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

                                  Form 10-Q/A-1

(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, 1997

                                       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 of incorporation    (I.R.S. Employer Identification
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 May 14, 1997
Class A Common Stock, without par value            4,016,788 Shares
---------------------------------------            ----------------
Class B Common Stock, without par value            9,200,000 Shares
---------------------------------------            ----------------
                                          
<PAGE>

                  UNION ACCEPTANCE CORPORATION AND SUBSIDIARIES
                                   FORM 10-Q/A
                                      INDEX


                                                                           Page
Part I.  FINANCIAL INFORMATION

Item 1.  Financial Statements (unaudited):

         Consolidated Condensed Balance Sheets as of
         March 31, 1997 and June 30, 1996                                     3

         Consolidated Condensed Statements of Earnings (Loss) 
         for the Three and Nine Months  Ended  March 31, 1997 and 1996        4

         Consolidated Condensed Statements of Cash Flows for the
         Nine Months Ended March 31, 1997 and 1996                            5

         Consolidated Condensed Statement of  Shareholders' Equity for
         the Nine Months Ended March 31, 1997                                 6

         Notes to Consolidated Condensed Financial Statements                 7

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

Part II. OTHER INFORMATION                                                   18

         Signatures                                                          19














Registrant  is  amending  this  report to give  effect to  previously  announced
restatement of its results of operations for the period covered by this report.

<PAGE>



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





Assets                                                           March 31, 1997       June 30, 1996
------
                                                                 --------------       -------------
                                                                  (Unaudited)

<S>                                                               <C>                  <C>     
Cash                                                              $ 73,442             $ 13,459
Restricted cash                                                     16,212               14,789
Loans, net                                                         189,323              259,290
Accrued interest receivable                                          1,650                2,127
Property and equipment, net                                          2,114                2,026
Excess servicing                                                   107,017               83,434
Spread accounts                                                     71,498               63,590
Other assets                                                        19,771               12,480
                                                                  --------             --------
  Total Assets                                                    $481,027             $451,195
                                                                  ========             ========
                                                                                    
Liabilities                                                                         
-----------                                                                         
                                                                                    
Amounts due under warehouse facilities                            $127,218             $187,756
Long term debt                                                     221,000              156,000
Accrued interest payable                                             2,212                5,820
Amounts due to trusts                                               14,626                7,931
Dealer premiums payable                                              1,182                3,381
Other payables and accrued expenses                                  3,308                3,326
Deferred income tax payable                                         18,278                8,357
                                                                  --------             --------
 Total Liabilities                                                 387,824              372,571
                                                                  --------             --------
                                                                                    
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; 4,016,788 and 4,011,358 shares                       
 issued and outstanding at March 31, 1997 and                                       
 June 30, 1996, respectively                                        58,270               58,180
                                                                                    
Class B Common Stock, without par value,                                            
 authorized 20,000,000 shares; 9,200,000                                            
 shares issued and outstanding at March 31, 1997 and                                
 June 30, 1996, respectively                                            --                   --
                                                                                    
Net unrealized gain on excess servicing                              4,776                   --
Retained earnings                                                   30,157               20,444
                                                                  --------             --------
 Total Shareholders' Equity                                         93,203               78,624
                                                                  --------             --------
                                                                                    
 Total Liabilities and Shareholders' Equity                       $481,027             $451,195
                                                                  ========             ========
</TABLE>                                                                      


See accompanying notes to consolidated condensed financial statements.

<PAGE>

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

<TABLE>
<CAPTION>
                                             Three Months Ended                  Nine Months Ended
                                                  March 31,                          March 31,
                                         ------------------------------     -----------------------------
                                             1997              1996             1997             1996
                                         ------------      ------------     ------------     ------------


<S>                                      <C>               <C>              <C>              <C>         
Interest on loans                        $      7,543      $      6,732     $     25,872     $     20,910
Interest on spread accounts
   and restricted cash                          1,618             1,317            4,673            4,073
                                         ------------      ------------     ------------     ------------
   Total interest income                        9,161             8,049           30,545           24,983
Interest expense                                6,118             5,359           18,793           16,204
                                         ------------      ------------     ------------     ------------
   Net interest margin                          3,043             2,690           11,752            8,779
Provisions for  losses                          1,180               600            3,028            2,050
                                         ------------      ------------     ------------     ------------
   Net interest margin after provision          1,863             2,090            8,724            6,729


Gain (loss) on sales of loans                  (6,168)            7,760            8,497           22,967
Servicing fees, net                             6,854             4,796           18,938           11,346
Other revenues                                  1,011               798            2,855            2,271
                                         ------------      ------------     ------------     ------------

 Total revenues                                 3,560            15,444           39,014           43,313
                                         ------------      ------------     ------------     ------------

Salaries and benefits                           4,065             3,232           11,597            8,611
Other expenses                                  3,480             3,426           10,926            8,368
                                         ------------      ------------     ------------     ------------

 Total operating expenses                       7,545             6,658           22,523           16,979
                                         ------------      ------------     ------------     ------------

Earnings (loss) before provision
   for income taxes                            (3,985)            8,786           16,491           26,334
Provision (benefit) for income taxes           (1,587)            3,473            6,778           10,659
                                         ------------      ------------     ------------     ------------

 Net earnings (loss)                     $     (2,398)     $      5,313     $      9,713     $     15,675
                                         ============      ============     ============     ============

 Net earnings (loss) per share           $      (0.18)     $       0.40     $       0.74     $       1.19
                                         ============      ============     ============     ============

 Weighted average number of
   common shares outstanding               13,216,788        13,211,358       13,214,554       13,208,718
                                         ============      ============     ============     ============
</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,
                                                                          ------------------------
                                                                             1997           1996
                                                                          ---------      ---------

Cash flows from operating activities:
<S>                                                                       <C>            <C>      
    Net earnings                                                          $   9,713      $  15,675
       Adjustments to reconcile net earnings to net cash
       provided (used) by operating activities:
                Loan acquisitions in excess of liquidations                (854,758)      (667,103)
                Dealer premiums paid in excess of dealer premium
                  rebates received on loans held for sale                   (43,014)       (35,156)
                Securitization of loans held for sale                       918,540        679,496
                Gain on sales of loans                                      (37,843)       (31,882)
                Proceeds on sale of interest-only strip                      25,979         19,383
                Return of excess and servicing asset cash 
                   flows, net of present value effect                        19,821         31,671
                Impairment of Excess Servicing                               19,601             --
                Provision for estimated credit losses                         3,028          2,050
                Amortization and depreciation                                 2,861          3,308
                Spread accounts                                              (7,908)        (3,323)
                Restricted cash                                              (1,423)       (14,961)
                Other assets and accrued interest receivable                (12,502)        (6,624)
                Amounts due to trusts                                         6,695         12,328
                Other payables and accrued expenses                           7,969         11,861
                                                                          ---------      ---------
                     Net cash provided by operating activities               56,759         16,723
                                                                          ---------      ---------

Cash flows from investing activities:
    Purchase of fixed assets                                                   (664)        (1,136)
                                                                          ---------      ---------

Cash flows from financing activites:
    Net change in Due to Union Federal, including
      regulatory equity distribution                                             --       (337,423)
    Net change in warehouse credit facilities                               (60,538)       159,435
    Proceeds from issuance of senior notes                                   65,000        110,000
    Net proceeds from issuance of common stock                                   --         58,000
    Payment of borrowing fees                                                  (574)        (2,886)
                                                                          ---------      ---------
                     Net cash provided (used) by financing activities         3,888        (12,874)

Change in cash                                                               59,983          2,713

Cash, beginning of period                                                    13,459          9,483
                                                                          ---------      ---------

Cash, end of period                                                       $  73,442      $  12,196
                                                                          =========      =========

Supplemental disclosures of cash flow information:

                     Income taxes paid                                    $   4,277      $   5,540
                                                                          =========      =========

                     Interest paid                                        $  21,983      $  13,862
                                                                          =========      =========


</TABLE>

See accompanying notes to consolidated condensed financial statements.



<PAGE>

Union Acceptance Corporation and Subsidiaries
Condensed Consolidated Statement of Shareholders' Equity
For the Nine Months Ended March 31, 1997
(Dollars in thousands, except share data)
(Unaudited)

<TABLE>
<CAPTION>

                       Number of Common                                                             
                      Shares Outstanding                                       Net            
                                                                            Unrealized                          Total
                                                        Common             Gain on Excess   Retained         Shareholders'
                     Class A          Class B           Stock                Servicing      Earnings           Equity
                     -------          -------           -----                ---------      --------           ------
<S>                    <C>             <C>                 <C>               <C>           <C>                  <C>     
Balance at                                                                                              
June 30, 1996           4,011,358       9,200,000           $58,180           $      -       $20,444              $78,624
Grants of Common Stock      5,430               -                90                  -             -                   90
Net earnings                    -               -                 -                  -         9,713                9,713
                  ---------------------------------------------------------------------------------------------------------
                        4,016,788       9,200,000            58,270                  -        30,157               88,427
                                                                                                      
Net unrealized gain on                                                                                    
excess servicing                -               -                 -              4,776             -                4,776
                  ---------------------------------------------------------------------------------------------------------
Balance at                                                                                            
March 31, 1997          4,016,788       9,200,000           $58,270           $  4,776       $30,157             $ 93,203
                  =========================================================================================================
</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, 1997 and March 31, 1996
(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  Subsidiaries  (formerly the "Union  Division").  On
August 7, 1995,  the Company  ("UAC")  issued 4 million shares of Class A Common
Stock at $16.00 per share with net proceeds of $58.0 million simultaneously with
a private  placement  of $110.0  million of Senior  Notes with net  proceeds  of
$108.6  million.  These  proceeds  and  fundings  under a $350.0  million  Prime
Warehouse Facility and a $50.0 million Non-prime Warehouse Facility were used to
eliminate amounts due to its former parent, and to capitalize UAC's business and
fund ongoing  operations.  The Business Transfer was completed at this time. The
Company's business is conducted solely by UAC and its subsidiaries. A summary of
the Corporation's  significant  accounting  policies is set forth in "Note 1" of
the "Notes to Consolidated  Financial  Statements" in the  Corporation's  Annual
Report on Form 10-K for the year ended June 30, 1996.

The consolidated condensed financial statements for the interim period 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.

Note 2 - Earnings Per Share
Earnings  per  share for the nine  months  ended  March  31,  1997 and 1996 were
computed by dividing  the net  earnings by the average  number of common  shares
outstanding  for the period.  Earnings per share for the nine months ended March
31, 1996 were computed by dividing net earnings by the average  number of common
shares  outstanding  during the period.  Shares outstanding from August 7, 1995,
through  September 30, 1995, were assumed to be outstanding for the entire three
months ended  September  30, 1995.  The effect of  unexercised  stock options on
earnings per share is less than three percent dilutive and has not been included
in the earnings per share computations.

Note 3 - Excess Servicing

Excess servicing is as follows (in thousands) at:

                                                 March 31, 1997   June 30, 1996
                                                 --------------   -------------
Estimated value of excess servicing cash
  flows, net of estimated prepayments            $      138,754   $     112,564
Allowance for estimated credit losses                 ( 64,545)        (43,516)
Estimated dealer premium rebates                         23,756          13,467
Discount to present value                             ( 11,318)         (9,535)
                                                 --------------- ---------------
                                                         86,647          72,980

Accrued interest on securitized loans                    12,343          10,454
Unrealized gain on excess servicing                       8,027               -
                                                 =============== ===============
Excess servicing                                  $     107,017         $83,434
                                                 =============== ===============

Outstanding balance of loans serviced
  through securitized trusts                      $   1,727,322   $   1,351,480
Allowance for estimated credit losses as
   a percentage of securitized loans serviced             3.74%            3.22%



Union Acceptance Corporation and Subsidiaries
Notes to the Consolidated Condensed Financial Statements
For the Nine Months Ended March 31, 1997 and March  31, 1996
(Unaudited)


Note 4 - Reclassifications
Certain amounts in the fiscal 1996 Consolidated  Condensed Financial  Statements
have been reclassified to conform to fiscal 1997 presentation.

Note 5 - Current Accounting Pronouncements

During June 1996,  the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial  Accounting  Standards No. 125, "Accounting for Transfers
and Servicing of Financial  Assets and  Extinguishments  of Liabilities"  ("SFAS
125").  SFAS 125 provides  accounting and reporting  standards for transfers and
servicing  of  financial  assets and  extinguishments  of  liabilities  based on
consistent  application  of a  financial  components  approach  that  focuses on
control.  It  distinguishes  transfers of  financial  assets that are sales from
transfers that are secured borrowings. The financial components approach focuses
on the assets and liabilities that exist after the transfer.

SFAS 125 is effective  for  transfers  and  servicing  of  financial  assets and
extinguishments  of liabilities  occurring after December 31, 1996, and is to be
applied prospectively.  Earlier or retroactive application is not permitted. The
Company  adopted  SFAS 125 on  January 1, 1997.  This  pronouncement  prescribes
methodology  for recognition of gain on sales of loans, as well as the valuation
of the retained  interests (or "excess servicing" ). Adjustments to market value
based upon the  valuation in accordance  with SFAS 125 will be recorded,  net of
tax, as a separate component of shareholders' equity until realized. As a result
of the adoption of SFAS 125, the Company  recognized an  unrealized  gain on the
valuation of its excess  servicing  which is defined as an  "available  for sale
security" under the provisions of SFAS 125.

In February  1997,  the FASB issued SFAS No. 128,  "Earnings  Per Share"  ("SFAS
128"). SFAS 128 provides computation,  presentation, and disclosure requirements
for  earnings  per share.  The  traditional  presentation  of primary  and fully
diluted  earnings per share will be replaced with basic and diluted earnings per
share. The Statement is effective for financial  statements for both interim and
annual  periods  after  December  15,  1997,  and  earlier  application  is  not
permitted. Management does not expect earnings per share to change materially as
a result of this  pronouncement  as the effect of unexercised  stock options are
less than three percent dilutive, and have not been included in the earnings per
share computations for historical periods.

In February 1997, the FASB issued SFAS No. 129, "Disclosure of Information about
Capital  Structure"  ("SFAS  129").  SFAS 129 provides  guidance for  disclosure
regarding dividend policies,  voting rights,  liquidation  preferences and other
miscellaneous  items related to capital  structure.  This Statement is effective
for reporting  periods ending after  December 15, 1997.  There may be disclosure
requirements  which apply to the Company as a result of this  pronouncement  for
the fiscal year ended June 30, 1998.

Note 6 - Restatement of Consolidated Condensed Financial Statements

The  Company  determined  in  August  1998  that it should  measure  other  than
temporary  impairment of Excess  Servicing on a disaggregate  basis (the pool by
pool method).  The  adjustments  resulting  from the  measurement  of other than
temporary impairment on a disaggregate basis were of sufficient  significance to
require restatement of the consolidated condensed financial statements since the
implementation  of SFAS 125.  This  restatement  had the effect of reducing  net
earnings by $8.9  million (net of income  taxes of $6.1  million),  or $0.67 per
share,  for the quarter and nine months ended March  31,1997.  This  restatement
reduced  shareholders' equity at March 31, 1997 by $229,000. In conjunction with
the restatement, the Company made other adjustments, which were not individually
significant, that increased net earnings for the quarter ended March 31, 1997 by
$189,000  (net of income taxes of  $128,000),  or $0.01 per share and  increased
shareholders' equity at March 31, 1997 by $188,000.



<PAGE>




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

General

         As  more  fully  described  in  Note  6 to the  Consolidated  Condensed
Financial Statements,  this report contains financial information which has been
restated.
         The  Company  derives  substantially  all  of  its  earnings  from  the
acquisition,   securitization  and  servicing  of  automobile  loans  originated
primarily   by   dealerships   affiliated   with  major   domestic  and  foreign
manufacturers.  To fund the  acquisition of loans prior to  securitization,  the
Company utilizes  revolving  warehouse  facilities,  discussed in "Liquidity and
Capital Resources." Through securitizations,  the Company periodically pools and
sells loans to a trust  which  issues  Certificates  to  investors  representing
pro-rata  interests  in the  loans  sold.  When  the  Company  sells  loans in a
securitization, it records a gain (or loss) on the sale of loans and establishes
excess  servicing as an asset.  Excess servicing cash flows are recorded against
the  excess   servicing   asset  as  received  over  the  life  of  the  related
securitization.
         Acquisition  Volume.  The Company acquires loans on automobiles made to
borrowers who exhibit a favorable credit profile. The Company currently acquires
loans in 27 states  from over  3,000  manufacturer-franchised  auto  dealerships
("Prime  lending") and,  since October 1994, to borrowers  with adequate  credit
quality  who would not  qualify  for a loan under the  Company's  Prime  lending
program  ("Non-prime   lending").   Nearly  900  of  the  Company's  dealerships
participate in the Non-prime  program,  PAC. The Company continues to expand its
operations  by  entering  new  cities,  and by signing  new  dealers in existing
markets.  Total loan  acquisitions  for the three  months  ended March 31, 1997,
increased  9.1% to  $279.8  million  over the same  quarter  of last  year,  and
increased 25.9% to $883.9 million for the nine months ended March 31, 1997, over
the same period of last year. The Company  tightened its credit standards during
the third quarter of fiscal 1997 (described below).  These underwriting  changes
will most  likely have the effect of  decreasing  loan  acquisition  growth on a
short-term  basis.  Third quarter loan  acquisitions  were lower than the second
quarter of fiscal 1997, and fourth quarter acquisitions are expected to be lower
than the fourth quarter of fiscal 1996.
         Underwriting  changes implemented prior to the beginning of fiscal 1997
included an  increase in cut-off  scores in several  markets  where  losses were
running  at 2.50% or  greater  over the  life of the  pools.  Additionally,  the
Company made significant  policy changes during the third quarter of fiscal 1997
including  the  implementation  of a new  Risk  Scorecard,  and an  increase  in
required discretionary income and total income thresholds. These strategies were
employed in order to improve the overall  average quality of the contracts being
purchased.  Management continues to focus on controlled growth, recognizing that
the  underlying  credit  quality of the  portfolio is one of the most  important
factors  associated  with  long-term  profitability.   Company  management  will
carefully evaluate the impact of these  underwriting  changes on the performance
of the portfolio, and continue to make improvements to both the underwriting and
collection  policies  in an  effort to  achieve  an  acceptable  level of credit
losses,  and hence,  the desired  level of  profitability.  See  "Discussion  of
Forward-Looking Statements" below.
         Non-prime loans represented  approximately 3.1% and 3.8% of total loans
acquired for the three and nine months ended March 31, 1997,  respectively.  The
Company's marine lending program generated  approximately  $1.8 million and $3.4
million of loan acquisitions for the three and nine months ended March 31, 1997.
The Company has historically focused its efforts and resources towards the prime
auto  segment,  and will continue to do so in the future  despite  expanding its
operations to include  other  products and  programs.  Management  believes that
there is substantial growth potential in the prime auto segment.
         Gross and Net Spreads.  The gross and net spreads on the third  quarter
securitization of fiscal 1997 were 6.96% and 5.43%,  respectively.  Gross spread
is defined as the  difference  between the  weighted  average  loan rate and the
Certificate  rate.  Net spread is defined as gross spread less  servicing  fees,
upfront  costs,  ongoing credit  enhancement  fees and trustee fees, and hedging
gains or losses. Net spreads on securitization  transactions  experienced steady
compressions  beginning  in the first  quarter of fiscal 1996 as a result of the
lag between changes in market  interest rates and loan rates.  Net spreads began
to rebound in the second quarter  securitization of fiscal 1997 (27 basis points
over the first quarter securitization),  and increased again slightly during the
third quarter  transaction.  Net spread is slightly  lower  compared to the same
quarter  of last year,  but  continues  to be  significantly  higher  than those
spreads  realized in fiscal 1995 and prior  years.  Net spreads are  expected to
experience some compression in the fourth quarter  securitization due to changes
in market interest rates relative to loan rates.
         Looking ahead,  management is currently  targeting net spreads of 5.00%
to 5.50% on prime  securitizations  (assuming a pricing spread for  asset-backed
certificates  over the two-year treasury note of 50 basis points) for the fourth
quarter of fiscal 1997.  Management believes that by targeting a spread of 7.00%
to 7.50% between loan rates and the two-year  treasury  rate,  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 market interest rates and demand for
asset-backed securities generally,  and for Certificates  representing interests
in   securitizations   sponsored  by  the   Company.   See  -   "Discussion   of
Forward-Looking Statements ," below.
         Gain on sales of loans  continues  to be a  significant  element of the
Company's  net  earnings.  The gain on sales of  loans is  affected  by  several
factors but is primarily affected by the amount of loans securitized and the net
spread.  The  Company  adjusts  its  pricing  frequently  and  employs a hedging
strategy to help ensure an  adequate  net spread in the ensuing  securitization,
while  mitigating  the risks of increasing  interest rates and the volatility in
net spreads.

         Portfolio   Performance.   Set  forth  below  is  certain   information
concerning  the  Company's  experience   pertaining  to  delinquencies  and  net
charge-offs  on the Prime  fixed rate  retail  automobile,  light  truck and van
receivables  serviced  by the  Company.  There can be no  assurance  that future
delinquency  and net loss  experience on receivables  will be comparable to that
set forth below.

<TABLE>
<CAPTION>
                                    March 31, 1997              June 30, 1996            March 31, 1996
                                ----------------------     ---------------------     ----------------------
                                Number of                  Number of                 Number of               
                                 Loans         Amount       Loans       Amount        Loans          Amount 
                                -------     ----------      -------   ----------     -------       --------  
                                                           (Dollars in thousands)           
<S>                             <C>         <C>             <C>       <C>            <C>           <C>                  
Servicing portfolio              171,234     $1,836,305      147,722   $1,548,538     137,346     $1,403,369           
Delinquencies
  30-59 days                       2,484         27,527        1,602       17,030       1,574         17,421 
  60-89 days                       1,561         18,894          694        7,629         785          9,354 
  90 days or more                    705          8,414          333        3,811         530          6,130 
                                 -------     ----------      -------   ----------     -------     ----------           
Total delinquencies                4,750         54,835        2,629       28,470       2,889         32,905 

Delinquency as a percentage of 
  servicing portfolio               2.77%         2.99%         1.78%        1.84%       2.10%          2.34%

</TABLE>


         As indicated by the above table,  delinquency  rates at March 31, 1997,
were  higher as  compared to the same  quarter of last year.  Delinquency  rates
based upon  outstanding loan balances of accounts 30 days past due and over were
2.99% at March 31,  1997,  compared  to 2.34% at March 31,  1996,  for the prime
servicing portfolio.  Management believes the increased delinquency is primarily
due to a tightening of the criteria for the deferment of an account which became
effective in February 1997.  Bankrupt accounts which are included in delinquency
statistics  pending  resolution  continue  to be a  significant  portion  of the
overall  delinquency  amount.  Bankrupt accounts  represented 42 basis points of
delinquency at March 31, 1997.
         Non-prime  portfolio  delinquency was 4.18% based upon outstanding loan
balances of accounts  30 days past due and over at March 31,  1997,  compared to
3.35% at June 30, 1996, and 2.57% at March 31, 1996. The Company began acquiring
non-prime loans in October 1994.  Management expects fluctuations in delinquency
rates on the  non-prime  portfolio as it  continues  to season.  The increase in
delinquency  is due, in part,  to a more  strict  application  of the  Company's
deferral policy primarily through the reduction of discretionary deferrals under
such policy. To date, the portfolio is performing within the ranges  anticipated
by the Company.  The non-prime portfolio makes up only approximately 3.6% of the
Company's total servicing portfolio. The Company has historically focused on the
prime end of the credit spectrum and will continue to do so.

<PAGE>

<TABLE>
<CAPTION>

                                        Nine Months Ended           Fiscal Year Ended         Fiscal Year Ended
                                          March 31, 1997             June 30, 1996              June 30, 1995
                                      ---------------------       --------------------      ---------------------
                                                                  (Dollars in thousands)           
<S>                                   <C>         <C>             <C>        <C>            <C>          <C>    
Average servicing portfolio           162,120     1,727,725       132,363    1,343,770      104,455      982,875

Gross charge-offs                       4,393        48,923         3,663       40,815        3,493       28,628
Recoveries                                           19,089                     19,543                    15,258
                                                  ---------                  ---------                   -------
  Net charge-offs                                    29,834                     21,272                    13,370

Gross charge-offs as a percentage
  of average servicing portfolio         3.61%*        3.78%*        2.77%        3.04%        3.34%        2.91%

Recoveries as a percentage
  of gross charge-offs                                39.02%                     47.88%                    53.30%

Net charge-offs as a percentage
  of average servicing portfolio                       2.30%*                     1.58%                     1.36%
</TABLE>

*  Annualized

         Annualized  net  charge-offs  as a percentage of the average  servicing
portfolio were 2.30% for the nine months ended March 31, 1997, compared to 1.58%
for the year ended June 30, 1996,  and 1.39% for the nine months ended March 31,
1996.   Tightening  of  the  Company's  deferral  policy,  as  discussed  above,
accelerated  losses during the third quarter causing quarterly  statistics to be
unusually high.  Management  believes that the short-term  effect of this change
will  be to  increase  delinquency  and  accelerate  net  charge-offs;  however,
management  does not expect  overall  credit losses in the long-term to increase
materially as a result of the change.  Management's expectations with respect to
delinquency and credit loss trends constitute forward-looking statements and are
subject  to  important  factors  that  could  cause  actual  results  to  differ
materially  from those  projected  by the  Company.  Certain  such  factors  are
discussed under "Discussion of Forward-looking  Information" in the Management's
Discussion and Analysis section of the Company's Annual Report on Form 10-K.
         Portfolio   performance  continues  to  be  within  the  parameters  of
management's  expectations  despite the recent  increases in delinquency and net
charge-offs.  The level of credit loss risk is gauged  against the potential for
profit  in  the  underwriting   process.   Management  has  implemented  various
collections  and  underwriting  changes  throughout the year in order to improve
portfolio  performance,  and continues to monitor closely the performance of the
portfolio, and its response to policy changes.
         The  increase in net  charge-offs  for the nine months  ended March 31,
1997  compared to the nine  months  ended March 31, 1996 is a result of both the
increase  in gross  charge-offs  as  discussed  above,  as well as a decline  in
recovery  rates.  Recovery rates with respect to the prime  servicing  portfolio
have  declined  from 53.30% for fiscal 1995 to 47.88% for fiscal 1996 and are at
39.02% for fiscal 1997 to date. Management attributes the decline to a softening
in current  used car  prices.  Management  is working  to improve  the  recovery
percentage by refocusing on its recovery efforts.
         Non-prime  net  charge-offs  totaled  approximately  $797,000  for  the
quarter.  Annualized  net  charge-offs  were  3.95%  of  the  average  Non-prime
servicing  portfolio for the nine months ended March 31, 1997, compared to 2.37%
for the fiscal year ended June 30,  1996,  and 2.19% for the nine  months  ended
March  31,  1996.  Management  is  closely  monitoring  the  performance  of the
Non-prime portfolio as it matures,  and is comfortable with the level of risk in
relation to its earning potential.
         Overall, the Company has made strategic changes with respect to pricing
and  underwriting,  including  an increase  in cut-off  scores in several of its
markets during the third quarter of fiscal 1996, and the implementation of a new
Risk  Scorecard in March 1997.  Adjustments  with respect to cut-off scores were
made in markets whose implied loss statistics indicated losses at 2.50% or above
on a static pool basis.  The new  scorecard is a composite  credit bureau score.
These changes were made with the intent of improving the overall  quality of the
contracts being  acquired.  Management  continues to focus on controlled  growth
with an emphasis on credit quality.  These strategies appear to be providing the
Company with the desired  results as the implied loss statistics as of March 31,
1997, indicated that the 1996 loan pools were improved over the 1995 loan pools.
See "Discussion of Forward-Looking Statements" below.
         Provisions  are made for estimated  credit losses in  conjunction  with
each loan sale.  The allowance  for  estimated  credit losses is inherent in the
excess servicing asset recorded upon sale. Although management believes that the
allowance  for  estimated  credit  losses on  securitized  loans  represents  an
appropriate  estimate of potential credit losses at the time of  securitization,
the adequacy of such  provisions  cannot be  determined  with  certainty as many
factors  exist which could result in credit  losses  materially  different  from
management's original estimates. The allowance for estimated undiscounted credit
losses as a percentage of outstanding  securitized  loans was 3.74% at March 31,
1997,  compared  to 3.22% at June  30,  1996,  and  3.19%  at  March  31,  1996.
Previously,  excess  servicing  was marked to market on an  aggregate  basis and
adjustments,  net of tax, were recorded as a component of shareholders'  equity.
The Company  determined  in August  1998 that it should  measure  impairment  of
Excess  Servicing on a  disaggregate  basis (the pool by pool method) and charge
other than temporary pool by pool impairments to earnings and record  unrealized
gains as a separate component of shareholders' equity.

Results of Operations

         Net earnings  for the three and nine months ended March 31, 1997,  were
down 145.1% and 38.0% respectively,  compared to the three and nine months ended
March 31,  1996.  The  decrease in net  earnings  for the  quarter is  primarily
attributable  to charges  taken for pool by pool  impairments  of $16.0  million
pre-tax ($9.5 million net of tax) offset by increased  servicing  fees.  Reduced
net earnings for the nine month period are  primarily a result of charges  taken
for pool by pool  impairments  offset  by  improved  net  interest  margins  and
increased  servicing fees. The Company's total loan acquisitions for the quarter
increased by 9.1%  compared to the same quarter of last year.  Year to date loan
acquisitions  are up 25.9%  over the  comparable  periods  of fiscal  1996.  The
servicing portfolio reached over $1.9 billion, a 32.2% increase over a year ago.
         Net interest margin after provision declined for the three months ended
March 31,  1997,  as compared to the three  months  ended  March 31,  1996,  but
increased  29.6% to $8.7  million  for the nine  months  ended  March 31,  1997,
compared to $6.7 million for the nine months ended March 31, 1996.  The increase
in interest  income  resulted from an increase in the average monthly balance of
prime loans held for sale to $224.4  million for the nine months ended March 31,
1997,  from $176.9  million for the  corresponding  period ended March 31, 1996,
which was a result of increased loan acquisitions in the nine months ended March
31,  1997,  relative to the nine months  ended March 31,  1996.  Total  interest
expense for the three and nine months ended March 31, 1997,  was greater than in
the  corresponding  periods of the prior  fiscal  year as a result of  increased
average  outstanding  borrowings  (due to increased  loan  acquisitions  and the
issuance of $65 million  7.80%  Senior Debt in March  1997).  However,  interest
expense as a percentage of the average outstanding borrowings has decreased. The
relative  decrease in interest expense is a result of the complete  amortization
of upfront fees paid in connection with the warehouse facilities in fiscal 1996;
because the warehouse facility  agreements  initially provided for a term of one
year subject to renewal,  the Company amortized all upfront costs over the first
year.  The warehouse  facilities  have  subsequently  been renewed.  The ongoing
interest  costs  related  to  the  warehouse   facilities  (through  which  loan
acquisitions are funded ) are variable and are based on commercial paper rates.
         Gain (loss) on sales of loans was $(6.2)  million and $8.5  million for
the three and nine months ended March 31, 1997,  respectively,  compared to $7.8
million and $23.0  million for the  corresponding  periods ended March 31, 1996,
respectively.  The loss for the three months ended March 31, 1997 consisted of a
$9.8 million gain on sale from the current  quarter  securitization  and a $16.0
million charge for other than temporary  impairments  of Excess  Servicing.  The
gain for the nine  months  ended March 31, 1997  consisted  of $24.5  million of
gains on sales from  quarterly  securitizations  and a $16.0 million  charge for
other than temporary  impairments of Excess Servicing.  The Company  securitized
over $293.3 million in loans during the third quarter of fiscal 1997 compared to
$237.5 million in the third quarter of fiscal 1996. Although the volume of loans
securitized  during the third  quarter of fiscal 1997 was  increased  over prior
periods,  the net spreads were less  favorable than in the same period of fiscal
1996.  Net  spreads   rebounded   somewhat  in  the  second  and  third  quarter
securitizations  to 5.37%  and  5.43%,  respectively  from  5.11%  in the  first
quarter. Net spreads suffered compressions  throughout fiscal 1996 due to upward
moving market interest rates.  There tends to be a lag between changes in market
rates of interest (i.e.  treasury rates) and automobile lending rates. There was
compression  in gross  spreads  for the third  quarter  securitization,  but net
spread improved because of favorable  pricing terms obtained with respect to the
third quarter transaction.
          Servicing  fees,  net  increased  43.0% to $6.9  million for the three
months  ended March 31,  1997,  compared to $4.8  million for the  corresponding
period ended March 31, 1996.  Servicing  fees consist of  contractual  servicing
fees  (1% on  prime  securitizations),  the  accretion  of  discount  on  excess
servicing  cash  flows,  and  excess  rebates.  Increased  servicing  fees  were
primarily  a result of the  increase in the  average  securitized  loans for the
three  months  ended  March 31,  1997,  as  compared  to the same  period of the
previous year.
         Other  revenues  increased  to $1.0  million for the three months ended
March 31, 1997,  from $798,000 for the three months ended March 31, 1996.  Other
revenue consists primarily of late charge income and origination fee income. The
increase  resulted  primarily  from  increases  in late charge fee  income.  The
increase is mainly due to the  increased  size of the servicing  portfolio,  but
also due to increased  delinquent  accounts.  Late charge income is not accrued,
but is recorded as income when received.
         Salaries  and  benefits  increased  25.8% to $4.1 million for the three
months ended March 31, 1997,  from $3.2 million the  corresponding  period ended
March 31, 1996.  These  increases  resulted  primarily from increased  full-time
equivalent ("FTE") employees. Average FTE's for the three months ended March 31,
1997 were 371,  compared to 283 for the comparable  period ended March 31, 1996.
The Company has experienced growth in collections,  credit,  sales,  operations,
and support  personnel.  These increases are in response to, and in anticipation
of,  continued  expansion  and loan  acquisition  growth,  as well as a  growing
servicing portfolio. Additional levels of management and support staff have been
added to ensure efficiency in operations as the Company's acquisition volume and
servicing portfolio continues to grow.
         Other  expenses  increased  only slightly to $3.5 million for the three
months ended March 31, 1997,  from $3.4 million for the three months ended March
31, 1996.  Other  operating  expenses  include  occupancy and  equipment  costs,
outside and professional services, loan expenses,  promotional expenses, travel,
office supplies and other.

Financial Condition

         Loans,  net includes the principal  balance of loans held for sale, net
of unearned discount,  allowance for estimated credit losses,  loans in process,
and prepaid dealer premiums.  The Company's portfolio of loans, net decreased to
$189.3  million at March 31, 1997,  from $259.3  million at June 30, 1996.  Loan
acquisition  volume was higher in the quarter  ended June 30, 1996,  than in the
quarter  ended  March 31,  1997,  as a result of seasonal  fluctuations  and the
tightening  of credit  standards.  The Company  effected a $293.3  million prime
securitization  in the quarter ended March 31, 1997,  and a $245.1 million prime
securitization for the quarter ended June 30, 1996.
         Excess Servicing increased to $107.0 million as of March 31, 1997, from
$83.4  million  as of June  30,  1996.  This  balance  increased  by the  amount
capitalized  upon  consummation  of the UACSC  1996-C,  1996-D,  and 1997-A Auto
Trusts related to excess  servicing and estimated  dealer premium  rebates,  and
excess servicing  related to the non-prime  securitization  effected in December
1996.  Structuring of the prime  securitizations  included the sale of "interest
only strips" which  generated  more cash from the sale, but served to reduce the
initial excess servicing asset recorded.  Total amounts capitalized for the nine
months ended March 31, 1997 were $53.1  million.  The Excess  Servicing  balance
also increased by a pre-tax  unrealized gain on excess servicing of $8.0 million
in accordance with the provisions of SFAS 125.  Excess  Servicing also increased
by the change in accrued  interest  of $1.9  million.  The  increases  to Excess
Servicing  were  offset by the return of excess  cash flows of $19.8  million as
received over the nine months ended March 31, 1997,  related to all  outstanding
securitizations  and by the effect of the $16.0  million  other  than  temporary
impairment of Excess  Servicing.  Also,  additional  provisions were made to the
allowance for estimated credit losses on securitized  loans during the first two
quarters of fiscal 1997 of $3.6  million.  The  provisions  were charged to gain
(loss) on sales of loans.  Allowance for estimated  credit losses on securitized
loans is included as a component  of the excess  servicing  asset.  At March 31,
1997,  the  undiscounted  allowances,   related  to  both  prime  and  non-prime
securitized loans,  totaled $64.5 million or 3.74% of the total securitized loan
portfolio.
         Spread  Accounts  increased to $71.5  million at March 31,  1997,  from
$63.6 million at June 30, 1996.  These  balances were increased by deposits made
monthly from excess  servicing cash flows, and are reduced by any withdrawals of
funds from the Spread  Accounts.  Withdrawals  of spread  account funds are made
when the  balance  of the  Spread  Accounts  are in excess  of the  requirements
stipulated in the servicing  agreement.  No initial spread  account  deposit was
made in connection  with the last several prime  transactions as a result of the
structuring which utilized  alternative credit  enhancements (i.e. surety bonds)
in lieu of initial spread account deposits.
         The Warehouse  Facilities,  Senior Notes, and Senior Subordinated Notes
constitute the Company's primary funding  facilities.  The Company issued $110.0
million in 8.53% Senior Notes (Due 2002) in August 1995, in conjunction with the
spin-off from its former  parent.  In April 1996, the Company issued $46 million
in 9.99% Senior  Subordinated Notes (Due 2003) in a private placement.  In March
1997,  the Company  issued $65  million of Senior  Notes (Due 2002) in a private
placement  with an  effective  coupon of 7.80%.  The  balance  of the  Warehouse
Facilities was $127.2  million at March 31, 1997,  compared to $187.8 million at
June 30, 1996. The decrease in total borrowings is due to the relative  decrease
in third quarter fiscal 1997 loan  acquisitions as compared to the quarter ended
June 30,  1996.  Additionally,  the Company has  realized  additional  liquidity
through its debt placement, by utilizing alternative credit enhancement features
in its  securitizations  as discussed  above,  and by deferring a portion of the
gain on sales of loans for income tax purposes.
         The net deferred  income taxes  payable  totaled $18.3 million at March
31, 1997, compared to $8.4 million at June 30, 1996. The increase is a result of
the deferral of a portion of the gain on sales of loans for the  securitizations
effected  during the first three quarters of fiscal 1997 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  loans,  (ii)  payment  of Dealer
Premiums,  (iii) securitization costs including cash held in Spread Accounts and
similar cash  collateral  accounts  under  Warehouse  Facilities,  (iv) servicer
advances of payments on securitized loans 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) interest  expense,  and
(viii) payment of income taxes.  The Company's  sources of cash from  operations
include  (i)  standard  servicing  fees,  generally  1.0% per annum of the prime
securitized  portfolio,  (ii) Excess 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,  (vi) sales of
loans in securitization  transactions,  and (vii) sales of interest-only strips.
Net cash  provided by operating  activities  increased to $56.8  million for the
nine months ended March 31, 1997,  from $16.7  million for the nine months ended
March 31, 1996.
         Hedging  transactions  may represent a source or a use of cash during a
given period depending on the change in interest rates. In the nine months ended
March  31,  1997,  hedging  transactions  have  required  a use of  cash of $5.8
million.

         Financing Activities and Credit Facilities. 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  financings  including long-term debt and revolving
warehouse   credit   facilities.   Historically,   the   Company  has  used  the
securitization  of loan pools as its primary  source of long-term  funding,  and
intends to continue to do so. Securitization  transactions enable the Company to
improve its liquidity, to recognize gains from the sales of the loan pools while
maintaining the servicing rights to the loans, 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.
         The Company has borrowing  arrangements  with an independent  financial
institution  for the Prime  Warehouse  Facility  of up to $350.0  million  and a
similar Non-prime Facility of up to $50.0 million.  The Prime Warehouse Facility
provides  funding for loan  acquisitions  at a purchase price of up to 100.0% of
the outstanding  principal  balance of eligible loans at the time of purchase to
the extent allocable to loans which, upon  origination,  provided for 72 monthly
payments or less. Additional funding is provided for eligible loans with greater
than 72 monthly  payments at a purchase price of up to 92.0% of the  outstanding
principal  balance.  The advance rate is adjusted monthly based upon actual loss
statistics in order to maintain the necessary  enhancement  level. The Non-prime
Warehouse Facility provides funding for loan acquisitions at a purchase price of
up to 80.0% (increased to up to 87% in the fourth quarter of fiscal 1997) of the
outstanding  principal  balance of eligible  loans at the time of purchase.  The
Company  also  issued  $110.0  million in Senior  Notes in  connection  with the
spin-off  of the  Company by Union  Federal  and the  Company's  initial  public
offering,  completed a private placement of $46.0 million in Senior Subordinated
Notes in April  1996 and $65  million  in Senior  Notes in March  1997.  Between
securitization  transactions,  the Company  relies  primarily  on the  Warehouse
Facilities to fund ongoing loan acquisitions (not including Dealer Premiums). In
addition to loan  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
described above. The Company's ability to borrow under the Warehouse  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  businesses  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 Warehouse Facilities.
         Management believes that the proceeds from the Company's initial public
offering,  the  Senior  Notes,  the Senior  Subordinated  Notes,  the  Warehouse
Facilities  described above,  future earnings,  and periodic  securitization  of
loans should  provide the necessary  capital and  liquidity  for its  operations
during the next twelve months;  however,  it is management's intent to take full
advantage of favorable market conditions to raise additional  working capital as
they occur.
         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,   including  particularly  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 raise additional  capital including equity securities or additional debt
in the near term. The sale of additional equity,  including Class A Common Stock
or preferred stock, would dilute the interests of current shareholders.

Other Matters

         As a part of its ongoing  development of its business plan, the Company
is researching the possibilities of engaging in other finance-related businesses
such as auto  leasing,  and  other  non-auto  consumer  lending.  Based  on this
research,  the Company may expand its current  operations to include some or all
of the  above  finance-related  businesses.  It is  management's  philosophy  to
continually  search for new  products and markets to grow and expand the Company
in order to maximize profits and shareholder value. The Company has expanded its
dealer base to include  nationally-recognized  used rental car outlets and "Used
Car Superstores" which are not manufacturer-franchised  dealerships. The Company
currently has 8 dealers signed in three states,  and is cashing deals with these
dealers.

         On April 3, 1997,  the Company  closed a $50 million  Marine  Warehouse
Facility  to provide  funding  for the  Company's  marine  portfolio.  There are
provisions  for an  increase in the  Facility to $75 million in March 1998.  The
Facility  provides  funding for loan  acquisitions  at advance  rates of 85% for
boats and 80% for personal  watercraft  with terms less than 49 months,  and 65%
for personal watercraft with terms of 49-60 months. The advance rates may adjust
upward to a maximum of 90% for boats and 85% for personal  watercraft with terms
less than 49 months  beginning in September 1997 if certain loss and delinquency
triggers are in compliance at that time.

         In  April  1997,  approval  for  renewal  of the  Prime  and  Non-Prime
Warehouse  Facilities  was  obtained  for a term  of one  year.  The  Prime  and
Non-Prime  Warehouse  Facilities  were renewed  through June 1998 and July 1998,
respectively.  The Company also  received a reduction in Program Fees related to
both the Prime and Non-Prime Warehouse  Facilities beginning in of May 1997. The
Program Fee on the Prime Facility will be reduced by 14.3%,  and the Program Fee
on the Non-Prime Facility will be reduced to 40%. Significant improvement in the
terms of the Non-Prime Facility were also negotiated increasing the advance rate
from 80% to 87% for non-prime loans.

Discussion of Forward-Looking Information

         The above discussions  contain  forward-looking  statements made by the
Company regarding its results of operations, cash flow needs and liquidity, loan
acquisition volume, target spreads,  potential credit losses,  servicing income,
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.   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 1996 which is
incorporated herein by this reference.



<PAGE>



Part II. Other Information

Item 6.  Exhibits and Reports on Form 8-K

          (a)  Exhibits-  The  following  Exhibits  are  filed as a part of this
               report:

                  Exhibit 10.1 - Note Purchase Agreement,  dated March 24, 1997,
                     among Union Acceptance  Corporation and certain  purchasers
                     of Senior Notes, due 2002*

                  Exhibit 27 -  Restated Financial Data Schedule

          (b)  Reports on Form 8-K

          No reports on Form 8-K were filed  during the quarter  ended March 31,
     1997.



*Previously filed.

<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




December 30, 1998                   By:   /s/ Rick A. Brown
                                          -----------------
                                          Rick A. Brown
                                          Treasurer and Chief Financial Officer