (“SST”), a
      subsidiary of J.P. Morgan Chase & Co., for approximately $8.1 million,
      which resulted in a net gain of approximately $6.6 million. SST retained
      substantially all of UAC’s remaining employees and continued operations at UAC’s
      existing facility in Indianapolis through May 28, 2004.




In
      connection with the sale of the servicing platform and related assets to SST,
      UAC and its subsidiaries entered into various amendments to the trust and
      servicing agreements, indentures and various other agreements related to UAC’s
      outstanding securitizations. In addition, UAC entered into an agreement with
      the
      surety provider to establish a Master Trust Account and to effectively cross
      collateralize the outstanding securitizations (“Master Trust Agreement”). These
      agreements generally provided for the following:




·
            UAC
                resigned, and SST was appointed, as servicer, and standards for SST’s
                performance and provisions for SST’s compensation were
                established.




·
            UAC
                was released from performance trigger obligations related to the
                securitizations, including the release of claims against UAC by the
                securitization trusts and MBIA, Inc.
                (“MBIA”).




·
            A
                Master Trust Account was created pursuant to the Master Trust Agreement.
                The Master Trust Account serves effectively to cross-collateralize
                the
                securitization trusts, as more specifically described below (“Master Trust
                Account”). The residual cash flows from the securitizations are paid
                through the Master Trust Account.




·
            Funds
                in excess of the cash collateral requirements of specific securitizations
                are remitted to the Master Trust
                Account.




·
            Funds
                in a particular securitization’s spread account in excess of the amount
                required for the immediately following distribution date may be drawn
                by
                the master trust to the Master Trust Account to make distributions
                to
                other securitization trusts or otherwise as provided in the Master
                Trust
                Agreement.




·
            Amounts
                held in the Master Trust Account are available to pay certain fees
                and
                expenses of the servicer, the securitization trustees, MBIA, and
                the
                master trustee, and to make distributions to securitization trusts to
                meet cash distribution obligations of those trusts to security holders
                of a securitization trust, to the extent cash otherwise available to
                that trust is insufficient for such
                purpose.




·
            Cash
                deposited to the Master Trust Account, to the extent not used for
                the
                foregoing purposes, will accumulate and, to the extent it exceeds
                prescribed levels, will be available for distribution to
                UAC.




With
      the
      establishment of the Master Trust Agreement in 2003, all excess cash from
      securitizations is required to be deposited in the Master Trust Account. Once
      prescribed cash reserve levels are met, cash will be released to UAC from the
      Master Trust Account. This future cash flow is reported as beneficial interest
      in Master Trust. Based upon this agreement, UAC’s retained interest was
      exchanged for the beneficial interest in Master Trust for financial reporting
      purposes.







66










UAC
      filed
      its original Plan of Reorganization under Chapter 11 of the United States
      Bankruptcy Code on June 5, 2003. After additional modification and negotiations
      with the creditors of UAC, the Second Amended and Restated Plan of
      Reorganization under Chapter 11 of the United States Bankruptcy Code was
      filed and confirmed by the Court on August 8, 2003. The Plan became
      effective and was consummated by UAC on September 8, 2003 along with the
      first distribution to creditors.




The
      Plan
      has facilitated the distribution of proceeds to holders of UAC’s pre-petition
      claims allowed by the Court (“Allowed Claims”). The Plan does this by providing
      for payments on an approximate quarterly basis to UAC’s creditors (the
“Creditors”) from cash on hand realized from prescribed assets net of amounts
      set aside for future disputes and operating purposes (the “Net Estate
      Proceeds”). The Plan also provides that UAC continue its operations, collect on
      the beneficial interest in Master Trust, and preserve the value of the net
      operating loss carryforwards for the benefit of UAC’s shareholders (the “Equity
      Interests”).




Net
      Estate Proceeds available to the Creditors do not include: (a) potential tax
      benefits of net operating loss carryforwards (“NOLs”) and (b) any amounts
      received by UAC after emergence from bankruptcy in connection with any new
      investments made by Equity Interests, any new permitted indebtedness, and any
      value created thereby (collectively, the “Excluded Assets”). The Plan provides
      that these amounts will accrue only to the Equity Interests, will be maintained
      in separate accounts (i.e., not commingled with funds designated as Net Estate
      Proceeds), and will not be used to make distributions to the Creditors unless
      otherwise agreed by UAC and approved by a majority in voting power of the
      holders of the Equity Interests.




Statement
      of Position (“SOP”) 90-7, Financial Reporting by Entities in Reorganization
      Under the Bankruptcy Code, specifies that entities emerging from Chapter 11
      (that do not meet the criteria to qualify for fresh-start accounting) should
      state liabilities at the “present value of amounts to be paid, determined at
      appropriate current interest rates.” Based on this present value calculation,
      UAC recognized a gain on fair valuation of creditor liabilities of $51.6 million
      in 2003. In addition, UAC accretes the present value to the face value of the
      creditor notes over their estimated life.




Costs
      related to the reorganization under the provisions of Chapter 11 protection
      are reported in the Consolidated Statements of Operations separately as
      Bankruptcy Costs in accordance with SOP 90-7. Approximately
      $0.3 million, $0.7 million and $8.9 million of professional fees
      and other expenses have been classified as Bankruptcy Costs for the years ended
      December 31, 2005, 2004 and 2003, respectively.




**Acquisition
      of Coastal Credit, LLC**




On
      August
      31, 2005, White River completed the acquisition of 100% of the interests in
      Coastal Credit with an aggregate purchase price of $50.8 million, including
      direct costs of acquisition. $45.0 million was paid to the sellers at closing
      and $3.8 million, net of a $1.2 million receivable from the previous owners,
      was
      held back until March 31, 2006 and payable with interest at the rate of 10%
      per
      annum. The results of Coastal Credit’s operations for the four months ended
      December 31, 2005 are included in the consolidated statement of
      operations.




Coastal
      Credit is a specialized sub-prime auto finance company engaged primarily in
      (1)
      acquiring retail installment sales contracts from both franchised and
      independent automobile dealers which have entered into contracts with purchasers
      of used and, to a much lesser extent, new cars and light trucks, and (2)
      servicing the contract portfolio. Coastal Credit commenced operations in
      Virginia in 1987 and was restructured as a limited liability company under
      the
      laws of the Commonwealth of Virginia in 1997. It conducts business in seventeen
      states - Arizona, California, Delaware, Florida, Georgia, Louisiana, Maryland,
      Mississippi, Nevada, North Carolina, Ohio, Oklahoma, Pennsylvania, Tennessee,
      Texas, Virginia and Washington - through its seventeen branch
      locations.







67










White
      River believes that there is significant benefit in acquiring an auto finance
      business that historically has focused on disciplined underwriting and
      consistent growth and profitability.




In
      accordance with SFAS No. 141, the acquisition was accounted for using the
      purchase method. The purchase method requires the cost of the acquired company,
      Coastal Credit, be allocated to the assets acquired and liabilities assumed.
      In
      accordance SFAS No. 141, the excess of the cost of an acquired entity over
      the
      amounts assigned to assets acquired and liabilities assumed shall be recognized
      as goodwill.




The
      allocation of the purchase price to the assets acquired and liabilities assumed
      has not been finalized due to the complexities of various components of the
      assets and liabilities of Coastal Credit. White River continues to analyze
      the
      finance receivables, net of Coastal Credit to derive a final allocation of
      the
      purchase price. The following table is a preliminary estimate of the allocation
      of the purchase price:










Cash
                and cash equivalent
            
            $
            3,733Finance
                receivables, net
            
            
            68,756Property
                and equipment
            
            
            626Other
                assets
            
            
            1,450Deferred
                tax assets
            
            
            4,651Goodwill
            
            
            35,153Line
                of credit
            
            
            (53,500
            )Subordinated
                debentures
            
            
            (8,650
            )Accrued
                Interest
            
            
            (380
            )Other
                payables and accrued expenses
            
            
            (1,035
            )Total
                purchase price
            
            $
            50,804





With
      the
      acquisition of Coastal Credit on August 31, 2005, the excess of purchase price
      over fair value of net assets acquired and liabilities assumed, goodwill, was
      recorded. In accordance with SFAS No. 142, Goodwill and Other Intangible Assets,
      White River will annually test the goodwill for impairment or more frequently
      if
      events or changes in circumstances indicate that the asset might be impaired.
      If
      the carrying value exceeds the fair value, impairment to goodwill will be
      recognized. The goodwill for this acquisition has been allocated to Coastal
      Credit for segment reporting. The goodwill is expected to be deductible for
      tax
      purposes.




The
      following is supplemental pro forma information that discloses the consolidated
      results of operations for the years ended December 31, 2005 and 2004 as though
      the acquisition of Coastal Credit by White River had been completed as of the
      beginning of the periods reported on. Assumed in this pro forma information
      is
      that the secured note payable was issued on January 1 of each respective year
      and the notes payable - Coastal Credit purchase holdback were issued on January
      1 and paid March 31 of each respective year. In addition, it is assumed that
      the
      subscription offering was completed on January 1 of each respective year for
      the
      calculation of the weighted average share information. During the January 1,
      2005 to August 31, 2005 time period, there were nonrecurring expenses for
      employee bonuses of $1.0 million and transaction expenses







68





incurred
      by Coastal Credit related to the acquisition of
      Coastal Credit by White River of $0.4 million which are included in the pro
      forma information:




**(Dollars
                  in thousands, except per share amounts)****Years
                  Ended December 31,****2005**
              
              **2004**Total
                  interest income
              
              
              53,861
              
              
              37,211Interest
                  expense
              
              
              (19,052
              )
              
              (17,722
              )Net
                  interest margin
              
              
              34,809
              
              
              19,489Provision
                  for estimated credit losses
              
              
              (2,446
              )
              
              (15,942
              )Net
                  interest margin after provision for estimated credit
                  losses
              
              
              32,363
              
              
              3,547Total
                  other revenues, net
              
              
              1,552
              
              
              7,345Total
                  other expenses
              
              
              16,469
              
              
              13,211Income
                  (Loss) Before Income Taxes
              
              
              17,446
              
              
              (2,319
              )Income
                  Taxes
              
              
              -
              
              
              -Net
                  Income (Loss)
              
              $
              17,446
              
              $
              (2,319
              )Net
                  Income (Loss) Per Common Share (Basic)
              
              $
              4.58
              
              $
              (0.61
              )Net
                  Income (Loss) Per Common Share (Diluted)
              
              $
              4.58
              
              $
              (0.61
              )Basic
                  Weighted Average NumberOf
                  Common Shares Outstanding
              
              
              3,810,155
              
              
              3,810,155Diluted
                  Weighted Average NumberOf
                  Common Shares Outstanding
              
              
              3,812,808
              
              
              3,810,155






**2.**  **SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES**




The
      consolidated financial statements include the accounts of White River and its
      wholly owned subsidiaries. All significant inter-company balances and
      transactions have been eliminated in consolidation. The consolidated financial
      statements have been prepared in conformity with accounting principles generally
      accepted in the United States of America and with the general practices of
      those
      in the consumer finance industry. In preparing the consolidated financial
      statements, management is required to make estimates and assumptions that affect
      the reported amounts of assets and liabilities at the date of the consolidated
      financial statements and the reported amounts of revenues and expenses during
      the reporting period. Actual results could differ significantly from those
      estimates. Material estimates that are particularly susceptible to significant
      change in the near term relate to the valuation of the beneficial interest
      in
      Master Trust, the valuation of post-emergence creditor liabilities, the
      valuation of deferred tax assets, and the allowance for credit
      losses.




***Cash
      and Cash Equivalents*** —White
      River considers all investments with maturity of three months or less when
      purchased to be cash equivalents.




***Restricted
      Cash*** —Restricted
      cash consists of funds held in reserve accounts in compliance with the terms
      of
      the collateralized financing agreements.







69










***Net
      Assets of Collateralized Financings*** -UAC
      Securitization Corporation has purchased receivables from off-balance sheet
      securitizations that were eligible for clean-up calls. These receivables were
      re-securitized through non-recourse asset backed note issuances. The associated
      future cash flows from these receivables are subject to the same Master Trust
      Account provisions as the securitizations called.




To
      finance the securitized receivable acquisitions, collateralized financings
      are
      used, secured by the respective portfolios of the acquired receivables and
      related restricted cash accounts. Timely payments of principal and interest
      on
      the non-recourse collateralized financings are insured by surety policies.
      Such
      obligations are also cross-collateralized through the Master Trust Agreement.
      Net interest cash flows in excess of expense are payable to the Master Trust
      Account and expensed as charge to Master Trust, net.




***Securitized
      Finance Receivables—net*** —UAC
      has
      repurchased receivables from outstanding securitizations and is using these
      receivables as collateral for new securitization debt that is recorded on White
      River’s balance sheet as collateralized financings. The receivables are carried
      at their principal amount plus interest receivable, less an allowance for credit
      losses.




***Finance
      Receivables—net*** —Finance
      receivables are recorded at cost, net of unearned finance charges, discounts
      and
      an allowance for credit losses. Coastal Credit purchases finance contracts
      from
      auto dealers without recourse, and accordingly, the dealer usually has no
      liability to Coastal Credit if the consumer defaults on the contract. There
      is
      no off-balance sheet credit exposure related to these receivables.




***Income
      Recognition - Finance Receivables*** -Finance
      charge income is recognized for financial reporting purposes using the interest
      method. Initial fees earned on add-on products such as collateral protection
      insurance, credit life insurance, road service plans and warranty products
      are
      recorded in income using the interest method. Late charges and deferment charges
      on contracts are recorded in income as collected. Cash received from loans
      that
      have previously been charged off is applied directly to the allowance for credit
      losses in the consolidated balance sheets. Discounts and fees, which consist
      primarily of non-refundable dealer acquisition discounts, are amortized over
      the
      term of the related finance receivables using the interest method and are
      removed from the consolidated balance sheets when the related finance
      receivables are charged off or paid in full.




***Beneficial
      Interest in Master Trust*** —UAC
      acquired receivables with the intention of reselling them through
      securitizations prior to November 7, 2002. In the securitization
      transactions, UAC sold a portfolio of receivables to a wholly owned special
      purpose subsidiary (“SPS”) that was established for the limited purpose of
      buying and reselling UAC’s receivables. The SPS transferred the same receivables
      to a trust vehicle (the “Trust”) which issued interest-bearing asset-backed
      securities. “Asset-backed securities” is a general reference to securities that
      are backed by financial assets such as automobile receivables. The securities
      were generally sold to investors in the public market. UAC provided credit
      enhancement for the benefit of the investors in various forms. The credit
      enhancement utilized in the securitization transactions completed through March
      2002 was in the form of a specific cash account (“Spread Account”) held by the
      Trust along with a surety bond. The Spread Accounts were required by the
      applicable servicing agreement to be maintained at specified levels.




At
      the
      closing of each securitization, UAC allocated its basis in the receivables
      between the portion of the receivables sold through the securities and the
      portion of the receivables retained from the securitizations (“Retained
      Interest”) based on the relative fair values of those portions at the date of
      the sale. The fair value was based upon the cash proceeds received for the
      receivables sold and the estimated fair value of the Retained Interest. The
      Retained Interest consisted of the discounted estimated cash flows to be
      received by UAC. The excess of the cash received over the basis allocated to
      the
      receivables sold, less transaction costs equaled the gain on sale of receivables
      that was recorded by UAC.







70










As
      previously discussed in Note 1 above, UAC entered into the Master Trust
      Agreement and exchanged its Retained Interest for the beneficial interest in
      Master Trust during 2003. The Master Trust Agreement established that all excess
      cash from securitizations is to be deposited in the Master Trust Account. Once
      prescribed cash reserve levels are met, cash is released to UAC from the Master
      Trust Account. The present value of this future cash flow is reported as
      beneficial interest in Master Trust. UAC determines the estimated fair value
      of
      its beneficial interest in Master Trust by discounting the expected cash flows
      to be released from the Master Trust Account (the cash out method) using a
      discount rate that UAC believes is commensurate with the risks involved of
      15%.
      Increases in the estimated future value of the cash flows from the Master Trust
      Account are recorded as other comprehensive income and accreted over time as
      interest income in accordance with Emerging Issues Task Force Issue (“EITF”)
      99-20, Recognition of Interest Income and Impairment on Purchased and Retained
      Beneficial Interest in Securitized Financial Assets.




When
      UAC
      filed a voluntary petition for reorganization under Chapter 11 of the
      United States Bankruptcy Code, the securitization trusts provided that the
      cash
      amount required to be held in the applicable spread account must be increased
      to
      equal the surety’s obligation (generally the outstanding note balance) until UAC
      emerged from bankruptcy, or a replacement servicer was put in place.
      Accordingly, cash residual distributions by the trusts were restricted until
      the
      sale of the servicing business and related assets to SST. The beneficial
      interest in Master Trust was valued utilizing the provisions within the trust
      documents that provide for the distribution of additional cash flows in
      accordance with the Master Trust Agreement. The Master Trust Agreement requires
      the collection of excess cash released from the securitized trusts up to
      prescribed levels to be available to fund obligations of the other securitized
      trusts in the event of a short fall. In this arrangement, all of the individual
      spread accounts pass any excess cash flows to the Master Trust Account and
      cash
      flows are subsequently released on tiered levels from the Master Trust Account
      once certain collateralization levels are met. In determining the fair value
      of
      the beneficial interest in Master Trust, UAC must estimate the future
      prepayments and rates of gross credit losses and credit loss severity, as they
      impact the amount and timing of the estimated cash flows. Significant factors
      in
      the determination of the fair value of the beneficial interest in Master Trust
      include the following assumptions, which are more fully described in Note 6
      below:




§
            Credit
                loss




§
            Prepayment




§
            Discount
                rate




UAC
      records beneficial interest in Master Trust as an “available for sale” security
      at fair value. Any associated unrealized gains and losses attributable to
      changes in fair value net of income taxes are recorded as a separate component
      of shareholders’ equity (deficit) (“accumulated other comprehensive income”).




***Deferred
      Costs*** —
      Deferred costs consist of professional fees paid for tax advisory services,
      legal counsel, accounting due diligence and UAC financial statement audit
      expenses to effect the transactions described in Note 1. The deferred costs
      were
      fully allocated to the acquisition of Coastal Credit, the subscription offering
      and deferred debt costs for the secured note payable.




***Goodwill*** —White
      River has adopted the provisions of SFAS No. 142, for the accounting of goodwill
      related to the acquisition of Coastal Credit during 2005. As a result, goodwill
      is not amortized; rather, White River will annually test the goodwill for
      impairment or more frequently if events or changes in circumstances indicate
      that the asset might be impaired. The amount of goodwill impairment, if any,
      is
      measured as the excess of the carrying value over the fair value. Since Coastal
      Credit was acquired during 2005, the first test of goodwill for impairment
      will
      occur during 2006.







71










***Receivables
      Held for Investment—net*** —Certain
      receivables are held for investment and are included in other assets. The
      receivables are carried at amortized cost plus interest receivables less the
      allowance for credit losses. Interest on these receivables is accrued and
      credited to interest income based upon the daily principal amount outstanding.




***Property,
      Equipment, and Leasehold Improvements—net*** —Property,
      equipment, and leasehold improvements are recorded at cost and included in
      other
      assets. Depreciation is determined primarily on straight-line methods over
      the
      estimated useful lives of the respective assets, ranging from 3 to
      10 years. In April 2003, UAC sold its servicing platform and related
      assets. In August 2003, UAC liquidated, through an auction, the majority of
      its
      remaining property and equipment.




***Collateralized
      Financing*** —Collateralized
      financings are non-recourse debt obligations that were used to purchase finance
      receivables from previous securitization trusts. This debt is secured by the
      securitized finance receivables that were purchased by UAC in addition to cash
      collateral “Spread Accounts” that are recorded as restricted cash and the Master
      Trust Account. Principal payments are required to correspond to the principal
      reduction of the finance receivables on a monthly basis.




***Amounts
      Due to Master Trust*** —Amounts
      due to Master Trust represents excess cash from finance receivables and
      restricted cash that are to be deposited in the Master Trust Account in
      accordance with the Master Trust Agreement that was established in April 2003.




***Creditor
      Notes Payable*** —Creditor
      notes payable represents the liability to creditors upon UAC’s emergence from
      bankruptcy in 2003. In accordance with SOP 90-7, UAC recorded the
      liabilities at fair value at the confirmation date. As a result, the
      restructured principal amount of the debt exceeded the recorded fair value
      of
      the debt by $51.6 million. This difference or discount was recorded as gain
      on fair valuation of creditor liabilities and will be amortized over the
      expected life of the liabilities. Although there is no stated maturity for
      the
      creditor notes payable, the discount is being accreted, using the effective
      interest method, over the period ending on the date on which the last
      contractual payment on the receivables underlying the beneficial interest in
      Master Trust was expected. During 2005, White River purchased a significant
      percentage of the UAC creditor notes payable. Upon the completion of the Share
      Exchange, creditor notes payable was reduced for the portion owned by White
      River and a gain from extinguishment of debt of $11.4 million was recorded.




***Servicing
      Fee Income*** —Servicing
      fee income was the contractual fee for servicing earned from each securitization
      trust. Until April 2003, UAC received base servicing fees and related ancillary
      fees such as late fees for the servicing of retail automobile installment sales
      contracts, which had been securitized. Effective April 17, 2003, in
      connection with the sale of its servicing platform and related assets, UAC
      no
      longer receives this servicing fee income or the ancillary fees.




***Other
      Income*** —Other
      income represents refunds of dealer rebates, monies collected on previously
      charged-off balances in the securitization trusts, and other miscellaneous
      income.




***Common
      Stock*** —
White
      River’s Registration Statement on Forms S-1/S-4 (Reg. No. 333-123909) was
      declared effective on July 18, 2005. Pursuant to the registration statement,
      White River registered (1) 3,500,000 shares of its common stock (aggregate
      offering price $35,000,000) which was offered in a subscription offering to
      the
      shareholders of Union Acceptance Corporation and to certain standby purchasers,
      and (2) 310,191 shares of its common stock which was offered in a Share Exchange
      for the outstanding shares of common stock of Union Acceptance Corporation.
      The
      Share Exchange was approved and consummated August 9, 2005 and 310,155 shares
      were ultimately issued in the exchange due to cash issued in lieu of fractional
      shares. The Subscription Offering closed on August 31, 2005.







72










***Income
      Taxes*** —Deferred
      tax assets and liabilities are recognized for the future tax consequences
      attributable to differences between the financial statement carrying amounts
      of
      existing assets and liabilities and their respective tax basis. Deferred tax
      assets and liabilities are measured using enacted tax rates expected to apply
      to
      taxable income in the years in which those temporary differences are expected
      to
      be recovered or settled. The effect on deferred tax assets and liabilities
      of a
      change in tax rates is recognized in income in the period that includes the
      enactment date.




The
      ultimate realization of the deferred tax asset depends on White River’s ability
      to generate sufficient taxable income in the future and its ability to not
      allow
      an ownership change to occur for tax purposes. The valuation allowance has
      been
      determined pursuant to the provisions of SFAS No. 109, Accounting for Income
      Taxes, including White River’s estimation of future taxable income, and reduces
      the total deferred tax asset to an amount that will more likely than not be
      realized (see Note 14).




***Segment
      Information*** —
White
      River is the holding company for Coastal Credit and UAC which are specialized
      auto finance companies. These subsidiaries are distinct legal entities and
      managed separately. Corporate and Other is the holding company and includes
      debt
      and interest expense related to the acquisition of Coastal Credit, professional
      fees related to holding activities of White River and the elimination of all
      inter-segment amounts, which generally relate to the holding activities of
      White
      River.




***Stock
      Based Compensation*** —UAC
      has
      two stock-based compensation plans, which are described in Note 15. UAC applied
      Accounting Principles Board (“APB”) Opinion No. 25, Accounting for Stock
      Issued to Employees and related Interpretations, in accounting for the plans.
      If
      compensation cost had been determined based on the fair value at the grant
      date
      for awards under those plans consistent with the method of SFAS No. 123,
      Accounting for Stock-Based Compensation, the effect on the net income (loss)
      and
      income (loss) per share for the years ended December 31, 2005, 2004 and
      2003 would have been immaterial.




On
      October 26, 2005, the board of directors of White River adopted the White River
      Capital, Inc. Directors Stock Compensation Plan. The plan provides for the
      payment of a portion of regular fees to members of the board of directors in
      the
      form of shares of White River common stock. The terms of the plan includes
      the
      reservation of 50,000 shares of White River common stock for issuance under
      the
      plan.




***New
      Accounting Pronouncements*** —In
      December 2004, SFAS No. 123 (revised 2004), Share-Based Payment (“SFAS No.
      123R”) was issued, which eliminates the intrinsic value method under APB 25 as
      an alternative method of accounting for stock-based awards. SFAS No. 123R also
      revises the fair-value-based method of accounting for share-based payment
      liabilities, forfeitures, and modifications of stock-based awards and clarifies
      SFAS No. 123’s guidance in several areas, including measuring fair value,
      classifying an award as equity or as a liability, and attributing compensation
      cost to reporting periods. In addition, SFAS No. 123R amends SFAS No. 95,
      Statement of Cash Flows, to require that excess tax benefits be reported as
      a
      financing cash inflow rather than as a reduction of taxes paid, which is
      included within operating cash flows. Although White River does not have
      effective stock-based award plans at December 31, 2005, White River will be
      required to adopt SFAS No. 123R if stock-based award plans are effective in
      the
      future.




**3.**  **NET
      ASSETS OF COLLATERALIZED FINANCINGS**




UAC
      Securitization Corporation (“UACSC”), a wholly owned special purpose subsidiary
      of UAC, in conjunction with a conduit provider and its surety provider,
      purchased receivables from outstanding securitizations during 2005, 2004 and
      2003. These receivables were re-securitized through non-recourse asset backed
      note issuances. The associated future cash flows from these receivables are
      subject to the same Master Trust Account provisions as the securitizations
      called.




To
      finance the receivable acquisitions, UAC used collateralized financings, secured
      by the respective portfolio of the acquired receivables and related restricted
      cash accounts. Timely payments of principal and interest on the non-recourse
      collateralized financings are insured by surety policies. Such obligations
      are
      also cross-collateralized through the Master Trust Agreement. Net interest
      cash
      flows in excess of expenses are payable to the Master Trust Account and expensed
      as charge to Master Trust, net.







73










The
      collateralized financing for 2003-A has been paid in full during the first
      quarter of 2006. At that time, the remaining receivables were released from
      the
      related collateral arrangements and inure directly to UACSC. These receivables
      will be recorded as receivables held for investment, net. The amount due to
      Master Trust with respect to 2003-A, as of December 31, 2005, is limited to
      the
      actual amounts paid to the Master Trust prior to the collateral financing being
      paid in full.




The
      following table represents the restricted net assets and liabilities related
      to
      non-recourse collateralized financings (in millions) as of:





**December
                31, 2005**
            
            **December
                31, 2004**Securitized
                finance receivables—net
            
            $
            109.5
            
            $
            115.2Restricted
                cash
            
            
            22.7
            
            
            23.5Receivable
                from servicer included in other assets
            
            
            1.1
            
            
            1.2Collateralized
                financings
            
            
            (122.3
            )
            
            (132.3
            )Series
                2003-A excess collateral
            
            
            (2.7
            )
            
            -Accrued
                interest payable
            
            
            (0.5
            )
            
            (0.5
            )Other
                payables and accrued expenses
            
            
            (0.4
            )
            
            (0.5
            )Amounts
                due to master trust
            
            $
            7.4
            
            $
            6.6





**4.   
      SECURITIZED** **FINANCE
      RECEIVABLES—NET**




Securitized
      finance receivables-net are recorded at the outstanding principal balance of
      the
      receivables plus accrued interest receivable, net of an allowance for credit
      losses. The collateralized financing for securitization 2003-A was paid in
      full
      during the first quarter of 2006. The remaining receivables were released from
      the related collateral arrangements and inure directly to UACSC. These
      receivables will be recorded as receivables held for investment, net. The
      following table represents components of securitized finance receivables—net (in
      thousands) as of:







**December
                31, 2005**
            
            **December
                31, 2004**Principal
                balance of securitized finance receivables
            
            $
            115,031
            
            $
            125,866Accrued
                interest receivable
            
            
            978
            
            
            1,021Allowance
                for credit losses
            
            
            (6,503
            )
            
            (11,722
            )Securitized
                finance receivables—net
            
            $
            109,506
            
            $
            115,165










74





Activity
        in the allowance for credit losses on securitized finance receivables is
        as
        follows (in thousands):





**Years
                Ended****December
                31,****2005**
            
            **2004**Balance
                at the beginning of period
            
            $
            11,722
            
            $
            5,006Allowance
                at purchase
            
            
            5,163
            
            
            3,604Charge-offs
            
            
            (21,637
            )
            
            (17,453
            )Recoveries
            
            
            14,333
            
            
            9,540Provision
                (recovery) for estimated credit losses
            
            
            (3,078
            )
            
            11,025Balance
                at the end of the period
            
            $
            6,503
            
            $
            11,722





**5.**  **COLLATERALIZED
      FINANCINGS**




UACSC
      issued notes to complete $153.4 million, $136.7 million and $120.3 million
      of non-recourse collateralized financings consisting of asset backed note
      issuances during 2005, 2004 and 2003, respectively to purchase securitized
      finance receivables.




The
      note
      principal and interest is paid monthly with total cash received from the
      corresponding securitized finance receivables collateralizing the notes. If
      the
      cash received within the month is insufficient to pay the note principal and
      interest, funds are drawn from restricted cash accounts or the Master Trust
      Account in accordance with the Master Trust Agreement. Interest expense related
      to these collateralized financings, including the amortization of debt issuance
      costs, was $7.8 million, $4.5 million and $1.1 million for the years
      ended December 31, 2005, 2004 and 2003, respectively.




The
      following table summarizes the outstanding principal balance of the
      collateralized financings (in thousands) at:








**Note**
                **Rate**
              
              **Initial
                  Note**
                **Amount**
              
              **December
                  31,**
                **2005**
              
              **December
                  31,**
                **2004****Notes
                  Series**Series
                  2003-A
              
              
              3.95
              %
              
              $
              120,327
              
              $
              2,072
              
              $
              28,098Series
                  2004-A1
              
              
              4.15
              
              
              
              29,485
              
              
              3,743
              
              
              14,911Series
                  2004-A2
              
              
              4.55
              
              
              
              29,298
              
              
              5,317
              
              
              18,155Series
                  2004-B
              
              
              5.02
              
              
              
              25,896
              
              
              5,972
              
              
              19,101Series
                  2004-C
              
              
              4.89
              
              
              
              51,992
              
              
              18,636
              
              
              51,992Series
                  2005-A
              
              
              4.49
              
              
              
              47,742
              
              
              20,730
              
              
              -Series
                  2005-B
              
              
              4.69
              
              
              
              50,684
              
              
              27,445
              
              
              -Series
                  2005-C
              
              
              5.40
              
              
              
              54,933
              
              
              38,378
              
              
              -$
              410,357
              
              $
              122,293
              
              $
              132,257







75





Based
        on
        the projected receivable reductions, the repayment of collateralized financings
        is as follows (in thousands):


**Principal****Year**
            
            **Repayment**2006
            
            $
            93,3042007
            
            
            26,2782008
            
            
            2,6512009
            
            
            60$
            122,293





**6.**  **BENEFICIAL
      INTEREST IN MASTER TRUST**




With
      the
      establishment of the Master Trust Agreement in 2003, all excess cash flows,
      as
      defined, from retained interest in securitized assets, finance receivables,
      and
      restricted cash accounts are to be deposited in the Master Trust Account. Once
      prescribed cash reserve levels are met, cash is released to UAC from the Master
      Trust Account. This estimated future discounted cash flow is reported as
      beneficial interest in Master Trust. In determining the fair value of the
      beneficial interest in Master Trust, estimates must be made for the future
      prepayments, rates of gross credit losses and credit loss severity, and
      delinquencies as they impact the amount and timing of the estimated cash flows
      from the Master Trust. The average of the interest rates on the receivables
      exceeds the interest rates on the securities issued in the securitization and
      the servicing and surety fees. This excess cash is held by the Master Trust
      Account and released based on reserve requirements of the Master Trust. These
      estimated cash flows from the Master Trust are then discounted to reflect the
      present value.




The
      assumptions used to calculate the beneficial interest in Master Trust are as
      follows:




·
            *Credit
                Loss Assumptions*—Prior
                to December 31, 2005, estimated net credit losses were calculated
                using
                the loss to liquidation methodology for each securitized pool. The
                loss to
                liquidation methodology takes into account the current loss level
                of each
                securitized pool and its “pool factor,” which is the percentage remaining
                of the original pool balance. Dividing the current cumulative net
                loss for
                each pool by its corresponding pool factor, future projected net
                cumulative net losses were calculated.





Beginning
      December 31, 2005, the gross credit losses are calculated using the loss to
      liquidation factor methodology as discussed above. However, recovery cash flows
      from gross credit losses are estimated independently as two different cash
      flow
      streams. These two recovery cash flow streams are:


o
            *Liquidation
                recovery*-
                consists of net auction proceeds, deficiency recoveries by the servicer,
                and scheduled payments from defaulted accounts. On a monthly basis
                for
                each pool, liquidation recovery cash dollars as a percentage of gross
                default dollars has been calculated for the previous year (this is
                typically in the 50-60% range). This twelve month average for each
                pool
                will be used to project monthly liquidation recovery by multiplying
                this
                value by the monthly estimated gross default dollars
                projected.


o
            *Bankruptcy
                recovery*-
                consists of cash recovered from accounts charged off and in bankruptcy
                status. Bankruptcy cash flows are somewhat independent of default
                rates
                due to bankruptcy court involvement and the latitude allowed debtors
                during the bankruptcy process. UAC has observed a reasonably predictable
                cash flow stream from bankruptcy payments in each securitized pool.
                This
                cash flow stream will, however, eventually expire as the bankruptcy
                cases
                are dismissed from the various courts with either a successful or
                non-successful
                outcome. A previous twelve month average of bankruptcy cash flows
                is
                calculated for each pool. This value is then reduced on a straight
                line
                basis over either a 30 or 42 month
                period.





76





successful
      outcome. A previous twelve month average of bankruptcy cash flows is calculated
      for each pool. This value is then reduced on a straight line basis over either
      a
      30 or 42 month period.





Finally,
      gross credit losses are netted against the two recovery cash streams to estimate
      future net credit losses.





The
      weighted average net credit loss assumption as a percentage of the original
      principal balance over the life of the receivables to value beneficial interest
      in Master Trust was 8.93% and 9.42% at December 31, 2005 and 2004,
      respectively.




*Prepayment
      Assumptions* —UAC
      estimates prepayments by evaluating the historical prepayment performance of
      each pool of receivables. UAC used annual prepayment rates ranging from 27.8%
      to
      42.3% at December 31, 2005 as compared to 21.6% to 31.2% at December 31,
      2004.




*Discount
      Rate Assumptions* —UAC
      determines the estimated fair value of its beneficial interest in Master Trust
      by discounting the expected cash flows released from the Master Trust Account
      (the cash out method) using a discount rate that UAC believes is commensurate
      with the risks involved. UAC used a discount rate of 15% to value the beneficial
      interest in Master Trust at December 31, 2005 and 2004 to reflect current
      market conditions and UAC’s financial position.




At
      December 31, 2005, key economic assumptions and the sensitivity of the current
      fair value of residual cash flows to immediate 10% and 20% adverse changes
      in
      assumed economics is as follows (in thousands):







**Expected
                Remaining Gross Credit Losses**
            
            **Discount
                Rate (annual rate)**
            
            **Prepayment
                Speed**
              **(curve)**Impact
                on fair value of10%
                adverse change
            
            $
            (1,320
            )
            $
            (371
            )
            $
            (63
            )20%
                adverse change
            
            $
            (2,640
            )
            $
            (731
            )
            $
            (123
            )





These
      sensitivities are hypothetical and should be used with caution. As the figures
      indicate, any change in fair value based on a particular percentage variation
      in
      assumptions cannot be extrapolated because the relationship of the change in
      fair value is not linear. Also, in this table, the effect of a variation in
      a
      particular assumption on the fair value of the beneficial interest in Master
      Trust is calculated independent from any change in another assumption; in
      reality, changes in one factor may result in changes in another, which might
      magnify or counteract the sensitivities.




The
      cash
      flows from the securitization trusts prior to formation of the Master Trust
      Agreement during April 2003 for the year ended December 31, 2003 were $6.0
      million for servicing fees received from Trusts and $5.2 million from the return
      of net interest advances to Trusts.




UAC
      recorded pre-tax charges of $39.2 million for the impairment of the Retained
      Interest / beneficial interest in Master Trust during the year ended December
      31, 2003. The majority of the impairment of the Retained Interest/beneficial
      interest in Master Trust was related to projected increases in the anticipated
      future credit losses.







77










**7.**  **FINANCE
      RECEIVABLES -- NET**




Finance
      receivables - net were acquired as part of the acquisition of Coastal Credit
      on
      August 31, 2005. Finance receivables - net generally have original terms ranging
      from 32 to 48 months and are secured by the related vehicles.




A
      significant number of contracts acquired by Coastal Credit are contracts made
      with borrowers who are in the United States military. Coastal Credit requests
      that all borrowers who are in the military use the military allotment system
      to
      make payments on their contracts. Under this allotment system, the borrower
      authorizes the military to make a payroll deduction for the amount of the
      borrower’s monthly contract payment and to direct this deduction payment to
      Coastal Credit on behalf of the borrower.




White
      River used SOP 03-3, Accounting for Certain Loans or Debt Securities Acquired
      in
      a Transfer as guidance to record the fair value of Coastal Credit’s finance
      receivables whose credit quality has deteriorated since origination at the
      date
      White River acquired Coastal Credit. The outstanding finance receivable net
      of
      unearned income for receivables identified as subject to SOP 03-3 was $1.5
      million as of August 31, 2005 as compared to $0.3 million as of December 31,
      2005. These receivables had a fair value of $0.6 million as of the acquisition
      date. The entire discount of $0.9 million was allocated to non-accretable
      discount.




Finance
      receivables - net outstanding at December 31, 2005 were as follows (in
      thousands):







**December
                31, 2005**Finance
                receivables, gross
            
            $
            97,820Unearned
                interest
            
            
            (9,868
            )Finance
                receivables, net of unearned finance charge income
            
            
            87,952Accretable
                unearned acquisition discounts and fees
            
            
            (11,137
            )Finance
                receivables, net of discounts and fees
            
            
            76,815Allowance
                for loan losses
            
            
            (6,031
            )Finance
                receivables, net
            
            $
            70,784












78





Activity
      in the allowance for credit losses on finance
      receivables is as follows (in thousands):




**Four**
              **Months
                Ended****December
                31,****2005**Balance
                at August 31, 2005
            
            $
            5,200Charge-offs,
                net of recoveries (1)
            
            
            (782
            )Provision
                for estimated credit losses
            
            
            1,613Balance
                at the end of the period
            
            $
            6,031Net
                charge offs
            
            $
            782Finance
                receivables, net of unearned finance charges
            
            $
            87,952Allowance
                for loan losses as a percent of finance receivables, net of unearned
                finance charges
            
            
            6.86
            %Annualized
                net charge offs as a percent of finance receivables, net of unearned
                finance charges
            
            
            2.67
            %Allowance
                for loan losses as a percent of annualized net charge offs
            
            
            257.08
            %





(1)
      Charge-offs do not include the portion of loans subject to SOP 03-3 that were
      charged off and attributable to the non-accretable discount during the four
      months during the four months ended December 31, 2005.




**8.**  **OTHER
      ASSETS**




Other
      assets are as follows (in thousands) at:







**December
                31, 2005**
            
            **December
                31, 2004**Receivable
                from servicer
            
            $
            1,124
            
            $
            1,197Prepaid
                expenses
            
            
            712
            
            
            824Property,
                equipment and leasehold improvements, net
            
            
            601
            
            
            50Dealer
                premium rebate receivable, net
            
            
            338
            
            
            859Receivables
                held for investment, net
            
            
            269
            
            
            499Receivable
                from Master Trust account
            
            
            -
            
            
            637Other
            
            
            271
            
            
            113Total
                other assets
            
            $
            3,315
            
            $
            4,179








79










**9.**  **LINE
      OF CREDIT**




The
      line
      of credit was acquired with the acquisition of Coastal Credit. This is an $80
      million line of credit of which $51.5 million was utilized at December 31,
      2005.
      This line of credit will increase to $100 million in July 2006. The maturity
      date on the line of credit is December 31, 2009. The availability of the line
      of
      credit allows Coastal Credit to borrow up to 84% of the aggregate balance of
      outstanding eligible receivables net of unearned interest, commissions and
      discounts. Eligible receivables exclude the following: (i) receivables for
      which
      a payment is 90 or more days past due on a contractual basis; (ii) receivables
      which have been deferred more than two times during the same calendar year,
      or
      more than six times over the contract term; (iii) receivables subject to
      foreclosure, repossession or bankruptcy proceedings or the account debtor with
      respect to which is a debtor under the Bankruptcy Code; (iv) receivables from
      officers, employees or shareholders of the borrower or any affiliate; (v)
      interest only accounts; (vi) receivables missing titles after 120 days from
      their origination date; and (vii) receivables which, in the lender’s reasonable
      discretion, do not constitute acceptable collateral. Total available under
      the
      line of credit was $64.0 million based upon the level of eligible collateral
      with $12.5 million available in excess of the amount utilized at December 31,
      2005.




The
      credit facility is secured by substantially all assets of Coastal Credit. In
      addition, White River has provided an unconditional corporate guaranty. Coastal
      Credit must maintain specified financial ratios within guidelines established
      by
      the lender and was in compliance with these ratios at December 31, 2005.
      Interest is paid monthly at a variable rate, based on meeting certain financial
      criteria. At December 31, 2005, the rate was the London Interbank Offered Rate
      (“LIBOR”) plus 2.85% (7.14%). There is an annual commitment fee of 1/8 of 1% on
      the average daily unused commitment. In the event of a significant pay down
      or
      an earlier retirement of the revolver commitment, Coastal Credit would sustain
      certain prepayment penalties. This facility limits distributions Coastal Credit
      may make to White River to 50% of Coastal Credit’s net income in addition to
      permitted payments on subordinated debt (including White River debt guaranteed
      by Coastal Credit.)




**10.**  **SECURED
      NOTE PAYABLE**




A
      $15
      million secured note was issued on August 31, 2005 and bears interest at a
      fixed
      rate of 10.75%. Interest is payable in arrears quarterly beginning October
      1,
      2005. The secured note payable is collateralized by White River’s ownership
      interest in Coastal Credit and is guaranteed by Coastal Credit, but subordinate
      to the line of credit. Principal will be payable in sixteen quarterly
      installments of $937,500 commencing July 1, 2006. Prepayment of the note is
      allowed beginning July 1, 2007. There is a 2% prepayment penalty if prepayment
      occurs between July 1, 2007 and June 30, 2008. This prepayment is 1% if
      prepayment occurs between July 1, 2008 and June 30, 2009. There is no penalty
      if
      the prepayment occurs after June 30, 2009.




**11.**  **SUBORDINATED
      DEBENTURES**




Coastal
      Credit has $7.7 million of subordinated debentures outstanding at December
      31,
      2005. Interest on the notes is payable quarterly at a fixed rate of interest
      of
      12% per annum. At December 31, 2005, approximately 73% the holders of
      subordinated debentures were related parties. All of the subordinated debt
      matures in 2007 and is subordinated to the line of credit and the secured note
      payable.





80


**12.**  **SELECT
        DEBT REPAYMENT SCHEDULES**
  The
        following table represents select debt principal repayment schedules (in
        thousands):





**Year**
            
            **Total**
            
            **Secured
                Note Payable**
            
            **Subordinated
                Debentures**
            
            **Note
                Payable - Coastal Credit Purchase Holdback**2006
            
            $
            5,715
            
            $
            1,875
            
            $
            -
            
            $
            3,8402007
            
            
            11,450
            
            
            3,750
            
            
            7,700
            
            
            -2008
            
            
            3,750
            
            
            3,750
            
            
            -
            
            
            -2009
            
            
            3,750
            
            
            3,750
            
            
            -
            
            
            -2010
            
            
            1,875
            
            
            1,875
            
            
            -
            
            
            -$
            26,540
            
            $
            15,000
            
            $
            7,700
            
            $
            3,840








**13.**  **RELATED
      PARTY TRANSACTIONS**




White
      River and UAC leased their corporate offices in Indianapolis, Indiana until
      November 2005 from Shadeland Properties, L.P., an entity controlled by Mr.
      Waterfield, a significant shareholder and a director of White River. During
      November 2005, the property was sold by Shadeland Properties to an unrelated
      third party. The lease was a month-to-month lease, subject to termination at
      any
      time by UAC or Shadeland Properties, L.P. upon 90 days prior written notice.
      The
      lease provided for rent payments of $2,164 per month for 2,361 square feet.
      Beginning March 1, 2006, White River and UAC relocated their corporate offices
      to a nearby location in Indianapolis, Indiana. The lease of this new corporate
      office is with an unrelated third party.




UAC’s
      administration of the Plan is supervised by Castle Creek, whose Funds are
      significant shareholders of White River. For these services, UAC compensates
      Castle Creek at a rate of $14,583 per month.




On
      April
      22, 2005, White River entered into a revolving note agreement with the Funds
      for
      the purpose of funding operating expenses of White River. This agreement allowed
      White River to borrow from the Funds up to $120,000 at a rate of 10% per annum.
      The outstanding principal and interest were payable on August 16, 2005, or,
      if
      earlier, the date three business days following consummation of White River’s
      subscription offering. On August 5, 2005, White River paid, in full, the
      principal related to the $120,000 revolving note to Castle Creek and interest
      of
      $2,444.




On
      June
      22, 2005, White River entered into a secured bridge note agreement for $2.3
      million with the Funds for the purpose of funding the buyout of the UAC
      Subordinated Notes in advance of June 30, 2005. This note bore interest at
      10.75% per annum and was secured by White River’s purchase of $41,341,325 in
      face value of Subordinated Notes. The outstanding principal and interest were
      payable on September 30, 2005, or, if earlier, the date three business days
      following consummation of White River’s subscription offering. On August 31,
      2005, White River paid, in full, the principal and interest of $46,195 related
      to the secured bridge note payable to the Funds.




Investment
      funds managed by Castle Creek Capital LLC, owned directly or indirectly 51.5%
      of
      the equity interest in Coastal Credit that was purchased by White River on
      August 31, 2005.   Mr. Eggemeyer's personal interest in Castle
      Creek represented approximately a 5% indirect interest in Coastal
      Credit.  William E. McKnight held approximately 22% of Coastal Credit and
      John W. Rose indirectly held approximately 6.0%.  White River paid $45
      million toward the purchase of Coastal Credit on August 31, 2005, and an
      aggregate of $3.8 million, net of a $1.2 million receivable from the previous
      owners, is payable to the former owners of Coastal Credit on March 31,
      2006.




On
      August
      31, 2005, White River reimbursed the Funds $1.4 million for transaction expenses
      incurred in connection with the acquisition of Coastal Credit which were paid
      by
      the Funds.




On
      August
      31, 2005, warrants were issued by White River to the Funds to purchase 150,000
      shares of White River common stock at an exercise price of $10 per share. The
      term of the warrant is three years and 90 days and will be exercisable three
      years after issuance. The warrants were recorded at fair value as of August
      31,
      2005. The fair value of the warrants was determined using the Black-Scholes
      option-pricing model with the following assumptions used for the warrants
      granted on August 31, 2005: expected volatility of 33.6%, risk free interest
      rate of 3.8% and expected life of three years and 90 days.







81





In
      August, 2005, Coastal Credit effected a private placement of $7.7 in subordinate
      debentures, due 2008, bearing interest at 12% per annum.  Mr. John W.
      Rose and members of his family purchased $1.5 million of such
      debentures.  A family partnership of William E. McKnight also
      purchased $1.5 million of such debentures.




Coastal
      Credit leases its corporate offices in Virginia Beach, Virginia and one of
      its
      branch offices in Jacksonville (Orange Park), Florida, from McKnight Family
      Partnerships, L.P., an entity controlled by Mr. McKnight, the President of
      Coastal Credit and a director of White River. The Virginia Beach lease has
      a
      three-year term, and provides for rent payments of $13,137 per month. The
      Virginia Beach lease will expire in September 2006. The Orange Park lease has
      a
      three-year term, and provides for rent payments of $9,010 per month. The Orange
      Park lease will expire in March 2007.




Coastal
      Credit and Mr. McKnight are parties to a letter agreement with respect to use
      of
      an aircraft owned by McKnight L.L.C., an entity controlled by Mr. McKnight.
      The
      aircraft is a Beechcraft King AirTM B200 twin engine turbo prop. The agreement
      provides that Coastal Credit will pay McKnight L.L.C. $14,000 per month to
      defray expenses associated with ownership of the aircraft in consideration
      for
      Mr. McKnight’s willingness to make the aircraft available for business use by
      key employees of Coastal Credit. Coastal Credit is required to pay additional
      amounts in any month in which its aircraft usage exceeds prescribed amounts.
      Six
      months prior written notice is required to withhold availability of the monthly
      payment or the plane.




On
      November 8, 2005, White River entered into an expense sharing agreement with
      Castle Creek Capital LLC and Castle Creek Advisors LLC, (collectively, “Castle
      Creek”). Castle Creek will provide various facilities, equipment and services to
      White River for a fee that represents a reasonable allocation of actual Castle
      Creek expenses proportionate to facilities, equipment and services provided
      to
      White River. This agreement was effective from September 1, 2005 and shall
      continue until terminated by either party upon 30 days’ prior written notice.




**14.**  **INCOME
      TAXES**




During
      2005, White River changed its tax year-end to December 31 from June 30. UAC
      carried back the net loss incurred for federal income tax purposes for the
      year
      ended June 30, 2003 to prior tax periods and received income tax refunds
      totaling $22.9 million of which $10.2 million related to this carry back.
      White River will carry forward any remaining tax losses to future periods.
      As of
      December 31, 2005, these net operating losses totaled approximately
      $112.8 million and expire 2022 through 2025.




As
      a
      result of the events which resulted in UAC’s decision to cease originating
      receivables on November 7, 2002, UAC deemed it necessary to provide a
      valuation allowance for its deferred tax assets as of December 31, 2002
      since it was more likely than not that UAC would be unable to realize these
      assets as realization is contingent upon achieving taxable income in future
      years.




On
      August
      31, 2005, White River acquired Coastal Credit, an established, profitable
      operating business within UAC’s historical line of business. With this
      acquisition, it is now more likely than not that a portion of the deferred
      tax
      assts will be realized by White River. As part of the acquisition purchase
      accounting, the taxable income of Coastal Credit was estimated and partially
      offset by the taxable loss of UAC and corporate expenses of White River for
      remainder of tax year 2005 and the following five years. The results of these
      estimates were a reduction in the valuation allowance of $4.7 million at August
      31, 2005. This adjustment to the valuation allowance was offset by a reduction
      to goodwill as part of the purchase of Coastal Credit.




In
      the
      future, White River will review the valuation allowance based on the estimated
      taxable income for the next five years and will make adjustments as required.
      These future adjustments will be recorded as income tax expense (benefit).
      The
      valuation allowance at December 31, 2005 and 2004 is $40.5 million and
      $54.6 million, respectively.







82










The
      composition of income tax expense (benefit) is as follows for the years ended
      December 31 (in thousands):







**2005**
            
            **2004**
            
            **2003**Current
                tax expense
            
            $
            -
            
            $
            -
            
            $
            -Deferred
                tax expense (benefit)
            
            
            9,369
            
            
            (884
            )
            
            1,838Valuation
                allowance
            
            
            (9,369
            )
            
            884
            
            
            (1,838
            )Net
                income tax expense (benefit)
            
            $
            -
            
            $
            -
            
            $
            -














The
      effective income tax rate differs from the statutory federal corporate tax
      rate
      as follows for the years ended December 31:







**2005**
            
            **2004**
            
            **2003**Statutory
                rate
            
            
            35.0
            %
            
            35.0
            %
            
            35.0
            %State
                income taxes
            
            
            1.5
            
            
            1.5
            
            
            1.5Valuation
                allowance and other
            
            
            (38.3
            )
            
            (34.0
            )
            
            (65.0
            )Bankruptcy
                costs not deductible
            
            
            1.8
            
            
            (2.5
            )
            
            28.5Effective
                rate
            
            
            -
            %
            
            -
            %
            
            -
            %








The
      composition of deferred income taxes is as follows as of December 31 (in
      thousands):






**2005**
              
              **2004**Deferred
                  tax assets:Net
                  operating loss carryforward
              
              $
              41,188
              
              $
              56,450Basis
                  difference in beneficial interest in Master Trust
              
              
              5,361
              
              
              15,426Allowance
                  for estimated credit losses
              
              
              614
              
              
              -Total
                  deferred tax assets
              
              
              47,163
              
              
              71,876Valuation
                  allowance
              
              
              (40,536
              )
              
              (54,612
              )Net
                  deferred tax assets
              
              
              6,637
              
              
              17,264Deferred
                  tax liabilities:Basis
                  difference in creditor notes payable
              
              
              1,582
              
              
              17,315Basis
                  difference in goodwill
              
              
              265
              
              
              -Other
              
              
              73
              
              
              (51
              )Total
                  deferred tax liabilities
              
              
              1,920
              
              
              17,264Net
                  deferred tax assets
              
              $
              4,707
              
              $
              -











83










**15.**  **STOCK
      BASED COMPENSATION**




UAC
      had
      two stock-based compensation plans, which are described below in terms of UAC
      shares adjusted for the one for 100 share exchange with White River. UAC applied
      APB Opinion No. 25 in accounting for the plans.




During
      2005 all outstanding options had either expired or were surrendered to UAC
      and
      cancelled. On August 28, 2005 White River’s Board of Directors adopted the White
      River Capital, Inc. 2005 Incentive Stock Plan. This plan will provide certain
      directors, officers and key employees of White River and its present and future
      subsidiaries a favorable opportunity to acquire White River common stock. The
      terms of this plan includes the reservation of 250,000 shares of White River
      common stock. This plan is subject to a vote of White River shareholders at
      the
      next annual shareholders’ meeting for approval.




On
      October 26, 2005, the board of directors of White River adopted the White River
      Capital, Inc. Directors Stock Compensation Plan. The plan provides for the
      payment of a portion of regular fees to certain members of the board of
      directors in the form of shares of White River common stock. The terms of the
      plan includes the reservation of 50,000 shares of White River common stock
      for
      issuance under the plan.




The
      Union
      Acceptance Corporation 1994 Incentive Stock Plan (“1994 Plan”) and the Union
      Acceptance Corporation 1999 Incentive Stock Plan (“1999 Plan”) were UAC’s
      long-term incentive plans for executive officers, directors and other key
      employees. The Plans authorized UAC’s Compensation Committee to award executive
      officers, directors and other key employees incentive and non-qualified stock
      options and restricted shares of Common Stock. A total of 5,000 shares of Common
      Stock were reserved for issuance under the 1994 Plan. A total of 3,000 shares
      of
      Common Stock were reserved for issuance under the 1999 Plan when adopted. The
      shareholders approved amendments increasing the shares authorized for issuance
      under the 1999 Plan from 3,000 shares to 9,000 shares.




The
      fair
      value of each option grant was estimated on the date of grant using the
      Black-Scholes options pricing model. Effective January 7, 2003, UAC
      re-priced 500 options with an original exercise option price of $558 per share
      to $50 per share. Compensation cost recorded was immaterial. No options were
      granted under the 1994 Plan or the 1999 Plan for the years ended
      December 31, 2005 and 2004.




The
      following weighted average assumptions were used for the year ended
      December 31, 2003:







Dividend
                yield
            
            
            NoneExpected
                volatility
            
            
            61.25
            %Risk-free
                interest rate
            
            
            1.78
            %Expected
                lives
            
            
            4
                Years








84





A
        summary
        of the status of UAC’s stock option plans and changes during the year is
        presented below for the years ended December 31:







**2005**
            
            **2004**
            
            **2003****Weighted**
            
            
            
            **Weighted**
            
            
            
            **Weighted****Average**
            
            
            
            **Average**
            
            
            
            **Average****Shares**
            
            **Price**
            
            **Shares**
            
            **Price**
            
            **Shares**
            
            **Price**Options
                outstandingat
                beginning of year
            
            
            4,762
            
            $
            499
            
            
            4,762
            
            $
            499
            
            
            5,837
            
            $
            549Options
                granted
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            500
            
            
            50Options
                exercised
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Options
                canceled
            
            
            (4,762
            )
            
            499
            
            
            -
            
            
            -
            
            
            (1,574
            )
            
            542Options
                outstandingat
                end of year
            
            
            -
            
            
            -
            
            
            4,762
            
            $
            499
            
            
            4,762
            
            $
            499Weighted
                average fairvalue
                of optionsgranted,
                per share,during
                the period
            
            
            N/A
            
            
            
            
            
            N/A
            
            
            
            
            $
            1.00





During
      December 2005, all remaining options under the 1994 Plan and the 1999 Plan
      were
      surrendered to UAC by their owners and subsequently cancelled. The 1994 Plan
      and
      1999 Plan were then terminated.




**16.**  **BUSINESS
      SEGMENT INFORMATION**




White
      River is the holding company for Coastal Credit and UAC which are specialized
      auto finance companies. These subsidiaries are distinct legal entities and
      managed separately. Corporate and Other is the White River holding company
      and
      includes debt and interest expense related to the acquisition of Coastal Credit,
      professional fees related to holding activities of White River and the
      elimination of all inter-segment amounts, which generally relate to the holding
      activities of White River.




Coastal
      Credit is a specialized sub-prime auto finance company engaged primarily in
      (1)
      acquiring retail installment sales contracts from both franchised and
      independent automobile dealers which have entered into contracts with purchasers
      of used and, to a much lesser extent, new cars and light trucks, and (2)
      servicing the contract portfolio. Coastal Credit commenced operations in
      Virginia in 1987 and conducts business in seventeen states through its seventeen
      branch locations.




UAC
      is a
      specialized auto finance company. Since confirmation of UAC’s bankruptcy Plan of
      Reorganization in August 2003, UAC has carried out the terms and provisions
      of
      the Plan of Reorganization. UAC is continuing business activities related to
      oversight of collection and refinancing of its securitized and unsecuritized
      auto receivable portfolios in compliance with its Plan of Reorganization.
      Generally, UAC continues to collect cash as it becomes available from prescribed
      assets of the bankruptcy estate and to distribute such cash to the creditors
      of
      the bankruptcy estate who made allowed claims in the bankruptcy case. The
      substantial majority of such UAC notes and claims were purchased by White River
      during 2005.









85








Set
        forth
        in the table below is certain financial information with respect to White
        River’s operating segments. Prior to 2005 UAC was the only operating segment.





**For
                The Year Ended December 31, 2005**
            
            **UAC**
            
            **Coastal
                Credit**
            
            **Corporate
                and Other**
            
            **Consolidated**Total
                interest income
            
            $
            28,505
            
            $
            8,810
            
            $
            18
            
            $
            37,333Interest
                expense
            
            
            (12,939
            )
            
            (1,545
            )
            
            (720
            )
            
            (15,204
            )Net
                interest margin
            
            
            15,566
            
            
            7,265
            
            
            (702
            )
            
            22,129Recovery
                (provision) for estimated credit losses
            
            
            3,078
            
            
            (1,613
            )
            
            -
            
            
            1,465Net
                interest margin (deficit) after recover (provision) for estimated
                credit
                losses
            
            
            18,644
            
            
            5,652
            
            
            (702
            )
            
            23,594Total
                other revenues (charges), net
            
            
            1,839
            
            
            (85
            )
            
            13
            
            
            1,767Total
                other expenses
            
            
            4,889
            
            
            3,203
            
            
            759
            
            
            8,851Net
                income (loss)
            
            $
            15,594
            
            $
            2,364
            
            $
            (1,448
            )
            $
            16,510








The
      following table presents assets with respect to White River’s operating segments
      (in thousands) at:







**December
                31,****2005**
            
            **2004**Corporate
                and other
            
            $
            6,918
            
            $
            634Coastal
                Credit
            
            
            108,165
            
            
            -UAC
            
            
            151,911
            
            
            150,296$
            266,994
            
            $
            150,930








**17.**  **EARNINGS
      PER SHARE**




Basic
      earnings per share are calculated by dividing the reported net income for the
      period by the weighted average number of common shares outstanding. The weighted
      average number of common shares outstanding during a period is weighted for
      the
      portion of the period that the shares were outstanding. The 3,500,000 shares
      issued in the subscription offering, which was completed on August 31, 2005,
      were outstanding for 123 days during the year ended December 31, 2005. The
      relatively short period of time these shares have been outstanding has resulted
      in a significantly different weighted average number of shares for the year
      ended December 31, 2005 when compared to the actual number of shares outstanding
      at year end. Diluted earnings per share include the dilutive effect of warrants
      that were granted on August 31, 2005. All stock options have been excluded
      from
      the earning per share calculation as the effect would have been anti-dilutive.
      Basic and diluted earnings per share have been





86




computed as follows (dollars in thousands except per share
      data):


**Year
                Ended December 31,****2005**
            
            **2004**
            
            **2003**Net
                Income (Loss)
            
            $
            16,510
            
            $
            (7,262
            )
            $
            5,674Weighted
                average shares outstanding
            
            
            1,489,607
            
            
            310,191
            
            
            310,191Incremental
                shares from assumed conversions:Warrants
            
            
            8,942
            
            
            -
            
            
            -Weighted
                average shares and assumed incremental shares
            
            
            1,498,549
            
            
            310,191
            
            
            310,191Earnings
                per share:Basic
            
            $
            11.08
            
            $
            (23.41
            )
            $
            18.29Diluted
            
            $
            11.02
            
            $
            (23.41
            )
            $
            18.29





**18.**  **QUARTERLY
      FINANCIAL DATA (UNAUDITED)**




The
      following is a summary of quarterly financial results (dollars in thousands,
      except per share data):







**First
                Quarter**
            
            **Second
                Quarter**
            
            **Third
                Quarter**
            
            **Fourth
                Quarter****Fiscal
                Year Ended December 31, 2005**Total
                interest income
            
            $
            6,030
            
            $
            9,576
            
            $
            10,221
            
            $
            11,506Net
                income (loss)
            
            $
            (1,208
            )
            $
            12,518
            
            $
            1,971
            
            $
            3,229Basic
                earnings per share
            
            $
            (3.89
            )
            $
            40.36
            
            $
            1.32
            
            $
            0.85Diluted
                earnings per share
            
            $
            (3.89
            )
            $
            40.36
            
            $
            1.32
            
            $
            0.84Diluted
                weighted average shares
            
            
            310,191
            
            
            310,191
            
            
            1,492,669
            
            
            3,841,458**Fiscal
                Year Ended December 31, 2004**Total
                interest income
            
            $
            2,881
            
            
            3,496
            
            
            3,870
            
            
            3,766Net
                income (loss)
            
            $
            (1,635
            )
            $
            (1,837
            )
            $
            (1,717
            )
            $
            (2,073
            )Basic
                earnings per share
            
            $
            (5.27
            )
            $
            (5.92
            )
            $
            (5.54
            )
            $
            (6.68
            )Diluted
                earnings per share
            
            $
            (5.27
            )
            $
            (5.92
            )
            $
            (5.54
            )
            $
            (6.68
            )Diluted
                weighted average shares
            
            
            310,191
            
            
            310,191
            
            
            310,191
            
            
            310,191





**19.**  **ESTIMATED
      FAIR VALUE OF FINANCIAL INSTRUMENTS**




The
      carrying value approximates the fair value due to the nature of the following
      accounts:




§
            Cash
                and cash equivalents




§
            Restricted
                cash







87










The
      fair
      value of the creditor notes payable and related accrued interest was determined
      by discounting estimated future cash payments at appropriate discount rates.
      The
      following table represents the estimated fair value for creditor notes payable
      and related accrued interest at December 31 (in thousands):







**2005**
            
            **2004****Carrying**
            
            **Fair**
            
            **Carrying**
            
            **Fair****Amount**
            
            **Value**
            
            **Amount**
            
            **Value**Creditor
                notes payable and relatedaccrued
                interest
            
            $
            2,008
            
            $
            1,972
            
            $
            18,040
            
            $
            3,912





The
      fair
      value of securitized finance receivables-net, was estimated by discounting
      the
      future cash flows, which were reduced by estimated credit loses for the life
      of
      the receivables, using the current interest rates at which similar loans would
      be made to borrowers with similar credit ratings and for the same remaining
      maturities and was approximately $0.1 million greater than the carrying amount
      as of December 31, 2005 compared to $2.3 million less than the carrying amount
      as of December 31, 2004.




The
      fair
      value of collateralized financings was determined by discounting estimated
      future cash payments at appropriate discount rates and was $7.1 million and
      $0.2
      million less than the carrying amount at December 31, 2005 and 2004,
      respectively.




The
      note
      payable -Coastal Credit purchase holdback and the secured note payable were
      incurred on August 31, 2005. Because of the recency of this debt, the carrying
      value approximates the fair value.




The
      fair
      value of beneficial interest in Master Trust is calculated by discounting the
      estimated cash flows released from the Master Trust Account using a discount
      rate that UAC believes is commensurate with the risks involved. An allowance
      for
      estimated credit losses is established and applied. Discount rates utilized
      are
      based upon current market conditions and prepayment assumptions are based on
      historical performance experience. See Notes 2 and 6 for a detailed
      discussion of each of the components of the fair value of beneficial interest
      in
      Master Trust.




Finance
      receivables-net, line of credit and subordinated debentures were recorded at
      fair value upon the acquisition of Coastal Credit on August 31, 2005. The
      current carrying amounts approximate the fair value of these
      accounts.




**20.**  **COMMITMENTS
      AND CONTINGENCIES**




White
      River and its subsidiaries, as consumer finance companies, are subject to
      various consumer claims and litigation seeking damages and statutory penalties,
      based upon, among other things, usury, disclosure inaccuracies, wrongful
      repossession, violations of bankruptcy stay provisions, certificate of title
      disputes, fraud, breach of contract and discriminatory treatment of credit
      applicants. Some litigation against White River and its subsidiaries could
      take
      the form of class action complaints by consumers. As the assignee of finance
      contracts originated by dealers, White River and its subsidiaries may also
      be
      named as a co-defendant in lawsuits filed by consumers principally against
      dealers. The damages and penalties claimed by consumers in these types of
      matters can be substantial. The relief requested by the plaintiffs varies but
      can include requests for compensatory, statutory and punitive damages. White
      River and its subsidiaries believe that it has taken prudent steps to address
      and mitigate the litigation risks associated with its business activities.
      Also
      refer to Note 13.




**21** **.**  **SUBSEQUENT
      EVENTS**




On
      January 11, 2006 White River issued 3,000 shares of common stock to certain
      members of the board of directors as part of the annual compensation in
      accordance with the Directors Stock Compensation Plan.




On
      February 2, 2006, UAC sold charged-off loans that have deficiency balances
      remaining to a third party (the “Buyer”) for $828,000, net of broker fees. Of
      the proceeds received, $777,000, net of broker fees, was collateral for the
      various securitization pools and these funds were deposited in the Master Trust
      Account. $51,000, net of broker fees, was owned by UAC and these funds remained
      at UAC. 10% of the proceeds received were held-back by UAC in the event the
      Buyer notifies UAC that non-conforming accounts will be returned to UAC. UAC
      will use these funds to reimburse the Buyer. The Buyer has sixty days from
      the
      date of Purchase to notify UAC of non-conforming accounts. After this holdback
      period has ended the remaining funds will revert back to the Master Trust or
      UAC
      as applicable.







88










**ITEM** **9.  
      CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE**




Not
      applicable.









**Item
      9A.   CONTROLS AND PROCEDURES**




White
      River carried out an evaluation, under the supervision of its Chief Executive
      Officer, President and Chief Financial Officer, of the effectiveness of the
      design and operation of White River’s disclosure controls and procedures
      pursuant to Exchange Act Rule 13a-15 and 15d-15 as of December 31, 2005. Based
      upon that evaluation, the Chief Executive Officer, President and Chief Financial
      Officer concluded that, at December 31, 2005, White River’s disclosure controls
      and procedures are effective in accumulating and communicating to management
      (including such officers) the information required to be included in White
      River’s periodic SEC filings.




**ITEM** **9B.  
      OTHER INFORMATION**


Not
      applicable.







89





**PART
      III**







**ITEM** **10.  
      DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT**




Information
      contained under the captions “Proposal 1: Election of Directors,” “Executive
      Officers” and “Executive Compensation” in the Proxy Statement is incorporated
      herein by reference in response to this Item 10.




White
      River has adopted the White River Capital, Inc. Code of Business Conduct and
      Ethics (“code of ethics”), a code of ethics that applies to the Chief Executive
      Officer, President and Chief Financial Officer. The code of ethics is filed
      as
      Exhibit 14.1 to this Form 10-K.




The
      information with respect to White River’s audit committee financial expert
      contained under the caption “Corporate Governance and Board Committees - Audit
      Committee” in White River’s proxy statement for the 2006 annual meeting of
      shareholders is incorporated herein by reference to such proxy statement.









**ITEM** **11.  
      EXECUTIVE COMPENSATION**


Information
      contained under the captions “Compensation of Directors” and “Executive
      Compensation” in the Proxy Statement is incorporated herein by reference in
      response to this Item 11.









**ITEM** **12.  
      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
      MANAGEMENT**




Information
      contained under the caption “Security Ownership of Certain Beneficial Owners and
      Management” in the Proxy Statement is incorporated herein by reference in
      response to this Item 12.









**ITEM** **13.  
      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS**




Information
      contained under the caption “Certain Relationships and Related Party
      Transactions” in the Proxy Statement is incorporated herein by reference in
      response to this Item 13.









**ITEM** **14.  
      PRINCIPAL ACCOUNTING FEES AND SERVICES**




Information
      contained under the caption “Independent Auditors” in the Proxy Statement is
      incorporated herein by reference in response to this Item 14.







90













**PART
      IV**







**ITEM** **15.  
      EXHIBITS**




1.  Financial
      Statements




The
      consolidated financial statements of White River Capital, Inc. and its
      subsidiaries and independent auditors’ report are included in Part II (Item 8)
      of this Form 10-K.




2.  Financial
      Statement Schedules




Not
      applicable.




3.  Exhibits




The
        following documents are included or incorporated by reference in this Annual
        Report on Form 10K:
  2.1
              Agreement
                  and Plan of Share Exchange dated March 9, 2005 between registrant
                  and
                  Union Acceptance Corporation (incorporated by reference to Exhibit
                  2.1 of
                  registrant’s Registration Statement on Form S-1/S-4 (Reg. No.
                  333-123909))2.2
              Limited
                  Liability Company Interests Purchase Agreement dated March 9, 2005
                  among
                  registrant, Coastal Credit, LLC and the members of Coastal Credit,
                  LLC
                  (incorporated by reference to Exhibit 2.2 of registrant’s Registration
                  Statement on Form S-1/S-4 (Reg. No. 333-123909))3.1
              Articles
                  of Incorporation of registrant (incorporated by reference to Exhibit
                  3.1
                  of registrant’s Registration Statement on Form S-1/S-4 (Reg. No.
                  333-123909))3.2
              Code
                  of By-laws of registrant (incorporated by reference to Exhibit
                  3.2 of
                  registrant’s Registration Statement on Form S-1/S-4 (Reg. No.
                  333-123909))4.1
              Form
                  of common stock certificate of registrant (incorporated by reference
                  to
                  Exhibit 4.1 of registrant’s Registration Statement on Form S-1/S-4 (Reg.
                  No. 333-123909))4.2
              Article
                  5 - “Number of Shares,” Article 6 - “Terms of Shares,” Article 10 -
                  “Transfer and Ownership Restrictions” and Article 11 - “Miscellaneous
                  Provisions” (concerning the applicability of the Indiana Control Share
                  Acquisitions Chapter and the Indiana Business Combinations Chapter)
                  of
                  registrant’s Articles of Incorporation (contained in registrant’s Articles
                  of Incorporation filed with this annual report as Exhibit
                  3.1)4.3
              Article
                  III - “Shareholder Meetings,” Article VI - “Certificates for Shares” and
                  Article VII, Section 3 - “Corporate Books and Records” of registrant’s
                  Code of By-laws (contained in registrant’s Code of By-laws filed with this
                  annual report as Exhibit 3.2)4.4(a)
              Note
                  Purchase Agreement dated March 9, 2005, between registrant and
                  the note
                  purchaser named therein (incorporated by reference to Exhibit 4.4(a)
                  of
                  registrant’s Registration Statement on Form S-1/S-4 (Reg. No.
                  333-123909))4.4(b)
              Form
                  of Secured Note of registrant due April 1, 2010 (incorporated by
                  reference
                  to Exhibit 4.4(b) of registrant’s Registration Statement on Form S-1/S-4
                  (Reg. No. 333-123909))4.4(c)
              Form
                  of Subordinated Guaranty between Coastal Credit, LLC and the note
                  purchaser (incorporated by reference to Exhibit 4.4(c) of registrant’s
                  Registration Statement on Form S-1/S-4 (Reg. No.
                  333-123909))4.4(d)
              Form
                  of Pledge Agreement between the registrant and the note purchaser
                  (incorporated by reference to Exhibit 4.4(d) of registrant’s Registration
                  Statement on Form S-1/S-4 (Reg. No.
                  333-123909))
  91
  
 4.5(a)
              Revolving
                  Note of registrant dated April 21, 2005 (incorporated by reference
                  to
                  Exhibit 4.5(a) of registrant’s Registration Statement on Form S-1/S-4
                  (Reg. No. 333-123909))4.5(b)
              Revolving
                  Note of registrant dated April 21, 2005 (incorporated by reference
                  to
                  Exhibit 4.5(b) of registrant’s Registration Statement on Form S-1/S-4
                  (Reg. No. 333-123909))4.6
              Second
                  Amended and Restated Plan of Reorganization of Union Acceptance
                  Corporation dated August 8, 2003 (incorporated by reference to
                  Exhibit 4.6
                  of registrant’s Registration Statement on Form S-1/S-4 (Reg. No.
                  333-123909))4.7(a)
              Note
                  Purchase Agreement dated October 7, 2003, among UAC Securitization
                  Corporation, Wachovia Capital Markets, LLC, the note purchasers
                  named
                  therein, Wachovia Bank, National Association and Variable Funding
                  Capital
                  Corporation (incorporated by reference to Exhibit 4.7(a) of registrant’s
                  Registration Statement on Form S-1/S-4 (Reg. No.
                  333-123909))4.7(b)
              Indenture
                  dated October 7, 2003 among UAC Securitization Corporation, Wilmington
                  Trust Company and JPMorgan Chase Bank (related to UAC Securitization
                  Corporation Asset-Backed Notes) (incorporated by reference to Exhibit
                  4.7(b) of registrant’s Registration Statement on Form S-1/S-4 (Reg. No.
                  333-123909))4.7(c)
              UAC
                  Securitization Corporation Series 2003-A Asset Backed Note (incorporated
                  by reference to Exhibit 4.7(c) of registrant’s Registration Statement on
                  Form S-1/S-4 (Reg. No. 333-123909))4.7(d)
              UAC
                  Securitization Corporation Series 2004-A, Class A-1 Asset Backed
                  Note
                  (incorporated by reference to Exhibit 4.7(d) of registrant’s Registration
                  Statement on Form S-1/S-4 (Reg. No. 333-123909))4.7(e)
              UAC
                  Securitization Corporation Series 2004-A, Class A-2 Asset Backed
                  Note
                  (incorporated by reference to Exhibit 4.7(e) of registrant’s Registration
                  Statement on Form S-1/S-4 (Reg. No. 333-123909))4.7(f)
              UAC
                  Securitization Corporation Series 2004-B Asset Backed Note (incorporated
                  by reference to Exhibit 4.7(f) of registrant’s Registration Statement on
                  Form S-1/S-4 (Reg. No. 333-123909))4.7(g)
              UAC
                  Securitization Corporation Series 2004-C Asset Backed Note (incorporated
                  by reference to Exhibit 4.7(g) of registrant’s Registration Statement on
                  Form S-1/S-4 (Reg. No. 333-123909))4.7(h)
              UAC
                  Securitization Corporation Series 2005-A Asset Backed Note (incorporated
                  by reference to Exhibit 4.7(h) of registrant’s Registration Statement on
                  Form S-1/S-4 (Reg. No. 333-123909))4.7(i)
              UAC
                  Securitization Corporation Series 2005-B Asset Backed Note (incorporated
                  by reference to Exhibit 4.7(i) of registrant’s Registration Statement on
                  Form S-1/S-4 (Reg. No. 333-123909))4.8(a)
              Amended
                  Finance Agreement dated April 16, 2001, between Coastal Credit,
                  LLC and
                  Wells Fargo Financial Preferred Capital, Inc. (incorporated by
                  reference
                  to Exhibit 4.8(a) of registrant’s Registration Statement on Form S-1/S-4
                  (Reg. No. 333-123909))4.8(b)
              First
                  Amendment to Finance Agreement dated March 22, 2004, between Coastal
                  Credit, LLC and Wells Fargo Financial Preferred Capital, Inc.
                  (incorporated by reference to Exhibit 4.8(b) of registrant’s Registration
                  Statement on Form S-1/S-4 (Reg. No. 333-123909))4.8(c)
              Second
                  Amendment to Finance Agreement, dated August 24, 2005, between
                  Coastal
                  Credit LLC and Wells Fargo Financial Preferred Capital, Inc. (including
                  replacement Promissory Note and White River Capital
                  Inc. Guaranty) (incorporated by reference to Exhibit 4.1 of
                  registrant’s Form 8-K filed September 2,
                  2005)
  92
  
 4.9
              Regulation
                  S-K, Item 601(b)(4)(iii) undertaking to furnish debt instruments
                  to the
                  Commission upon request (incorporated by reference to Exhibit 4.9
                  of
                  registrant’s Registration Statement on Form S-1/S-4 (Reg. No.
                  333-123909))4.10(a)
              Secured
                  Bridge Note of registrant, dated June 22, 2005, to Castle Creek
                  Capital
                  Partners Fund IIa (incorporated by reference to Exhibit 4.10(a)
                  of
                  registrant’s Registration Statement on Form S-1/S-4 (Reg. No.
                  333-123909))4.10(b)
              Secured
                  Bridge Note of registrant, dated June 22, 2005, to Castle Creek
                  Capital
                  Partners Fund IIb (incorporated by reference to Exhibit 4.10(b)
                  of
                  registrant’s Registration Statement on Form S-1/S-4 (Reg. No.
                  333-123909))4.10(c)
              Pledge
                  and Security Agreement, dated June 22, 2005, among registrant,
                  Castle
                  Creek Capital, LLC, Castle Creek Capital Partners Fund IIa and
                  Castle
                  Creek Capital Partners Fund IIb (incorporated by reference to Exhibit
                  4.10(c) of registrant’s Registration Statement on Form S-1/S-4 (Reg. No.
                  333-123909))10.1
              Warrant
                  Issuance Agreement dated March 9, 2005, between registrant, Union
                  Acceptance Corporation, Castle Creek Capital, L.L.C., Castle Creek
                  Capital
                  Partners Fund IIa, LP and Castle Creek Capital Partners Fund IIb,
                  LP, as
                  amended (incorporated by reference to Exhibit 10.1 of registrant’s
                  Registration Statement on Form S-1/S-4 (Reg. No.
                  333-123909))10.2
              Memorandum
                  of Understanding dated February 15, 2005, among registrant, Union
                  Acceptance Corporation and the Plan Committee under Union Acceptance
                  Corporation’s Second Amended and Restated Plan of Reorganization
                  (incorporated by reference to Exhibit 10.2 of registrant’s Registration
                  Statement on Form S-1/S-4 (Reg. No. 333-123909))10.3
              Form
                  of Tender Agreement for Restructured Senior Noteholders of Union
                  Acceptance Corporation (incorporated by reference to Exhibit 10.3
                  of
                  registrant’s Registration Statement on Form S-1/S-4 (Reg. No.
                  333-123909))10.4
              Form
                  of Tender Agreement for Restructured Subordinated Noteholders of
                  Union
                  Acceptance Corporation (incorporated by reference to Exhibit 10.4
                  of
                  registrant’s Registration Statement on Form S-1/S-4 (Reg. No.
                  333-123909))10.5
              Summary
                  of arrangement between Union Acceptance Corporation and Castle
                  Creek
                  Capital, LLC (incorporated by reference to Exhibit 10.5 of registrant’s
                  Registration Statement on Form S-1/S-4 (Reg. No.
                  333-123909))10.6(a)
              Employment
                  Agreement dated April 1, 1998, between Coastal Credit, LLC and
                  William E.
                  McKnight (incorporated by reference to Exhibit 10.6 of registrant’s
                  Registration Statement on Form S-1/S-4 (Reg. No.
                  333-123909))10.6(b)
              Restated
                  Employment Agreement, as of December 28, 2005, between William
                  E. McKnight
                  and Coastal Credit LLC (incorporated by reference to Exhibit 10.1
                  of
                  registrant’s Form 8-K filed January 10, 2006)10.7(a)
              Master
                  Trust Account Agreement dated April 17, 2003 among Union Acceptance
                  Corporation, UAC Securitization Corporation, Performance Securitization
                  Corporation, Official Committee of Unsecured Creditors of Union
                  Acceptance
                  Corporation, MBIA Insurance Corporation, BNY Midwest Trust Company,
                  The
                  Bank of New York, Systems & Services Technologies, Inc., JPMorgan
                  Chase Bank and Wilmington Trust Company (incorporated by reference
                  to
                  Exhibit 10.7(1b) of registrant’s Registration Statement on Form S-1/S-4
                  (Reg. No. 333-123909))10.7(b)
              Amendment
                  No. 1 to Master Trust Account Agreement dated October 7, 2003
                  (incorporated by reference to Exhibit 10.7(b) of registrant’s Registration
                  Statement on Form S-1/S-4 (Reg. No. 333-123909))10.7(c)
              Amendment
                  No. 2 to Master Trust Account Agreement dated May 21, 2004 (incorporated
                  by reference to Exhibit 10.7(c) of registrant’s Registration Statement on
                  Form S-1/S-4 (Reg. No.
                  333-123909))
  93
  
 10.7(d)
              Amendment
                  No. 3 to Master Trust Account Agreement dated August 1, 2004 (incorporated
                  by reference to Exhibit 10.7(d) of registrant’s Registration Statement on
                  Form S-1/S-4 (Reg. No. 333-123909))10.8
              Servicing
                  Transfer Agreement dated April 17, 2003, among Union Acceptance
                  Corporation, UAC Securitization Corporation, Performance Securitization
                  Corporation, Systems & Services Technologies, Inc., MBIA Insurance
                  Corporation and the Official Committee of Unsecured Creditors of
                  Union
                  Acceptance Corporation (incorporated by reference to Exhibit 10.8
                  of
                  registrant’s Registration Statement on Form S-1/S-4 (Reg. No.
                  333-123909))10.9
              White
                  River Capital, Inc. 2005 Stock Incentive Plan (incorporated by
                  reference
                  to Exhibit 4.4 of registrant’s Form S-8 (File No.
                  333-130187))10.10
              Letter
                  Agreement between registrant and Martin J. Szumski dated April
                  8, 2005
                  (incorporated by reference to Exhibit 10.10 of registrant’s Registration
                  Statement on Form S-1/S-4 (Reg. No. 333-123909))10.11
              Expense
                  Sharing Agreement, dated November 8, 2005, between White River
                  Capital,
                  Inc. and Castle Creek Capital, LLC and Castle Creek Advisors LLC
                  (incorporated by reference to Exhibit 10.1 of registrant’s Form 10-Q for
                  the period ended September 30, 2005)10.12
              White
                  River Capital Inc. Directors Stock Compensation Plan (incorporated
                  by
                  reference to Exhibit 10.2 of registrant’s Form 10-Q for the period ended
                  September 30, 2005)14.1
              Code
                  of Ethics21.1
              Subsidiaries
                  of White River Capital, Inc.23.1
              Consent
                  of Deloitte & Touche LLP31.1
              Certification
                  by Chief Executive Officer required by Rule 13a-14(a) or 15d-14(a)
                  of the
                  Exchange Act31.2
              Certification
                  by Chief Financial Officer required by Rule 13a-14(a) or 15d-14(a)
                  of the
                  Exchange Act32.1
              Section
                  1350 Certifications





94





**SIGNATURES**




Pursuant
      to the requirements o f 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.







**White
                River Capital, Inc.**(Registrant)March
                31, 2006
            By:
            /s/
              Martin J. SzumskiMartin
                J. SzumskiChief
                Financial Officer(Signing
                on behalf of the registrantas
                Principal Financial Officer)





Pursuant
      to the requirements of the Securities Exchange Act of 1934, this report has
      been
      signed by the following persons on behalf of the registrant and in the
      capacities and on the dates indicated.




**Signature**
            
            
            
            **Date**/s/
                JOHN M. EGGEMEYER
            
            Chairman
                and Chief Executive Officer, Director
            
            March
                31, 2006John
                M. Eggemeyer
            
            (Principal
                Executive Officer)/s/
                MARK R. RUH
            
            President,
                Chief Operating Officer and Director
            
            March
                31, 2006Mark
                R. Ruh/s/
                MARTIN J. SZUMSKI
            
            Chief
                Financial Officer (Principal Financial
            
            March
                31, 2006Martin
                J. Szumski
            
            Officer
                and Principal Accounting Officer)/s/
                WILLIAM E. MCKNIGHT
            
            Director
            
            March
                31, 2006William
                E. McKnight/s/
                JOHN W. ROSE
            
            Director
            
            March
                31, 2006John
                W. Rose/s/
                DONALD A. SHERMAN
            
            Director
            
            March
                31, 2006Donald
                A. ShermanDirector
            
            March
                ___, 2006Richard
                D. Waterfield





95