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 December 31, 2000

                                       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 Identification
         of incorporation or organization)                  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 February 5, 2001

     Class A Common Stock, without par value               5,833,048
     Class B Common Stock, without par value               7,461,608

<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
         December 31, 2000 and June 30, 2000                                3

         Consolidated Condensed Statements of Earnings
         for the Three and Six Months Ended December 31, 2000 and 1999      4

         Consolidated Condensed Statements of Cash Flows for the
         Six Months Ended December 31, 2000 and 1999                        5

         Consolidated Condensed Statement of Shareholders' Equity for the
         Six Months Ended December 31, 2000                                 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                                                 24

Item 4.  Submission of Matters to a Vote of Security Holders               24

Item 6.  Exhibits and Reports on Form 8-K                                  24

Signatures                                                                 25

<PAGE>

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

<TABLE>
<CAPTION>
                                                                      December 31,     June 30,
Assets                                                                   2000            2000
                                                                     -------------   -------------


<S>                                                                       <C>            <C>
Cash and cash equivalents                                                 $ 6,446        $ 14,792
Restricted cash                                                             9,325          13,010
Receivables held for sale, net                                            243,604         206,701
Retained interest in securitized assets                                   247,372         208,431
Accrued interest receivable                                                 2,316           1,727
Property, equipment, and leasehold improvements, net                        9,536           9,494
Other assets                                                               25,006          23,983
                                                                     -------------   -------------

Total Assets                                                             $543,605        $478,138
                                                                     =============   =============

Liabilities and Shareholders' Equity

Liabilities

Amounts due under warehouse facilities                                   $227,057        $152,235
Long-term debt                                                            155,000         177,000
Accrued interest payable                                                    5,465           5,408
Amounts due to trusts                                                      14,494          14,487
Dealer premiums payable                                                     2,968           3,663
Current and deferred income taxes payable                                   9,797           9,740
Other payables and accrued expenses                                         9,249           5,576
                                                                     -------------   -------------

Total Liabilities                                                         424,030         368,109
                                                                     -------------   -------------

Commitment and Contingencies                                                    -               -

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; 5,833,048 and
   5,816,024 shares issued and outstanding at
   December 31, 2000 and June 30, 2000, respectively                       58,733          58,632

 Class  B  Common  Stock,  without  par  value,
   authorized  20,000,000  shares;
   7,461,608 shares issued and outstanding
   at December 31, 2000 and June 30, 2000                                       -               -

  Accumulated other comprehensive earnings, net of income taxes             6,195           3,564
  Retained earnings                                                        54,647          47,833
                                                                     -------------   -------------

 Total Shareholders' Equity                                               119,575         110,029
                                                                     -------------   -------------

  Total Liabilities and Shareholders' Equity                             $543,605        $478,138
                                                                     =============   =============
</TABLE>

See accompanying notes to consolidated condensed financial statements.

<PAGE>

Union Acceptance Corporation and Subsidiaries
Consolidated Condensed Statements of Earnings
(Dollars in thousands, except share data)
(Unaudited)

<TABLE>
<CAPTION>

                                                    Three Months Ended Six Months Ended

                                                 December 31,                December 31,
                                           --------------------------  --------------------------
                                              2000          1999          2000          1999
                                           ------------ -------------  ------------  ------------


<S>                                           <C>            <C>          <C>           <C>
Interest on receivables held for sale         $ 10,853       $ 6,684      $ 25,224      $ 14,829
Retained interest and other                      8,005         6,442        15,305        12,170
                                           ------------ -------------  ------------  ------------

   Total interest income                        18,858        13,126        40,529        26,999
Interest expense                                 8,478         6,179        19,519        12,743
                                           ------------ -------------  ------------  ------------

   Net interest margin                          10,380         6,947        21,010        14,256
Provision for estimated credit losses            1,250           665         2,225         1,415
                                           ------------ -------------  ------------  ------------
   Net interest margin after provision
     for estimated credit losses                 9,130         6,282        18,785        12,841
                                           ------------ -------------  ------------  ------------

Gain on sales of receivables, net                7,805         1,261        15,672         7,791
Loss on interest rate swaps on
   securitized receivables                      (3,536)            -        (8,886)            -
Loss on interest rate swaps on held
   for sale receivables                         (2,269)            -        (4,709)            -
Servicing fees                                   7,626         6,188        14,345        12,256
Late charges and other fees                      1,711         1,508         3,466         3,013
                                           ------------ -------------  ------------  ------------

  Other revenues                                11,337         8,957        19,888        23,060
                                           ------------ -------------  ------------  ------------

Salaries and benefits                            8,490         6,737        16,408        13,664
Other general and administrative expenses        5,928         4,993        11,440         9,907
                                           ------------ -------------  ------------  ------------

  Total operating expenses                      14,418        11,730        27,848        23,571
                                           ------------ -------------  ------------  ------------

Earnings before provision for income taxes       6,049         3,509        10,825        12,330
Provision for income taxes                       2,234         1,361         4,001         4,763
                                           ------------ -------------  ------------  ------------

Net earnings                                   $ 3,815       $ 2,148       $ 6,824       $ 7,567
                                           ============ =============  ============  ============

Net earnings per common share
   (basic & diluted)                           $ 0.29        $ 0.16        $ 0.51        $ 0.57
                                           ============ =============  ============  ============

Basic weighted average number of common
  shares outstanding                        13,286,514    13,264,379    13,282,073    13,257,519

Common stock options                            10,079        44,544        28,363        44,701
                                           ------------ -------------  ------------  ------------

Diluted weighted average number of common
  shares outstanding                        13,296,593    13,308,923    13,310,436    13,302,220
                                           ============ =============  ============  ============
</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>
                                                                                            Six Months Ended
                                                                                        December 31,
                                                                        --------------------------------------------
                                                                            2000                           1999
                                                                        --------------                  ------------

Cash flows from operating activities:

<S>                                                                           <C>                           <C>
   Net earnings                                                               $ 6,824                       $ 7,567
     Adjustments to reconcile net earnings to net cash
       from operating activities:
         Increase in acquisitions of receivables held for sale,
              net of liquidations                                          (1,047,626)                     (580,250)
         Dealer premiums paid, net on receivables held for sale               (30,844)                      (16,324)
         Proceeds from securitization of receivables held for sale          1,010,000                       667,484
         Gain on sales of receivables                                         (25,050)                      (16,545)
         Impairment of retained interest in securitized assets                  2,081                         4,243
         Accretion of discount on retained interest in securitized assets     (14,733)                      (11,412)
         Provision for estimated credit losses                                  2,225                         1,415
         Amortization and depreciation                                          3,177                         1,742
         Restricted cash                                                        3,685                            14
         Other assets and accrued interest receivable                          (3,492)                        2,926
         Amounts due to trusts                                                      7                           866
         Other payables and accrued expenses                                    3,877                       (13,287)
                                                                        --------------                  ------------
           Net cash provided by (used in) operating activities                (89,869)                       48,439
                                                                        --------------                  ------------

Cash flows from investing activities:
   Collections on retained interest in securitized assets
      and change in spread accounts and accelerated principal                  30,279                        36,903
   Capital expenditures                                                          (957)                       (2,060)
                                                                        --------------                  ------------
           Net cash provided by investing activities                           29,322                        34,843

Cash flows from financing activities:

   Principal payment on long-term debt                                        (22,000)                      (22,000)
   Stock options exercised                                                          -                            93
   Net change in warehouse credit facilities                                   74,822                       (58,141)
   Payment of borrowing fees                                                     (621)                         (446)
                                                                        --------------                  ------------
           Net cash provided by (used in) financing activities                 52,201                       (80,494)
                                                                        --------------                  ------------

Change in cash and cash equivalents                                            (8,346)                        2,788

Cash and cash equivalents, beginning of period                                 14,792                         8,088
                                                                        --------------                  ------------

Cash and cash equivalents, end of period                                      $ 6,446                      $ 10,876
                                                                        ==============                  ============

Supplemental disclosures of cash flow information:

Income taxes paid                                                             $ 5,430                      $ 18,987
Interest paid                                                                $ 19,194                      $ 13,253
</TABLE>

See accompanying notes to consolidated condensed financial statements.

<PAGE>

Union Acceptance Corporation and Subsidiaries
Consolidated Condensed Statement of Shareholders' Equity
For the Six Months Ended December 31, 2000
(Dollars in thousands, except per share data)
(Unaudited)

<TABLE>
<CAPTION>

                                                                                      Accumulated
                                      Number of Common Stock                             Other                         Total
                                        Shares Outstanding            Common         Comprehensive     Retained    Shareholders'
                                 ----------------------------------
                                    Class A             Class B        Stock            Earnings       Earnings        Equity
                                 --------------       ------------- ------------    ----------------- ------------ ---------------

<S>             <C> <C>              <C>                 <C>           <C>                   <C>         <C>            <C>
Balance at June 30, 2000             5,816,024           7,461,608     $ 58,632              $ 3,564     $ 47,833       $ 110,029

Comprehensive earnings:
  Net earnings                               -      -            -            -                    -        6,824           6,824
  Net unrealized gain on retained
     interest in securitized assets          -      -            -            -                4,238            -           4,238
  Income taxes related to unrealized
    gain in securitized assets               -                   -            -               (1,607)           -          (1,607)
                                                                                                                   ---------------
Total comprehensive earnings                                                                                                9,455

  Stock grants issued                   17,024                   -          101                    -            -             101
                                                                                                                                -
  Other                                      -                   -            -                    -          (10)            (10)

                                 --------------       ------------- ------------    ----------------- ------------ ---------------
Balance at December 31, 2000         5,833,048           7,461,608     $ 58,733              $ 6,195     $ 54,647       $ 119,575
                                 ==============       ============= ============    ================= ============ ===============

</TABLE>


See accompanying notes to consolidated condensed financial statements.

<PAGE>

Union Acceptance Corporation and Subsidiaries
Notes to Consolidated Condensed Financial Statements
For the Six Months Ended December 31, 2000 and 1999

(Unaudited)

Note 1 - Basis of Presentation

         The  foregoing   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  ("UAC") and its subsidiaries  (collectively,  the
"Company").

         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  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, 2000.  Certain
amounts for the prior  period have been  reclassified  to conform to the current
period presentation.

Note 2 - Retained Interest in Securitized Assets

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

         The average of the interest rates  received on receivables  exceeds the
interest  rates paid on securities  issued in the  securitization.  Accordingly,
Retained Interest is a significant asset of the Company. In determining the fair
value  of  the  Retained   Interest,   the  Company  must  estimate  the  future
prepayments,  rates of  gross  credit  losses  and  credit  loss  severity,  and
delinquencies, as they impact the amount and timing of the estimated cash flows.
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 21.43% to 28.00%
at December 31, 2000. The Company  estimates gross credit losses and credit loss
severity using available historical loss data for comparable receivables and the
specific  characteristics  of the  receivables  purchased  by the  Company.  The
Company used net credit loss  assumptions  of 4.00% to 6.40% as a percentage  of
the  original  principal  balance  over  the  life of the  receivables  to value
Retained Interest at December 31, 2000.

         The  Company  determines  the  estimated  fair  value  of its  Retained
Interest by  discounting  the expected  cash flows  released from the Trust (the
cash  out  method)  using  a  discount  rate  which  the  Company   believes  is
commensurate  with the risks  involved.  The Company used tiered  discount rates
based  on a  pool's  specific  risk  factors  up to 900  basis  points  over the
applicable U.S.  Treasury Rate. The Company utilized discount rates ranging from
8.32% to 14.16% on the  estimated  cash  flows to be  released  from the  Spread
Account to value the  Retained  Interest  at December  31,  2000.  The  weighted
average  discount rate used to value Retained  Interest at December 31, 2000 was
12.77%  compared  to 13.78% at June 30,  2000.  This  decrease  in the  weighted
average discount rate is primarily a result of a decrease in U.S. Treasury Rates
since June 30, 2000.


<PAGE>




Union Acceptance Corporation and Subsidiaries
Notes to Consolidated Condensed Financial Statements
For the Six Months Ended December 31, 2000 and 1999

(Unaudited)

         In July 2000,  the Emerging  Issues Task Force  ("EITF")  finalized the
provisions  of EITF  Issue  No.  99-20,  "Recognition  of  Interest  Income  and
Impairment  of  Purchased  and  Retained  Beneficial  Interests  in  Securitized
Financial Assets",  ("EITF 99-20").  EITF 99-20 sets forth rules for recognizing
interest  income and  determining  when  securities must be written down to fair
value because of other than temporary  impairments.  EITF 99-20 will require the
prospective  method of adjusting  the  recognition  of interest  income when the
anticipated  cash flows have either  increased or  decreased.  Anticipated  cash
flows can change as the result of factors such as credit  losses and  prepayment
rates.  Under the provisions of EITF 99-20,  an other than temporary  impairment
must be recorded when the  anticipated  cash flows have decreased since the last
estimate and the fair value of the  Retained  Interest is less than the carrying
value.

         The Company  currently  applies  certain  provisions  of EITF Issue No.
93-18 "Recognition of Impairment for an Investment in a Collateralized  Mortgage
Obligation Instrument or in a Mortgage-Backed  Interest-Only Certificate" ("EITF
93-18") regarding impairment. EITF 99-20 will no longer allow for measurement of
other than temporary  impairments  based on fair values  discounted at risk free
rates as dictated by EITF 93-18.

         The  effective  date for EITF  99-20 is  April 1,  2001,  with  earlier
adoption  permitted.  Any write-down  associated with the implementation of EITF
99-20  would be  reported  as a  "cumulative  effect of a change  in  accounting
principle"  and would be reported on a  prospective  basis.  The Company has not
determined  the impact of this  change,  if any, on the  consolidated  financial
statements.

<PAGE>

Retained Interest in Securitized Assets is as follows (in thousands) at:
<TABLE>
<CAPTION>

                                                            December 31,         June 30,
                                                                2000               2000
                                                           ----------------------------------
Estimated gross interest spread from receivables,
<S>                                                           <C>               <C>
  net of estimated prepayments and fees                       $ 349,302         $ 287,661
Estimated dealer premium rebates refundable                      16,907            18,133
Estimated credit losses on securitized receivables             (138,906)         (119,003)
Accelerated Principal (1)                                        28,823            24,082
Spread accounts                                                  72,069            58,663
Discount to present value                                       (80,823)          (61,105)
                                                            ------------      -----------
  Total Retained Interest in Securitized Assets               $ 247,372         $ 208,431
                                                            ------------      -----------

Outstanding balance of securitized receivables              $ 3,109,149       $ 2,676,655
                                                            ===========       ===========

Estimated credit losses as a percentage of
  securitized receivables serviced                                 4.47%             4.45%
</TABLE>

(1)  Also referred to as "turbo".
<PAGE>

Union Acceptance Corporation and Subsidiaries
Notes to Consolidated Condensed Financial Statements
For the Six Months Ended December 31, 2000 and 1999

(Unaudited)

Note 3 - Segment Information

         The  Company  has a  single  reportable  segment  which  is  acquiring,
securitizing and servicing  retail  automobile  installment  sales contracts and
installment  loan  agreements  originated by dealerships  affiliated  with major
domestic and foreign  automobile  manufacturers.  The single segment is based on
management's   approach  to  operating  decisions,   assessing  performance  and
reporting financial information.

Note 4 - Earnings Per Share

         Options  to  purchase  shares of common  stock  are  excluded  from the
calculation  of Earnings Per Share ("EPS")  assuming  dilution when the exercise
prices of these options are greater than the average  market price of the common
share during the period.  The  following  chart  indicates the numbers of shares
which were  excluded  from the  calculation  of EPS  assuming  dilution  for the
periods indicated:

        Three Months Ended                               Six Months Ended
           December 31,                                    December 31,
   ------------------------------                  -----------------------------
      2000                 1999                       2000           1999
   ----------            --------                  -----------     -------------
    925,011               420,076                   841,748         408,969



Note 5 - Recent Accounting Pronouncements

     In  September  2000,  the  Financial   Accounting  Standards  Board  issued
Statement  of  Accounting  Standards  No. 140,  "Accounting  for  Transfers  and
Servicing of Financial  Assets and  Extinguishments  of Liabilities"  ("SFAS No.
140").  SFAS No. 140 replaces  Statement of Accounting  Standard No. 125,  which
bears the same title,  ("SFAS No. 125"). SFAS No. 140 is effective for transfers
and servicing of financial assets and  extinguishments of liabilities  occurring
after March 31, 2001. Other provisions of the statement are effective for fiscal
years  ended  after  December  15,  2000  and  include   additional   disclosure
requirements  and changes  related to the recognition  and  reclassification  of
collateral. The Company has not determined the impact of this change, if any, on
the consolidated financial statements.

<PAGE>

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

Results of Operations

         Acquisition  Volume. The Company currently  acquires  receivables in 40
states from over 5,400  manufacturer-franchised  auto  dealerships.  The Company
focuses its efforts on acquiring receivables on late model used and, to a lesser
extent,  new  automobiles  due from  purchasers  who exhibit a favorable  credit
profile ("Tier I"). Total  receivable  acquisitions  were $489.2 million for the
quarter ended December 31, 2000, compared to $263.8 million for the same quarter
of  last  fiscal  year.  The  Company   believes  the  increase  in  receivables
acquisitions  in the quarter  ended  December 31, 2000  compared to December 31,
1999 is primarily due to pricing pressures  experienced during the quarter ended
December  31,  1999  as the  result  of  increased  treasury  rates.  Receivable
acquisitions  for the quarter  ended  December 31, 2000 were down 15.1% from the
quarter ended September 30, 2000  acquisitions  of $576.4  million.  The Company
believes  that the purchase of  automobiles  by consumers  and the  financing of
these  purchases  is  seasonal  and that  there is  usually  a  decline  in auto
purchasing  activity in the last calendar  quarter.  The Company  typically sees
some decline in  receivable  acquisitions  during this  quarter.  The  Company's
primary focus remains on acquiring  high quality,  profitable  receivables.  The
Company will continue to emphasize growth in existing markets while  maintaining
or enhancing spreads.  As the Company emphasizes  marginally stronger spreads in
its pricing  strategy in the near term, it may see some moderation in receivable
acquisition levels. See--"Discussion of Forward-Looking Statements".

         Gross and Net Spreads.  The gross and net spreads on the second quarter
securitization  of fiscal 2001 were 6.51% and 4.82% compared to 7.06% and 5.66%,
respectively, over the same quarter of last fiscal year. Gross spread is defined
as the difference  between the weighted average receivable rate and the weighted
average  certificate  rate.  Net spread is defined as the gross  spread,  net of
upfront costs,  servicing fees,  ongoing credit  enhancement fees, trustee fees,
and the economic  hedging gains or losses.  During June 2000,  the Company began
migrating to a risk based pricing model which attempts to price the acquisitions
based on perceived  risks such as credit risk,  age of the car,  length of terms
and advance over the vehicle's book value.  The risk based pricing model rewards
those customers with better credit quality with lower rates, which in turn could
potentially  lower the Company's  net spread.  The risk based pricing model also
prices  higher risk  accounts at higher  rates which could result in a lower net
spread if the Company is less competitive on the higher risk accounts.

     Net   spreads  are   currently   targeted   between   5.00%  and  5.50%  on
securitizations  for  the  remaining  two  quarters  of  fiscal  2001.  Although
management believes these targeted net 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".

         Portfolio  Performance.  The  Company  experienced  an  increase in net
credit  losses  during the quarter  ended  December  31,  2000,  compared to the
quarter ended  September  30, 2000 and a decrease  compared to the quarter ended
December 31, 1999.  As shown in the following  tables,  Tier I net credit losses
totaled  2.35% for the quarter  ended  December 31, 2000,  compared to 2.11% and
2.40%  for the  quarters  ended  September  30,  2000  and  December  31,  1999,
respectively.  Tier I net credit  losses for the six months  ended  December 31,
2000 were 2.24%  which was higher than 2.19% for the six months  ended  December
31, 1999.  Delinquency on the Tier I automobile  portfolio was 3.50% at December
31,  2000,  compared to 3.13% and 3.33% at  September  30, 2000 and December 31,
1999, respectively.  Recoveries as a percentage of gross charge-offs on the Tier
I portfolio  were 39.10% for the quarter  ended  December 31, 2000,  compared to
41.01% and 38.87% for the  quarters  ended  September  30, 2000 and December 31,
1999, respectively.

         Notwithstanding  modest increases during the quarter ended December 31,
2000,   delinquency  and  credit  loss   percentages  are  within   management's
expectations  and  continue to exhibit  relative  stability.  These  percentages
historically  trend  upward in the second  quarter  due to  seasonality  and the
holiday season. The delinquency for greater than 60-day accounts as a percentage
of the  servicing  portfolio  was 1.5% at December 31, 2000 compared to 1.3% and
1.4% at  September  30, 2000 and June 30, 2000,  respectively.  Based on current
delinquency  statistics of the greater than 60-day accounts, the Company expects
higher  credit  losses in the quarter  ended March 31,  2001.  Overall  recovery
percentages have been relatively stable over the past year, bolstered in part by
the  significantly  higher  recovery  rates the  Company  is able to  realize by
disposing of repossessed  vehicles  through its retail  operation rather than at
auction. Approximately 27% of repossessed automobiles were sold at the Company's
retail operations during the quarter ended December 31, 2000.

         Provisions are made for estimated net credit losses in conjunction with
each  receivable  sale. The current  assumption  utilized in the gain on sale of
receivables calculation for estimated net credit losses on the second quarter of
fiscal 2001 securitization was 4.75% over the life of the pool compared to 4.50%
over the life of the pool on the  fiscal  2000  second  quarter  securitization.
Estimated net credit losses as a percentage of securitized  receivables serviced
(inherent in Retained  Interest)  was 4.47% at December  31,  2000,  compared to
4.36% and 4.47% at September 30, 2000 and December 31, 1999, respectively.

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

<TABLE>
<CAPTION>

                                                                        Tier I Credit Loss Experience
                                                                         For the Three Months Ended
                                   -------------------------------------------------------------------------------------------------
                                          December 31, 2000                  September 30, 2000             December 31, 1999
                                   -------------------------------------------------------------------------------------------------
                                                                           (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             260,881      $ 3,274,480            246,406      $ 3,031,640     217,695      $ 2,537,094

Gross charge-offs                         2,638         $ 31,643              2,306         $ 27,099       2,232         $ 24,948
Recoveries                                                12,372                              11,112                        9,698
                                                     -----------                         -----------                  -----------
  Net charge-offs                                       $ 19,271                            $ 15,987                     $ 15,250
                                                     ===========                         ===========                  ===========

Gross charge-offs as a percentage
  of average servicing portfolio (1)       4.04%            3.87%             3.74%            3.58%       4.10%            3.93%
Recoveries as a percentage of
  gross charge-offs                                        39.10%                             41.01%                       38.87%
Net charge-offs as a percentage
  of average servicing portfolio (1)                        2.35%                              2.11%                        2.40%
(1) Annualized
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

                                              For the Six Months Ended
                          ---------------------------------------------------------------------
                                 December 31, 2000                  December 31, 1999
                          ---------------------------------  ----------------------------------
                                                (Dollars in thousands)

                                      Number of                           Number of
                                     Receivables         Amount         Receivables         Amount
                                     -----------         ------         -----------         ------
<S>                                   <C>            <C>                   <C>          <C>
Average servicing portfolio           253,643        $ 3,153,060           217,102      $ 2,526,278

Gross charge-offs                       4,944             58,742             4,235           46,037
Recoveries                                                23,484                             18,370
                                                     -----------                        -----------
  Net charge-offs                                       $ 35,258                           $ 27,667
                                                     ===========                        ===========

Gross charge-offs as a percentage
  of average servicing portfolio (1)     3.90%             3.73%              3.90%            3.64%
Recoveries as a percentage
  of gross charge-offs                                    39.98%                              39.90%
Net charge-offs as a percentage
  of average servicing portfolio (1)                       2.24%                               2.19%

    (1) Annualized
</TABLE>


<TABLE>
<CAPTION>

                                                                        Tier I Delinquency Experience
                             -------------------------------------------------------------------------------------------------------
                                       At December 31, 2000         At September 30, 2000              At December 31, 1999
                             -------------------------------------------------------------------------------------------------------
                                                                     (Dollars in thousands)

                                Number of                           Number of                       Number of
                              Receivables            Amount        Receivables       Amount        Receivables            Amount
                              -----------            ------        -----------       ------        -----------            ------
<S>                              <C>              <C>                  <C>        <C>                  <C>            <C>
Servicing portfolio              263,984          $ 3,324,102          252,293    $ 3,133,025          217,904        $ 2,540,391
Delinquencies:
  30-59 days                       5,792             $ 64,651            5,120    $    56,184            4,636        $    49,988
  60-89 days                       2,924               35,130            2,482         29,062            2,202             24,505
  90 days or more                  1,444               16,462            1,158         12,918              944             10,151
                             ---------------      -------------- ---------------- --------------  ---------------     --------------
Total delinquencies               10,160          $   116,243            8,760    $    98,164            7,782        $    84,644
                             ===============      ============== ================ ==============  ===============     ==============
Delinquency as a percentage
  of servicing portfolio            3.85%               3.50%            3.47%          3.13%            3.57%               3.33%
</TABLE>


         Net earnings are summarized in the table below. Net earnings  increased
77.6% to $3.8  million,  or $0.29  per  diluted  share,  for the  quarter  ended
December 31, 2000, compared to $2.1 million, or $0.16 per diluted share, for the
quarter ended December 31, 1999. The increase over the same quarter of the prior
year is primarily  due to  increased  net interest  margin after  provision  for
estimated  credit  losses  and a  higher  net gain on sale of  receivables.  Net
earnings decreased 9.8% to $6.8 million, or $0.51 per diluted share, for the six
months ended December 31, 2000,  compared to $7.6 million,  or $0.57 per diluted
share,  for the six months ended December 31, 1999. The decrease in net earnings
for the six months ended December 31, 2000 was primarily  related to the loss on
interest  rate swaps on held for sale  receivables.  The loss on  interest  rate
swaps on held for sale receivables is the result of the  implementation of a new
accounting  standard,  Statement  of  Financial  Accounting  Standards  No. 133,
"Accounting for Derivative  Instruments and Hedging Activities" ("SFAS No. 133")
during the first quarter of fiscal 2001. SFAS No. 133 is further discussed below
in the "Gain on sale of  receivables,  net" section.  The decrease was partially
offset by an increase in net  interest  margin  after  provision  for  estimated
credit  losses,  which was primarily  the result of the higher  average held for
sale portfolio.

<TABLE>
<CAPTION>

                                   Three Months                  Six Months
                                 Ended December 31,           Ended December 31,
                           -------------------------------   ---------------------------
                              2000                1999          2000            1999
                           -----------         -----------   -----------     -----------
                                   (Dollars in thousands, except per share amounts)

<S>                           <C>                 <C>           <C>            <C>
Net Income                    $ 3,815             $ 2,148       $ 6,824        $ 7,567
Net Earnings Per Share
  (basic and diluted)          $ 0.29              $ 0.16        $ 0.51         $ 0.57

</TABLE>

         Interest on receivables  held for sale increased 62.4% to $10.9 million
and 70.1% to $25.2  million for the quarter and six months  ended  December  31,
2000,  respectively,  compared to $6.7 million and $14.8 million for the quarter
and six months  ended  December 31, 1999,  respectively.  The increase  over the
prior year related to a higher average held for sale portfolio of $258.0 million
and $333.7  million for the  quarter and six months  ended  December  31,  2000,
respectively, compared to $190.0 million and $214.5 million for the same periods
ended December 31, 1999.

         Retained  interest and other interest  income  increased  24.3% to $8.0
million and 25.8% to $15.3 million for the quarter and six months ended December
31,  2000,  respectively,  compared to $6.4  million  and $12.2  million for the
corresponding  periods  of fiscal  2000.  The  discount  component  of  Retained
Interest  increased at June 30, 1999 as a result of the Company  increasing  the
discount rate used to record the gain on sale of  receivables  during the fourth
quarter of fiscal 1999.  As a result,  more  Securitizations  discounted  at the
higher rate are being  accreted  into  income  during the quarter and six months
ended  December 31, 2000 than in the  corresponding  periods ended  December 31,
1999. The individual  components of Retained  interest and other interest income
are shown in the following table.

<TABLE>
<CAPTION>

                                Three Months                  Six Months
                             Ended December 31,             Ended December 31,
                           2000              1999          2000             1999
                        ------------     ------------- -------------     ------------
                                 (In thousands)                 (In thousands)

<S>                         <C>               <C>           <C>              <C>
Discount accretion          $ 7,858           $ 6,112       $14,991          $11,484
Other interest income           147               330           314              686
                        ------------     ------------- -------------     ------------
                            $ 8,005           $ 6,442       $15,305          $12,170
                        ============     ============= =============     ============

</TABLE>

         Interest  expense  increased  37.2% to $8.5  million and 53.2% to $19.5
million for the quarter and six months ended  December  31, 2000,  respectively,
compared to $6.2 million and $12.7 million for the  corresponding  periods ended
December 31, 1999.  The  increase is  primarily  the result of higher  warehouse
borrowing needs. The higher borrowing needs are the result of an increase in the
average receivables held for sale balances caused by the increase in acquisition
volume previously discussed. These increases were offset by lower long-term debt
interest  expense due to the $22 million  principal  payment  made on the Senior
debt in the first quarter of fiscal 2001.

         Provision for estimated  credit losses  increased 88.0% to $1.3 million
and 57.2% to $2.2  million  for the quarter and six months  ended  December  31,
2000,  respectively,  compared to $665,000 and $1.4 million for the same periods
of fiscal  2000.  The  increase is due to higher  receivable  acquisitions,  not
securitizing  approximately  $60  million of eligible  receivables  in the first
quarter of fiscal 2001 and higher actual losses. The receivables acquired during
the quarter and six months ended  December 31, 2000  increased  85.4% and 79.4%,
respectively, over the same periods ended December 31, 1999.

         Gain on sale of  receivables,  net and Loss on  interest  rate swaps on
securitized receivables. The gain on sale of receivables,  net, increased 519.0%
to $7.8 million and  increased  101.2% to $15.7  million for the quarter and six
months ended December 31, 2000, respectively,  compared to $1.3 million and $7.8
million for the corresponding  periods ended December 31, 1999. The Gain on sale
of  receivables,  net for the  quarter  ended  December  31,  2000 is  primarily
comprised of $9.9 million of gain net of $2.1 million of impairment  compared to
$5.2 million of gain net of $4.0  million of  impairment  for the quarter  ended
December 31, 1999.  For the six months ended December 31, 2000, the Gain on sale
of receivables,  net is primarily comprised of $17.7 million of gain net of $2.1
million of  impairment  compared to $12.1 million of gain net of $4.2 million of
impairment  for the six months  ended  December 31,  1999.  On a regular  basis,
management  reviews  the fair  value of the  estimated  recoverable  cash  flows
associated with the retained interest for other than temporary impairments. Some
of the factors  considered in this evaluation are discussed further in the Notes
to  Consolidated  Financial  Statements.  See  -  "Note  2 of  the  Consolidated
Condensed Financial Statements".

         The accounting  treatment for the Company's derivative activity changed
during the first quarter of fiscal 2001 and is discussed in more detail below in
the "Loss on interest  rate swaps on held for sale  receivables"  section.  As a
result, the Gain on sale of receivables,  net for the quarter ended December 31,
2000 is not readily  comparable to the gain on sale of receivables,  net for the
quarter ended December 31, 1999. Historically, the gain or loss on interest rate
swaps on securitized  receivables and other than temporary impairments have been
included as components of the Gain on sales of receivables, net in the statement
of earnings.  Beginning  with the first quarter of fiscal 2001, the Gain on sale
of  receivables,  net no longer reflects the gain or loss on interest rate swaps
on securitized  receivables;  rather, the economic hedging gain or loss is shown
separately  in the  statement of earnings as "Gain (loss) on interest rate swaps
on securitized receivables."

         The net  economic  gain (the gain on the  sales of  receivables  net of
losses on interest rate swaps on  securitized  receivables  but excluding  other
than  temporary  impairments)  on the  sales  on  receivables  (as  shown in the
following  table)  increased to $6.3 million for the quarter ended  December 31,
2000 from $5.2 million for the quarter ended December 31, 1999. The net economic
gain for the securitization  during the quarter ended December 31, 2000 included
a loss on interest rate swaps on securitized  receivables  of $3.5 million.  The
increase  in the  economic  gain  during the  quarter  ended  December  31, 2000
compared  to the same  period  of last year is due  primarily  to  selling  $200
million more receivables, offset by a lower net spread of 84 basis points.

<TABLE>
<CAPTION>

                                       Fiscal Quarter ended             Six Months ended
                                           December 31,                   December 31,
                                   ----------------------------    ---------------------------
                                       2000            1999            2000           1999
                                   ------------    ------------    ------------   ------------
                                          (In thousands)                 (In thousands)
<S>                                    <C>             <C>            <C>            <C>
Gain on sales of receivables           $ 9,869         $ 5,248        $ 17,728       $ 12,090
Loss on interest rate swaps on
     securitized receivables            (3,536)              -          (8,886)             -
                                   ------------    ------------    ------------   ------------

     Net economic gain                 $ 6,333         $ 5,248         $ 8,842       $ 12,090
                                   ============    ============    ============   ============
</TABLE>


<PAGE>


         Gain on sale of receivables,  net also includes charges,  if applicable
based on management's review, for other than temporary impairments. On a regular
basis, management reviews the fair value of the estimated recoverable cash flows
associated with the retained interest for other than temporary impairments. Some
of the factors  considered in this evaluation are discussed further in the Notes
to  Consolidated  Financial  Statements.  See  -  "Note  2 of  the  Consolidated
Condensed Financial Statements".

         The gain on sales of receivables  continues to be a significant element
of the Company's net earnings.  The gain on sales of  receivables is affected by
several  factors  but  is  primarily  affected  by  the  amount  of  receivables
securitized,  the net spread,  the level of estimation for net credit losses and
discount rate.

         Set forth below is certain  information  relating to the second quarter
fiscal 2001 and 2000 securitizations:

Second Quarter Securitizations                               Fiscal
                                                   ---------------------------
                                                      2001            2000
                                                   -----------      ----------

                                                    2000 - D        1999 - D

Amount securitized (in millions)                     $510.0          $302.7
Weighted average receivable rate                     13.58%           13.62%
Weighted average certificate rate                     7.07%            6.56%
Gross spread (1)                                      6.51%            7.06%
Net spread (2)                                        4.82%            5.66%
Credit loss assumption                                4.75%            4.50%
Annual prepayment speed assumption                   25.00%           28.00%
Discount rate assumption                             14.91%           14.81%
Weighted average remaining maturity (in months)       72.7             69.9
Weighted average life (in years)                      2.14             1.95
Gain as a percentage of amount securitized (3)        1.24%            1.73%


(1) Gross spread - difference  between the weighted average  receivable rate and
weighted average certificate rate.

(2) Net spread - gross spread,  net of upfront costs,  servicing  fees,  ongoing
credit  enhancement  fees,  trustee fees,  and the hedging gains or losses.  (3)
Includes  impact of the $3.5 million and $399,000 loss on interest rate swaps on
securitized receivables for 2000-D and 1999-D, respectively.

         Loss on interest rate swaps on held for sale receivables.  Beginning in
the first  quarter of fiscal  2001,  a new  accounting  standard,  SFAS No. 133,
became  effective  for the Company.  This new  standard  changes how the Company
accounts for its derivative activity.  The only derivative  instruments that the
Company  utilizes  relate  to  interest  rate  swaps  executed  solely  to hedge
receivable  acquisitions prior to securitization.  Management  believes that the
interest rate swaps are  effective in protecting  the Company from interest rate
fluctuations from origination through securitization and that these transactions
are typical in this industry.  However,  it has been  determined that under SFAS
No. 133, these transactions do not qualify for hedge accounting  treatment,  and
the Company's  derivatives  are therefore  required to be marked to market every
accounting period.

         Previously, the market value of these derivatives was not accounted for
until the corresponding  receivables were securitized and the derivatives closed
out. At that time, the gain or loss on the closed out  derivatives  was included
in the gain on sales of  receivables, net amount.  This amount is now a separate
line item on the income  statement titled "Gain (loss) on interest rate swaps on
securitized receivables." In addition, UAC is now required to reflect the market
value of any  outstanding  derivatives on its balance sheet,  and the changes in
the corresponding value will be reported in the income statement as "Gain (loss)
on interest rate swaps on held for sale receivables." Based on a notional amount
of $448.2  million,  this amount was a loss of $4.7 million at December 31, 2000
and is related to  interest  rate swaps on  receivables  held for sale,  most of
which should be securitized in the securitization in the quarter ended March 31,
2001.  Although  this  accounting  change may have a  significant  impact on the
volatility of period to period earnings,  SFAS No. 133 has no cash effect on the
Company's business.  The following table illustrates the movement of the hedging
losses from the held for sale receivables to the securitized receivables:


<TABLE>
<CAPTION>

                                                Quarter ended             Six Months ended
                                            September 30,  December 31,     December 31,
                                           ------------   ------------   -----------------
                                               2000           2000             2000
                                           ------------   ------------   -----------------
                                                            (in millions)
Held for Sale Receivables
Loss on interest rate swaps on
<S>                                             <C>            <C>                 <C>
    held for sale receivables                   $ (2.4)        $ (4.7)             $ (7.1)
Reclassified to securitized receivables              -            2.4                 2.4
                                           ------------   ------------   -----------------
Total net loss on interest rate swaps on
    held for sale receivables                   $ (2.4)        $ (2.3)             $ (4.7)
                                           ============   ============   =================

Securitized Receivables
Loss on interest rate swaps on
    securitized receivables                     $ (5.4)        $ (1.1)             $ (6.5)
Reclassified from held for sale receivables          -           (2.4)               (2.4)
                                           ------------   ------------   -----------------
Total net loss on interest rate swaps on
    securitized receivables                     $ (5.4)        $ (3.5)             $ (8.9)
                                           ============   ============   =================

</TABLE>


         Servicing  fees  increased  23.2% to $7.6  million  and  17.0% to $14.3
million for the quarter and six months ended  December  31, 2000,  respectively,
compared to $6.2  million and $12.3  million  for the  corresponding  periods of
fiscal 2000.  The increase in servicing  fees is a result of the higher  average
securitized servicing portfolio of $3.0 billion and $2.8 billion for the quarter
and six months  ended  December  31, 2000  compared to $2.4 billion for the same
periods  of  the  prior  fiscal  year.   Servicing  fees  consist  primarily  of
contractual servicing fees of 1.0% on Tier I securitizations.

         Late charges and other fees  increased  13.5% to $1.7 million and 15.0%
to $3.5  million  for the  quarter  and six  months  ended  December  31,  2000,
respectively,  compared to $1.5 million and $3.0  million for the  corresponding
periods of fiscal 2000.  Other fees consist  primarily  of late  charges,  gross
profit from dealership sales, and other fee income.

         Salaries and benefits expense increased 26.0% to $8.5 million and 20.1%
to $16.4  million  for the  quarter  and six months  ended  December  31,  2000,
respectively, from $6.7 million and $13.7 million for the quarter and six months
ended December 31, 1999, respectively.  The increase was primarily related to an
increase in employees as the average  servicing  portfolio  increased  27.8% and
23.6% for the  quarter  and six months  ended  December  31,  2000.  The average
full-time equivalents for the quarter and six months ended December 31, 2000 was
691 and 676, respectively, compared to 574 and 556 for the corresponding periods
in fiscal 2000.

         Other  general  and  administrative  expense  increased  18.7%  to $5.9
million and 15.5% to $11.4 million for the quarter and six months ended December
31,  2000,  respectively,  compared  to $5.0  million  and $9.9  million for the
quarter and six months ended December 31, 1999,  respectively.  Other  operating
expense  includes  occupancy  and  equipment  costs,  outside  and  professional
services,  receivable expenses,  promotional expenses,  travel, office supplies,
and  other.  The  increase  in other  general  and  administrative  expenses  is
primarily  attributed  to an  increase  in  receivable  expenses  due to  higher
receivable  acquisitions.  Total  operating  expenses  (including  salaries  and
benefits) as a percentage of the average  servicing  portfolio was 1.75% for the
quarter and six months ended December 31, 2000,  compared to 1.82% and 1.83% for
the same periods of fiscal 2000.

         Provision  for  income  taxes  increased  64.1%  to  $2.2  million  and
decreased  16.0% to $4.0 million for the quarter and six months  ended  December
31,  2000,  respectively,  compared  to $1.4  million  and $ 4.8 million for the
corresponding  periods ended  December 31, 1999. The increase for the quarter is
the result of an increase in earnings  before  income taxes which was  partially
offset by a decrease in the effective tax rate.  The decrease for the six months
ended  December 31, 2000 is the result of a decrease in earnings  before  income
taxes and a decrease in the  effective  tax rate.  Beginning  July 1, 2000,  the
Company  decreased  the  effective  tax rate by 1.7% to 36.5% from 38.2% (before
permanent differences) to more accurately reflect the combined federal and state
tax  liability   resulting   from  the  Company's   operations  in  the  various
jurisdictions in which the Company does business.

Financial Condition

         Receivables  held for sale,  net and servicing  portfolio.  Receivables
held for sale, 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.  Selected  information
regarding the  Receivables  held for sale,  net and the  servicing  portfolio at
December 31, 2000 and June 30, 2000 is summarized in the following table:

                                          December 31,            June 30,
                                              2000                  2000
                                        -----------------     -----------------
                                         (In thousands)

Receivables held for sale, net                 $ 243,604             $ 206,701
Allowance for net credit losses                 $ (2,583)             $ (2,978)
Securitized assets serviced                  $ 3,109,149           $ 2,676,655
Total servicing portfolio                    $ 3,349,133           $ 2,881,115



         Retained interest in securitized assets ("Retained Interest"). Retained
Interest  increased  $39.0 million to $247.4 million at December 31, 2000,  from
$208.4  million at June 30, 2000.  The Retained  Interest  balance  increased or
decreased by the amounts  capitalized upon  consummation of the first and second
quarter securitizations including estimated dealer premium rebates, collections,
accretion of discount,  change in spread accounts,  impairment and net change in
unrealized  gain. The Company's  collections are the receipt of the net interest
spread.

         The following table  illustrates the activity of Retained  Interest for
the six months ended December 31, 2000 (in thousands):

Balance at June 30, 2000                                          $ 208,431

Amounts capitalized (including estimated dealer rebates)             52,425
Collections                                                         (48,426)
Accretion of discount                                                14,733
Change in spread accounts                                            13,406
Change in accelerated principal                                       4,741
Other than temporary impairment                                      (2,081)
Net change in unrealized gain                                         4,143
                                                               -------------

Balance at December 31, 2000                                      $ 247,372
                                                               =============




         The following table  illustrates the activity of the Spread account for
the six months ended December 31, 2000 (in thousands):

Balance at June 30, 2000                                          $ 58,663

Excess cash flows deposited to spread accounts                      33,147
Initial spread account deposits                                      6,275
Interest earned on spread accounts                                   2,034
Less:  excess cash flows released to the Company                   (28,050)
                                                              -------------

Balance at December 31, 2000                                      $ 72,069
                                                              =============



         Allowance for net credit losses on securitized  receivables is included
as a component of Retained Interest. At December 31, 2000, the allowance related
to both Tier I and Tier II securitized  receivables  totaled $138.9 million,  or
4.47% of the total securitized receivable portfolio, compared to $119.0 million,
or  4.45%,   at  June  30,   2000.   Impairment   of   Retained   Interest,   an
available-for-sale  security, is measured on a disaggregate (pool by pool) basis
in  accordance  with SFAS 115.  See  "Note 2 - Notes to  Consolidated  Condensed
Financial  Statements" for additional  discussions  regarding Retained Interest.
Also, see - "Discussion of Forward-Looking Statements".

         Amounts due under  revolving  warehouse  credit  facilities were $227.1
million at December 31, 2000,  compared to $152.2  million at June 30, 2000. The
increase  is a result  of  higher  acquisition  volume  after  the  close of the
securitization  transaction in the quarter ending  December 2000 compared to the
quarter ending June 2000.

         Long-term debt was $155 million at December 31, 2000,  compared to $177
million at June 30,  2000.  The  decrease  in  long-term  debt was a result of a
required principal payment on the Company's Senior Notes in August 2000 of $22.0
million.

         Current and  deferred  income  taxes  payable  totaled  $9.8 million at
December 31, 2000,  compared to $9.7 million at June 30, 2000. The difference is
primarily  the result of the tax  payments  made  during  the six  months  ended
December 31, 2000 and offset by the tax liability  associated  with current year
earnings.

Liquidity and Capital Resources

         Sources  and Uses of Cash in  Operations.  Net cash  used in  operating
activities  was $89.9  million  for the six  months  ended  December  31,  2000,
compared to cash  provided by operating  activities of $48.4 million for the six
months ended December 31, 1999. The change was primarily  attributable to higher
receivable acquisitions than receivables securitized during the six months ended
December 31, 2000.  Net cash provided by investing  activities was $29.3 million
and  $34.8  million  for the six  months  ended  December  31,  2000  and  1999,
respectively.  The  decrease  over the prior  period  primarily  relates  to the
decrease in the change in spread accounts but was partially offset by the change
in the  accelerated  principal  and an increase in the  collections  on retained
interest in securitized assets. Net cash provided from financing  activities for
the six months ended  December 31, 2000 was $52.2  million  compared to net cash
used in financing  activities of $80.5 million for the six months ended December
31,  1999.  The  primary  factor  for this  change  is the  increased  warehouse
borrowings  resulting from the higher  acquisition of receivables in the quarter
ended December 31, 2000 compared to the quarter ended December 31, 1999.

         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,  securitization  transactions  and  external
financing including long-term debt,  revolving warehouse credit facilities and a
$15  million  working  capital  line.  Historically,  the  Company  has used the
securitization  of receivable pools as its primary source of long-term  funding.
In August  1999,  the Company  established  an  additional  source of  liquidity
through a  securitization  arrangement  with a commercial  paper  conduit.  This
facility  has  capacity of $500  million,  and $450.8  million  was  utilized at
December 31, 2000. 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  facilities  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  revolving  warehouse  credit  facilities 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 revolving warehouse credit facilities.  The Company consistently
assesses its long-term receivable funding arrangements with a view of optimizing
cash flows and  reducing  costs.  The Company  has  several  options for funding
including, but not limited to, a public asset-backed securitization, a sale into
a  commercial  paper  facility,  a private  sale,  or  temporarily  holding  the
receivables.  The Company  continues to evaluate market conditions and available
liquidity  and could  decide to alter the timing of its  securitizations  in the
future  depending  on the  Company's  cash  position  and  available  short-term
funding.

         Derivative  financial  instruments.   Derivative  financial  instrument
transactions  (generally, a gain or loss on interest rate swaps) may represent a
source  or a use of cash  during  a given  period  depending  on the  change  in
interest  rates.  In the first and second  quarters of fiscal  2001,  derivative
financial  instrument  transactions  used cash of $8.9 million  compared to cash
provided of $2.6 million during the first and second quarters of fiscal 2000.

         Warehouse   facilities.   The  Company  has  Credit   Facilities   with
independent  financial  institutions  for  a  total  of  $750  million  to  fund
receivable  acquisitions.  A $350  million  Credit  Facility  and a $200 million
Credit Facility are insured by surety bond providers while a $200 million Credit
Facility is not insured.  At December 31, 2000,  $227.1  million of the capacity
was utilized,  and an  additional  $4.2 million was available to borrow based on
the outstanding principal balance of eligible receivables. At June 30, 2000, and
December  31,  1999,  $152.2  million  and $127.4  million of the  capacity  was
utilized,  and an  additional  $47.1  million and $43.3 million was available to
borrow  based on the  outstanding  principal  balance of  eligible  receivables,
respectively.  The Credit Facilities generally have a term of one year. Selected
summary information about the Credit Facilities is shown below:

  Credit Facility                  Outstanding                    Expiration
     Capacity                  at December 31, 2000                  Date
--------------------         -------------------------         -----------------
   (in millions)
       $ 350                          $227.1                    September 2001
       $ 200                           None                       March 2001
       $ 200                           None                       August 2001

         Working  capital line. In June 2000, the Company  established a working
capital line of credit for $15.0  million.  This line of credit is unsecured and
is available to fund short-term cash flow needs of the Company. The facility has
a one year term,  and the entire  amount was  available  for use at December 31,
2000. This facility expires in June 2001.

         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 of $22
million  began on August  1,  1998 and are due on August 1. The Notes  currently
have a private  rating by Fitch of B+. 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.  The
Notes have a current  private  rating by Fitch of B-. 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. The Notes have a current private rating by Fitch of B+.

         The Company's credit agreements, among other things, require compliance
with  monthly  and  quarterly  financial  maintenance  tests  and  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 facilities,
working  capital  line,  future  earnings,  anticipated  receivable  acquisition
levels, and periodic  securitization of receivables should provide the necessary
capital and liquidity for its operations through the end of the fiscal year. 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.

         The Company is exploring its  capitalization  alternatives and may seek
to issue  additional  equity or debt  securities  in the near term.  The current
Fitch  ratings  on the  Company's  existing  long-term  debt may have an adverse
effect on its ability to obtain or its cost of additional debt  securities.  The
sale of additional  equity,  including Class A Common Stock or preferred  stock,
could  dilute  the  interests  of current  shareholders.  See -  "Discussion  of
Forward-Looking Statements".

Discussion of Forward-Looking Statements

         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,  and other
aspects of its business.  Similar forward-looking  statements may be made by the
Company  from  time  to  time.  In  particular,  the  Company's  gain on sale of
receivables  and  retained  interest in  securitized  assets are reported on the
basis  of  significant   estimates  of  future   portfolio   performance.   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  2000  which is  incorporated
herein by this reference.


Item 3.  Quantitative and Qualitative Disclosures About Market Risk

         The Company's  sources for  short-term  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 an economic  hedging strategy to mitigate this risk. The
Company uses an economic  hedging  strategy that  primarily  consists of forward
interest rate swaps having a maturity  approximating the average maturity of the
acquisition  volume during the relevant period. At such time as a Securitization
is committed,  the interest rate swaps are  terminated.  The Company's  economic
hedging   strategy  is  an  integral  part  of  its  practice  of   periodically
securitizing  receivables.  Prior to March 1999, as part of the economic hedging
strategy,  the Company  used an  economic  hedging  vehicle  that  included  the
execution of short sales of U.S. Treasury Notes having a maturity  approximating
the average  maturity of the receivable  acquisition  volume during the relevant
period. In addition,  the commercial paper conduit pursuant to which the Company
Securitized  $500.0 million in  receivables in September  2000, and which it may
utilize from time to time in the future, provides for issuance of a note bearing
interest at a floating rate with the  resulting  interest rate risk covered by a
related  interest  rate  swap  arrangement.  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  economic
hedging  transactions during periods of increasing interest rates and realizes a
loss on such transactions  during periods of decreasing interest rates. Prior to
July 1, 2000, the economic hedging gain or loss substantially  offset changes in
interest  rates  as seen by  reporting  a  lower  or  higher  gain on  sales  of
receivables,  respectively.  Also,  prior  to  July,  1,  2000,  recognition  of
unrealized gains or losses is deferred until the sale of receivables  during the
Securitization  and on the date of the sale,  deferred  hedging gains and losses
are  recognized  as a  component  of the Gain  (loss)  on sales of  receivables.
Beginning  July 1,  2000,  both  the  Gain  (loss)  on  interest  rate  swaps on
securitized  receivables  and the Gain (loss) on interest rate swaps on held for
sale receivables are be reflected in the income statement. At December 31, 2000,
the Company had an  unrealized  hedging loss on forward  interest  rate swaps of
$4.7 million based on notional amounts  outstanding of $448.2 million.  The fair
value of long-term  debt  increases or  decreases as market  interest  rates are
reduced or increased, respectively.

         The following  table presents the principal cash repayments and related
weighted  average  interest rates by maturity date for the current variable rate
and long-term debt at December 31, 2000:

<TABLE>
<CAPTION>


                                       Six months ended
                                        June 30, 2001     2002       2003        Total      Fair Value
                                       ----------------   ----       ----        -----      ----------
                                                        (Dollars in thousands)
                                                        ----------------------

<S>                                      <C>           <C>          <C>        <C>           <C>
Amounts due under warehouse facility     $227,057      $      -     $       -  $ 227,057     $ 227,057
   Weighted average variable rate           6.28%

Long-term debt                           $     -       $ 43,667     $ 111,333  $ 155,000     $ 148,846
   Weighted average fixed rate                 -           8.14%         8.86%      8.66%


</TABLE>


<PAGE>



Sensitivity analysis on Retained Interest

         The Company  bears the primary risk of loss due to credit losses in its
servicing portfolio.  Credit loss rates are impacted by general economic factors
that affect  customers'  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 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.  The
Company does not believe  fluctuations in interest rates  materially  affect the
rate of prepayments on receivables.

         At December 31, 2000, key economic  assumptions  and the sensitivity of
the current  fair value of Retained  Interest to  immediate  10% and 20% adverse
changes in assumed economics is as follows:

<TABLE>
<CAPTION>

Amounts as of December 31, 2000                  Tier I          Tier II          Total
                                                 ------          -------          -----

<S>                                              <C>                <C>           <C>
Fair value of retained interest (1)              $ 257,290          $ 1,770       $ 259,060

Prepayment speed assumption (annual rate)        21.43% - 28.00%    20.64%

Impact on fair value of 10% adverse change       $ 249,688          $ 1,757       $ 251,445
Impact on fair value of 20% adverse change       $ 242,475          $ 1,745       $ 244,220


Net loss rate assumption (pool life rate)        4.00% - 6.40%      12.00%

Impact on fair value of 10% adverse change       $ 231,292          $ 1,443       $ 232,735
Impact on fair value of 20% adverse change       $ 205,267          $ 1,121       $ 206,388


Discount rate assumption (annual rate)           8.32% - 14.16%     13.29%

Impact on fair value of 10% adverse change       $ 250,707          $ 1,734       $ 252,441
Impact on fair value of 20% adverse change       $ 244,425          $ 1,699       $ 246,124


</TABLE>

 (1) Retained  Interest on the balance  sheet is lower than the total fair value
included in this  analysis.  The difference  primarily  relates to the inventory
value of repossessed  autos that have not been sold.  This amount is included in
Retained  Interest  as part of the  allowance  for  estimated  credit  losses on
securitized receivables but not included in the total fair value.

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


<PAGE>



Part II. Other Information

Item 4.  Submission of Matters to a Vote of Security Holders

         At the Company's Annual Meeting of Shareholders,  on November 14, 2000,
the following nominees were elected to the Board of Directors.

                                Affirmative               Votes
                                   Votes                 Withheld

                            ---------------------    -----------------

John M. Davis                    42,571,220              304,310
John M. Eggemeyer, III           42,571,240              304,290
Donald A. Sherman                42,571,240              304,290
John M. Stainbrook               42,566,920              308,610
Michael G. Stout                 42,568,490              307,040
Jerry D. Von Deylen              42,567,040              308,490
Richard D. Waterfield            42,567,220              308,310
Thomas M. West                   42,571,240              304,290


     The following  proposals  were approved at the Company's  Annual Meeting on
November 14, 2000:

     Ratification of appointment of auditors. Deloitte & Touche LLP was retained
as the Company's  auditors for the fiscal year 2001.  The votes were as follows:
13,044,147 Affirmative Votes; 10,251 Negative Votes, and 1,900 Votes Abstained.

     Approval  of  the  adoption  of  an  amendment  of  the  Union   Acceptance
Corporation 1999 Incentive Stock Plan reserving an additional  300,000 shares of
Class A Common Stock. The votes were as follows:  10,607,358  Affirmative Votes;
477,900 Negative Votes; and 20,108 Votes Abstained.

Item 6.  Exhibits and Reports on Form 8-K

         (a)  Exhibits

              4.1   Amendment  Number  2 to  Security  Agreement,  dated  as  of
                    September  30,  2000 by and among Union  Acceptance  Funding
                    Corporation,    UAFC-1    Corporation,    Union   Acceptance
                    Corporation,  Enterprise  Funding  Corporation,  and Bank of
                    America,  N.A.,  amending  that certain  Security  Agreement
                    dated as of May 25, 2000.


              4.2   Amendment Number Three,  dated as of January 8, 2001, by and
                    among   Union   Acceptance   Funding    Corporation,    UAFC
                    Corporation,   Union  Acceptance   Corporation,   Enterprise
                    Funding Corporation, MBIA Insurance Corporation, and Bank of
                    America,  N.A.  amending  that certain  Amended and Restated
                    Security Agreement dated as of May 12, 2000.


         (b)  Reports on Form 8-K

              The Company filed no reports on Form 8-K during the quarter ended
              December 31, 2000.


<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

February 8, 2001                      By:/s/ John M. Stainbrook
                                         ---------------------------------------
                                         John M. Stainbrook
                                         President and Chief Executive Officer



February 8, 2001                      By:/s/ Rick A. Brown
                                         --------------------------------------
                                         Rick A. Brown
                                         Treasurer and Chief Financial Officer