United States Securities and Exchange Commission
                             Washington, D.C. 20549

                                    Form 10-Q

(Mark One)

           (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 1999

                                       or

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

                  For the Transition Period from _____ to _____

                         Commission File Number: 0-26412

                          UNION ACCEPTANCE CORPORATION
             (Exact name of registrant as specified in its charter)


          Indiana                                           35-1908796
(State or other jurisdiction                             (I.R.S. Employer 
of incorporation or organization)                     Identification Number)



250 N. Shadeland Avenue, Indianapolis, IN                      46219
 (Address of principal executive office)                     (Zip Code)



                                 (317) 231-6400
              (Registrant's telephone number, including area code)

         Indicate  by check mark  whether  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
filing requirements for the past 90 days.

Yes (X)           No ( )

         Indicate  the  number of  shares  outstanding  of each of the  issuer's
classes of common stock, as of the latest practicable date:

                   Class                            Outstanding at May 14, 1999

 Class A Common Stock, without par value                 5,099,344 Shares
 ---------------------------------------                 ----------------
 Class B Common Stock, without par value                 8,150,266 Shares
 ---------------------------------------                 ----------------



<PAGE>

                  UNION ACCEPTANCE CORPORATION AND SUBSIDIARIES
                                    FORM 10-Q
                                      INDEX


                                                                           Page
Part I.  FINANCIAL INFORMATION

Item 1.  Consolidated Condensed Financial Statements (unaudited):

         Consolidated Condensed Balance Sheets as of
         March 31, 1999 and June 30, 1998                                     3

         Consolidated Condensed Statements of Earnings (Loss) and
         Comprehensive Earnings (Loss) for the Three
         and Nine Months Ended  March 31, 1999 and 1998                       4

         Consolidated Condensed Statements of Cash Flows for the
         Nine Months Ended March 31, 1999 and 1998                            5

         Consolidated Condensed Statement of  Shareholders' Equity for the
         Nine Months Ended March 31, 1999                                     6

         Notes to Consolidated Condensed Financial Statements                 7

Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations                                 10

Item 3.  Quantitative and Qualitative Disclosures about Market Risk          22

Part II. OTHER INFORMATION                                                   23


         Signatures                                                          24


<PAGE>

Union Acceptance Corporation and Subsidiaries
Consolidated Condensed Balance Sheets
(Dollars in thousands, except share data)
(Unaudited)
<TABLE>
<CAPTION>

                                                                         March 31,                    June 30,
Assets                                                                     1999                         1998
                                                                  -------------------------------------------
<S>                                                               <C>                           <C>         
Cash                                                              $          9,237              $     75,612
Restricted cash                                                             12,384                    17,823
Receivables, net                                                           242,675                   118,259
Accrued interest receivable                                                  1,862                     1,045
Property, equipment, and leasehold improvements, net                         8,553                     7,921
Retained interest in securitized assets                                    201,984                   171,593
Other assets                                                                26,706                    19,280
                                                                  -------------------------------------------
  Total Assets                                                    $        503,401               $   411,533
                                                                  ===========================================

Liabilities

Amounts due under warehouse facilities                            $        170,376              $     73,123
Long-term debt                                                             199,000                   221,000
Accrued interest payable                                                     2,069                     6,280
Amounts due to trusts                                                       13,123                    15,510
Dealer premiums payable                                                      2,115                     1,374
Income taxes payable                                                         3,834                         -
Deferred income taxes payable                                               17,713                     9,573
Other payables and accrued expenses                                          3,211                     2,200
                                                                  -------------------------------------------
  Total Liabilities                                                        411,441                   329,060
                                                                  -------------------------------------------

Shareholders' Equity

Preferred Stock, without par value, authorized
  10,000,000 shares; none issued and outstanding                                            
                                                                                 -                         -

Class A Common Stock, without par value,
  authorized 30,000,000 shares; 5,098,994 and 4,376,446 shares
  issued and outstanding at March 31, 1999 and
  June 30, 1998, respectively                                               58,450                    58,360

Class B Common Stock, without par value,
  authorized 20,000,000 shares; 8,150,266 and 8,855,036 shares
  issued and outstanding at March 31, 1999 and
  June 30, 1998, respectively                                                               
                                                                                 -                         -

Accumulated other comprehensive income                                       7,762                     7,609
Retained earnings                                                           25,748                    16,504
                                                                  -------------------------------------------
  Total Shareholders' Equity                                                91,960                    82,473
                                                                  -------------------------------------------

  Total Liabilities and Shareholders' Equity                      $        503,401               $   411,533
                                                                  ===========================================

</TABLE>
See accompanying notes to consolidated condensed financial statements.




<PAGE>
Union Acceptance Corporation and Subsidiaries
Consolidated Condensed Statements of Earnings (Loss) and
  Comprehensive Earnings (Loss)
(Dollars in thousands, except share data)
(Unaudited)
 
<TABLE>
<CAPTION>
                                                             Three Months Ended                Nine Months Ended
                                                                March 31,                         March 31,
                                                     -----------------------------     -----------------------------
                                                         1999             1998             1999             1998
                                                     ------------     ------------     ------------     ------------
<S>                                                  <C>              <C>              <C>              <C>         
Interest on receivables                              $      8,087     $      7,133     $     23,276     $     20,233
Other interest                                              4,798            3,230           15,314            9,534
                                                     ------------     ------------     ------------     ------------
   Total interest income                                   12,885           10,363           38,590           29,767
Interest expense                                            6,919            6,990           20,209           19,210
                                                     ------------     ------------     ------------     ------------
   Net interest margin                                      5,966            3,373           18,381           10,557
Provision for estimated credit losses                       1,225            1,900            4,825            5,175
                                                     ------------     ------------     ------------     ------------
   Net interest margin after provision                      4,741            1,473           13,556            5,382

Gain (loss) on sales of receivables, net                    6,386            3,113           13,179           (5,714)
Servicing fees, net                                         5,601            4,742           16,023           14,290
Other revenues                                              1,442            1,065            3,821            3,070
                                                     ------------     ------------     ------------     ------------

Total revenues                                             18,170           10,393           46,579           17,028
                                                     ------------     ------------     ------------     ------------

Salaries and benefits                                       6,328            4,815           17,451           14,296
Other expenses                                              4,913            4,007           14,090           12,185
                                                     ------------     ------------     ------------     ------------

Total operating expenses                                   11,241            8,822           31,541           26,481
                                                     ------------     ------------     ------------     ------------

Earnings (loss) before provision (benefit)
   for income taxes                                         6,929            1,571           15,038           (9,453)
Provision (benefit) for income taxes                        2,665              654            5,794           (4,713)
                                                     ------------     ------------     ------------     ------------

Net earnings (loss)                                  $      4,264     $        917     $      9,244     $     (4,740)
                                                     ============     ============     ============     ============

Other comprehensive earnings (loss) before
  provision (benefit) for income taxes:

Net change in unrealized gain on retained
   interest in securitized assets                              29              519              248            7,146
Provision for income taxes related to
   items of other comprehensive earnings                       11              198               95            2,816
                                                     ------------     ------------     ------------     ------------

Other comprehensive earnings                                   18              321              153            4,330
                                                     ------------     ------------     ------------     ------------

Comprehensive earnings (loss)                        $      4,282     $      1,238     $      9,397     $       (410)
                                                     ============     ============     ============     ============

 Net earnings (loss) per share (diluted & basic)     $       0.32     $       0.07     $       0.70     $      (0.36)
                                                     ============     ============     ============     ============
 Weighted average number of
   common shares outstanding (basic)                   13,249,260       13,231,482       13,238,944       13,225,047
                                                     ============     ============     ============     ============
 Weighted average number of
   common shares outstanding (diluted)                 13,227,130       13,231,482       13,246,246       13,225,047
                                                     ============     ============     ============     ============

</TABLE>
See accompanying notes to consolidated condensed financial statements.

<PAGE>

Union Acceptance Corporation and Subsidiaries
Consolidated Condensed Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>

                                                                                         Nine Months Ended
                                                                                             March 31,
                                                                                   ----------------------------
                                                                                       1999             1998
                                                                                   -----------      -----------

<S>                                                                                <C>              <C>         
Cash flows from operating activities:
     Net earnings (loss)                                                           $     9,244      $    (4,740)
           Adjustments to reconcile net earnings to net cash
           provided (used) by operating activities:
                       Receivable acquisitions in excess of liquidations            (1,073,788)        (688,342)
                       Dealer premiums paid in excess of dealer premium
                         rebates received on receivables held for sale                 (40,178)         (30,199)
                       Securitization of receivables held for sale                     947,838          651,475
                       Gain on sales of receivables                                    (30,772)         (19,660)
                       Proceeds on sale of interest-only strip                           2,847           11,050
                       Return of excess and servicing asset cash flows,
                          net of present value effect                                   29,777           16,311
                       Impairment of retained interest in securitized assets             9,464           20,187
                       Provision for estimated credit losses                             4,825            5,175
                       Amortization and depreciation                                     3,576            3,325
                       Spread accounts                                                  (4,656)           1,202
                       Restricted cash                                                   5,439           (1,674)
                       Other assets and accrued interest receivable                    (10,029)             (32)
                       Amounts due to trusts                                            (2,387)           1,865
                       Other payables and accrued expenses                               8,864           (4,225)
                                                                                   -----------      -----------
                                   Net cash used by operating activities              (139,936)         (38,282)
                                                                                   -----------      -----------

Cash flows from investing activities:
     Purchase of property, equipment, and leasehold improvements                        (1,590)          (5,109)
                                                                                   -----------      -----------

Cash flows from financing activites:
     Principal payment on long-term debt                                               (22,000)              --
     Payment of borrowing fees                                                            (102)              --
     Net change in warehouse credit facilities                                          97,253           12,615
                                                                                   -----------      -----------
                                   Net cash provided from financing activities          75,151           12,615
                                                                                   -----------      -----------

Change in cash                                                                         (66,375)         (30,776)

Cash, beginning of period                                                               75,612           58,801
                                                                                   -----------      -----------

Cash, end of period                                                                $     9,237      $    28,025
                                                                                   ===========      ===========

Supplemental disclosures of cash flow information:

Income taxes paid                                                                  $       171      $        20
                                                                                   ===========      ===========

Interest paid                                                                      $    25,863      $    23,255
                                                                                   ===========      ===========

</TABLE>
See accompanying notes to consolidated condensed financial statements.






<PAGE>

Union Acceptance Corporation and Subsidiaries
Consolidated Condensed Statement of Shareholders' Equity
For the Nine Months Ended March 31, 1999
(Dollars in thousands, except per share data)
(Unaudited)

<TABLE>
<CAPTION>
                                                                        
                                           Number of Common Stock                       Accumulated
                                            Shares Outstanding                             Other                           Total
                                       ----------------------------       Common       Comprehensive    Retained       Shareholders'
                                         Class A        Class B           Stock           Income        Earnings          Equity
                                       ---------------------------------------------------------------------------------------------
<S>                                     <C>             <C>             <C>             <C>           <C>                 <C>    
Balance at June 30, 1998                4,376,446       8,855,036       $   58,360      $  7,609      $    16,504         $82,473

Grants of Common Stock                     17,778               -               90             -                -              90

Conversion of Class B
  Common Stock into
  Class A Common Stock                    704,770       (704,770)                -             -                -               -

Net earnings                                    -               -                -             -            9,244           9,244

Other Comprehensive Income:

Net change in unrealized
   gain on retained interest
   in securitized assets, net of tax            -               -                -           153                -             153
                                       -------------------------------------------------------------------------------------------
Balance at March 31, 1999               5,098,994       8,150,266       $   58,450      $  7,762      $    25,748         $91,960
                                       ===========================================================================================

</TABLE>

See accompanying notes to consolidated condensed financial statements.





<PAGE>

Union Acceptance Corporation and Subsidiaries
Notes to Consolidated Condensed Financial Statements
For the Nine Months Ended March 31, 1999 and 1998
(Unaudited)

Note 1 - Basis of Presentation
         The forgoing consolidated condensed financial statements are unaudited.
However,  in the opinion of  management,  all  adjustments  necessary for a fair
presentation of the results of the interim period  presented have been included.
All  adjustments are of a normal and recurring  nature.  Results for any interim
period are not  necessarily  indicative  of results to be expected for the year.
The consolidated  condensed  financial  statements include the accounts of Union
Acceptance Corporation and its subsidiaries.

         During  fiscal  1995,  Union  Acceptance   Funding   Corporation,   UAC
Securitization  Corporation,  Performance  Funding  Corporation  and Performance
Securitization  Corporation  were formed as  wholly-owned  subsidiaries  of UAC.
During  fiscal  1996,  UAC Boat  Funding  Corp.  was  formed as a wholly-  owned
subsidiary  of UAC.  In fiscal  1997,  UAC Finance  Corporation  was formed as a
wholly-owned  subsidiary  of UAC.  Circle City Car Company and Union  Acceptance
Receivables  Corporation were formed as wholly-owned  subsidiaries of UAC during
the first and second quarters, respectively, of fiscal 1998.

         The  consolidated  condensed  interim  financial  statements  have been
prepared in accordance with Form 10-Q  specifications,  and,  therefore,  do not
include all  information and footnotes  normally shown in full annual  financial
statements.  A summary of the Company's  significant  accounting policies is set
forth in "Note 1" of the "Notes to  Consolidated  Financial  Statements"  in the
Company's Annual Report on Form 10-K for the year ended June 30, 1998.

         In determining  the fair value of the Retained  Interest in Securitized
Assets,   the  Company  must   estimate   the  future   rates  of   prepayments,
delinquencies,  defaults and default loss severity as they impact the amount and
timing of the  estimated  cash  flows.  The  Company  estimates  prepayments  by
evaluating historical prepayment  performance of comparable  receivables and the
impact  of  trends  in the  economy.  The  Company  has used  annual  prepayment
estimates  ranging  from 21.99% to 28.0% and 17.35% to 19.38% on Tier I and Tier
II receivables,  respectively.  The Company estimates  defaults and default loss
severity using available historical loss data for comparable receivables and the
specific  characteristics  of the  receivables  purchased  by the  Company.  The
Company used default losses of 4.00% to 6.41% and 12.00% to 14.49% on Tier I and
Tier II  receivables,  respectively,  as a percentage of the original  principal
balance over the life of the receivables.  The Company  determines the estimated
fair value of its Retained  Interest in Securitized  Assets by  discounting  the
expected cash flows using a discount rate based on the comparable  treasury rate
plus a spread  which  the  Company  believes  is  commensurate  with  the  risks
involved. The Company used discount rates of 8.63% to 8.97% and 10.72% to 10.92%
on Tier I and Tier II receivables, respectively.

Note 2 - Reclassification
         Certain amounts for the prior period have been  reclassified to conform
to the current period presentation.

Note 3 - Other Interest Income
         Other  interest  income  includes  interest  earned on cash  collection
accounts on all securitization transactions before January 1, 1997, the discount
accretion  recognized  on  retained  interest  in  securitized  assets,  and the
discount  accretion  related to the servicing  asset which was  established  for
securitization  transactions between January 1, 1997 and December 31, 1998. Cash
collection accounts represent customer payments held in trust until disbursement
by the  trustee.  Interest  is earned by the  Company  on these  funds  prior to
distribution  of such funds to investors  and the servicer.  Beginning  with the
implementation of Statement of Financial Accounting Standards No. 125 on January
1, 1997, the Company  established a servicing asset for the expected  collection
account  interest.  The  structure of the 1999-A  securitization  was changed to
include the collection account interest as part of the securitization trust cash
flows resulting in the capitalization of the collection account interest as part
of Retained  Interest and not as a separate  servicing  asset. The change in the
structure  of the 1999-A  securitization  resulted  in an  increase  in Retained
Interest;  however,  there  was no effect on other  interest  income.  


<PAGE>

Union Acceptance  Corporation and Subsidiaries  
Notes to Consolidated Condensed Financial Statements 
For the Nine Months Ended
March 31, 1999 and 1998 
(Unaudited)

Note 4 - Conversion of Common Stock
         The  Company's  charter  provides  that shares of Class B Common  Stock
convert  automatically  to shares of Class A Common  Stock on a  share-for-share
basis upon  transfer  outside a  prescribed  group of holders.  Pursuant to such
provision,  639,770 and 65,000 shares of Class B Common Stock were  converted to
shares of Class A Common Stock in the fiscal  quarters  ended March 31, 1999 and
December 31, 1998, respectively.

Note 5 - Earnings Per Share
         EPS have been computed on the basis of the weighted  average  number of
common shares  outstanding in accordance  with Statement of Financial  Standards
No. 128  "Earnings per Share" (EPS).  The following is a  reconciliation  of the
weighted  average  common  shares for the basic and diluted  earnings  per share
computations:

   
<TABLE>
<CAPTION>
                                                       Three Months Ended                Nine Months Ended
                                                            March 31,                        March 31,
                                                  ------------------------------   ------------------------------
                                                      1999            1998             1999            1998
                                                  ------------------------------   ------------------------------
Basic EPS:
<S>                                                  <C>             <C>              <C>             <C>       
    Weighted average common shares                   13,249,260      13,231,482       13,238,944      13,225,047
                                                  ==============  ==============   ==============  ==============

Diluted EPS:
    Weighted average common shares                   13,249,260      13,231,482       13,238,944      13,225,047
    Dilutive effect of stock options                     27,870               -            7,302               -
                                                  --------------  --------------   --------------  --------------
    Weighted average common and
         incremental shares                          13,277,130      13,231,482       13,246,246      13,225,047
                                                  ==============  ==============   ==============  ==============

</TABLE>

         The effect of stock  options  not  exercised  during the three and nine
months  ended March 31, 1999 are  dilutive  although  the effect on earnings per
share is less than $.01.  The effect of stock options not  exercised  during the
three and nine months ended March 31, 1998 are  anti-dilutive  and therefore not
included in weighted average common shares.

Note 6 - Current Accounting Pronouncements
         In June 1997, the Financial Accounting Standards Board issued Statement
of Financial  Accounting  Standards No. 131,  "Disclosures  About Segments of an
Enterprise and Related  Information,"  which  introduces new guidance on segment
reporting.  The Statement is effective for fiscal years beginning after December
15, 1997,  with  earlier  application  encouraged.  The Company will include the
appropriate segment information beginning in the annual financial statements for
the year  ended  June 30,  1999 and all  quarterly  statements  thereafter.  The
Statement is not expected to have a material  impact on the financial  condition
or results of operations of the Company.

         In June 1998, the Financial Accounting Standards Board issued Statement
of  Financial   Accounting   Standards  No.  133,   "Accounting  for  Derivative
Instruments and Hedging Activities." The Statement is effective for fiscal years
beginning after June 15, 1999, with earlier application  allowed.  Management is
currently  assessing the impact of this Statement on the financial condition and
operations of the Company upon adoption.

         In April 1998, the American  Institute of Certified Public  Accountants
issued  Statement  of  Position  98-5,  "Reporting  on  the  Costs  of  Start-up
Activities."  This  Statement is  effective  for fiscal  years  beginning  after
December  15, 1998,  with earlier  application  allowed.  This  Statement is not
expected  to have a material  impact on the  financial  condition  or results of
operations of the Company when adopted.


<PAGE>




Union Acceptance Corporation and Subsidiaries
Notes to Consolidated Condensed Financial Statements
For the Nine Months Ended March 31, 1999 and 1998
(Unaudited)

Note 7 - Retained Interest in Securitized Assets
         The  Retained  Interest  in  Securitized   Assets  is  recorded  as  an
"available  for sale"  security  and is recorded  at fair value with  unrealized
gains and losses  attributable  to change in fair value,  net of related  income
taxes,  as a separate  component of  shareholders'  equity  ("accumulated  other
comprehensive  income").  Other than temporary  impairment  charges are recorded
through earnings as a component of gain on sale of receivables, net.


Retained Interest in Securitized Assets is as follows (in thousands) at:
<TABLE>
<CAPTION>
                                                                      March 31,                 June 30,
                                                                        1999                      1998
                                                                   ---------------      --------------------
<S>                                                                <C>                      <C>            
Estimated fair value of excess servicing receivable,
  net of estimated prepayments                                     $      214,972           $       175,164
Allowance for estimated credit losses on securitized receivables        (100,208)                  (90,203)
Estimated dealer premium rebates                                           24,367                    25,718
Discount to present value                                                (37,877)                  (33,117)
                                                                   -----------------------------------------
                                                                          101,254                    77,562

Spread accounts                                                            72,769                    68,113
Accrued interest on securitized receivables                                15,400                    13,606
Unrealized gain                                                            12,561                    12,312
                                                                   -----------------------------------------
Retained interest in securitized assets                            $      201,984           $       171,593
                                                                   =========================================

Outstanding balance of receivables serviced
  through securitized trusts                                        $   2,178,751            $    1,929,981
Allowance for estimated credit losses as
  a percentage of securitized receivables serviced                          4.60%                     4.67%
</TABLE>






<PAGE>


Item 2.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS

General

         The  Company  derives  substantially  all  of  its  earnings  from  the
acquisition,  securitization and servicing of retail installment sales contracts
originated  by   dealerships   affiliated   with  major   domestic  and  foreign
manufacturers.  To fund the acquisition of receivables prior to  securitization,
the Company utilizes a revolving warehouse facility, discussed in "Liquidity and
Capital Resources." Through securitizations,  the Company periodically pools and
sells receivables to a trust which issues Certificates to investors representing
pro-rata   interests  in  the  receivables   sold  or  notes   representing  the
indebtedness  of the trust  secured by the  receivables  sold.  When the Company
sells  receivables in a  securitization,  it records a gain (or loss) on sale of
receivables and establishes  Retained Interest in Securitized  Assets ("Retained
Interest") as an asset. Excess cash flows are recorded against Retained Interest
as received over the life of the related securitization.

         Acquisition  Volume. The Company currently  acquires  receivables in 32
states from over 3,900  manufacturer-franchised  auto  dealerships.  The Company
primarily  acquires  receivables on automobiles  made to borrowers who exhibit a
favorable  credit  profile  ("Tier I") and since October 1994, to borrowers with
adequate  credit  quality  who  would  not  qualify  for  acquisition  under the
Company's Tier I quality  criteria ("Tier II").  Effective  January 1, 1999, the
Company  discontinued  the acquisition of Tier II  receivables.  The decision to
stop acquiring Tier II receivables should not significantly impact operations as
Tier II receivable  acquisitions  have  historically  been less than 5% of total
receivable  acquisitions  and represent  less than 3.00% of the total  servicing
portfolio at March 31, 1999.

         Total  receivable  acquisitions  decreased  to $321.9  million  for the
quarter ended March 31, 1999, from $361.9 million for the quarter ended December
31, 1998,  but  increased  from $220.3  million for the quarter  ended March 31,
1998. Tier I receivable  acquisitions  were $321.4 million for the quarter ended
March 31,  1999,  compared to $214.4  million for the same quarter of last year.
The increase in receivable acquisitions over the comparable quarter of last year
is a result of a  strategic  decision  to  increase  acquisition  volume  due to
consistent improvement in the credit quality of receivable  acquisitions and the
servicing  portfolio  as a whole.  In order to achieve  the  higher  acquisition
volume during this fiscal year,  organizational  changes were made in the latter
part of fiscal 1998 which focused on strengthening  dealer relations in order to
increase the number of contracts per dealer and activate  those dealers who were
not  consistently  using  the  Company.  Tier II  receivable  acquisitions  were
$450,000 for the quarter ended March 31, 1999,  compared to $5.6 million for the
quarter  ended March 31, 1998.  This  decrease is  attributed to the decision to
discontinue  acquiring Tier II receivables  and our continued  effort to improve
the credit  quality  of our  portfolio.  See -  "Discussion  of  Forward-Looking
Statements".

         Gross and Net Spreads.  The gross and net spreads on the third  quarter
securitization  of fiscal 1999 were 7.19% and 6.16% compared to 6.81% and 5.27%,
respectively, over the same quarter of last year. Gross spread is defined as the
difference between the weighted average receivable rate and the rate born by the
related  asset-backed  securities.  Net spread is defined as gross  spread  less
servicing fees, upfront costs,  ongoing credit enhancement and trustee fees, and
hedging gains or losses.

         Net spreads are currently targeted at 5.50% to 6.00% on securitizations
(assuming  a  pricing  spread  for  asset-backed  securities  over the  two-year
treasury  note of 100 basis  points) for the  remaining  three  months of fiscal
1999.  Management  believes that by targeting a spread of 8.00% to 8.50% between
receivable  rates and the two-year  treasury  rate that these net spreads can be
achieved.  Although management believes these spreads can be achieved,  material
factors  affecting  the net  spreads  are  difficult  to predict and could cause
management's  projections  to be materially  inaccurate.  These include  current
market  conditions  with respect to interest  rates and demand for  asset-backed
securities  generally and for securities issued in securitizations  sponsored by
the Company. See - "Discussion of Forward-Looking Statements".

         Gain (loss) on Sales of  Receivables,  Net and Interest Rate Risk. Gain
(loss) on sales of  receivables  continues  to be a  significant  element of the
Company's net earnings.  The gain (loss) on sales of  receivables is affected by
several  factors  but  is  primarily  affected  by  the  amount  of  receivables
securitized,  the net spread, and the level of estimation for net credit losses.
Prior to the  quarter  ended June 30,  1998,  the Company  estimated  the future
servicing  cash  flows  recognized  as a  component  of  the  gain  on  sale  by
discounting  the projected  future  servicing  cash flows from the time they are
received by the respective trust. However, management implemented the "cash out"
method  during the fourth  quarter of fiscal 1998 which  discounts  the expected
future  servicing  cash  flows from the time they are  released  from the spread
account to the Company.

         The  Company's  sources  for funds  generally  have  variable  rates of
interest,  and its  receivable  portfolio  bears  interest at fixed  rates.  The
Company  therefore  bears  interest  rate  risk on  receivables  until  they are
securitized  and employs a hedging  strategy to mitigate this risk. As a part of
the  hedging  strategy,  the  Company  executes  short  sales  of U.S.  Treasury
securities  having a maturity  approximating the average maturity of receivables
to be acquired during the relevant period.  Beginning in March 1999, the Company
began using a hedging  strategy  that  primarily  consists of the  execution  of
forward  interest rate swaps.  There is no assurance that these  strategies will
completely  offset changes in interest  rates.  In particular,  such  strategies
depend on management's  estimates of receivable acquisition volume and timing of
its  securitizations.  The Company  realizes a gain on its hedging  transactions
during  periods  of  increasing  interest  rates  and  realizes  a loss  on such
transactions  during periods of decreasing  interest rates.  The hedging gain or
loss will in part offset  changes in interest  rates as  reflected by a lower or
higher  reported  gain on sales of  receivables,  respectively.  Recognition  of
unrealized gains or losses is deferred until the sale of receivables  during the
securitization.  On the date of the sale,  deferred hedging gains and losses are
recognized as a component of the gain (loss) on sales of receivables.

         Portfolio  Performance.  Since  September  30,  1997,  the  Company has
experienced  steady  improvement in both delinquency and net credit losses.  The
Company  attributes  the  improvement  to the  implementation  of tighter credit
standards  in March  1997 and  strategic  changes  made in its  origination  and
collection  departments.  Recoveries as a percentage of gross charge-offs on the
Tier I portfolio  increased  slightly to 39.93% for the quarter  ended March 31,
1999, compared to 37.79% for the quarter ended December 31, 1998, and 39.42% for
the same quarter of last year.  This  increase is  primarily  due to the Company
opening a new car franchised  dealership in Indianapolis and retailing a portion
of its repossessed automobiles through the dealership.  This method of disposing
of repossessions  along with stricter  monitoring of the repossession and resale
process  should  increase  the  recovery  rate  over  time.  Recovery  rates for
repossessed automobiles sold by the Company's retail operation are significantly
higher than recovery rates on vehicles sold at auction.  Approximately  10.0% of
repossessed  automobiles  were sold at the Company's retail operation during the
nine months ended March 31, 1999. The recovery rate on  automobiles  retailed by
the Company  was  approximately  60.00% as a  percentage  of gross  charge-offs,
compared  to  total  Tier  I  reported  recoveries  as  a  percentage  of  gross
charge-offs of 39.93%. See - "Discussion of Forward-Looking Statements".

         Provisions are made for estimated net credit losses in conjunction with
each receivable sale. Current assumptions utilized in the gain (loss) on sale of
receivables calculation for estimated net credit losses during the third quarter
securitization  was 4.50% over the life of the pool based on a combined  sale of
Tier I, Tier II and modified receivables. Allowance related to net credit losses
on securitized  receivables  (inherent in Retained  Interest) was 4.60% at March
31,  1999,  compared  to 4.59% and 4.86% at  December  31,  and March 31,  1998,
respectively.

         Tier I Portfolio. Set forth below is certain information concerning the
Company's  experience  pertaining to delinquencies  and net credit losses on the
Tier I fixed rate retail automobile, light truck and van receivables serviced by
the Company.  There can be no assurance that future  delinquency  and net credit
loss experience on receivables will be comparable to that set forth below.
See "Discussion of Forward-Looking Statements".

<TABLE>
<CAPTION>

                                                           Tier I Delinquency Experience
                            -----------------------------------------------------------------------------------------------------

                                  At March 31, 1999             At December 31, 1998              At March 31, 1998
                            ----------------------------   -----------------------------     ------------------------------------

                                                               (Dollars in thousands)

                             Number of                      Number of                     Number of    
                            Receivables        Amount      Receivables       Amount      Receivables         Amount 
<S>                            <C>          <C>              <C>          <C>              <C>            <C>        
Servicing portfolio            207,705      $ 2,355,418      202,890      $ 2,277,112      181,026        $ 1,929,151
Delinquencies:                                                                                          
  30-59 days                     3,650      $    37,890        4,379      $    44,626        3,426        $    35,449
  60-89 days                     1,633           17,279        1,682           17,475        1,923             21,818
  90 days or more                  646            6,818          694            7,161          623              7,088
                            ===========  =============== ============ ================   ==========     ==============
Total delinquencies              5,929      $    61,987        6,755      $    69,262        5,972        $    64,355
                            ===========  =============== ============ ================   ==========     ==============
Delinquency as a percentage                                                                             
  of servicing portfolio          2.85%            2.63%        3.33%            3.04%        3.30%              3.34%
</TABLE>

                                                                  
         As  indicated  by  the  above  table,   delinquency  rates  based  upon
outstanding receivable balances of accounts 30 days past due and over were 2.63%
at March 31, 1999,  compared to 3.04% at December  31, 1998,  and 3.34% at March
31, 1998, for the Company's Tier I servicing portfolio.

<TABLE>
<CAPTION>
                                                                      Tier I Credit Loss Experience
                                                                        For the Three Months Ended
                                       --------------------------------------------------------------------------------------------

                                             March 31, 1999                 December 31, 1998                  March 31, 1998
                                       ---------------------------     -----------------------------       ------------------------
                                                                         (Dollars in thousands)

                                       Number of                       Number of                           Number of
                                       Receivables        Amount      Receivables           Amount       Receivables     Amount 
                                       -----------        ------      -----------           ------       -----------     ------ 
<S>                                    <C>          <C>                <C>               <C>               <C>          <C>       
Average servicing portfolio            206,174      $  2,329,127       200,164           $ 2,234,753       180,631      $1,924,930

Gross charge-offs                        1,841            19,139         1,886                19,339         1,886          20,767
Recoveries                                                 7,643                               7,309                         8,186
                                                  ---------------                  ------------------                 -------------
  Net charge-offs                                   $     11,496                         $    12,030                    $   12,581
                                                  ===============                  ==================                 =============

Gross charge-offs as a percentage
  of average servicing portfolio (1)      3.57%             3.29%         3.77%                 3.46%         4.18%           4.32%
Recoveries as a percentage of
  gross charge-offs                                        39.93%                              37.79%                        39.42%
Net charge-offs as a percentage
  of average servicing portfolio (1)                        1.97%                               2.15%                         2.61%
</TABLE>


<TABLE>
<CAPTION>
                                                                  For the Nine Months Ended
                                         ------------------------------------------------------------------------------

                                                   March 31, 1999                            March 31, 1998
                                         ----------------------------------           ---------------------------------
                                                                       (Dollars in thousands)

                                              Number of                                   Number of
                                              Receivables           Amount               Receivables           Amount  
<S>                                            <C>             <C>                       <C>               <C>        
Average servicing portfolio                    199,072         $  2,217,348              178,628           $ 1,907,770
                                                                                                         
Gross charge-offs                                5,923               62,129                5,917                66,197
Recoveries                                                           24,098                                     24,848
                                                          ------------------                             --------------
  Net charge-offs                                            $       38,031                              $      41,349
                                                          ==================                             ==============
                                                                                                         
Gross charge-offs as a percentage                                                                        
  of average servicing portfolio (1)             3.97%                3.74%                4.42%                 4.63%
Recoveries as a percentage                                                                               
  of gross charge-offs                                               38.79%                                     37.54%
Net charge-offs as a percentage                                                                          
  of average servicing portfolio (1)                                  2.29%                                      2.89%
</TABLE>
(1) Annualized



<PAGE>



         As indicated in the above table,  net credit  losses on the Tier I auto
portfolio  totaled  $11.5 million for the quarter ended March 31, 1999, or 1.97%
(annualized)  as a percentage  of the average  servicing  portfolio  compared to
2.15%  and  2.61% for the  quarters  ended  December  31,  and  March 31,  1998,
respectively.

         Tier II Portfolio.  Set forth below is certain  information  concerning
the Company's  experience  pertaining to delinquencies  and net credit losses on
the Tier II portfolio. There can be no assurance that future delinquency and net
credit loss  experience  on  receivables  will be  comparable  to that set forth
below. See "Discussion of Forward-Looking Statements".



<PAGE>
<TABLE>
<CAPTION>
                                                               Tier II Delinquency Experience
                                    ------------------------------------------------------------------------------------
                                           At March 31, 1999        At December 31, 1998         At March 31, 1998
                                    ---------------------------   -----------------------    ---------------------------
                                                                   (Dollars in thousands)

                                    Number of                      Number of                    Number of
                                   Receivables       Amount       Receivables     Amount       Receivables       Amount 
                                    ---------     --------------  ---------     ---------      -----------    ------------
<S>                                    <C>        <C>                <C>        <C>             <C>         <C>          
Servicing portfolio                    5,965      $      60,284      6,327      $  66,363         6,414       $      69,850
Delinquencies:                                                                                             
  30-59 days                             336      $       3,545        421      $   4,492           371       $       4,186
  60-89 days                             134              1,401        183          1,871           114               1,369
  90 days or more                          4                 48          5             48             -                   -
                                    ---------   ----------------  ---------     ----------     ---------      -------------
Total delinquencies                      474      $       4,994        609      $   6,411           485       $       5,555
                                    =========   ================  =========     ==========     =========      =============
Delinquency as a percentage                                                                                
   of servicing portfolio               7.95%              8.28%      9.63%          9.66%         7.56%               7.95%
                                                                                                        

         As  indicated in the above table,  Tier II  portfolio  delinquency  was
8.28% based on outstanding  receivable balances of accounts 30 days past due and
over at March 31, 1999,  compared to 9.66% at December  31,  1998,  and 7.95% at
March 31,  1998.  The decrease in  delinquency  over last quarter is a result of
enhanced  collection  strategies,   however,  delinquency  as  a  percentage  of
servicing portfolio on the Tier II portfolio is expected to increase,  while not
actually  deteriorating,  as a result of a declining  Tier II average  servicing
portfolio and the  determination  to eliminate  Tier II receivable  acquisitions
effective January 1, 1999. See "Discussion of Forward-Looking Statements".

<PAGE>


                                                                           Tier II Credit Loss Experience
                                                                             For the Three Months Ended
                                         ------------------------------------------------------------------------------------------

                                                     March 31, 1999               December 31, 1998            March 31, 1998
                                         -------------------------------      -------------------------     -----------------------
                                                                                (Dollars in thousands)

                                            Number of                      Number of                    Number of 
                                          Receivables        Amount        Receivables       Amount    Receivables      Amount 
                                          -----------        ------        -----------       ------    -----------      ------ 
<S>                                          <C>        <C>                  <C>        <C>             <C>          <C>       
Average servicing portfolio                  6,104      $      62,614        6,370      $   67,145      6,414        $   70,345

Gross charge-offs                              163              1,410          168           1,663        159             1,781
Recoveries                                                        471                          580                          602
                                                     -----------------               --------------              ---------------
  Net charge-offs                                       $         939                  $     1,083                  $     1,179
                                                     =================               ==============              ===============

Gross charge-offs as a percentage
  of average servicing portfolio(1)         10.68%              9.01%       10.55%           9.91%      9.92%            10.13%

Recoveries as a percentage
  of gross charge-offs                                          33.40%                       34.87%                      33.81%
Net charge-offs as a percentage
  of average servicing portfolio (1)                            6.00%                        6.45%                        6.70%
</TABLE>

<TABLE>
<CAPTION>
                                                 For the Nine Months Ended
                                    ----------------------------------------------------------

                                          March 31, 1999                 March 31, 1998
                                    -------------------------    -----------------------------
                                                     (Dollars in thousands)

                                        Number of                  Number of
                                      Receivables    Amount       Receivables       Amount 
                                      -----------    ------       -----------       ------ 
<S>                                        <C>       <C>           <C>            <C>       
Average servicing portfolio                6,272     $65,692       6,319          $   70,239

Gross charge-offs                            546       5,190         583               6,418
Recoveries                                             1,791                           2,243
                                                  -----------                    ------------
  Net charge-offs                                   $  3,399                     $     4,175
                                                  ===========                    ============

Gross charge-offs as a percentage
  of average servicing portfolio (1)       11.61%      10.53%      12.30%              12.18%
Recoveries as a percentage
  of gross charge-offs                                34.51%                          34.95%
Net charge-offs as a percentage
  of average servicing portfolio (1)                   6.90%                           7.92%
</TABLE>

(1) Annualized


         As  indicated  in the above  table,  net credit  losses for the quarter
ended March 31, 1999,  totaled $939,000 or 6.00% (annualized) as a percentage of
the  average  Tier II  servicing  portfolio  compared to 6.45% and 6.70% for the
quarters ended December 31, and March 31, 1998, respectively.


<PAGE>

Results of Operations

         Net  earnings  increased  364.8% to $4.3  million or $0.32 per  diluted
share for the quarter  ended March 31,  1999,  compared to $917,000 or $0.07 per
diluted  share for the quarter  ended March 31,  1998.  Net  earnings  increased
295.0% to $9.2  million or $0.70 per  diluted  share for the nine  months  ended
March 31,  1999,  compared  to a net loss of $4.7  million or $0.36 per  diluted
share for the nine months ended March 31, 1998. The increase in net earnings for
the  quarter and nine months  ended  March 31, 1999 was  primarily  related to a
higher gain on sale of  receivables,  net,  and an  increase  in other  interest
income.

         Net interest  margin after provision  increased  221.9% to $4.7 million
and 151.9% to $13.6  million for the  quarter  and nine  months  ended March 31,
1999,  respectively,   compared  to  $1.5  million  and  $5.4  million  for  the
corresponding periods ended March 31, 1998.

         Interest on  receivables  increased  13.4% to $8.1 million and 15.0% to
$23.3   million  for  the  quarter  and  nine  months   ended  March  31,  1999,
respectively,  compared to $7.1 million and $20.2 million for the  corresponding
periods  ended March 31,  1998.  The  increase in  interest on  receivables  was
primarily  a  result  of an  increase  in the  average  outstanding  balance  of
receivables  held for sale for the quarter and nine months ended March 31, 1999,
to $231.0 million and $222.3 million,  respectively,  compared to $211.5 million
and $189.6 million for the corresponding periods ended March 31, 1998.

         Other  interest  income  increased  48.5% to $4.8  million and 60.6% to
$15.3   million  for  the  quarter  and  nine  months   ended  March  31,  1999,
respectively,  compared to $3.2 million and $9.5  million for the  corresponding
periods  ended March 31, 1998.  The increase in other  interest  income  relates
primarily  to the  implementation  of the "cash out" method of valuing  Retained
Interest  at  June  30,  1998,  which  increased  the  discount  resulting  in a
subsequent increase in discount accretion but was offset by lower collection and
spread account interest. Other interest income related to discount accretion was
$4.4  million and $14.3  million for the quarter and nine months ended March 31,
1999,  respectively,  compared to $1.8  million and $5.2 million for the quarter
and nine months  ended March 31,  1998.  Other  interest  income  related to the
restricted cash accounts  (collection  and spread  accounts) for the quarter and
nine months ended March 31, 1999,  was $353,000 and $1.0 million,  respectively,
compared to $1.4  million and $4.3 million for the quarter and nine months ended
March 31, 1998.

         Interest  expense  decreased 1.0% to $6.9 million and increased 5.2% to
$20.2 million for the quarter and nine months ended March 31, 1999,  compared to
$7.0 million and $19.2  million for the  corresponding  periods  ended March 31,
1998.  The  increase  for the nine months  ended  March 31,  1999 was  primarily
related to higher average borrowing needs due to higher receivable  acquisitions
but was offset by lower  interest  on  long-term  debt as a result of a required
principal payment of $22.0 million made in August 1998.

         Provision for estimated  credit losses  decreased 35.5% to $1.2 million
and 6.8% to $4.8  million for the quarter and nine months  ended March 31, 1999,
compared to $1.9  million and $5.2 million for the quarter and nine months ended
March 31, 1998.  The decrease for the quarter and nine months ended is primarily
related to improvement in the quality of the held for sale portfolio.

         Gain on sales of receivables, net totaled $6.4 million and $3.1 for the
quarters  ended  March  31,  1999,  and  1998,  respectively.  Gain on  sales of
receivables, net totaled $13.2 million for the nine months ended March 31, 1999,
compared  to a loss on sales of  receivables,  net of $5.7  million for the nine
months ended March 31, 1998. The gain for the quarters ended March 31, 1999, and
1998,  consisted of gains on  securitization  transactions  of $10.8 million and
$5.7  million  and  charges  for other than  temporary  impairments  of Retained
Interest of $4.3 million and $2.6 million,  respectively.  The gain for the nine
months  ended  March  31,  1999 and 1998  consisted  of gains on  securitization
transactions of $22.9 million and $14.7 million,  respectively,  and charges for
other than temporary  impairments of Retained Interest of $9.5 million and $20.2
million, respectively.  Unrealized gains on Retained Interest are not charged to
income. (See - Financial Condition - "Retained interest in securitized  assets,"
below). The increase in the securitization  transaction gain relates to a higher
volume of  receivables  securitized  and a higher net spread but was offset by a
higher  credit  loss  assumption  of 4.50% for the  fiscal  1999  third  quarter
securitization   compared   to  4.00%  for  the  fiscal   1998   third   quarter
securitization.  The  increase was also offset by an increase in the discount of
the estimated  Retained Interest related to the implementation of the "cash out"
method of valuing Retained Interest.  The receivables sold in the securitization
for the quarter  ended March 31, 1999,  were $320.5  million  compared to $228.9
million  for  the  same  quarter  of  last  year.  The  receivables  sold in the
securitizations  for the nine months ended March 31, 1999, and 1998, were $947.8
million  and $651.5  million,  respectively.  The  increase  in the credit  loss
assumption  from 4.00% to 4.50% was related to the  combined  securitization  of
Tier I, Tier II and modified receivables in fiscal 1999 securitizations compared
to the  securitization  of only Tier I  receivables  in fiscal 1998.  The annual
prepayment  estimate and discount rate  assumptions used for the fiscal 1999 and
fiscal 1998 third quarter  securitizations were 28.00% and 9.84%, and 28.04% and
10.61%, respectively.

         Servicing  fees, net increased 18.1% to $5.6 million and 12.1% to $16.0
million  for the quarter and nine  months  ended March 31,  1999,  respectively,
compared to $4.7 million and $14.3 million for the  corresponding  periods ended
March 31, 1998. The increase in servicing  fees, net is a result of the increase
in average  securitized  receivables by approximately  21.8% to $2.2 billion for
the third quarter of fiscal 1999, compared to $1.8 billion for the third quarter
of fiscal 1998.  Servicing fees consist primarily of contractual  servicing fees
of 1.0% on Tier I  securitizations.  Beginning with the quarter ended  September
30, 1998,  the scheduled  accretion of discount on excess  servicing cash flows,
previously  a component  of  servicing  fees,  net,  was  reclassified  to other
interest income.

         Other  revenues  totaled  $1.4 million and $3.8 million for the quarter
and nine months ended March 31, 1999, respectively, compared to $1.1 million and
$3.1 million for the corresponding  periods ended March 31, 1998. Other revenues
consist primarily of late charge and origination fee income.

         Salaries and benefits expense increased 31.4% to $6.3 million from $4.8
million for the  quarters  ended March 31, 1999 and 1998,  respectively  and was
related to  increased  full-time  equivalent  ("FTE")  employees  and  increased
performance related incentives. Salaries and benefits expense increased 22.1% to
$17.5  million  from $14.3  million for the nine months ended March 31, 1999 and
1998, respectively and resulted primarily from increased FTE employees.  Average
FTE's for the quarter and nine months  ended March 31,  1999,  were 522 and 530,
respectively,  compared to 492 and 451 for the  quarter  and nine  months  ended
March 31,  1998.  Since  March 31,  1998,  the Company  has  experienced  growth
primarily in  reconditioning  and remarketing  but modestly in other areas.  The
increase in the number of reconditioning  and remarketing  operations  employees
was due to the opening of a new automotive dealership in July 1998 to facilitate
reconditioning and remarketing of repossessed vehicles.

         Other  operating  expense  increased 22.6% to $4.9 million and 15.6% to
$14.1   million  for  the  quarter  and  nine  months   ended  March  31,  1999,
respectively,  from $4.0 million and $12.2 million for the corresponding periods
ended March 31, 1998. Other operating  expense includes  occupancy and equipment
costs,  outside and  professional  services,  receivable  expenses,  promotional
expenses, travel, office supplies and other. Total operating expenses (including
salaries  and  benefits)  as a  percentage  of the average  servicing  portfolio
increased  to 1.88% and 1.84% for the quarter  and nine  months  ended March 31,
1999,  respectively,  compared to 1.76% and 1.78% for the corresponding  periods
ended March 31, 1998.

Financial Condition

         Receivables, net and servicing portfolio. Receivables, net includes the
principal  balance of receivables  held for sale,  net of unearned  discount and
allowance for estimated net credit losses,  receivables in process,  and prepaid
dealer premiums. The Company's portfolio of receivables, net increased to $242.7
million at March 31, 1999,  from $118.3  million at June 30, 1998.  The increase
was primarily due to a higher volume of Tier I receivables  acquired compared to
Tier I  receivables  securitized  in the three  fiscal 1999  securitizations  of
approximately  $154.5 million resulting from the timing of the securitization in
the second month of the quarter.  The increase was offset by the sale of Tier II
and modified receivables in the three fiscal 1999  securitizations.  The Tier II
receivables  held  for  sale  decreased   approximately  $5.4  million  as  more
receivables  were  securitized  than acquired during the nine months ended March
31, 1999. The modified  receivable  portfolio,  included in receivables held for
sale,  decreased  approximately  $13.6  million  as a  portion  of the  modified
receivables  were included in the three fiscal 1999  securitizations.  Allowance
for net credit losses on receivables held for sale was $2.5 million at March 31,
1999,  compared to $1.9  million at June 30,  1998.  The Company  serviced  $2.2
billion and $1.9 billion in  securitized  receivables,  and the total  servicing
portfolio  was $2.4 billion and $2.0 billion as of March 31, 1999,  and June 30,
1998, respectively.

         Retained interest in securitized assets ("Retained Interest"). Retained
Interest  increased to $202.0 million at March 31, 1999,  from $171.6 million at
June  30,  1998.  The  Retained   Interest  balance  increased  by  the  amounts
capitalized upon consummation of the UACSC 1998-C, 1998-D and 1999-A Auto Trusts
("1998-C",  "1998-D" and "1999-A")  securitizations  including  estimated dealer
premium rebates.  Total amounts  capitalized for the nine months ended March 31,
1999,  were $61.8  million.  Retained  Interest also  increased by an additional
pre-tax  unrealized  gain  of  $249,000,  a $1.8  million  increase  in  accrued
interest,  and a net increase in spread  accounts of $4.7 million.  Additions to
Retained  Interest  were offset by the return of excess cash flows over the nine
months ended March 31, 1999, related to all securitizations of $28.6 million and
by the effect of the $9.5 million  impairment of Retained  Interest taken during
the first,  second and third  quarters  of fiscal  1999.  Withdrawals  of spread
account  funds  are made when the  balance  of the  account  is in excess of the
requirements  stipulated in the servicing  agreement  (the  Company's  servicing
agreements  are   collectively   referred  to  as  the  "Pooling  and  Servicing
Agreements").  Allowance for net credit  losses on  securitized  receivables  is
included as a component of Retained  Interest.  At March 31, 1999, the allowance
related  to both  Tier I and  Tier II  securitized  receivables  totaled  $100.2
million or 4.60% of the total securitized receivable portfolio compared to $90.2
million  or  4.67% at June 30,  1998.  The  Company's  assumptions  for  valuing
Retained Interest on a "cash out" basis at March 31, 1999, include the Company's
latest  estimates  for net credit losses of 4.00% to 6.41% on Tier I receivables
and  12.00%  to  14.49%  on Tier II  receivables  as a  percentage  of  original
principal  balance over the life of  receivables,  annual  prepayment  estimates
ranging from 21.99% to 28.00% on Tier I receivables and 17.35% to 19.83% on Tier
II  receivables  and  discount  rates  ranging  from  8.63%  to  8.97% on Tier I
receivables and 10.72% to 10.92% on Tier II receivables.  Impairment of Retained
Interest,  an  available-for-sale  security, is measured on a disaggregate basis
(pool by pool) in accordance with SFAS 115. See - "Discussion of Forward-Looking
Statements".

         Amounts due under  revolving  warehouse  credit  facility and long-term
debt. The balance of the revolving  warehouse credit facility and the Senior and
Senior  Subordinated  Notes was $369.4  million at March 31,  1999,  compared to
$294.1  million at June 30,  1998.  The  increase in  borrowings  was  primarily
related to the  timing of the  securitization  in the  current  quarter  but was
offset by a required  principal  payment on the Company's  Senior Note in August
1998 of $22.0 million. The March 1999 quarter securitization was effected during
the  second  month  of  the  quarter  while  the  fiscal  1998  fourth   quarter
securitization  was effected  during the third month of the quarter.  The timing
difference  resulted in the Company borrowing for more days after the closing of
the securitization  transaction in the quarter ended March 31, 1999, compared to
the quarter ended June 30, 1998.

         Income tax  payable.  The income tax payable  totaled  $3.8  million at
March 31, 1999, compared to no income tax payable at June 30, 1998. The increase
in the income  tax  payable is a result of  current  year-to-date  net  earnings
compared to a net loss for the year ended June 30, 1998.

         Net  deferred  income  taxes.  The net deferred  income  taxes  payable
totaled  $17.7  million at March 31, 1999,  compared to $9.6 million at June 30,
1998.  This increase is a result of the deferral of a portion of the gain on the
sale of  receivables  for the  securitizations  effected  during the first three
quarters  of fiscal  1999 in excess of  previously  deferred  income  recognized
currently for tax purposes.


Liquidity and Capital Resources

         Sources and Uses of Cash in Operations. The Company's business requires
significant  amounts of cash to support  operations.  Its  primary  uses of cash
include (i)  acquisitions  and financing of receivables,  (ii) payment of dealer
premiums,  (iii) securitization costs including cash held in spread accounts and
similar cash collateral  accounts under the revolving warehouse credit facility,
(iv)  servicer  advances  of  payments on  securitized  receivables  pursuant to
securitization trusts, (v) losses on hedging transactions realized in connection
with the  closing  of  securitization  transactions  where  interest  rates have
declined during the period covered by the hedge, (vi) operating expenses,  (vii)
payment of income taxes, and (viii) interest  expense.  The Company's sources of
cash from operations  include (i) standard  servicing  fees,  generally 1.0% per
annum of the Tier I securitized  portfolio,  (ii) future  servicing  cash flows,
(iii) dealer premium  rebates,  (iv) gains on hedging  transactions  realized in
connection with the closing of securitization  transactions where interest rates
have increased  during the periods covered by the hedge, (v) interest income and
(vi) sales of receivables in securitization transactions and (vii) proceeds from
sale of interest-only  strips in conjunction with  securitization  transactions.
Net cash used by operating  activities  increased to $140.0 million for the nine
months ended March 31, 1999, from net cash used by operating activities of $38.3
million for the nine months  ended March 31, 1998.  The  increase was  primarily
attributable  to a decrease in receivables  securitized  relative to receivables
acquired  resulting from the timing of the securitization in the second month of
the  third  quarter  of fiscal  1999  compared  to the third  month of the third
quarter of fiscal 1998.

         Hedging.  Hedging  transactions may represent a source or a use of cash
during a given period  depending on the change in interest  rates.  In the first
three quarters of fiscal 1999,  hedging  transactions  required a use of cash of
$4.5 million, compared to $2.2 million during the first three quarters of fiscal
1998.

         Financing Activities. Net cash provided by financing activities for the
nine  months  ended  March 31,  1999,  was $75.2  million  compared  to net cash
provided by  financing  activities  of $12.6  million for the nine months  ended
March 31, 1998. The increase was a result of higher borrowings related to higher
receivable  acquisitions  for the period after the third quarter  securitization
through  March 31, 1999,  compared to the same period ended March 31, 1998,  but
was offset by a required principal payment on long-term debt of $22.0 million in
August 1998. The Company has  substantial  capital  requirements  to support its
ongoing  operations and anticipated  growth.  The Company's sources of liquidity
are currently  funds from  operations,  securitizations  and external  financing
including   long-term  debt  and  the  revolving   warehouse   credit  facility.
Historically, the Company has used the securitization of receivable pools as its
primary  source of long-term  funding.  Securitization  transactions  enable the
Company to  improve  its  liquidity,  to  recognize  gains from the sales of the
receivable pools while maintaining the servicing rights to the receivables,  and
to control  interest  rate risk by  matching  the  repayment  of amounts  due to
investors in the securitizations with the actual cash flows from the securitized
assets. Between securitization transactions, the Company relies primarily on the
revolving warehouse credit facility to fund ongoing receivable acquisitions (not
including dealer premiums).  In addition to receivable  acquisition funding, the
Company  also  requires  substantial  capital  on an  ongoing  basis to fund the
advances of dealer premiums,  securitization  costs,  servicing  obligations and
other cash requirements  previously  described.  The Company's ability to borrow
under the revolving  warehouse  credit facility is dependent upon its compliance
with the terms and conditions thereof. The Company's ability to obtain successor
facilities  or  similar  financing  will  depend on,  among  other  things,  the
willingness  of financial  institutions  to  participate  in funding  automobile
financing  business  and  the  Company's  financial  condition  and  results  of
operations.   Moreover,  the  Company's  growth  may  be  inhibited,   at  least
temporarily,  if the Company is not able to obtain  additional  funding  through
these or other  facilities,  or if it is unable to  satisfy  the  conditions  to
borrowing  under  the  revolving   warehouse   credit   facility.   The  Company
consistently  assesses its long-term receivable funding arrangements with a view
to optimizing cash flows and reducing costs.

         Warehouse  Facility.  The Company has  borrowing  arrangements  with an
independent  financial  institution  for a $450.0  million  revolving  warehouse
credit  facility  that is insured by a surety bond provider to fund the purchase
of Tier I  receivable  acquisitions.  At March 31, 1999,  $170.4  million of the
capacity was utilized,  and an additional  $54.5 million was available to borrow
based on the outstanding principal balance of eligible receivables.  At December
31, June 30, and March 31, 1998, $174.8 million, $73.1 million and $57.1 million
of the capacity was utilized,  and an additional $51.9 million, $4.7 million and
$45.6 million was available to borrow based on the outstanding principal balance
of eligible receivables, respectively.

         Long-term debt. The Company issued $110.0 million of 8.53% Senior Notes
due August 1, 2002, in connection  with the Company's  initial public  offering.
Interest on the Notes is payable  semiannually,  and  principal  payments  began
August 1, 1998, and are due on each subsequent  August 1, in the amount equal to
approximately 20% of the stated original principal balance. A required principal
payment was made on the Senior Notes in August 1998 of $22.0  million.  In April
1996, the Company completed a private placement of $46.0 million of 9.99% Senior
Subordinated  Notes due March 30, 2003,  with  interest  payable  quarterly  and
principal due at maturity.  In March 1997,  the Company  issued $65.0 million of
Senior Notes due  December 27, 2002.  The Notes were issued as "Series A" in the
principal  amount of $50.0  million  at 7.75%  interest  and  "Series  B" in the
principal  amount of $15.0 million at 7.97%  interest.  Interest on the Notes is
payable  semiannually  and a  principal  payment is due March 15,  2002,  in the
amount equal to approximately 33 1/3% of the stated original  balance,  with the
remaining principal due at maturity.

         The Company's credit agreements, among other things, require compliance
with monthly and quarterly  financial  maintenance tests as well as restrict the
Company's ability to create liens, incur additional indebtedness,  sell or merge
assets and make investments. The Company is in compliance with all covenants and
restrictions imposed by the terms of indebtedness.

         Based on current cash flow  projections,  management  believes that the
Company's  existing capital resources,  the revolving  warehouse credit facility
described above,  future earnings,  expected growth in receivable  acquisitions,
and periodic  securitization of receivables should provide the necessary capital
and liquidity for its operations  through at least the next twelve  months.  The
period  during  which  its  existing  capital  resources  will  continue  to  be
sufficient will,  however,  be affected by the factors described above affecting
the  Company's  cash  requirements.  A number of these  factors are difficult to
predict,  particularly  including the cash effect of hedging  transactions,  the
availability of outside credit enhancement in securitizations or other financing
transactions   and  other   factors   affecting   the  net  cash   provided   by
securitizations.   Depending  on  the  Company's   ongoing  cash  and  liquidity
requirements,  market conditions and investor interest,  the Company may seek to
issue  additional  debt or  equity  securities  in the  near  term.  The sale of
additional  equity,  including  Class A Common Stock or preferred  stock,  would
dilute the interests of current shareholders.

Discussion of Forward-Looking Information

         The above  discussions  and notes to consolidated  condensed  financial
statements contain forward-looking  statements made by the Company regarding its
results of  operations,  effects of changes in  accounting  policies,  cash flow
needs and liquidity,  receivable  acquisition volume, target spreads,  potential
credit losses,  recovery rates,  prepayment rates,  servicing income,  Year 2000
compliance,   and  other  aspects  of  its  business.   Similar  forward-looking
statements  may be made by the Company from time to time.  Such  forward-looking
statements are subject to a number of important factors that cannot be predicted
with  certainty  and which could  cause such  forward-looking  statements  to be
materially  inaccurate.  Such factors include,  for example,  demand for new and
used autos,  competition,  and consumer credit and delinquency  trends.  See the
"Discussion of Forward-Looking  Information" under "Management's  Discussion and
Analysis of Financial  Condition  and Results of  Operations"  in the  Company's
Annual Report on Form 10-K for fiscal 1998 which is incorporated  herein by this
reference.



<PAGE>




Year 2000 Compliance

         During  the  year  ended  June  30,  1997,  the  Company  began  a risk
evaluation of potential Year 2000 issues. The outcome of this evaluation was the
formation of a Year 2000  Committee  that  consists of  directors,  officers and
employees of the Company.  The purpose of this committee is to assess all risks,
analyze  current  systems,  coordinate  upgrades  and  replacements,  and report
current and projected status of all known Year 2000 compliance issues.

         During the assessment  phase,  over thirty  service  bureaus and system
vendors  were  identified  that  performed  or  supplied   potential  Year  2000
compliance  issues.  The list included  eight service  bureaus,  seven  software
vendors,  seven hardware  vendors,  one electric  company,  six  maintenance and
supplies companies and four telecommunications  companies. Once the systems were
identified,  an  immediate  correspondence  was  established  for the purpose of
educating  the  Company  on known  Year  2000  issues  or Year  2000  compliance
certification.

         The systems  identified were put through one of two possible phases. If
the  vendor  provided  proof that the system in  question  had proper  Year 2000
compliance  certification  and a testing  cycle  was  possible,  an  appropriate
testing cycle was performed. If the testing cycle failed or the system had known
Year 2000 issues, a mission critical evaluation and replacement  recommendations
were performed.

         At this time,  all known  mission  critical  systems  have been  either
replaced  or  upgraded  with Year 2000  compliant  solutions.  The last of these
upgrades was performed in March 1999, as scheduled.  The Company plans to repeat
a company wide  internal test of all systems in the quarter ended June 30, 1999,
and again in the quarter ended  September 30, 1999.  Beginning  October 1, 1999,
the  Company  will be  entering a "quiet  period" on  in-house  development  and
implementations  that will last through  December  31, 1999.  The purpose of the
"quiet period" is to prevent new system Year 2000 issues.

         The replacement or remediation  costs for Year 2000  compliance  issues
with the  Company  is  estimated  to be less than  $100,000,  which the  Company
recognizes as incurred.  This estimated cost is mostly due to software  upgrades
that include new features which are combined with Year 2000 corrections.

         The  Company  estimates  that the worst case Year 2000  issue  scenario
would be discontinuance  of electrical power.  Although the Company has numerous
power backup  devices,  a long-term  power outage would have a material  adverse
effect on the Company's  operations.  Although the  discontinuance of electrical
power is possible,  the Company  believes the likelihood of such an outage to be
remote. The Company continuously  monitors the status of its Year 2000 plan and,
based on such information,  will develop  contingency plans as necessary.  See -
"Discussion of Forward-Looking Statements".



<PAGE>



Item 3.           Quantitative and Qualitative Disclosures About Market Risk

         The  Company  bears the  primary  risk of loss due to  defaults  in its
servicing  portfolio.  Default  and credit  loss rates are  impacted  by general
economic  factors  that  affect  borrowers'  ability to  continue to make timely
payments on their  indebtedness.  Prepayments  on  receivables  in the servicing
portfolio  reduce the size of the portfolio  and reduce the Company's  servicing
income.  The gain  (loss)  on sales  of  receivables  in  connection  with  each
securitization  transaction  and the amount of Retained  Interest  recognized in
each  transaction  reflect  deductions  for  estimates  of future  defaults  and
prepayments.   The  carrying   value  of  Retained   Interest  may  be  adjusted
periodically  to reflect  differences  between  estimated  and actual net credit
losses and  prepayments  on past  securitizations.  For  example,  if net credit
losses  increased  or  decreased  by  100  basis  points  on  a  $300.0  million
securitization,  the gain on sale would  result in a reduction or an increase of
the gain (loss) on sales of receivables by  approximately  $3.0 million pre-tax,
before  consideration of any discounting.  The same 100 basis points increase or
decrease would result in a reduction or an increase of the Retained  Interest of
approximately $22.0 million, before consideration of any discounting, based on a
securitized receivable portfolio of $2.2 billion at March 31, 1999. The forgoing
examples are developed  utilizing the cash flow model  employed by management to
calculate the fair market value of Retained Interest by changing the credit loss
assumption as described.  The Company does not believe  fluctuations in interest
rates materially affect the rate of prepayments on receivables.

         The  Company's  sources  of  funds  generally  have  variable  rates of
interest,  and its  receivable  portfolio  bears  interest at fixed  rates.  The
Company  therefore  bears  interest  rate  risk on  receivables  until  they are
securitized  and employs a hedging  strategy to mitigate this risk. As a part of
the  hedging  strategy,  the  Company  executes  short  sales  of U.S.  Treasury
securities  having a maturity  approximating the average maturity of receivables
to be acquired during the relevant period.  Beginning in March 1999, the Company
began using a hedging  strategy  that  primarily  consists of the  execution  of
forward  interest rate swaps.  There is no assurance that these  strategies will
completely  offset changes in interest  rates.  In particular,  such  strategies
depend on management's  estimates of receivable acquisition volume and timing of
its  securitizations.  The Company  realizes a gain on its hedging  transactions
during  periods  of  increasing  interest  rates  and  realizes  a loss  on such
transactions  during periods of decreasing  interest rates.  The hedging gain or
loss will  substantially  offset changes in interest rates as seen by a lower or
higher  reported  gain on sales of  receivables,  respectively.  Recognition  of
unrealized gains or losses is deferred until the sale of receivables  during the
securitization.  On the date of the sale,  deferred hedging gains and losses are
recognized as a component of gain (loss) on sales of  receivables.  Increases or
decreases in interest rates reduce or increase the fair value of long-term debt,
respectively.  The Company had an  unrealized  hedging gain at March 31, 1999 on
short sales of U.S.  Treasury  securities of $431,000 based on notional  amounts
outstanding  of $229.0  million and an  unrealized  hedging  loss of $163,000 on
notional amounts outstanding of $132.0 million on forward interest rate swaps.


<PAGE>

Part II. Other Information

Item 6.  Exhibits and Reports on Form 8-K

                  Exhibit 27 -  Financial Data Schedule

         (b)  Reports on Form 8-K

                The Company filed the following reports on Form 8-K during the
                quarter ended March 31, 1999.

                March 3, 1999 - Change in Registrant's  Certifying Accountants-
                                Dismissal of KPMG LLP as independent auditors
                                as of such date.

                March 8, 1999 - Change in Registrant's  Certifying Accountants-
                                Amendment to report on Form 8-K dated March  
                                3, 1999 extending interim period to February 
                                25, 1999 from  December 31, 1998 stating that
                                no disagreements took place with KPMG LLP on 
                                any matters of accounting principles or 
                                practice.

                March 12, 1999 - Change in Registrant's Certifying Accountants-
                                 Deloitte & Touche LLP engaged as new 
                                 independent accountants.



<PAGE>




Signatures

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  Registrant  has duly  caused  this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                      Union Acceptance Corporation

May 14, 1999                          By:      /S/ John M. Stainbrook
                                               ----------------------
                                      John M. Stainbrook
                                      President and Chief Executive Officer



May 14, 1999                          By:      /S/ Rick A. Brown
                                               -----------------
                                      Rick A. Brown
                                      Treasurer and Chief Financial Officer