UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549


                                  FORM 10-QSB A


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

                      FOR THE QUARTER ENDED MARCH 31, 1997

(  )  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 33-97130-A

                             THE THAXTON GROUP, INC.
                 (Name of small business issuer in its charter)


       SOUTH CAROLINA
                                                           57-0669498
(State or other jurisdiction of                          (IRS Employer
incorporation or organization)                         Identification No.)


              1524 PAGELAND HIGHWAY, LANCASTER SOUTH CAROLINA 29271
                    (Address of principal executive offices)

                     Issuers telephone number: 803-285-4336


Indicate by check mark whether the issuer (1) has filed all reports required to
by 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 issuer was required
to file such reports), and (2) has been subject to such filing requirement for
the past 90 days.
Yes   X   No ____

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



                                                    OUTSTANDING AT
         CLASS                                      APRIL 30, 1997
      COMMON STOCK                                    3,925,882


<PAGE>


The Company is amending its Report on Form 10-Q for the period ended March 31,
1997, because the Company determined subsequent to the filing of the Form that
all financial statements presented should combine the accounts of the Company
with those of The Thaxton Insurance Group, Inc., which the company acquired in
October of 1996. That acquisition was accounted for as a pooling of interests,
but the Company's Form 10-Q for the period ended March 31, 1997 as originally
filed did not present combined statements for periods prior to the acquisition.
This amendment combines the accounts for all statements for all periods
presented.
                                       2
<PAGE>




PART I

ITEM 1.  FINANCIAL STATEMENTS

                             THE THAXTON GROUP, INC.

                           Consolidated Balance Sheet

                                 March 31, 1997

ASSETS

Cash                                                               $    (44,122)

Finance receivables, net                                             48,126,492

Premises and equipment, net                                           1,955,409
Accounts receivable                                                   1,364,262
Repossessed automobiles                                               1,266,389
Goodwill and other intangible assets                                  3,840,729
Other assets                                                          1,692,519
                                                                   ------------

                TOTAL ASSETS                                       $ 58,201,678
                                                                   ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Notes payable                                                      $ 47,887,732
Accrued interest payable                                                390,098
Notes payable to affiliates                                             737,621
Accounts payable                                                        854,787
Emoloyee savings plan                                                 1,215,453
Other liabilities                                                       572,012
                                                                   ------------

                TOTAL LIABILITIES                                    51,657,703

Common stock, $.01 par value; authorized
  50,000,000 shares, issued and
  outstanding 3,926,382 shares                                           39,264
Additional paid-in-capital                                            3,439,980
Retained earnings                                                     3,762,231
Deferred stock award                                                   (697,500)
                                                                   ------------

                TOTAL STOCKHOLDERS' EQUITY                            6,543,975
                                                                   ------------

                TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
                                                                   $ 58,201,678
                                                                   ============


                                       3
<PAGE>



                             THE THAXTON GROUP, INC.

                        Consolidated Statements of Income

                           Three Months Ended March 31
                                                       1997            1996
                                                       ----            ----

Interest and fee income                                $3,519,211     $3,204,877
Interest expense                                        1,148,796        979,803
                                                       ----------     ----------

     NET INTEREST INCOME                                2,370,415      2,225,074

Provision for credit losses                               729,767        478,614
                                                       ----------     ----------

     NET INTEREST INCOME AFTER PROVISION
        FOR CREDIT LOSSES                               1,640,648      1,746,460

Other income:
     Insurance premiums and
          commissions, net                              1,207,657      1,309,643
     Other income                                         448,862        276,205
                                                       ----------     ----------

          TOTAL OTHER INCOME                            1,656,519      1,585,848

Operating expenses:
     Compensation                                       1,425,474      1,349,991
     Telephone, postage, and supplies                     317,275        277,415
     Net occupancy                                        355,534        298,850
     Insurance                                             56,961         47,115
     Collection expense                                    43,311         26,962
     Travel                                                32,407         25,444
     Professional fees                                     37,470         18,867
     Reinsurance claims expense                           123,655         42,925
     Other                                                422,111        680,084
                                                       ----------     ----------

          TOTAL OPERATING EXPENSES                      2,814,198      2,767,653
                                                       ----------     ----------

     NET INCOME BEFORE TAXES                              482,969        564,655

Income tax expense                                        168,693        213,953
                                                       ----------     ----------

     NET INCOME                                        $  314,276     $  350,702
                                                       ==========     ==========

Dividends on preferred stock                                 --       $    8,500
                                                       ==========     ==========

     NET INCOME APPLICABLE TO COMMON
     SHAREHOLDERS                                      $  314,276     $  342,202
                                                       ==========     ==========
                                                       ==========     ==========

     NET INCOME PER COMMON SHARE                       $      .08     $      .09
                                                       ==========     ==========

    WEIGHTED AVERAGE SHARES OUTSTANDING                 3,929,281      3,938,236
                                                       ==========     ==========

                                       4
<PAGE>

                             THE THAXTON GROUP, INC.

                      Consolidated Statements of Cash Flows

                   Three months ended March 31, 1997 and 1996

                                                     1997             1996
                                                      ----             ----

Cash flows from operating activities               $   881,729      $   391,526
Cash flows from investing activities                (2,883,165)      (4,275,254)
Cash flows from financing activities                 1,535,849        2,114,291
                                                   -----------      -----------

NET DECREASE IN CASH                                  (465,587)      (1,769,436)

CASH AT BEGINNING OF PERIOD                            421,465        1,828,484
                                                   -----------      -----------

CASH AT END OF PERIOD                              $   (44,122)     $    59,048

                                                   ===========      ===========



                                       5
<PAGE>





                             THE THAXTON GROUP, INC.

                   Notes to Consolidated Financial Statements

                             March 31, 1997 and 1996


(1)    Summary of Significant Accounting Policies

       The Thaxton Group, Inc. (the Company) is incorporated under the laws of
       the state of South Carolina and operates branches in South Carolina,
       North Carolina, Georgia, Virginia and Tennessee. The Company is a
       diversified consumer finance company that is engaged primarily in
       purchasing and servicing retail installment contracts purchased from
       independent used car dealers and making and servicing personal loans to
       borrowers with limited credit histories, low incomes or past credit
       problems. The Company also offers insurance premium financing to such
       borrowers, and with the acquisition of Thaxton Insurance Group, Inc.(TIG)
       in 1996 began selling on an agency basis various lines of automobile,
       property and casualty, life and accident and health insurance. A
       substantial amount of the Company's premium finance business has been
       derived from customers of the independent insurance agencies owned by
       TIG. The Company provides reinsurance through a wholly-owned subsidiary,
       TICO Reinsurance, Ltd. (TRL). All significant intercompany accounts and
       transactions have been eliminated in consolidation.

       The preparation of the consolidated financial statements in conformity
       with generally accepted accounting principles requires management to make
       estimates and assumptions that affect reported amounts of assets and
       liabilities at the date of the financial statements and the amounts of
       income and expenses during the reporting period. Actual results could
       differ from those estimates.

       The following is a description of the more significant accounting and
       reporting policies which the Company follows in preparing and presenting
       its financial statements.

       (a)    INTEREST AND FEE INCOME

              Interest income from finance receivables is recognized using the
              interest (actuarial) method on an accrual basis. Accrual of income
              on finance receivables continues until the receivable is either
              paid off in full or is charged off. Fee income consists primarily
              of late fees which are credited to income when they become due
              from borrowers. For receivables which are renewed, interest income
              is recognized using a method similar to the interest method.



       b)     ALLOWANCE FOR CREDIT LOSSES

              Additions to the allowance for credit losses are based on
              management's evaluation of the finance receivables portfolio
              considering current economic conditions, overall portfolio
              quality, charge-off experience, and such other 


                                       6
<PAGE>

              factors which, in management's judgment, deserve recognition in
              estimating credit losses. Loans are charged-off when, in the
              opinion of management, such loans are deemed to be uncollectible
              or six months has elapsed since the date of the last payment,
              whichever occurs first. While management uses the best information
              available to make such evaluations, future adjustments to the
              allowance may be necessary if conditions differ substantially from
              the assumptions used in making the evaluations.

       (c)    NON-FILE INSURANCE

              Non-file insurance is written in lieu of recording and perfecting
              the Company's security interest in the assets pledged to secure
              certain loans. Non-file insurance premiums are collected from the
              borrower on certain loans at inception and renewal and are
              remitted directly to an unaffiliated insurance company. Certain
              losses related to such loans, which are not recoverable through
              life, accident and health, or property insurance claims, are
              reimbursed through non-file insurance claims subject to policy
              limitations.
              Any remaining losses are charged to the allowance for credit
losses.

       (d)    PREMISES AND EQUIPMENT

              Premises and equipment are reported at cost less accumulated
              depreciation which is computed using the straight-line method for
              financial reporting and accelerated methods for tax purposes.
              Maintenance and repairs are charged to expense as incurred and
              improvements are capitalized.

       (e)    INSURANCE

              The Company remits a portion of credit life, accident and health,
              property and auto insurance premiums written in connection with
              certain loans to an unaffiliated insurance company at the time of
              origination. Any portion of the premiums remitted to this
              insurance company which are not required to cover their
              administrative fees or to pay reinsurance claims expense are
              returned to the Company through its reinsurance subsidiary, TRL,
              and are included in insurance premiums and commissions in the
              accompanying consolidated statements of income. Unearned insurance
              commissions are accreted to income over the life of the related
              insurance contracts using a method similar to that used for the
              recognition of finance charges.

              Insurance commissions earned by TIG are recognized as services are
              performed in accordance with TIG's contractual obligations with
              the underwriters, but not before protection is placed with
              insurers.



                                       7
<PAGE>




       (f)    EMPLOYEE SAVINGS PLAN

              The Company offers a payroll deduction savings plan to all its
              employees. The Company pays interest monthly at an annual rate of
              10% on the prior month's ending balance. Employees may withdraw
              savings on demand.

       (g)    INCOME TAXES

              The Financial Accounting Standards Board's Statement of Financial
              Accounting Standards No. 109, "Accounting for Income Taxes"
              (Statement 109), requires a change from the deferred method of
              accounting for income taxes of APB Opinion 11 to the asset and
              liability method of accounting for income taxes. Under the asset
              and liability method of Statement 109, deferred tax assets and
              liabilities are recognized for the future tax consequences
              attributable to differences between the financial statement
              carrying amounts of existing assets and liabilities and their
              respective tax bases. Deferred tax assets and liabilities are
              measured using the enacted tax rates expected to apply to taxable
              income in the years in which those temporary differences are
              expected to be recovered or settled. Under Statement 109, the
              effect on deferred tax assets and liabilities of a change in tax
              rates is recognized in income in the period that includes the
              enactment date.

       (h)    EARNINGS PER SHARE

              Earnings per share is calculated using the weighted average shares
              outstanding of 3,929,281 and 3,777,023 for 1997 and 1996,
              respectively. The effect of common stock equivalent shares
              applicable to stock option plans has not been included in the
              calculation of net income per share because such effect is not
              materially dilutive.

       (i)    INTANGIBLE ASSETS

              Intangible assets include goodwill, expiration lists, and
              covenants not to compete related to the purchase of insurance
              agencies. Goodwill represents the excess of the cost of insurance
              agencies over the fair value of its assets at the date of
              acquisition. Goodwill is amortized on a straight-line basis over a
              fifteen to twenty year period. The expiration lists are amortized
              over their estimated useful life of twenty years on a
              straight-line basis . Covenants not to compete are amortized
              according to the purchase contract over five to six years on a
              straight-line basis. Intangible assets also include the premium
              paid to acquire Eagle Premium Finance, which is being amortized on
              a straight-line basis over ten years. Recoverability of recorded
              intangibles is evaluated by using undiscounted cash flows.


                                       8
<PAGE>



       (j)    STOCK OPTIONS

              Effective January 1, 1996, the Company adopted Statement of
              Financial Accounting Standard ("SFAS") No. 123, "Accounting for
              Stock-Based Compensation," which requires that the fair value of
              employee stock-based compensation plans be recorded as a component
              of compensation expense in the statement of income or the impact
              of such fair value on net income and earnings per share be
              disclosed on a pro forma basis in a footnote to the financial
              statements in accordance with APB 25. The Company will continue
              such accounting under the provisions of APB 25.

       (k)    FAIR VALUE OF FINANCIAL INSTRUMENTS

              All financial assets and liabilities of the Company are short term
              in nature or are substantially at variable rates of interest. As
              such, the carrying values of these financial assets and
              liabilities approximate their fair value.

       (l)    REPOSSESSED ASSETS

              Repossessed assets are recorded at their estimated fair value less
              costs to dispose. Any difference between the loan balance and the
              fair value of the collateral on the date of repossession is
              charged to the allowance for credit losses.

       (j)     INTERIM UNAUDITED FINANCIAL STATEMENTS

              Information with respect to March 31, 1997 and 1996, and the
                periods then ended, have not been audited by the Company's
                independent auditors, but in
              the opinion of management, reflect all adjustments (which include
                only normal recurring adjustments) necessary for the fair
                presentation of the operations of Company.





                                       9
<PAGE>




(2)    Finance Receivables

       Finance receivables consisted of the following at March 31, 1997 and
1996:

                                                   1997                 1996
                                                   ----                 -----
Consumer                                        $ 60,607,601       $ 45,925,943
Real estate secured                                  917,354            820,323
Insurance premium finance                          3,149,645          5,672,881
Wholesale loans                                      310,133            263,851
                                                ------------       ------------

     Total finance receivables                    64,984,733         52,682,998

Unearned interest                                (12,835,353)       (10,082,822)
Unearned insurance premiums, net                     (62,783)          (328,960)
Allowance for credit losses                       (2,285,057)          (870,076)
Bulk purchase discount                              (890,071)          (333,730)
Dealer holdback                                     (784,977)          (853,450)
                                                ------------       ------------

     Finance receivables, net                   $ 48,126,492       $ 40,213,960
                                                ============       ============

       Consumer loans include bulk purchases of receivables, auto dealer
       receivables under holdback arrangements, and small consumer loan
       receivables. With bulk purchase arrangements, the Company typically
       purchases a group of receivables from an auto dealer or other retailer at
       a discount to par based on management's review and assessment of the
       portfolio to be purchased. This discount amount is then maintained in an
       unearned income account to which losses on these loans are charged. To
       the extent that losses from a bulk purchase exceed the purchase discount,
       the allowance for credit losses will be charged. To the extent losses
       experienced are less than the purchase discount, the remaining discount
       is accreted into income. The amount of bulk purchased receivables, net of
       unearned interest and insurance, and the related purchase discount
       outstanding were approximately $6,865,000 and $890,000, respectively, at
       March 31, 1997 and approximately $3,246,000 and $334,000, respectively,
       at March 31, 1996.

        With holdback arrangements, an auto dealer or other retailer will assign
       receivables to the Company on a loan-by-loan basis, typically at par. The
       Company will withhold a certain percentage of the proceeds, generally 5%
       to 10%, as a dealer reserve to be used to cover any losses which occur on
       these loans. The agreements are structured such that all or a portion of
       these holdback amounts can be reclaimed by the dealer based on the
       performance of the receivables. To the extent that losses from these
       holdback receivables exceed the holdback amounts, the allowance for
       credit losses will be charged. The amount of holdback receivables, net of
       unearned interest and insurance, and the related holdback amount
       outstanding were approximately $32,545,000 and $785,000, respectively, at
       March 31, 1997 and approximately $24,469,000 and $853,000, respectively,
       at March 31, 1996.

                                       10
<PAGE>

       At March 31, 1997, there were no significant concentrations of
       receivables in any type of property or to one borrower.

      These receivables are pledged as collateral for a line of credit
agreement.

       Changes in the allowance for credit losses for the three months ended
March 31, 1997 and 1996 were as follows:

                                                    1997                1996
                                                     ----                ----
Beginning balance                                  $ 2,195,000          783,200
Valuation allowance for acquired loans                     -0-           34,193
Provision for credit losses                            729,766          478,614
Charge-offs                                           (688,489)        (498,754)
Recoveries                                              48,780           67,473
                                                   -----------      -----------
Net charge-offs                                       (639,709)        (425,931)
                                                   -----------      -----------
Ending balance                                     $ 2,285,057          870,076
                                                   ===========      ===========

       The Company's loan portfolio primarily consists of short term loans, the
       majority of which are originated or renewed during the current year.
       Accordingly, the Company estimates that fair value of the finance
       receivables is not materially different from carrying value.

(3)    Indebtedness

       At March 31, 1997, the Company maintained a line of credit agreement with
       a commercial finance company for $80 million, maturing on July 31, 1998.
       Of this amount, approximately $39 million was available at March 31,
       1997. The outstanding balance under this line of credit was $41,200,000
       at March 31, 1997. There are two tranches under this agreement, Tranche A
       and Tranche B. The total line of credit under Tranche A is $70,000,000 of
       which $28,800,000 was available at March 31, 1997. This tranche bears
       interest at the lender's prime rate plus 1% (9.5% at March 31, 1997). The
       total line of credit under Tranche B is $10,000,000, of which the full
       amount was available at March 31, 1997. This tranche bears interest at
       the lender's prime rate plus 5% (13.5% at March 31, 1997). Interest on
       the outstanding line of credit balance is payable monthly.

       The terms of the line of credit agreement provide that the finance
       receivables are pledged as collateral for the amount outstanding. The
       agreement requires the Company to maintain certain financial ratios at
       established levels and comply with other non-financial requirements.
       Also, the Company may pay dividends up to 50% of the current years net
       income. As of March 31, 1997, the Company met all such ratios and
       requirements.

       TIG maintains a line of credit agreement with the same commercial finance
       company for $3 million maturing March 31, 1998. Of this amount,
       approximately $1,486,000 




                                       11
<PAGE>

       was available at March 31, 1997. The outstanding balance under this line
       of credit was $1,514,000 at March 31, 1997. Borrowings under this
       arrangement bear interest at the lender's prime rate plus 3% (11.5% at
       March 31, 1997), payable monthly.

       TIG also has a line of credit agreement with a commercial bank whereby
       the Company can borrow up to $400,000. The principal is payable on
       demand, and interest is payable quarterly at the bank's prime rate plus
       one percent (9.5% at March 31, 1997). The amount outstanding as of March
       31, 1997 was approximately $64,000. The line of credit is secured by
       certain real estate, furniture, fixtures, equipment and investments owned
       by TIG and individual shareholders. TIG also has a sweep account with the
       bank. The bank requires TIG to maintain a $55,000 balance in the account.
       If the account drops below $55,000 the bank automatically advances money
       from the line-of-credit to increase the account to $55,000.

          At March 31, the Company had notes payable to other non affiliates in
         the amount of $5,110,000 and affiliates in the amount of $738,000.

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

GENERAL

      The Company is a diversified consumer financial services company that,
operating in Georgia, North Carolina, South Carolina, Tennessee and Virginia
under the name "TICO Credit Company," is engaged in purchasing and servicing
retail installment contracts ("Automobile Sales Contracts") originated by
independent used automobile dealers ("Dealers") and making and servicing
personal loans ("Direct Loans") to persons with limited credit histories, low
incomes or past credit problems ("Non-prime Borrowers"). Under the name "TICO
Premium Finance Company" in North Carolina and South Carolina and "Eagle Premium
Finance" in Virginia, the Company finances insurance premiums ("Premium Finance
Contracts"), primarily for personal lines of insurance purchased by Non-prime
Borrowers through independent agents ("Premium Finance"). The Company also sells
on an agency basis various insurance products (primarily credit life and credit
accident and health) in conjunction with the purchase of Automobile Sales
Contracts or the making of Direct Loans and, with the acquisition of TIG on
October 31, 1996, began selling on an agency basis various lines of automobile,
property and casualty, life and accident and health insurance.

      The Company believes the best opportunities for continued growth in its
Automobile Sales Contract and Direct Loan portfolios lie in the opening of new
finance offices in small to medium-sized markets in the states where the Company
presently operates and contiguous states that management believes to be under
served by its competitors. The Company opened two new finance offices in 1996
and plans to open at least two in 1997 and 1998. The Company estimates that the
capital expenditure necessary for opening each new finance office is
approximately $21,000. While there are certain risks associated with such
expansion, the Company believes that its ability to identify and retain finance
office management personnel having established relationships with Dealers, its
expertise in extending and servicing credit to Non-prime Borrowers and other
factors will enable it to manage anticipated growth in its finance office
network and in its Automobile Sales Contract and Direct Loan portfolios. The
Company will continue to expand its Premium Finance Contract portfolio by
establishing and broadening relationships with insurance agencies having a
client base in need of premium financing. The Company also periodically may make
bulk purchases of Automobile Sales Contracts and Premium Finance Contracts if
such purchases are deemed beneficial to the Company's competitive position and
portfolio mix and will seek opportunities to expand its network of independent
insurance agencies.

                                       12
<PAGE>


RECENT ACQUISITION AND EXPANSION ACTIVITIES

      During the first quarter of 1997 the Company opened a finance office in
Christiansburg, Va., which is primarily focused upon Automobile Sales Contract
origination. The Company also acquired independent insurance agencies in York,
South Carolina and Winston-Salem, North Carolina.

PROFITABILITY

         The following table sets forth certain data relating to the Company's
profitability.

                                                       For the Three Months
                                                         Ended  March 31
                                                        -----------------
                                                       1997              1996
                                                       ----              ----

Average Net Finance Receivables (1)               $49,626,047       $39,636,208
Average notes payable                              42,710,080        33,382,553

Interest and fee income                             3,700,561         3,202,385
Interest expense (2)                                1,022,191           874,459
                                                  -----------       -----------
Net interest income                                 2,678,370         2,327,926

Average interest rate earned (1)                        29.83%            32.32%
Average interest rate paid (1)                           9.57             10.48
                                                  ============     =============
Net interest spread                                     20.26             21.84

Net interest margin (3)                                 24.59             23.49
                                                         ========    ==========
------------

(1)    Averages are computed using month-end balances during the periods
       presented.

(2)    Excludes TIG interest expense.

(3)    Net interest margin represents net interest income divided by average Net
       Finance Receivables.


RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996

      Finance Receivables at March 31, 1997 were $64,984,733 versus $52,682,998
at March 31, 1996, a 23% increase. The primary component of this increase was
Automobile Sales Contracts, which increased from $33,438,769 at March 31, 1996
to $39,585,713 at March 31, 1997, or 18%. The Company opened two branch offices
in 1996 and one in early 1997, which generated significant additional volume of
Automobile Sales Contracts in the first quarter of 1997.

      Unearned income at March 31, 1997 was $12,898,136 versus $10,411,782 at
March 31, 1996, a 24% increase which was directly related to the higher volume
of Automobile Sales Contract originations during 1997. The provision for credit
losses established for the three months ended March 31, 1997 was $729,767 versus
$478,614 for 1996, and the allowance for credit losses increased from $870,076
at March 31, 1996 to $2,285,057 at March 31, 1997. The increase in the provision
is due to strengthening the Company's allowance for credit losses in response to
higher than expected loan losses and repossessions in the fourth quarter of
1996. The allowance for credit losses as a percentage of average Net Finance
Receivables increased from 2.06% at March 31, 1996 to 4.39% at March 31, 1997.

      The growth in finance receivables during the three months ended March 31,
1997 versus the comparable period in 1996 resulted in higher levels of interest
and fee income. Interest and fee income for the three months ended March 31,
1997 was $3,519,211, versus $3,204,877 for the three months ended March 31,
1996, a 10% increase. Interest expense also was higher, increasing to $1,148,796
for


                                       13
<PAGE>


the three months ended March 31, 1997 versus $979,803 for the three months
ended March 31, 1996, a 17% increase. The increase in interest expense was due
to the higher levels of borrowings needed to fund finance receivable
originations.

      Net interest income for the three months ended March 31, 1997 increased to
$2,370,415 from $2,225,074 for the comparable period of 1996, a 7% increase. The
increases in net interest income are attributable to the higher levels of
finance receivables, the interest income and fees from which more than offset
the 14% decrease in net interest spread for the three months ended March 31,
1997 versus 1996.

      Insurance commissions net of insurance cost decreased to $1,207,657 for
the three months ended March 31, 1997 from $1,309,643 for 1996. Other income
increased from $276,205 at March 31, 1996 to $448,862 at March 31, 1997 due to
profit sharing payments received from insurance companies.

      Operating expenses increased from $2,767,653 for the three months ended
March 31, 1996 to $2,814,198 for 1997, a 2% increase. The increase in expenses
was due to opening new offices, in addition to a general increase in costs
associated with administering a significantly larger finance receivable
portfolio.

      Net income decreased to $314,276 for the three months ended March 31, 1997
from $350,702 for 1996. The decrease in net income was due to the higher levels
of net interest and insurance income being offset by higher loss provisions and
expenses.

      Stockholders' equity increased from $6,371,305 at December 31, 1996 to
$6,543,975 at March 31, 1997, a 3% decrease, as a result of retained earnings
from after tax profits during the period.

CREDIT LOSS EXPERIENCE

      Provisions for credit losses are charged to income in amounts sufficient
to maintain the allowance for credit losses at a level considered adequate to
cover the expected future losses of principal and interest in the existing
finance receivable portfolio. Credit loss experience, contractual delinquency of
finance receivables, the value of underlying collateral and management's
judgement are factors used in assessing the overall adequacy of the allowance
and resulting provision for credit losses. The Company's charge-off policy is
based on an account by account review of delinquent receivables. Losses on
finance receivables secured by automobiles are recognized at the time the
collateral is repossessed. Other finance receivables are charged off when they
become contractually past due 180 days, unless extenuating circumstances exist
leading management to believe such finance receivables will be collectible.
Finance receivables may be charged off prior to the normal charge-off period if
management deems them to be uncollectible.



                                       14
<PAGE>




     The following table sets forth the Company's allowance for credit losses at
March 31, 1997, and 1996 and the credit loss experience over the periods
presented.
<TABLE>
<CAPTION>

                                                   At or for the Three Months
                                                         Ended March 31,
                                                   ----------------------------
                                                      1997              1996
                                                   ---------          ---------  
<S>                                                 <C>              <C>    

Net finance receivables(1)                            $52,086,596    $42,271,216
Allowance for credit losses                             2,285,057        870,076
Allowance for credit losses as a percentage of  net          4.39%          2.06%
finance receivables (1)
Dealer reserves and discounts on bulk purchases       $ 1,675,048    $ 1,187,180
Dealer reserves and discounts on bulk purchases as           4.23%          4.67%
percentage of Automobile Sales Contracts at period
end(2)
Allowance for credit losses and dealer reserves and          7.60%          4.87%
discount on bulk purchases as a percentage of net
finance receivables (1)
Provision for credit losses                           $   729,767    $   478,614
Charge-offs (net of recoveries)                           639,709        425,931
Charge-offs (net of recoveries) as a percentage of           5.16%          4.30%
average net finance receivables (1)
</TABLE>

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

(1)    Averages are computed using month-end balances of Net Finance Receivables
       during the period presented.

(2)    Percentages are computed using Automobile Sales Contracts, net of
       unearned finance charges only.



                                       15
<PAGE>



      The following table presents an allocation of the Company's reserves and
allowances for credit losses, by type of receivable. The allowance for credit
losses has been allocated on an approximate basis between Direct Loans and
Premium Finance Contracts because losses on Automobile Sales Contracts are
charged against dealer reserves if the originating dealer's Specific Reserve
Account is adequate to cover the loss. The entire allowance is, however,
available to absorb losses occurring on any type of finance receivable. The
allocation is not indicative of future losses.

                                                           At March 31,
                                                         1997        1996
                                                        ------       -----
 Dealer reserves and discounts on bulk purchases       $1,675,048   $1,487,180
    on Automobile 
 Sales Contracts Allowance for credit losses:
   Direct Loans                                         2,069,255      553,327
   Premium Finance Contracts                              215,802      316,749
                                                       ----------   ----------
       Subtotal                                         2,285,057      870,076
                                                       ----------   ----------
       Total                                           $3,960,105   $2,357,256

                                                       ==========   ==========
      The following table sets forth certain information concerning Automobile
Sales Contracts and Direct Loans at the end of the periods indicated:
<TABLE>
<CAPTION>

                                                                           At March 31,
                                                                         ----------------
                                                                  1997                   1996
                                                              ---------------        -------------   
<S>                                                              <C>                 <C>    

Automobile Sales Contracts and Direct Loans contractually         $394,144             $304,663
 past due 90 days or more(1)
 Automobile Sales Contracts and Direct Loans (1)                 47,380,472           36,229,145
 Automobile Sales Contracts and Direct Loans contractually             .83%                 .84%
 past due 90 days or more as a percentage of Automobile
 Sales  Contracts and Direct Loans
</TABLE>

-------------------------
      
(1)    Finance receivable balances are presented net of unearned finance
       charges, dealer reserves on Automobile Sales Contracts and discounts on
       bulk purchases.

      The following table sets forth certain information concerning Premium
Finance Contracts at the end of the periods indicated:

                                                 At March 31,
                                               ----------------
                                             1997          1996
                                             -----         ----- 
Premium finance contracts contractually    $   66,208    $  124,150
past due 60 days or more(1)
Premium finance contracts outstanding(1)    3,031,076     5,390,978
Premium finance contracts contractually          2.18%         2.30%
past due 60 days or more as a percentage
of premium finance contracts


                                       16
<PAGE>

-------------------------------------------
(1) Finance receivable balances are presented net of unearned finance charges
and discounts on bulk purchases

LIQUIDITY AND CAPITAL RESOURCES

      The Company generally finances its operations and new offices through cash
flow from operations and borrowings under the Revolving Credit Facility. The
Revolving Credit Facility is extended by Finova and consists of two tranches.
The primary tranche provides for advances of up to $70 million and the secondary
tranche provides for advances of up to $10 million during their respective
terms, both of which expire on July 31, 1998, subject to the limitation that
advances under each tranche of the Revolving Credit Facility may not exceed an
amount equal to specified percentages of Net Finance Receivables. As of April
30, 1997, $42.5 was outstanding under the Revolving Credit Facility and there
was $37.5 available for additional borrowing. The interest rate for borrowings
is the prime rate published by Citibank, N.A. (or other money center bank
designated by Finova) plus one percent per annum for the primary tranche and
plus five percent per annum for the secondary tranche. The Revolving Credit
Facility agreement, amended on July 28, 1996, provides for a lower fixed
percentage over prime than did the previous agreement. The Revolving Credit
Facility imposes several financial and other covenants, including leverage
tests, dividend restrictions, and minimum net worth requirements. The Company
does not believe these covenants will materially limit its business or its
expansion strategy.

      Management believes that the recent increase in the maximum borrowings
available under the Revolving Credit Facility, in addition to cash expected to
be generated from operations, will provide the resources necessary to pursue the
Company's business and growth strategy through 1997. The company is currently
investigating several options for raising additional funds to support growth in
future years.

                                       17
<PAGE>