<PAGE>


                          SECURITIES AND EXCHANGE COMMISSION
                                Washington, D.C. 20549


                                      FORM 10-Q

    [X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                           SECURITIES EXCHANGE ACT OF 1934
                   (For the Quarterly Period ended June 30, 1997)

                                          OR

    [ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                           SECURITIES EXCHANGE ACT OF 1934
          For transition period from ________________to_______________

                      Commission File Number:  0-24286


                                 EAGLE FINANCE CORP.
                ------------------------------------------------------
                (Exact name of Registrant as specified in its charter)


            DELAWARE                                        36-2464365  
--------------------------------                 ----------------------------
(State or other jurisdiction of                  (IRS Employer Identification
incorporation or organization)                                number) 

1425 TRI-STATE PARKWAY, GURNEE, ILLINOIS                    60031-4060
-----------------------------------------                   -----------
(Address of principal executive offices)                    (Zip Code)

                                   (847) 855-7150
                 ----------------------------------------------------
                 (Registrant's telephone number, including area code)



    Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  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:

10,000,000 shares of common stock, $0.01 par value per share, were authorized
and 4,189,100 shares were issued and outstanding as of June 30, 1997.

<PAGE>


                                EAGLE FINANCE CORP.

                                      FORM 10-Q

                               ________________________

                                  TABLE OF CONTENTS
                               ________________________
                                                                         PAGE
                                                                        NUMBER
                            PART I.  FINANCIAL INFORMATION

Item 1.   FINANCIAL STATEMENTS

          Balance Sheets ..............................................    3

          Statements of Income ........................................    4

          Statements of Changes in Stockholders' Equity................    5

          Statements of Cash Flows ....................................    6

          Notes to Financial Statements................................    7

Item 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF 
          FINANCIAL CONDITION AND RESULTS OF OPERATIONS................    9

                             PART II - OTHER INFORMATION

Item 1.   LEGAL PROCEEDINGS ...........................................   20

Item 2.   CHANGES IN SECURITIES .......................................   21

Item 3.   DEFAULTS UPON SENIOR SECURITIES..............................   21

Item 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..........   21

Item 5.   OTHER INFORMATION............................................   21

Item 6.   EXHIBITS AND REPORTS ON FORM 8-K ............................   21

SIGNATURES ............................................................  S-1

                                         2

<PAGE>

                                 EAGLE FINANCE CORP.

                                    BALANCE SHEETS
                  AS OF JUNE 30, 1997 AND 1996 AND DECEMBER 31, 1996
                                     (Unaudited)

                                        ASSETS
<TABLE>
<CAPTION>

                                                                JUNE 30,
                                                       ----------------------------   DECEMBER 31,
                                                          1997             1996           1996 
                                                       -----------   --------------   ------------
<S>                                                    <C>           <C>               <C>
Finance receivables, net                               $39,753,660     $119,473,972    $54,663,926
Nonrefundable acquisition discount                        (796,936)      (5,378,439)    (1,443,164)
Allowance for credit losses                             (4,296,219)      (8,892,423)    (6,045,514)
                                                       -----------   --------------   ------------
                                                        34,660,505      105,203,110     47,175,248
Excess servicing receivable                              2,882,771               --      1,050,590
Cash                                                     3,658,884        1,654,451      1,271,594
Money market investments                                   552,863          554,155        552,651
Prepaid expenses and debt issuance costs                 1,118,333        1,030,745      1,554,082
Repossessed or titled assets                             1,857,819        4,761,981      4,249,443
Income tax receivable                                           --               --      4,732,346
Deferred income tax benefit                              1,470,529        4,908,341      1,004,912
Other assets                                             2,705,487        1,282,148      2,176,696
                                                       -----------   --------------   ------------
                                                       $48,907,191     $119,394,931    $63,767,562
                                                       -----------   --------------   ------------
                                                       -----------   --------------   ------------
    
                               LIABILITIES AND STOCKHOLDERS' EQUITY
    
Senior debt                                            $20,048,498      $81,902,675    $32,827,893
Subordinated debt                                       17,631,728       17,970,114     17,977,720
Accrued interest                                           502,991          367,353        468,533
Accounts payable and accrued liabilities                 2,099,063        2,986,945      1,893,737
Unearned insurance commissions                               1,209           30,252          5,158
Dealer reserves                                            273,590          270,701        286,783
                                                       -----------   --------------   ------------
Total liabilities                                       40,557,079      103,528,040     53,459,824
Stockholders' equity:
Preferred Stock, authorized 3,000,000 shares;
    none issued                                                 --               --             --
Common Stock:  $.01 par value, authorized 10,000,000
    shares, issued and outstanding 4,189,100 shares         41,891           41,891         41,891
Additional paid-in capital                              13,514,422       13,514,422     13,514,422
Retained earnings                                       (5,206,201)       2,310,578     (3,248,575)
                                                       -----------   --------------   ------------
Total stockholders' equity                               8,350,112       15,866,891     10,307,738
                                                       -----------   --------------   ------------
                                                       $48,907,191     $119,394,931    $63,767,562
                                                       -----------   --------------   ------------
                                                       -----------   --------------   ------------
</TABLE>

                                      
                                      
              See accompanying notes to financial statements.


                                       3

<PAGE>

                            EAGLE FINANCE CORP.

                            STATEMENTS OF INCOME
             THREE AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996
                                (Unaudited)
<TABLE>
<CAPTION>
                                          THREE MONTHS ENDED JUNE 30,     SIX MONTHS ENDED JUNE 30,
                                          ---------------------------   ---------------------------
                                               1997            1996         1997            1996
                                          ------------   ------------   -----------   -------------
<S>                                       <C>            <C>            <C>           <C>
Interest income:
  Interest and fee income                 $  3,178,395   $  7,279,401   $ 6,605,984   $  15,359,907
  Interest expense                          (1,310,153)    (2,483,799)   (2,760,479)     (4,872,722)
                                          ------------   ------------   -----------   -------------
Net interest income                          1,868,242      4,795,602     3,845,505      10,487,185
Provision for credit losses                 (2,793,321)    (2,200,000)   (3,168,321)     (4,896,000)
                                          ------------   ------------   -----------   -------------
Net interest income after provision
  for credit losses                           (925,079)     2,595,602       677,184       5,591,185
Other income:
  Servicing income                           1,659,117      1,676,033     2,439,572       2,353,410
  Gain on sale of finance receivables        2,621,232             --     2,621,232              --
  Insurance commissions                          2,634         13,850         5,044          35,085
                                          ------------   ------------   -----------   -------------
Total other income                           4,282,983      1,689,883     5,065,848       2,388,495
Income before operating expenses             3,357,904      4,285,485     5,743,032       7,979,680
Operating expenses:
  Salaries and related costs                 1,951,323      2,138,417     3,986,468       3,882,362
  Other operating expenses                   1,856,188      1,995,982     3,714,190       3,807,780
                                          ------------   ------------   -----------   -------------
Total operating expenses                     3,807,511      4,134,399     7,700,658       7,690,142
                                          ------------   ------------   -----------   -------------
Income (loss) before income taxes             (449,607)       151,086    (1,957,626)        289,538
Applicable income taxes                             --         26,784            --          78,984
                                          ------------   ------------   -----------   -------------
Net income (loss)                          $  (449,607)   $   124,302   $(1,957,626)    $   210,554
                                          ------------   ------------   -----------   -------------
                                          ------------   ------------   -----------   -------------
Per share data:
  Net income (loss) per common share
    (primary)                                   $(0.11)         $0.03        $(0.47)          $0.05
  Net income (loss) per common share
    (fully diluted)                             $(0.11)         $0.03        $(0.47)          $0.05
  Average number of common shares
    outstanding (primary)                    4,189,100      4,189,100     4,189,100       4,189,100
  Average number of common shares
    outstanding (fully diluted)              4,189,100      4,189,100     4,189,100       4,192,400
</TABLE>

              See accompanying notes to financial statements.


                                       4

<PAGE>

                            EAGLE FINANCE CORP.

               STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
             THREE AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996
                                (Unaudited)
<TABLE>
<CAPTION>
                                          THREE MONTHS ENDED JUNE 30,     SIX MONTHS ENDED JUNE 30,
                                          ---------------------------     -------------------------
                                               1997            1996            1997          1996
                                           -----------    -----------     -----------   -----------
<S>                                        <C>            <C>             <C>           <C>
Common stock:
  Balance at beginning of period           $    41,891    $    41,891     $    41,891   $    41,891
  Stock options exercised                           --             --              --            --
                                           -----------    -----------     -----------   -----------
                                                41,891         41,891          41,891        41,891
                                           -----------    -----------     -----------   -----------
Additional paid-in capital:
  Balance at beginning and end of period    13,514,422     13,514,422      13,514,422    13,514,422
Retained earnings:
  Balance at beginning of period            (4,756,594)     2,186,276      (3,248,575)    2,100,024
  Net income (loss)                           (449,607)       124,302      (1,957,626)      210,554
                                           -----------    -----------     -----------   -----------
                                            (5,206,201)     2,310,578     (5,206,201)     2,310,578
                                           -----------    -----------     -----------   -----------
Total stockholders' equity                 $ 8,350,112    $15,866,891     $ 8,350,112   $15,866,891
                                           -----------    -----------     -----------   -----------
                                           -----------    -----------     -----------   -----------
</TABLE>








                                    
                                      
              See accompanying notes to financial statements.


                                       5

<PAGE>

                            EAGLE FINANCE CORP.

                          STATEMENTS OF CASH FLOWS
             THREE AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996
                                (Unaudited)
<TABLE>
<CAPTION>
                                                THREE MONTHS ENDED JUNE 30,     SIX MONTHS ENDED JUNE 30,
                                                ---------------------------     ---------------------------
                                                     1997            1996            1997          1996
                                                ------------   ------------     ------------   ------------
<S>                                             <C>            <C>              <C>            <C>
Cash flows from operating activities:
  Net income (loss)                             $   (449,607)  $    124,302     $ (1,957,626)  $    210,554
  Adjustments to reconcile net income to 
    net cash provided by (used in) 
    operating activities:
      Provision for credit losses                  2,793,321      2,200,000        3,168,321      4,896,000
      Net finance receivable (charge-offs) 
        recoveries against allowance              (2,887,052)    (5,315,282)      (4,917,616)    (6,811,412)
      Decrease (increase) in:
        Prepaid expenses unrelated to debt            80,438        217,443          151,574        172,738
        Excess servicing receivable               (2,034,862)            --       (1,832,181)            --
        Repossessed or titled assets               1,054,529       (314,795)       2,391,624       (332,841)
        Other assets                                (161,198)       103,323         (528,791)       (29,102)
        Income tax receivable                      3,406,729       (772,071)       4,266,729       (772,071)
      Increase (decrease) in:
        Accrued interest                             250,180       (364,988)          34,458       (135,481)
        Accrued income tax                                15       (710,644)           1,925       (683,144)
        Accounts payable and accrued
          liabilities                               (412,552)      (125,671)         203,401       (193,382)
        Unearned insurance commissions                (2,627)       (11,968)          (3,949)       (15,863)
        Dealer reserves                               (3,091)       (24,451)         (13,193)       (22,163)
        Nonrefundable dealer reserves             (1,943,844)      (444,363)        (646,228)    (4,049,713)
                                                ------------   ------------     ------------   ------------
Net cash provided by (used in) operating 
    activities                                      (309,621)    (5,439,165)         318,448     (7,765,880)
                                                ------------   ------------     ------------   ------------
Cash flows from investing activities:
  Purchase of investments                             (7,863)        (9,155)            (212)        (9,155)
  Proceeds from bulk sale/securitization of 
    vehicle retail installment notes              30,750,043     21,470,402       30,750,043     34,282,274
  Principal collected on finance receivables       3,786,113     12,300,627        9,949,907     27,139,870
  Finance receivables originated or 
    acquired (net of write-offs)                 (11,617,665)   (17,382,429)     (25,789,684)   (35,177,250)
                                                ------------   ------------     ------------   ------------
Net cash provided by (used in) investing 
  activities                                      22,910,628     16,379,445       14,910,054     26,235,739
                                                ------------   ------------     ------------   ------------
Cash flows from financing activities:
  Proceeds from draws on bank lines               29,592,066     12,700,000       39,229,348     29,280,583
  Repayments of borrowings                       (51,092,066)   (23,950,000)     (51,092,066)   (48,480,583)
  Debt to affiliate                                 (140,764)       489,774         (916,677)       451,118
  Proceeds from issuance of other debt                 7,714         14,320           50,768         55,728
  Repayment of other debt                             (4,217)      (130,913)        (396,760)      (130,913)
  Debt issuance cost                                  73,383       (102,432)         284,175        (60,558)
                                                ------------   ------------     ------------   ------------
Net cash provided by (used in) financing 
    activities                                   (21,563,884)   (10,979,251)     (12,841,212)   (18,884,625)
                                                ------------   ------------     ------------   ------------
Cash, net change                                   1,037,123        (38,971)       2,387,290       (414,766)
Cash at beginning of period                        2,621,761      1,693,422        1,271,594      2,069,217
                                                ------------   ------------     ------------   ------------
Cash at end of period                           $  3,658,884   $  1,654,451     $  3,658,884   $  1,654,451
                                                ------------   ------------     ------------   ------------
                                                ------------   ------------     ------------   ------------
Supplemental cash flow disclosures - cash paid 
  during the period for:
  Interest                                      $  1,094,431   $  1,828,772     $  2,760,479   $  3,931,756
  Income taxes and Illinois replacement tax     $         15   $  1,509,500     $      1,925   $  1,534,200
</TABLE>

              See accompanying notes to financial statements.
                                      
                                       6

<PAGE>

                             EAGLE FINANCE CORP.

                          NOTES TO FINANCIAL STATEMENTS
                                       

1.  The financial statements of Eagle Finance Corp., a Delaware corporation 
(the "Company"), are unaudited, but in the opinion of management reflect all 
necessary adjustments, consisting only of normal recurring accruals, for a 
fair presentation of results as of the dates and for the periods covered by 
the financial statements. The results for the interim periods are not 
necessarily indicative of the results of operations that may be expected for 
the fiscal year. Management suggests that the unaudited interim financial 
statements contained herein be read in conjunction with the financial 
statements and the accompanying notes to the financial statements included in 
the Company's 1996 Annual Report on Form 10-K. 

2.  Net income (loss) per common share amounts are based on the weighted 
average number of common shares and common stock equivalents outstanding as 
reflected on Exhibit 11 to this Quarterly Report on Form 10-Q.

3.  As of January 1, 1997, the Company adopted Financial Accounting Standards 
Board Statement ("FASB") No. 125, "Accounting for Transfers and Servicing of 
Financial Assets and Extinguishments of Liabilities" ("FASB 125").  FASB 125 
is effective for transfers and servicing of financial assets and retirements 
of liabilities occurring after December 31, 1996, and is to be applied 
prospectively.  FASB 125 provides accounting and reporting standards for 
transfers and servicing of financial assets and retirements 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.  Adoption of FASB 125 is 
expected to have a material impact on the Company's financial position and 
results of operations.

4.  In February 1997, FASB Statement No. 128, "Earnings Per Share" ("FASB 
128"), was issued. FASB 128 supersedes APB Opinion No. 15, Earnings Per Share 
and specifies the computation, presentation, and disclosure requirements for 
earnings per share (EPS) for entities with publicly held common stock or 
potential common stock.  FASB 128 was issued to simplify the computation of 
EPS and to make the U.S. standard more compatible with the EPS standards of 
other countries and that of the International Accounting Standards Committee. 
It replaces the presentation of primary EPS with a presentation of basic EPS 
and fully diluted EPS with diluted EPS.  It also requires dual presentation 
of basic and diluted EPS on the face of the income statement for all entities 
with complex capital structures and requires a reconciliation of the 
numerator and denominator of the basic EPS computation to the numerator and 
denominator of the diluted EPS computation.

    Basic EPS, unlike primary EPS, excludes dilution and is computed by 
dividing income available to common stockholders by the weighted-average 
number of common shares outstanding for the period.  Diluted EPS reflects the 
potential dilution that could occur if securities or other contracts to issue 
common stock were exercised or converted into common stock or resulted in the 
issuance of common stock that then shared in the earnings of the entity.  
Diluted EPS is computed similarly to fully diluted EPS under APB 15.

    FASB 128 is effective for financial statements for both interim and 
annual periods ending after December 15, 1997.  Earlier application is not 
permitted (although pro forma EPS disclosure in the footnotes for periods 
prior to required adoption is permitted).  After adoption, all prior-period 

                                      7

<PAGE>

EPS data presented must be restated to conform with FASB 128.  Although no 
assurances can be provided, the Company does not expect adoption of FASB 128 
to have a significant impact on the Company's financial statements.

    In June 1997, FASB issued FASB Statement No. 130, "Reporting 
Comprehensive Income", which is effective for fiscal years beginning after 
December 15, 1997 ("FASB 130").  The statement establishes standards for 
reporting and display of comprehensive income and its components (revenues, 
expenses, gains and losses) in a full set of general-purpose financial 
statements.  This statement requires that all items that are required to be 
recognized under accounting standards as components of comprehensive income 
be reported in a financial statement that is displayed with the same 
prominence as other financial statements.  Although no assurances can be 
provided, the Company does not expect adoption of FASB 130 to have a 
significant impact on the Company's financial statements.

THIS REPORT MAY CONTAIN CERTAIN FORWARD-LOOKING STATEMENTS WITHIN THE MEANING 
OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF 
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.  THE COMPANY INTENDS SUCH 
FORWARD-LOOKING STATEMENTS TO BE COVERED BY THE SAFE HARBOR PROVISIONS FOR 
FORWARD-LOOKING STATEMENTS CONTAINED IN THE PRIVATE SECURITIES REFORM ACT OF 
1995, AND IS INCLUDING THIS STATEMENT FOR PURPOSES OF INDICATING SUCH INTENT. 
FORWARD-LOOKING STATEMENTS THAT ARE BASED ON CERTAIN ASSUMPTIONS, AND 
DESCRIBE FUTURE PLANS, STRATEGIES AND EXPECTATIONS OF THE COMPANY, ARE 
GENERALLY IDENTIFIABLE BY USE OF THE WORDS "BELIEVE," "EXPECT," "INTEND," 
"ANTICIPATE," "ESTIMATE," "PROJECT" OR SIMILAR EXPRESSIONS.  THE COMPANY'S 
ABILITY TO PREDICT RESULTS OR THE ACTUAL EFFECT OF FUTURE PLANS OR STRATEGIES 
IS INHERENTLY UNCERTAIN. FACTORS THAT COULD HAVE A MATERIAL ADVERSE EFFECT ON 
THE OPERATIONS AND FUTURE PROSPECTS OF THE COMPANY INCLUDE, BUT ARE NOT 
LIMITED TO, CHANGES IN INTEREST RATES, GENERAL ECONOMIC CONDITIONS, 
LEGISLATIVE/REGULATORY CHANGES, MONETARY AND FISCAL POLICIES OF THE U.S. 
GOVERNMENT, INCLUDING POLICIES OF THE U.S. TREASURY AND THE FEDERAL RESERVE 
BOARD, THE QUALITY OR COMPOSITION OF THE COMPANY'S PORTFOLIO OF FINANCE 
RECEIVABLES, THE ABILITY OF THE COMPANY TO OBTAIN DEBT OR OTHER FINANCING, 
COMPETITION, DEMAND FOR FINANCIAL SERVICES IN THE COMPANY'S MARKET AREA AND 
ACCOUNTING PRINCIPLES, POLICIES AND GUIDELINES. THESE RISKS AND UNCERTAINTIES 
SHOULD BE CONSIDERED IN EVALUATING FORWARD-LOOKING STATEMENTS AND UNDUE 
RELIANCE SHOULD NOT BE PLACED ON SUCH STATEMENTS.  FURTHER INFORMATION 
CONCERNING THE COMPANY AND ITS BUSINESS, INCLUDING ADDITIONAL FACTORS THAT 
COULD MATERIALLY AFFECT THE COMPANY'S FINANCIAL RESULTS, IS INCLUDED IN OTHER 
COMPANY FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION.

                                      8

<PAGE>

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

    The Company is a specialized financial services company engaged primarily 
in acquiring and servicing automobile retail installment sales contracts 
("Installment Contracts") for purchases of late model used automobiles by 
"non-prime" consumers, who typically have limited access to traditional 
sources of consumer credit.  To a lesser extent, the Company also makes 
direct consumer loans and finance leases and purchases other retail 
installment sale contracts (collectively "Other Loans") and offers, as agent, 
insurance and other products related to consumer finance transactions 
(collectively "Insurance Products"). The Company maintains its corporate 
headquarters and a regional office near Chicago in Gurnee, Illinois, and 
operates two other regional offices in Tampa and Orlando, Florida.

    As of June 30, 1997, the Company had active relationships (I.E., the 
Company purchased Installment Contracts from such dealers during the 
preceding 90 days) with approximately 370 dealers located primarily in 
Illinois, Florida, South Carolina, Georgia and Wisconsin, and, to a lesser 
extent, in Indiana, New Mexico, Kentucky, Tennessee, Utah and Wyoming.

    The following is management's discussion and analysis of the financial 
condition of the Company at June 30, 1997 (unaudited) as compared to June 30, 
1996 (unaudited) and December 31, 1996, and the results of operations for the 
three and six months ended June 30, 1997 and 1996 (unaudited).  This 
discussion should be read in conjunction with the Company's financial 
statements and notes thereto appearing elsewhere in this quarterly report. 
Data for the three months ended June 30, 1997 are not necessarily indicative 
of results expected for the full fiscal year.  The ratios and percentages 
provided below are calculated using the detailed financial information 
contained in the Company's financial statements and the financial data 
included elsewhere in this Form 10-Q.  References to "net" finance 
receivables or Installment Contracts shall mean finance receivables or 
Installment Contracts, as appropriate, net of unearned finance charges.

RECENT DEVELOPMENTS

    On April 14, 1997 and June 27, 1997, the Company sold approximately $19.2 
million and $11.5 million (net), respectively, of Installment Contracts to 
General Electric Capital Corporation ("GECC") under an Asset Purchase 
Agreement dated as of June 25, 1996, between the Company and GECC (the "GECC 
Agreement").  As of June 30, 1997, the Company serviced approximately $74.1 
million (net) of Installment Contracts sold pursuant to the GECC Agreement.  
SEE "--Liquidity and Capital Resources."  

GENERAL

    Installment Contracts represented over 99% of the Company's net finance 
receivables at June 30, 1997.  Installment Contracts are purchased on a 
non-recourse basis from automobile dealers and are typically secured by 
medium-priced used automobiles.  The automobiles are purchased by non-prime 
consumers at retail prices typically ranging from approximately $5,000 to 
$15,000.  Installment Contracts financing such purchases typically have 
annual percentage rates of interest ("APRs") ranging from 21% to 33% and 
repayment terms ranging from 12 to 60 months.  The average original principal 
amount financed under Installment Contracts outstanding at June 30, 1997 was 
approximately $7,900, at an average APR of approximately 26.5%, with an 
average original term of approximately 40 months.  The Company's experience 
has shown, however, that the average life of the Company's Installment 
Contracts is substantially less than 40 months due to payoffs and 
repossessions that occur prior to contract maturity.

                                      9

<PAGE>

    The Company's outstanding balance of owned or serviced (i.e., managed) 
Installment Contracts declined to $135.3 million at June 30, 1997 from $151.6 
million at December 31, 1996 and from $176.0 million at June 30, 1996.  This 
decline reflects the Company's emphasis on addressing credit losses (rather 
than portfolio growth) during 1996 and 1997.

    Interest and servicing income on managed Installment Contracts accounts 
for most of the Company's revenue.  The net amount of Installment Contracts 
purchased declined to $31.0 million during the six months ended June 30, 1997 
from $57.5 million during the six months ended June 30, 1996.  As reflected 
in the following table, the finance receivables (purchased or originated) by 
the Company during the periods presented below consist primarily of 
Installment Contracts. 

<TABLE>
<CAPTION>

                                    FOR THE THREE MONTHS ENDED JUNE 30,        FOR THE SIX MONTHS ENDED JUNE 30,
                                   -------------------------------------    ---------------------------------------
                                         1997                 1996                 1997                  1996
                                   ----------------     ----------------    ------------------    -----------------
                                              % OF                 % OF                  % OF                 % OF
                                   AMOUNT     TOTAL     AMOUNT     TOTAL     AMOUNT      TOTAL    AMOUNT      TOTAL
                                   -------   ------     -------    -----     -------     -----    -------    ------
                                                               (DOLLARS IN THOUSANDS)
<S>                                <C>        <C>       <C>         <C>      <C>         <C>      <C>         <C>
Net Installment Contracts
    purchased (1).............     $13,817     100%     $28,722      99%     $31,014     100%     $57,477      99%
Net Other 
    Loans originated (1)......          57       0%         102       1%         116       0%         190       1%
                                   -------   ------     -------    -----     -------     -----    -------    ------
 Total........................     $13,874     100%     $28,824     100%     $31,130     100%     $57,652     100%
                                   -------   ------     -------    -----     -------     -----    -------    ------
                                   -------   ------     -------    -----     -------     -----    -------    ------
-------------------
(1) Net of unearned finance charges

</TABLE>

SECURITIZATION TRANSACTIONS

    The Company sells or securitizes (each, a "Securitization" or 
"Securitization Transaction") Installment Contracts on a regular basis in 
order to generate liquidity and to enable the Company to purchase additional 
Installment Contracts.  Securitization Transactions include the sale of 
distinct portfolios of Installment Contracts with the servicing of the 
Installment Contracts retained by the Company.  The servicing arrangements 
generally provide for the Company to earn a base servicing fee, computed as a 
percentage of the outstanding balance of the Installment Contracts, as 
compensation for its duties as servicer.  In addition, the servicing 
arrangements typically provide that the Company is entitled to certain bonus 
and excess servicing fees, which represent collections on the securitized 
portfolio of Installment Contracts in excess of the amounts corresponding to 
(i) principal reductions on securitized Installment Contracts, (ii) an agreed 
upon rate of return and (iii) certain expenses (including, primarily, base 
servicing fees).  Base servicing fees, bonus servicing fees and excess 
servicing fees are referred to herein, collectively, as "Servicing Fees."

    The Company generally recognizes gains on its Securitization 
Transactions.  Gains are determined based upon the difference between the 
sale proceeds and the Company's recorded investment in the Installment 
Contracts included in a Securitization Transaction. Additionally, gains are 
also comprised of the Company's estimates of excess servicing receivables 
("ESRs") for each Securitization Transaction.  ESRs represent the present 
value of the anticipated Servicing Fees on a securitized portfolio of 
Installment Contracts. Aggregate ESRs are recorded as an asset, and a 
corresponding gain is recorded in the period the Securitization occurs.  To 
the extent that the actual future performance of the subject Installment 
Contracts results in lower Servicing Fees than estimated, the recorded ESRs 
will be adjusted (at least quarterly) with corresponding charges made against 

                                      10

<PAGE>

income in the period in which the adjustment is made.  To the extent that the 
actual Servicing Fees are greater than estimated, the Company will record 
additional servicing fee income over the periods in which excess Servicing 
Fees are collected during the life of the subject portfolios.

    During the quarter ended June 30, 1997, the Company sold (with servicing 
retained) $30.7 million of Installment Contracts to GECC. Consistent with the 
Company's adoption of FASB 125, effective January 1, 1997, a gain of $2.6 
million was recognized and capitalized in the quarter ended June 30, 1997.  
The Company intends to continue to record gains or losses, as appropriate, 
resulting from future Securitizations in a manner consistent with generally 
accepted accounting principles.  The net amount of Installment Contracts 
serviced by the Company for third parties was $95.5 million and $56.5 million 
at June 30, 1997 and 1996, respectively.  SEE "--Profitability" and 
"--Liquidity and Capital Resources."

PROFITABILITY

    The following table sets forth certain data relating to the Company's net 
income for the three and six months ended June 30, 1997 and 1996 and for the 
year ended December 31, 1996:

<TABLE>
<CAPTION>

                                                             FOR THE THREE MONTHS      FOR THE THREE MONTHS      FOR THE
                                                                 ENDED JUNE 30,            ENDED JUNE 30,       YEAR ENDED
                                                             ---------------------     ---------------------    DECEMBER 31,
                                                               1997         1996         1997         1996         1996
                                                             --------     --------     --------     --------     --------
                                                                                (DOLLARS IN THOUSANDS)
<S>                                                          <C>          <C>          <C>          <C>          <C>
 Average net finance receivables
    Owned................................................... $ 49,121     $133,892     $ 52,586     $136,859     $116,797
    Serviced................................................   89,782       44,565       90,506       42,907       56,041
                                                             --------     --------     --------     --------     --------
         Managed............................................  138,903      178,457      143,092      179,766      172,838
Average interest bearing liabilities........................   45,456      110,586       49,114      112,689       98,202
 Total interest and fee income (owned)......................    3,178        7,279        6,606       15,360       26,653
 Total interest expense (owned).............................    1,310        2,483        2,760        4,873        9,059
                                                             --------     --------     --------     --------     --------
Net interest income before provision for 
    credit losses (owned)................................... $  1,868     $  4,796      $ 3,846    $  10,487     $ 17,594
                                                             --------     --------     --------     --------     --------
Average interest rate earned on 
    net finance receivables (owned).........................    25.88%       21.75%       25.12%       22.45%       22.82%
Average interest rate on interest
 bearing liabilities (owned)................................    11.53%        8.98%       11.24%        8.65%        9.23%
                                                             --------     --------     --------     --------     --------
 Net interest spread (owned)................................    14.35%       12.76%       13.88%       13.80%       13.59%
                                                             --------     --------     --------     --------     --------
 Net interest margin (owned) (1)............................    15.21%       14.33%       14.63%       15.33%       15.06%
                                                             --------     --------     --------     --------     --------
</TABLE>
--------------------------

(1) Net interest margin represents net interest income on an annualized basis 
    divided by average net finance receivables.

    A principal component of the Company's net income is its net
interest spread.  Net interest spread represents the difference
between interest earned on finance receivables and interest paid for
borrowed funds.  The laws of certain states establish the maximum
interest rates, and prescribe the types and maximum amounts of fees,
insurance premiums and other amounts that consumers may be
charged.  As is common in its market segment, the Company's
Installment Contracts generally bear the maximum allowable interest
rates, fees, premiums and other charges permitted under state law.  As
a result, the Company has limited ability to offset increases in its
cost of funds.

    An increasingly larger component of the Company's profitability is the 
servicing income earned on Securitization Transactions by the Company.  

                                      11

<PAGE>

Servicing income is derived from base servicing fees for Installment Contract 
administration and collection services and bonus or excess servicing fees 
paid based on the performance of the securitized Installment Contracts.  The 
increase in servicing income was due to higher levels of Installment 
Contracts serviced by the Company.  The following table sets forth certain 
data relating to servicing fees for the periods shown:


<TABLE>
<CAPTION>

                                                   FOR THE THREE MONTHS        FOR THE THREE MONTHS        FOR THE
                                                      ENDED JUNE 30,               ENDED JUNE 30,         YEAR ENDED
                                               -------------------------     -------------------------    DECEMBER 31,
                                                  1997            1996          1997           1996           1996
                                               ----------     ----------     ----------     ----------     ----------
<S>                                            <C>            <C>            <C>            <C>            <C>
Base servicing fees.......................     $  689,129     $  312,426     $1,375,168     $  620,680     $1,712,437
Bonus/excess servicing fees(1)...........       1,556,359      1,363,607      1,853,455      1,732,730      3,705,841
Amortization of ESRs(1)..................        (586,371)            --       (789,051)            --       (310,693)
                                               ----------     ----------     ----------     ----------     ----------
Net servicing fees.......................      $1,659,117     $1,676,033     $2,439,572     $2,353,410     $5,107,585
                                               ----------     ----------     ----------     ----------     ----------
                                               ----------     ----------     ----------     ----------     ----------
</TABLE>
---------------------------

(1) Servicing Fees in respect of pre-1997 Securitization Transactions with    
    GECC are recorded as income when received (I.E., on a cash-flow basis).  
    As a result, there is no amortization of ESRs with respect to Installment 
    Contracts included in such Securitization Transactions.  A portion of the 
    bonus/excess servicing fees reflects cash flows from pre-1997 
    Securitization Transactions with GECC.  The October 1996 Securitization 
    with Greenwich Capital Markets Inc. was accounted for in accordance with 
    FASB 125.

    The Company maintains credit loss reserves to absorb potential losses in 
its finance receivables portfolio.  Credit loss reserves for the Company's 
Installment Contracts portfolio are comprised of nonrefundable acquisition 
discount and allowance for credit losses. SEE "--Credit Loss Experience."

    The Company's liabilities are generally more interest-rate sensitive than 
its finance receivables.  As a result, significant increases in the Company's 
cost of funds borrowed under its Revolving Credit Agreement could have a 
material adverse effect on its profitability.  The Company has attempted to 
mitigate the adverse effect of increases in interest rates by entering into 
interest rate protection agreements.  The Company has purchased an interest 
rate cap and interest rate collars that provide limited interest rate 
protection.  SEE "--Liquidity and Capital Resources."  Additionally, the 
Company may utilize alternative financing structures, such as a fixed rate 
senior or subordinated debt, securitizations or whole loan sales to attempt 
to mitigate the adverse effect of interest rate increases.

    Another significant component of the Company's profitability is the level 
of its operating expenses.  Operating expenses are influenced by the level of 
volume and delinquency in the Company's Installment Contracts.  The Company 
increased the number of employees in early 1996 in order to address increases 
in delinquencies.

                                      12

<PAGE>
FINANCIAL CONDITION

    Total assets decreased $14.9 million (23.3%) to $48.9 million at
June 30, 1997 from $63.8 million at December 31, 1996 primarily due to
a decrease in net finance receivables (net of dealer reserves,
nonrefundable acquisition discount and allowance for credit losses) to
$34.7 million at June 30, 1997 from $47.2 million at December 31,
1996.  Total assets were $119.4 million at June 30, 1996 and net
finance receivables (net of dealer reserves, nonrefundable acquisition
discount and allowance for credit losses) were $105.2 million at such
date.  This decline in assets and finance receivables is, in part,
attributable to the securitization of Installment Contracts and lower
Installment Contract acquisition levels resulting in reduced
receivables outstanding.  The Securitization of Installment Contracts
was part of the Company's financing plan.  SEE "--Liquidity and
Capital Resources."  The net amount of owned or serviced Installment
Contracts decreased to $135.3 million at June 30, 1997 from $151.6
million at December 31, 1996.  The net amount of owned or serviced
Installment Contracts was $176.0 million at June 30, 1996. 

    Total liabilities decreased $12.9 million (24.1%) to $40.6
million at June 30, 1997 from $53.5 million at December 31, 1996,
primarily due to a decrease in total debt to $37.7 million at June 30,
1997 from $50.8 million at December 31, 1996.  The decrease in total
debt was primarily the result of a reduction in borrowings under the
Revolving Credit Agreement to $19.9 million at June 30, 1997 from
$31.8 million at December 31, 1996.  SEE "--Liquidity and Capital
Resources."  Total liabilities and stockholders' equity decreased
$14.9 million (23.3%) to $48.9 million at June 30, 1997 from $63.8
million at December 31, 1996.

RESULTS OF OPERATIONS

    The following table sets forth certain data relating to the
Company's results of operations for the three and six months ended
June 30, 1997 and 1996:

<TABLE>
<CAPTION>                                          FOR THE THREE MONTHS       FOR THE SIX MONTHS
                                                       ENDED JUNE 30,            ENDED JUNE 30,
                                                  ----------------------     -----------------------
                                                     1997         1996          1997          1996
                                                  ---------     --------     ---------     ---------
                                                                (DOLLARS IN THOUSANDS)
<S>                                               <C>           <C>          <C>            <C>
Automobile portfolio interest and 
    fee income.................................     $3,110       $7,205       $ 6,460       $15,222
                                                  ---------     --------     ---------     ---------
 Total interest and fee income.................     $3,178       $7,279       $ 6,606       $15,360
 Total interest expense........................      1,310        2,483         2,760         4,873
                                                  ---------     --------     ---------     ---------
Net interest income before provision for 
    credit losses..............................      1,868        4,796         3,846        10,487
 Provision for credit losses...................      2,793        2,200         3,169         4,896
                                                  ---------     --------     ---------     ---------
Net interest income after provision for 
    credit losses..............................       (925)       2,596           677         5,591
                                                  ---------     --------     ---------     ---------
 Other Income:
 Servicing income (from Installment
    Contracts).................................      1,659        1,676         2,440         2,353
 Gain on securitization........................      2,621           --         2,621            --
 Insurance products commissions................          2           14             5            36
                                                  ---------     --------     ---------     ---------
 Total other income............................      4,282        1,690         5,066         2,389
                                                  ---------     --------     ---------     ---------
 Salaries and related costs....................      1,951        2,138         3,986         3,882
 Other operating expenses......................      1,856        1,997         3,715         3,808
                                                  ---------     --------     ---------     ---------
 Total operating expenses......................      3,807        4,135         7,701         7,690
                                                  ---------     --------     ---------     ---------
 Income (loss) before taxes....................       (450)         151        (1,958)          290
 Taxes.........................................         --           27            --            79
                                                  ---------     --------     ---------     ---------
 Net income (loss).............................    $  (450)      $  124     $  (1,958)       $  211
                                                  ---------     --------     ---------     ---------
                                                  ---------     --------     ---------     ---------
</TABLE>
                                      13
<PAGE>


    COMPARISON OF SIX MONTHS ENDED JUNE 30, 1997 TO SIX MONTHS ENDED JUNE 30, 
1996.  The Company experienced a net loss of $2.0 million for the six months 
ended June 30, 1997 compared to net income of $211,000 for the comparable 
1996 period, primarily due to the decrease in net interest income before 
provision for credit losses.  Net interest income before the provision for 
credit losses decreased 63.3% to $3.8 million for the six months ended June 
30, 1997 from $10.5 million for the comparable 1996 period, primarily as a 
result of a decline in the outstanding balance of net finance receivables 
owned by the Company. The net finance receivables outstanding at June 30, 
1997 decreased to $39.8 million from $119.5 million at June 30, 1996, due to 
increased Securitizations and reduced originations of Installment Contracts. 
SEE "--Liquidity and Capital Resources."

    Total interest expense decreased to $2.8 million for the six months ended 
June 30, 1997 from $4.9 million for the six months ended June 30, 1996.  The 
decrease resulted from a decrease in the amount of average debt outstanding, 
which was partially offset by higher borrowing rates.  The total debt 
outstanding at June 30, 1997 decreased to $37.7 million from $99.9 million at 
June 30, 1996.  The average debt outstanding for the six months ended June 
30, 1997 decreased to $49.1 million from $112.7 million for the six months 
ended June 30, 1996.  The weighted average interest rate paid for borrowed 
funds increased to 11.24% for the six months ended June 30, 1997 from 8.65% 
for the six months ended June 30, 1996 primarily as a result of the 
subordinated debt representing a higher proportion of total debt.

    The provision for credit losses decreased $1.7 million to $3.2 million 
for the six months ended June 30, 1997 from $4.9 million for the six months 
ended June 30, 1996.  The decline in the provision for credit losses was due, 
in part, to the decline in the outstanding balance of net finance receivables 
owned by the Company.  SEE "--Credit Loss Experience."

    Other income, consisting primarily of income from Servicing Fees and 
gains on Securitization Transactions, increased 112% to $5.1 million for the 
six months ended June 30, 1997 from $2.4 million for the six months ended 
June 30, 1996.  Servicing income, net of ESR amortization, was $2.4 million 
for the six months ended June 30, 1997 and 1996.  Gains on sale of $2.6 
million were recognized for the six months ended June 30, 1997.  No 
comparable gain was recognized for the six months ended June 30, 1996.  This 
increase reflects the increased amount of servicing-retained Securitizations 
of finance receivables by the Company.   SEE "--Profitability."

    Total operating expenses remained at $7.7 million for the six months 
ended June 30, 1997 compared to $7.7 million for the six months ended June 
30, 1996.  Salaries and related costs increased $104,000 from the 
corresponding period in 1996 to $4.0 million for the six months ended June 
30, 1997, due primarily to normal pay increases. The number of full time 
equivalent employees decreased 18.7% at June 30, 1997 when compared to June 
30, 1996.  The Company's other operating expenses decreased to $3.7 million 
for the six months ended June 30, 1997 compared to $3.8 million the six 
months ended June 30, 1996.  Total operating expenses (annualized) as a 
percentage of average net finance receivables owned or serviced increased to 
10.8% for the six months ended June 30, 1997 as compared to 8.6% for the six 
months ended June 30, 1996, principally as a result of a decrease in owned or 
serviced finance receivables.

    No income tax expense was recorded for the six months ended June 30, 
1997, while $79,000 was recorded for the six months ended June 30, 1996.  The 
decrease was due to the net loss experienced for the six months ended June 
30, 1997 as compared to a net profit for the corresponding period in 1996.

                                      14

<PAGE>

    COMPARISON OF THREE MONTHS ENDED JUNE 30, 1997 TO THREE MONTHS ENDED JUNE 
30, 1996.  The Company experienced a net loss of $450,000 for the three 
months ended June 30, 1997 compared to net income of $124,000 for the 
comparable 1996 period.

    Net interest income before the provision for credit losses decreased 
61.0% to $1.9 million for the three months ended June 30, 1997 from $4.8 
million for the comparable 1996 period, primarily as a result of a decline in 
the outstanding balance of net finance receivables owned by the Company.  

    Total interest expense decreased to $1.3 million for the three months 
ended June 30, 1997 from $2.5 million for the three months ended June 30, 
1996.  The decrease resulted from a decrease in the amount of average debt 
outstanding, which was partially offset by higher borrowing rates.  The 
weighted average interest rate paid for borrowed funds increased to 11.53% 
for the three months ended June 30, 1997 from 8.98% for the three months 
ended June 30, 1996 primarily as a result of the subordinated debt 
representing a higher proportion of total debt.

    The provision for credit losses increased $0.6 million to $2.8 million 
for the three months ended June 30, 1997 from $2.2 million for the three 
months ended June 30, 1996.  The increase in the provision for credit losses 
was due, in part, to increasing reserves and allowances available for losses 
to 13.5% of net finance receivables owned by the Company from 12.2% at June 
30, 1996.  SEE "--Credit Loss Experience."

    Other income, consisting primarily of income from Servicing Fees and 
gains on Securitization Transactions, increased 153% to $4.3 million for the 
three months ended June 30, 1997 from $1.7 million for the three months ended 
June 30, 1996.  Servicing income, net of ESR amortization, was $1.7 million 
for the three months ended June 30, 1997 and 1996.  Gains on sale of $2.6 
million were recognized for the three months ended June 30, 1997.  No 
comparable gain was recognized for the three months ended June 30, 1996. This 
increase reflects the increased amount of servicing-retained Securitizations 
of finance receivables by the Company.  SEE "--Profitability."

    Total operating expenses decreased to $3.8 million for the three months 
ended June 30, 1997 compared to $4.1 million for the three months ended June 
30, 1996.  Salaries and related costs decreased $187,000 from the 
corresponding period in 1996 to $2.0 million for the three months ended June 
30, 1997, due primarily to a decreasing number of employees and benefit costs 
offset by normal pay increases.  The Company's other operating expenses 
decreased to $1.9 million for the three months ended June 30, 1997 compared 
to $2.0 million the three months ended June 30, 1996.  Total operating 
expenses (annualized) as a percentage of average net finance receivables 
owned or serviced increased to 11.0% for the three months ended June 30, 1997 
as compared to 9.3% for the three months ended June 30, 1996.

    No income tax expense was recorded for the three months ended June 30, 
1997, while $27,000 was recorded for the three months ended June 30, 1996.  
The decrease was due to the cumulative net loss experienced for the 1997 tax 
year as compared to a net profit for the corresponding period in 1996.

CREDIT LOSS EXPERIENCE

    The Company's credit loss reserves are comprised of three components: 
nonrefundable acquisition discount; an allowance for credit losses; and 
refundable dealer reserves.  The total of allowance for credit losses, 
nonrefundable acquisition discount and dealer reserves equaled 13.5% and 
12.2% of net owned finance receivables at June 30, 1997 and 1996, 
respectively. 

                                      15

<PAGE>

    NONREFUNDABLE ACQUISITION DISCOUNT AND DEALER RESERVES.  In order to 
achieve an acceptable rate of return and appropriately reflect credit risks 
generally associated with the Company's automobile finance business, the 
Company purchases Installment Contracts from dealers at a discount from their 
principal amount.  The Company negotiates the amount of the discount with 
dealers based upon various criteria, including the credit risk associated 
with the contracts being purchased and market pricing factors.  The discount 
is nonrefundable, is equal to the difference between (a) the total principal 
amount to be repaid under the Installment Contract and (b) net funds paid to 
the dealer, and is allocated to the nonrefundable acquisition discount 
account.  As part of the Company's financing of retail installment sales 
contracts (other than Installment Contracts), refundable dealer reserves may 
be established to protect the Company from losses associated with such 
contracts, and are shown as a liability of the Company.

    The following table presents a reconciliation of the changes in 
nonrefundable acquisition discount and dealer reserves for the three and six 
months ended June 30, 1997 and 1996:
<TABLE>
<CAPTION>                                          FOR THE THREE MONTHS       FOR THE SIX MONTHS
                                                       ENDED JUNE 30,            ENDED JUNE 30,
                                                  ----------------------     -----------------------
                                                     1997         1996          1997          1996
                                                  ---------     --------     ---------     ---------
                                                                (DOLLARS IN THOUSANDS)
<S>                                               <C>           <C>          <C>            <C>
 Balance at beginning of period...............      $3,017        $6,118       $1,730      $  9,721
 Additions applicable to new volume...........       1,432         2,897        3,102         5,382
 Reductions applicable to accounts sold.......      (3,104)       (2,701)      (3,104)       (3,982)
 Losses charged, net of recoveries............        (275)         (665)        (658)       (5,472)
                                                  ---------     --------     ---------     ---------
 Balance at end of period.....................      $1,070        $5,649       $1,070      $  5,649
                                                  ---------     --------     ---------     ---------
                                                  ---------     --------     ---------     ---------
 Balance at end of period as a percentage
    of net finance receivables (owned) at 
    end of period.............................        2.69%         4.73%        2.69%         4.73%
</TABLE>

    ALLOWANCE AND PROVISION FOR CREDIT LOSSES/CHARGE-OFFS.  The Company 
maintains an allowance for credit losses at a level that management believes 
is adequate to absorb potential losses in its finance receivables portfolio.  
Management evaluates the adequacy of the allowance for credit losses by 
reviewing credit loss experience and delinquency trends using static pool 
analysis, the value of the underlying collateral and general economic 
conditions and trends.  If the amount of nonrefundable acquisition discount 
associated with a specific pool of Installment Contracts is determined to be 
insufficient, in the opinion of management, to absorb projected losses for 
that pool, a provision for credit losses would be charged against earnings.  
The Company's general policy is to charge-off delinquent accounts when they 
are deemed uncollectible, and in any event prior to their becoming 90 days 
contractually delinquent.  The amount of the Company's charge-offs, and the 
charge-off rate as a percentage of average owned Installment Contracts (net), 
was $2.5 million, or 20.1%, during the three months ended June 30, 1997, and 
$6.4 million, or 19.1%, during the corresponding period in 1996.

    The following table reflects the Company's allowance for credit losses 
and provision for credit losses for the three and six months ended June 30, 
1997 and 1996:     

                                      16

<PAGE>

<TABLE>
<CAPTION>                                          FOR THE THREE MONTHS       FOR THE SIX MONTHS
                                                       ENDED JUNE 30,            ENDED JUNE 30,
                                                  ----------------------     -----------------------
                                                     1997         1996          1997          1996
                                                  ---------     --------     ---------     ---------
                                                                (DOLLARS IN THOUSANDS)
<S>                                               <C>           <C>          <C>            <C>
 Balance at beginning of period...............     $  4,390    $  12,008      $  6,046       $10,807
 Provision charged to expense.................        2,793        2,200         3,169         4,896
 Losses charged net of recoveries.............       (2,887)      (5,316)       (4,919)       (6,811)
                                                  ---------     --------     ---------     ---------
 Balance at end of period.....................     $  4,296     $  8,892      $  4,296      $  8,892
                                                  ---------     --------     ---------     ---------
                                                  ---------     --------     ---------     ---------
Allowance as a percentage of net
    finance receivables (owned) at end of 
    period....................................        10.81%        7.44%        10.81%         7.44%
</TABLE>


DELINQUENCIES

    The Company monitors delinquencies in the managed finance receivables 
portfolio to gauge overall credit trends.  Managed finance receivables that 
were 30 days and greater contractually delinquent (net of unearned finance 
charges) were $11.8 million, $16.6 million and $14.6 million, representing 
8.7%, 11.0% and 8.3% of net managed finance receivables, as of June 30, 1997, 
December 31, 1996, and June 30, 1996, respectively.  Managed finance 
receivables that were 60 days and greater contractually delinquent (net of 
unearned finance charges) were $3.1 million, $3.4 million and $2.7 million, 
representing 2.3%, 2.2% and 1.5% of net managed finance receivables as of 
June 30, 1997, December 31, 1996, and June 30, 1996, respectively.

LIQUIDITY AND CAPITAL RESOURCES

    The Company finances its operations through cash flow from operations, 
borrowings under that certain Revolving Credit Agreement dated June 30, 1995 
among the Company, CoreStates Bank, N.A., as agent, and seven other 
commercial banks (as amended, the "Revolving Credit Agreement"), proceeds 
from subordinated indebtedness and from the periodic sale or securitization 
of Installment Contracts and other finance receivables.

    Net cash provided by (used in) operating activities totaled ($310,000) 
and ($5.4) million during the three months ended June 30, 1997 and 1996, 
respectively.  For the six months ended June 30, 1997 and 1996, net cash 
provided by (used in) operating activities totaled $318,000 and ($7.8) 
million, respectively.  During these periods, the primary source of net cash 
provided by (used in) operating activities has been net income and the net 
changes in the provision for credit losses and the nonrefundable acquisition 
discount accounts.  Net cash provided by operating activities was affected by 
reductions in income tax receivables and repossessed assets for the three and 
six months ended June 30, 1997.  Net cash used in operating activities for 
the three and six months ended June 30, 1997 and 1996 was affected by the 
significant decline in the nonrefundable acquisition discount account and by 
the net change in the allowance for credit losses.

    Net cash provided by (used in) investing activities represents the net 
investment in, or liquidation of, finance receivables, which for the 
three-month period ended June 30, 1997 and 1996 was $22.9 million and $16.4 
million, respectively.  For the six months ended June 30, 1997 and 1996, net 
cash provided by (used in) investing activities was $14.9 million and $26.2 
million, respectively.  During the three and six months ended June 30, 1997, 
cash provided from the sale/securitization of Installment Contracts was $30.8 
million.  Cash provided from the sale/securitization of Installment Contracts 
was $21.5 million and $34.3 million for the three and six months ended June 
30, 1996

    Net cash provided by (used in) financing activities for the three
and six months ended June 30, 1997 and the comparable 1996 periods
largely result from borrowings and repayments under the Revolving

                                      17

<PAGE>

Credit Agreement.  Net cash provided by (used in) financing activities
for the three months ended June 30, 1997 was ($21.6) million and net
cash provided by financing activities for the three months ended June
30, 1996 was ($11.0) million.  For the six months ended June 30, 1997
and 1996, net cash provided by (used in) financing activities was
($12.8) million and ($18.9) million, respectively.

    The self-liquidating nature of Installment Contracts and Other Loans 
enables the Company to maintain higher debt-to-equity ratios than in most 
other businesses.  The amount of debt the Company incurs from time to time 
depends on the Company's need for cash and its ability to borrow under the 
terms of the Revolving Credit Agreement. The Company intends to meet its 
short- and long-term liquidity needs with cash flow from operations, 
borrowings under the Revolving Credit Agreement, the sale or securitization 
of finance receivables and the proceeds from the issuance of securities in 
the capital markets.

    The maximum availability under the Revolving Credit Agreement was $10.1 
million at June 30, 1997.  The facility matures September 30, 1997.  The 
Company has the option of borrowing funds under the Revolving Credit 
Agreement at an interest rate equal to either the prime rate of the agent 
bank or the LIBOR rate plus 2.5% (which rate represents an increase from the 
rate of LIBOR plus 2.0% that was available to the Company through September 
26, 1996).  On June 30, 1997, the three-month LIBOR borrowing rate under the 
Revolving Credit Agreement was 8.31% compared to 7.44% on June 30, 1996.  The 
prime rate was 8.50% on June 30, 1997 and the three-month LIBOR rate was 
5.81% on such date.

    The Company must comply with customary financial and other covenants 
under the Revolving Credit Agreement.  At June 30, 1997, the Company was in 
breach of the tangible net worth, interest coverage ratio and subordinated 
debt limitation covenant under the Revolving Credit Agreement and the 
interest coverage ratio covenant under its agreements with GECC.  The Company 
has received waivers with respect to these breaches (which, pursuant to the 
Revolving Credit Agreement, are measured on the last day of each quarter) for 
all periods through September 30, 1997.  The Revolving Credit Agreement 
waiver also provides for, among other things:  (i) a reduction in the total 
amount of the facility to $30 million; and (ii) a reduction in the borrowing 
base, generally, to 75% of eligible receivables.  The Company expects to 
remain in violation of these covenants for the near term.

    The Company is continuing negotiations with its current lenders and 
alternative lenders to provide financing beyond September 30, 1997.  In any 
event, the Company anticipates relying more heavily during 1997 and 
thereafter upon alternative funding sources, such as securitization 
financing.  No assurance can be given that the Revolving Credit Agreement, or 
an equivalent facility, will be in place beyond September 30, 1997, or that 
alternative funding transactions will be successfully completed, although 
management does believe that existing and/or alternative funding sources will 
continue to provide the Company with sufficient liquidity to maintain 
existing operations.

    At June 30, 1997, the Company had total debt of $37.7 million as compared 
to $50.8 million at December 31, 1996 and $99.9 million at June 30, 1996.  At 
June 30, 1997, $10.1 million was available under the Revolving Credit 
Agreement from committed financial institutions. The following table presents 
the Company's debt instruments and the weighted average interest rates on 
such instruments for the periods indicated:


                                      18
<PAGE>
<TABLE>
<CAPTION>
                                                                                                AS OF AND FOR THE
                                                     FOR THE SIX MONTHS ENDED JUNE 30,         TWELVE MONTHS ENDED
                                                       1997                    1996             DECEMBER 31, 1996
                                               -------------------      ------------------      ------------------
                                               BALANCE       RATE       BALANCE       RATE      BALANCE       RATE
                                               -------      ------      -------      -----      -------      -----
                                                                        (DOLLARS IN THOUSANDS)
<S>                                            <C>          <C>         <C>          <C>         <C>         <C>
 SENIOR:
   Revolving Credit Agreement..............    $19,900       8.59%      $80,450       8.25%      $31,763      8.05%
   Loan from Commonly Controlled
    Company................................        148       6.75%        1,453       6.75%        1,065      6.75%
 SUBORDINATED:
   Notes payable...........................     17,632      12.18%       17,970      12.14%       17,978     12.15%
                                               -------                  -------                  -------     
 Total debt................................    $37,680      11.24%      $99,873       8.65%      $50,806      9.23%
                                               -------                  -------                  -------
                                               -------                  -------                  -------
</TABLE>

    The following table sets forth information with respect to maturities of 
senior and subordinated debt at June 30, 1997:

<TABLE>
<CAPTION>
                                                LOANS FROM
                                      SENIOR      COMMONLY
                                    BANK LINES   CONTROLLED  SUBORDINATED   
    YEAR                             OF CREDIT    COMPANY    NOTES PAYABLE    TOTAL
    ----                            ----------   ----------  -------------   --------
                                                (DOLLARS IN THOUSANDS)
<S>                                  <C>          <C>          <C>           <C>
    1997........................      $19,900       $148         $  88       $20,136
    1998........................                                    13            13
    1999........................                                   833           833
    2000........................                                   807           807
    2001........................                                   869           869
    Thereafter..................                                15,022        15,022
                                    ----------   ----------  -------------   --------
    Total.......................      $19,900       $148       $17,632       $37,680
                                    ----------   ----------  -------------   --------
                                    ----------   ----------  -------------   --------
</TABLE>


    The Company has purchased interest rate caps and interest rate collars in 
an aggregate notional amount of $45 million.  The interest rate cap purchased 
by the Company in an aggregate notional amount of $15 million protects the 
Company against increases in the interest rate of a portion of its revolving 
debt if the three-month LIBOR rate exceeds 10.5%.  The interest rate cap 
expires in July, 1998.

    The interest rate collars purchased by the Company in an aggregate 
notional amount of $30 million protect the Company against increases in the 
interest rate of its revolving debt when the three-month LIBOR rate exceeds 
8%.  The Company must make payments to the counterparties to the interest 
rate collars if three-month LIBOR falls below 5%.  The interest rate collars 
expire in September, 2000.

    The GECC Agreement provides for the purchase by GECC of Installment 
Contracts, on a revolving basis, having a maximum principal amount of up to 
$80 million (net) outstanding at any time. As of June 30, 1997, $74.1 million 
(net) principal amount of Installment Contracts was outstanding pursuant to 
the GECC Agreement. The term of the GECC Agreement expires June 25, 1998.  

    Total stockholders' equity at June 30, 1997 was $8.8 million as compared 
to $10.3 million at December 31, 1996 and $15.9 million at June 30, 1996.  
The Company's ability to pay dividends is limited by the Revolving Credit 
Agreement.

                                      19

<PAGE>

                        PART II - OTHER INFORMATION
                                      
ITEM 1.       LEGAL PROCEEDINGS

    In addition to the lawsuits described below, the Company is involved in 
litigation in the normal course of business.  The Company believes that the 
resolution of such normal-course-of-business matters will not have a material 
adverse effect on its financial position or results of operations.  The 
Company regularly initiates legal proceedings as a plaintiff in connection 
with its routine collection activities.

    The company has been named as a defendant in the following described 
lawsuits:

    1.   REHM V. EAGLE FINANCE CORP. is pending in the United States District 
Court for the Northern District of Illinois and is designated by case number 
96 C 2455.  The plaintiff has filed a class action complaint alleging that 
the Company and three of its directors and officers have violated Section 
10(b) of the Securities and Exchange Act and Rule 10b-5 promulgated 
thereunder.  The litigation is now proceeding with discovery, although no 
depositions have been taken. The Company intends to defend vigorously the 
claims made in the complaint.

    2.   CLEVELAND V. WALLACE AUTO SALES, INC. ET AL. was filed on September 
19, 1996 in the United States District Court for the Northern District of 
Illinois and is designated by Case Number 96 C 6045.  The complaint alleges 
that the Company has violated the Illinois Consumer Fraud Act, the Illinois 
Sales Finance Agency Act and the Federal Racketeer Influenced and Corrupt 
Organizations Act arising out of the Company's purchase of retail installment 
sales contracts through which the plaintiffs purchased a used automobile.  
The complaint is alleged as a class action, and includes unnamed, and still 
unknown, directors and officers of the Company.  The Company has filed a 
Motion to Dismiss, and the parties are awaiting a ruling from the court.  No 
discovery has been taken.  The Company intends to defend vigorously the 
claims made in the complaint.

    3.   SOLARMAR SYSTEMS CORP V. EAGLE FINANCE CORP., RONALD B. CLONTS ET 
AL. was filed on September 14, 1995 in Circuit Court of the Eleventh Judicial 
Circuit, Dade County, Florida, and is designated as Case No. 95-18056-CA-01.  
This suit arose out of a settlement agreement entered in 1988 between the 
plaintiff and the predecessor to the Company (the "Settlement Agreement"), 
following the plaintiff's bankruptcy.  The Company (E.F. Wonderlic & 
Associates, Inc.) purchased promissory notes from the plaintiff that the 
plaintiff had received in connection with the sale of hot water heating 
systems to Florida homeowners.  The complaint filed against the Company 
alleges that the Company breached the Settlement Agreement and fraudulently 
induced the plaintiff to enter into it.  The plaintiff's complaint was 
dismissed in June, 1996, with leave to amend, primarily on the grounds that 
the claims were time-barred by the applicable Florida statute of limitations. 
The plaintiff filed an amended complaint in June, 1996, which asserted 
essentially the same claims of fraud, violations of the Federal Racketeer 
Influenced and Corrupt Organizations Act and fraud in the inducement.  The 
Company intends to defend vigorously the claims made in the complaint.

    4.   DRAKE V. EAGLE FINANCE CORP., was filed on June 13, 1997 in the 
Circuit Court of Cook County, Illinois, and is designated as Case No. 97 L 
6521.  The class action Complaint alleges that he Company has violated the 
Uniform Commercial Code, the Illinois Consumer Fraud Act and the Illinois 
Sales Finance Agency Act arising out of the notice that the Company sent to 
the plaintiff's after the Company repossessed their car.  The case is in the 
initial pleading stages, and no discovery has been taken.  The Company 
intends to defend vigorously the claims made in the Complaint.

                                      20

<PAGE>

    5.   HALL V. EAGLE FINANCE CORP., was filed on July 28, 1997 in the 
Circuit Court of Cook County, Illinois, and is designated as Case No. 97 CH 
9328.  The class action Complaint alleges that the Company has violated the 
Illinois Wage Assignment Act arising out of the Company's attempt to enforce 
the wage assignment that the plaintiff executed when he purchased a car.  The 
case is in its initial pleading stage, and no discovery has been taken.  The 
Company intends to defend vigorously the claims made in the Complaint.

ITEM 2.       CHANGES IN SECURITIES - None

ITEM 3.       DEFAULTS UPON SENIOR SECURITIES - None

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

  A.  The Annual Meeting of Stockholders was held on May 20, 1997.

  B.  At the meeting, Charles F. Wonderlic and Robert L. Jooss were
      elected to serve as Class III directors (term expires in 2000). 
      Continuing as Class II directors (term expires in 1999) are
      Robert H. Arnold, Ronald B. Clonts and Walter J. O'Brien. 
      Continuing as Class I directors (term expires in 1998) are
      Richard E. Wonderlic and E. Bruce Fredrickson.

  C.  The following individuals were elected to serve as directors of
      the Company for a term of three years at the Annual Meeting.  The
      votes for and against such individuals are set forth below.

                                        FOR      AGAINST      WITHHELD
                                     --------    -------      --------
  1.  Charles F. Wonderlic           3,914,623      0         43,915
  2.  Robert L. Jooss                3,914,623      0         43,915

  D.  Ratification of KPMG Peat Marwick LLP as the Company's
      independent auditors.

            FOR         AGAINST       WITHHELD          ABSTAINED
         ---------      -------       --------          ---------
         3,907,063      28,825         22,450              200

ITEM 5.       OTHER INFORMATION - None

ITEM 6.       EXHIBITS AND REPORTS ON FORM 8-K

    (a)  Exhibits

         10.1 Form of Fourth Amendment to Amended and Restated
              Revolving Credit Agreement dated June 30, 1997
         
         11   Statement re computation of per share earnings

         27   Financial Data Schedule
         
    (b)  Reports on Form 8-K - The Company did not file any reports on
         Form 8-K during the three months ended June 30, 1997.

                                      21

<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.

                                         EAGLE FINANCE CORP.



Date:  August 13, 1997                   ROBERT J. BRAASCH
                                         ----------------------------------
                                         Robert J. Braasch
                                         President and Chief Financial Officer
                                        (Duly Authorized Officer and Principal
                                         Financial Officer)

                                      S-1

<PAGE>


                               EXHIBIT INDEX


Exhibit
 No.          Description
-------     --------------
 10.1     Form of Fourth Amendment to Amended and Restated Revolving Credit
          Agreement dated June 30, 1997

 11       Statement re computation of per share earnings

 27       Financial Data Schedule