<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-K


/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934
                    For fiscal year ended December 31, 1996

                                      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          (I.R.S. Employer Identification Number)
incorporation or organization)

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

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:          (847) 855-7150
                                                             --------------

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

                                                   Name of each Exchange
                 Title of each class                on which registered
                 -------------------               ----------------------
                        NONE                                NONE

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

                       COMMON STOCK, $0.01 PAR VALUE PER SHARE
                                  (Title of Class)


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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this 10-K or any
amendment to this form 10-K. /X/


<PAGE>


The aggregate market value of voting common stock of Registrant held by
non-affiliates as of February 28, 1997 was $8,223,530.(1)  At February 28,
1997, the total number of shares of common stock outstanding was 4,189,100.

                      DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the Annual Meeting of Shareholders to be
held May 20, 1997 are incorporated by reference in Part III hereof, to the
extent indicated herein.

________________________
(1) Based on the closing price of Registrant's common stock on February 28,
    1997 on the Nasdaq National Market, and reports of beneficial ownership
    filed by directors and executive officers of Registrant and by beneficial
    owners of more than 5% of the outstanding shares of common stock of
    Registrant; however, such determination of shares owned by affiliates does
    not constitute an admission of affiliate status or beneficial interest in
    shares of common stock of Registrant.

<PAGE>


                              EAGLE FINANCE CORP.

                          1996 FORM 10-K ANNUAL REPORT

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

                               TABLE OF CONTENTS

                             ---------------------
                                                                            PAGE
                                                                          NUMBER
                                     PART I

Item 1.       BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . .    1

Item 2.       PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . .    7

Item 3.       LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . .    8

Item 4.       SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. . . . .    9

                                    PART II

Item 5.       MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
              STOCKHOLDER MATTERS. . . . . . . . . . . . . . . . . . . . .    9

Item 6.       SELECTED FINANCIAL DATA. . . . . . . . . . . . . . . . . . .    10

Item 7.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
              CONDITION AND RESULTS OF OPERATIONS. . . . . . . . . . . . .    11

Item 8.       FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. . . . . . . . .    23

Item 9.       CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
              ACCOUNTING AND FINANCIAL DISCLOSURE. . . . . . . . . . . . .    41

                                    PART III

Item 10.      DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT . . . . .    41

Item 11.      EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . .    41

Item 12.      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
              OWNERS AND MANAGEMENT. . . . . . . . . . . . . . . . . . . .    41

Item 13.      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS . . . . . . .    41

                                    PART IV

Item 14.      EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
              ON FORM 8-K. . . . . . . . . . . . . . . . . . . . . . . . .    41

<PAGE>

                              [ANNUAL REPORT COVER]

<PAGE>


                                 FINANCIAL HIGHLIGHTS


<TABLE>
<CAPTION>
(Dollars in thousands, except per share amounts)             1996       1995
--------------------------------------------------------------------------------
<S>                                                        <C>        <C>
Net Income (Loss).......................................   $ (5,349)  $    325
Net Income (Loss) Per Share.............................      (1.28)      0.08
Net Managed Finance Receivables (Owned or Serviced).....    151,630    184,882
Stockholders' Equity....................................     10,308     15,656
Return on Average Equity................................     (34.85%)     1.86%
Return on Average Assets................................      (5.03%)     0.29%
Net Charge-Offs as a Percentage of Average Net Managed
   Finance Receivables (Owned or Serviced)..............      19.60%     15.57%
--------------------------------------------------------------------------------
</TABLE>

THE CHART SET FORTH ABOVE SHALL NOT BE DEEMED FILED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AND
IT SHALL NOT BE DEEMED INCORPORATED BY REFERENCE BY ANY GENERAL STATEMENT
INCORPORATING BY REFERENCE THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE
FISCAL YEAR ENDED DECEMBER 31, 1996 INTO ANY FILING UNDER SUCH ACTS.



THIS REPORT, INCLUDING THE LETTER TO STOCKHOLDERS, 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 WHICH 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 THE
COMPANY'S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

[EAGLE LOGO HERE]



DEAR FELLOW STOCKHOLDER:


A $5.3 million loss was recorded in 1996 largely as a result of credit loss
provisions and higher operating expenses primarily related to loan collection
efforts.  As managers and major stockholders we are disappointed with our
results.  We believe strongly that the non-prime niche we serve is both viable
and growing.  Much of this letter will address steps taken to bring about a
significant improvement in our financial results and a more predictable future.

In late 1995, we reduced loan originations and focused on infrastructure issues.
It has become clear to us that many industry players, including Eagle, lacked
the proper tools with which to accurately measure asset quality.  In 1996, Eagle
exited several markets and reduced its managed assets by $33 million to $152
million.  Today's loan originations are focused in the midwest and southeast.

In foregoing 1996 growth, we focused on underwriting execution.  To speed this
process we contracted with a national provider of credit scoring products.
Their product did not meet our expectations.  In June, 1996, we began developing
a proprietary credit scoring model which formally went on line in January, 1997.

Through the credit score development process, we were able to draw upon our
actual customer demographic variables and contract terms.  Eagle was able to
validate relationships between its credit score design and observed charge-off
rates.  The use of credit scoring has resulted in major changes made in the area
of underwriting.  The impact of these changes eliminates the 30% of our
historical loan approvals which, we believe, produced the highest portion of
our charge-offs.

Our management team took the following actions in 1996 that were intended to
bring closure to past problems.

    *    Experienced management has been added in the collections and marketing
         groups.  Sam Keith was hired as Chief Operating Officer to oversee all
         regional center operations.

    *    Management responsibilities have been clarified, performance goals
         established for all functional areas and management performance is
         formally measured against these goals.

    *    Operating controls have been tightened, particularly in the
         underwriting and collections areas.

    *    Collection performance has been improved through the hiring of more
         experienced personnel and upgraded training programs.

    *    A risk management process has been developed to establish and refine
         credit policy, monitor portfolio performance, validate and enhance the
         credit scoring model and develop profitability models.

    *    Cost containment measures have been taken including the consolidation
         of certain of the functions performed at the Orlando and Tampa
         regional centers.

<PAGE>

INDUSTRY OBSERVATIONS

    *    The stock market has punished the stock prices of all non-prime auto
         lenders.  Erratic earnings, defaults, asset quality issues and lack of
         consistency in financial reporting have strained investor patience and
         created concern regarding industry viability.

    *    Eagle, and several of its competitors, initiated public offerings in a
         relatively short time span.  This brought about a surge in new capital
         and a competitive environment which favored automobile dealers rather
         than shareholders of the non-prime entrants.

    *    Little new money is flowing into non-prime industry and signs of
         consolidation are evident.  Competitive observations suggest an
         economic balance between assessing and pricing risk is coming into
         focus.  Growth may take a secondary position to profitability.


1996 REVIEW

    *    Credit losses remained high in 1996 with losses on our managed
         portfolio up 4% from 1995 levels to 19.6%.  The managed receivables
         portfolio reflects the combination of our owned portfolio and
         accounts serviced for third parties.

    *    We shifted our funding mix relying more heavily on receivable sales
         and securitization transactions.  This change in funding emphasis is
         the primary reason for the reduction in balance sheet outstandings.
         Owned receivables, shown on our balance sheet, shrank $91.0 million.
         Serviced receivables grew $57.7 million.  At December 31, 1996 managed
         receivables were $151.6 million, down $33.3 million from the prior
         year.

    *    In October, as part of our funding strategy, loans were packaged and
         sold to third party investors through a securitization. Profitability
         on securitized transactions is heavily influenced by portfolio
         performance.  The performance of the portfolio is reflected in the
         amount of bonus/excess servicing fees earned by Eagle.  In 1996 we
         earned a total of $5.1 million in net servicing fees, consisting of
         $1.7 million in base servicing income and $3.4 million in bonus/excess
         serving income. Total servicing fee income increased 141% over 1995.

    *    In September we sold $9.6 million of Texas receivables to a
         competitor.  We no longer maintain a significant presence in Texas.

    *    New auto purchases declined $80.3 million to $105.9 million in 1996.
         This represents a 43% drop in loan acquisition activity from our 1995
         levels.

    *    Reserves, in 1996, were built from current-year earnings.  Prior to
         December 31, 1995 the Company in part built loss reserves by
         allocating a portion of contract interest (that would have been
         recorded as unearned finance charges) to reserves.  In changing
         its funding mix and relying more heavily on securitizations the
         Company has reduced the impact of reserves on current earnings.

<PAGE>

    *    Reserves available to absorb credit losses, as a percentage of owned
         finance receivables, were 14.2% at year end.  As a result of reduced
         growth, our portfolio is now more seasoned and predictable.  Our
         reserve position when combined with portfolio seasoning is stronger
         today than in past periods.

    *    We have restructured our marketing efforts by hiring Sales Managers in
         both of our geographic regions.  They are seasoned in the auto
         business and are charged with re-establishing receivable growth.

    *    Operating expenses increased 43% to $16.2 million in 1996.  Operating
         expenses as a percentage of average managed receivables were 9.4%.  We
         presently have several programs underway which will reduce operating
         expenses.

    *    At December 31, 1996 the Company had 258 full time equivalent
         employees representing an increase of 39 employees or a 17.8%
         increase. We have, at present, capacity for measured growth.




    CHARLES F. WONDERLIC
    CHAIRMAN OF THE BOARD AND
    CHIEF EXECUTIVE OFFICER
    April __, 1997





THE FOREGOING LETTER TO STOCKHOLDERS SHALL NOT BE DEEMED FILED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED, AND IT SHALL NOT BE DEEMED INCORPORATED BY REFERENCE BY ANY
GENERAL STATEMENT INCORPORATING BY REFERENCE THE COMPANY'S ANNUAL REPORT ON FORM
10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996, INTO ANY FILING UNDER SUCH
ACTS.


<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-K


/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934
                    For fiscal year ended December 31, 1996

                        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          (I.R.S. Employer Identification Number)
incorporation or organization)

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

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:          (847) 855-7150
                                                             --------------

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:          (847) 855-7150
                                                             --------------

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:  NONE
                                                             ----

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:  COMMON STOCK, $0.01
                                                             -------------------
                                                             PAR VALUE PER SHARE
                                                             -------------------

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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this 10-K or any
amendment to this form 10-K. /X/

The aggregate market value of voting common stock of Registrant held by
non-affiliates as of February 28, 1997 was $8,223,530.(1)  At February 28,
1997, the total number of shares of common stock outstanding was 4,189,100.

                      DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the Annual Meeting of Shareholders to be
held May 20, 1997 are incorporated by reference in Part III hereof, to the
extent indicated herein.

________________________
(1) Based on the closing price of Registrant's common stock on February 28,
    1997 on the Nasdaq National Market, and reports of beneficial ownership
    filed by directors and executive officers of Registrant and by beneficial
    owners of more than 5% of the outstanding shares of common stock of
    Registrant; however, such determination of shares owned by affiliates does
    not constitute an admission of affiliate status or beneficial interest in
    shares of common stock of Registrant.



<PAGE>


                              EAGLE FINANCE CORP.

                          1996 FORM 10-K ANNUAL REPORT

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

                               TABLE OF CONTENTS

                             ---------------------
                                                                            PAGE
                                                                          NUMBER
                                     PART I

Item 1.       BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . .    1

Item 2.       PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . .    7

Item 3.       LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . .    8

Item 4.       SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. . . . .    9

                                    PART II

Item 5.       MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
              STOCKHOLDER MATTERS. . . . . . . . . . . . . . . . . . . . .    9

Item 6.       SELECTED FINANCIAL DATA. . . . . . . . . . . . . . . . . . .    10

Item 7.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
              CONDITION AND RESULTS OF OPERATIONS. . . . . . . . . . . . .    11

Item 8.       FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. . . . . . . . .    23

Item 9.       CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
              ACCOUNTING AND FINANCIAL DISCLOSURE. . . . . . . . . . . . .    41

                                    PART III

Item 10.      DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT . . . . .    41

Item 11.      EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . .    41

Item 12.      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
              OWNERS AND MANAGEMENT. . . . . . . . . . . . . . . . . . . .    41

Item 13.      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS . . . . . . .    41

                                    PART IV

Item 14.      EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
              ON FORM 8-K. . . . . . . . . . . . . . . . . . . . . . . . .    41

<PAGE>

                                     PART I

ITEM 1.       BUSINESS

GENERAL

    Eagle Finance Corp., a Delaware corporation (the "Company"), is a
specialized financial services company engaged primarily in acquiring and
servicing automobile retail installment sale contracts ("Installment
Contracts") for purchases of late model used automobiles (cars and light
trucks) by "non-prime" consumers, who typically have limited access to
traditional credit sources.  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 consumer finance-related products (collectively,
"Insurance Products") to consumers with whom it has financing relationships.

    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 December 31, 1996, the Company had active
relationships (I.E., the Company purchased Installment Contracts from such
dealers during the preceding 90 days) with approximately 390 dealers located
primarily in Illinois, Georgia, Florida and South Carolina, and, to a lesser
extent, in Arizona, Colorado, Indiana, Kentucky, New Mexico, Ohio, Tennessee,
Texas, Utah, Wisconsin, and Wyoming.

BUSINESS STRATEGY

    The Company's business strategy is to increase its profitability through
greater penetration in most of its current markets, controlled geographic
expansion into new markets, reduced credit losses and lower operating
expenses. Unlike many of its competitors, the Company's strategy emphasizes
the use of its industry-experienced, employee and agent marketing
representatives to service the Company's market areas without opening
additional regional offices while maintaining quality control and realizing
economies of scale through its regionally-centralized credit underwriting and
servicing operations.  The Company relies on its marketing representatives to
communicate frequently with dealers in order to maintain a high level of
responsiveness to dealer concerns, but they have no input into the credit
underwriting or buying decisions of the Company.

    The Company focuses its efforts on purchasing Installment Contracts from
manufacturer-franchised dealers as opposed to independent used car dealers.
The Company believes that Installment Contracts purchased from
manufacturer-franchised dealers generally represent a reduced amount of
credit risk because such Installment Contracts generally involve consumers
with better credit histories.

CONSUMER FINANCE PRODUCTS

    GENERAL.  Installment Contracts represented over 99.1% (approximately
$54.2 million, not including approximately $97.0 million of net Installment
Contracts serviced by the Company for third parties) of the Company's net
finance receivables at December 31, 1996.  The remaining receivables
(approximately $486,000) consisted of Other Loans.  Approximately 58%, 26%
and 16% of the Company's outstanding net finance receivables at December 31,
1996 were originated by the Illinois, Tampa and Orlando regional offices,
respectively. In addition to the interest income and related fee income from
Installment Contracts and Other Loans, the Company obtains revenue for
servicing Installment Contracts that it has sold to third parties and from
the sale of Insurance Products that it offers, as agent, to consumers.

    INSTALLMENT CONTRACTS.  The Company had an aggregate Installment
Contracts receivable, net of unearned finance charges, of approximately $54.2
million at December 31, 1996.  Substantially all of the Company's

<PAGE>

Installment Contracts are originated by dealers in connection with purchases
of used automobiles by non-prime consumers.  The Company occasionally
purchases Installment Contracts relating to purchases of new automobiles.

    Installment Contracts are originated by the dealer at the time the dealer
sells an automobile to a consumer.  The consumer enters into an Installment
Contract with the dealer on a form supplied by, or acceptable to, the
Company, which is then sold by the dealer to the Company, together with the
dealer's security interest in the automobile.  The Company is not obligated
to accept Installment Contracts originated by the dealer.  In order for the
dealer to enhance its prospects of selling an Installment Contract to the
Company, the sale of the automobile or other property is usually coordinated
with, and occurs contemporaneously with, the Company's review, processing and
underwriting of the customer's credit application.

    The amount financed on Installment Contracts purchased by the Company
typically ranges from approximately $5,000 to $15,000, annual percentage
rates of interest ("APRs") typically range from 21% to 33% and the
repayment terms typically extend from 12 to 60 months depending upon the
amount financed.  The average original principal amount financed for
Installment Contracts outstanding at December 31, 1996 was approximately
$8,300, the average APR on such Installment Contracts was 27% and the average
original term was 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 the amount of payoffs and
repossessions that occur prior to contract maturity.

    OTHER LOANS.  The Company had an aggregate Other Loans receivable, net of
unearned finance charges, of $485,514 at December 31, 1996.  The Company's
direct loan business complements the Installment Contract business because of
their similar underwriting and servicing processes, and because Installment
Contract consumers are a readily identifiable source of potential loan
business. Other Loans typically range in principal amount from approximately
$4,000 to $11,000 with APRs typically ranging from 16% to 27%.  Other Loans
are repayable in substantially equal monthly installments of principal and
interest for terms typically ranging from 12 to 60 months.  The Company
believes that security for Other Loans is relatively unimportant as the
principal amounts of Other Loans are generally small.

    SERVICING.  The Company earned approximately $5.1 million in servicing
fees during the year ended December 31, 1996.  As of December 31, 1996, the
Company serviced approximately $97.0 million in net Installment Contracts
that it had previously sold to third parties.  Average net finance
receivables serviced for third parties were approximately $56.0 million in
1996.  The Company has sold Installment Contracts in the past and anticipates
selling Installment Contracts in the future as an alternative source of
financing, although there can be no assurance in this regard.

    INSURANCE PRODUCTS.  In connection with its consumer financing
transactions, the Company offers, as agent, Insurance Products to consumers.
The Company receives commissions on its sales of all such insurance.  The
Company earned approximately $66,000 from the sale of Insurance Products
during the year ended December 31, 1996.

MARKETING

    The Company's Installment Contract marketing efforts are directed at
automobile dealers.  The Company attempts to meet dealers' needs by offering
highly-responsive, cost-competitive and service-oriented financing programs,
and by promptly paying to dealers the purchase price for Installment
Contracts.  The financing programs are flexible enough to meet dealer needs
and may, on occasion, be tailored to meet the budget of a specific consumer.
In order to maximize the efficiency of its regional office personnel, the
Company relies on its marketing representatives to locate potential dealers,
establish initial contacts and enhance relationships through recurring
communication.  As of December 31, 1996, the Company utilized eight marketing
representatives throughout the states in which the Company purchases
Installment Contracts.  As of December 31, 1995, the Company utilized 18

                                        2

<PAGE>

marketing representatives.  The reduction in the number of marketing
representatives reflects the Company's emphasis on addressing credit losses
(rather than portfolio growth) during 1996 as well as the decision of the
Company to discontinue purchasing Installment Contracts in Texas.  The
Company creates incentives for its marketing representatives through
compensation arrangements that are based on the number of transactions the
Company closes with each marketing representative's dealers.

    To complement the efforts of marketing representatives, the Company
employs an open dialogue policy with dealers at each regional office that is
reinforced by timely and consistent credit decisions that result in a high
level of service being provided.  The open dialogue policy provides the
Company with many opportunities to gauge dealer satisfaction and to further
educate a dealer regarding the Company's flexible credit underwriting
standards.

RELATIONSHIPS WITH DEALERS

    The Company has active relationships with approximately 390 new and used
automobile dealers.  The Company has entered into written agreements with
almost all of the dealers from whom it purchases Installment Contracts.
These agreements set forth general terms upon which Installment Contracts
will be purchased by the Company, but do not obligate the dealer to sell, or
the Company to purchase, any particular Installment Contract or volume of
Installment Contracts.

    In connection with establishing a relationship with a dealer, the
Company, through its marketing representatives, offers the dealer a training
and orientation program to promote a mutually profitable and efficient
relationship. The goals of the training and orientation program are to
introduce dealers to the Company's procedures, to engender loyalty to the
Company and to enable dealers to pre-screen Installment Contracts.  This
pre-screening, in turn, permits the Company to respond more quickly to credit
applications from dealers, which ultimately expedites the payment of the
purchase price from the Company to dealers upon purchase of an Installment
Contract.  The Company monitors overall dealer volume and tracks the
performance of Installment Contracts purchased from each dealer as a means of
identifying and ensuring against possible adverse trends in its dealer
relationships at the earliest possible time.  None of the dealers with whom
the Company does business accounted for greater than 8% of the Company's
total dollar volume of Installment Contracts purchased during 1996.

    Installment Contracts are generally purchased at a discount by the
Company and without recourse to the dealer.  In all cases where the Company
and the dealer have entered into a written agreement, the dealer makes
certain warranties as to the validity of the Installment Contract and
compliance with certain laws, and indemnifies the Company for any claims,
defenses and set-off rights that may be asserted against the Company.

PURCHASING AND LENDING PROCEDURES AND GUIDELINES

    Prior to its approval of the purchase of an Installment Contract, the
Company is provided with a standardized credit application completed by the
consumer which contains information concerning the consumer's background,
employment and credit history.  The Company also obtains a credit report from
an independent reporting service and verifies the consumer's employment and
residence.  Consumers are in virtually all cases interviewed by telephone by
a Company application processor.  As part of the credit underwriting process,
the automobile is qualified and its value is established.  In cases where
higher financing values are sought or exceptions to Company purchasing
guidelines are requested, a Company representative may personally inspect the
automobile and, in any event, approval from senior management of certain
exceptions is required.

    During 1996, the Company developed a proprietary credit scoring model to
be used in the credit review and approval process.  The model was integrated
into the Company's management information system in January, 1997. The Company
believes that the model's integration with the Company's existing information
management system will provide a useful tool in the credit decision-making
process, and will improve turnaround



                                       3
<PAGE>

time, reduce operating costs and increase management control.  For those
credit applications that exceed the Company's minimum credit score, credit
approval is generally left to the discretion of the regional office manager
or underwriter.  Regional office managers and underwriters are encouraged to
apply their knowledge of local conditions and collateral values in making
credit decisions.  The Company typically completes its credit analysis and
communicates to dealers its decisions, or conditions of approval to purchase
Installment Contracts, in approximately four hours.  Consumers who are denied
credit by the Company typically have credit histories, incomes or overall
credit profiles that are incompatible with the Company's underwriting
standards.  The Company does not purchase all of the Installment Contracts
approved for purchase because dealers typically offer to sell Installment
Contracts to more than one finance company or consumers often decide not to
purchase an automobile from a dealer to whom they have submitted a credit
application.

    The financing documents are generated by the dealer on standardized
forms. If an automobile is taken as collateral, as is the case in all
Installment Contract transactions, the Company obtains the certificate of
title to the automobile with a lien recorded.  The Company typically does not
perfect its lien on other types of collateral.  In certain states, the
Company obtains a voluntary wage assignment from the consumer as additional
security in connection with the closing of the Installment Contract purchase.
The regulations in other states make obtaining wage assignments
impracticable.  The Company also requests that the dealer obtain from the
consumer a statement in which the consumer acknowledges, among other things,
that the dealer may sell the Installment Contract to any third party at any
price, including at a discount.  In the case of Installment Contracts, the
documents are signed by the dealer and the consumer, and the dealer sells the
Installment Contract to the Company.  In the case of Other Loans, the
consumer signs a note and security agreement and the net loan proceeds are
remitted to the consumer.  In either case, the consumer either receives a
payment coupon book or a monthly statement and instructions on remitting
monthly payments to the Company.

    Copies of Installment Contracts and related documents are periodically
selected for review by senior management.  This internal control is
supplemented by the Company's computer system, which is equipped with warning
"flags" that are triggered upon the occurrence of certain unusual, and
potentially problematic, events, including changes in payment due dates and
other modifications to any contract terms.  In addition, a member of senior
management generally visits each regional office at least once each month to
review its operations, Installment Contract documentation and repossessed
automobiles.

    The Company makes all credit decisions on a case-by-case basis.  The
Company generally does not refinance delinquent accounts unless it determines
that refinancing is not likely to increase its credit risk or it is able to
improve its position with additional collateral or a cosigner.

SERVICING AND COLLECTION

    Consumers obligated under the Company's Installment Contracts are
expected to remit their monthly payments using a coupon book or a monthly
statement provided to them by the Company.  In the event a consumer is
delinquent on one or more of his or her first three scheduled payments, the
Company attempts to contact the consumer by telephone within one day of the
payment due date. Addressing delinquencies early in its relationship with a
consumer provides the collection staff an opportunity to assess the
consumer's financial situation and the likelihood that the consumer will
continue to be delinquent.  If a payment other than one of the first three
scheduled payments is not received on its due date, the Company mails a
computer-generated written notice to the consumer within five days of the due
date and typically contacts the consumer by telephone as a follow-up to the
written notice.  In the event of a delinquency, the Company's trained
collection specialists attempt to stay in regular contact with the consumer
until the delinquency is cured.  If the consumer does not cure the
delinquency and misses a subsequent payment, the Company typically
repossesses the automobile promptly.  In situations where the delinquency is
caused by the failure of the automobile to be in driveable condition, the
Company may make an accommodation to the



                                       4
<PAGE>

consumer that will allow the consumer to pay for repairs to the automobile.
Accommodations may also be made in certain circumstances where a consumer has
previously demonstrated a strong payment history.

    Typically, 25% to 35% of the Installment Contracts serviced by the
Company require some collection efforts each month.  The Company's target is
to have each collection employee service approximately 150 collection
accounts.  As of December 31, 1996, the Company was meeting this target.  All
collection activities are handled in the company's three regional offices.
Deficiency accounts and accounts that have been charged off are serviced by a
separate group of collectors who have repossession and recovery experience.

    Repossessed automobiles are typically offered to dealers for bidding or
they are auctioned after the lapse of the applicable redemption period, if
any. Installment Contracts are charged off prior to becoming 90 days
contractually delinquent or, if earlier, upon repossession of the automobile.
Once an automobile is repossessed, the automobile is carried on the
Company's books as a repossession on hand at a value equal to the lower of
cost or market.  In certain situations, automobiles may be reconditioned
and/or repaired prior to sale.

REGULATION

    The Company's operations are subject to extensive supervision and
regulation under state and federal laws and regulations, which, among other
things, require that the Company obtain and maintain certain licenses and
qualifications, limit the interest rates, fees and other charges the Company
is allowed to charge, limit or prescribe certain other terms of the Company's
financings, require specified disclosures to consumers, govern the sale and
terms of insurance products offered by the Company and the insurers for which
it acts as agent, and limit the Company's rights to repossess and sell
collateral.

    The Company is regulated in the states where it purchases Installment
Contracts and makes Other Loans.  In addition, the repossession of
automobiles and other collateral is generally governed by the law of the
state in which the repossession takes place.  In general, the Company's
business is conducted under licenses issued by individual states, and the
Company is subject to periodic examination by the individual states.  State
licenses are generally revocable for cause.

    The Company is also subject to state regulations governing insurance
agents in connection with its sales of credit and other insurance, which
require that insurance agents (such as the Company's personnel) be licensed,
govern the commissions that may be paid to agents in connection with the sale
of credit insurance and limit the premium amount charged for insurance.

THE INDUSTRY AND COMPETITION

    The year 1996 through the first quarter of 1997 was a period of dramatic
upheaval in the indirect used auto lending segment of the non-prime
automobile finance industry.  The indirect used auto lending segment is
relatively young, and has attracted many new publicly traded participants.
Within the segment, competition for new lending opportunities fostered growth
to the detriment of credit quality and altered pricing discipline.  The
combination of deteriorating credit quality among consumers and declining
yields on new loans has contributed to reduced operating returns and results.
Many industry participants, including the Company, have adjusted their
operating strategies to improve credit quality and financial returns.

    The non-prime credit segment of the automobile finance industry is highly
fragmented and competitive.  The prospect of high returns in this segment has
caused many finance companies to focus their operations more heavily on the
non-prime automobile finance business.  During the last few years, a number
of finance companies have undertaken an initial public offering, thereby
improving their ability to compete.  While other finance companies represent
substantial competition for the Company, the Company does not believe that
any finance company owns



                                       5
<PAGE>

direct loans or installment contracts representing more than 2% of the total
volume of non-prime automobile financing in the United States.

    Existing and potential competitors also include a variety of financial
entities, including captive finance arms of major automobile manufacturers,
banks, savings and loans, independent finance companies, small loan
companies, industrial thrifts and leasing companies.  Many of these financial
organizations do not consistently solicit business in, or have withdrawn
from, this credit market.  The Company believes that captive finance
companies generally focus their marketing efforts on this market when
inventory control and/or production scheduling requirements of their parent
organizations dictate a need to enhance sales volumes and then exit the
market once these sales volumes are satisfied. The Company also believes that
increased regulatory oversight and capital requirements imposed by market
conditions and governmental agencies have limited the activities of many
banks and savings and loans in this credit market.

    The Company believes that its established relationships with dealers,
prompt and consistent review of credit applications, prompt payment of
purchase prices for Installment Contracts, and high level of service enable
it to compete effectively for the purchase of Installment Contracts.

EXECUTIVE OFFICERS OF THE COMPANY

    The executive officers of the Company and their ages and positions are as
follows:

<TABLE>
<CAPTION>
                           AGE AT
    NAME                APRIL 1, 1997                POSITION WITH THE COMPANY
    ----                -------------       ----------------------------------------------

<S>                          <C>            <C>
Charles F. Wonderlic         58             Chairman, Chief Executive Officer and Director
Ronald B. Clonts             64             Vice Chairman and Director
Robert J. Braasch            50             President and Chief Financial Officer
Samuel M. Keith              49             Chief Operating Officer
Richard E. Wonderlic         31             Executive Vice President and Director
</TABLE>

    CHARLES F. WONDERLIC has been the Chief Executive Officer of the Company
since 1980 and Chairman since 1984.  He has served the Company in various
capacities since 1962, including President, Chief Financial Officer, Vice
President and Treasurer.  He was named a Director in 1962.  Prior to joining
the Company, he was employed by General Finance Loan Company.  Mr. Wonderlic
currently is a member of the Executive Committee of the American Financial
Services Association and has continuously served as a Director of that
organization since 1974.  Mr. Wonderlic received his M.B.A. degree from
Northwestern University, Evanston, Illinois.

    RONALD B. CLONTS has been Vice Chairman of the Company since July, 1996.
Previously, since 1992, he was the Company's President.  He was named a
Director of the Company in 1994.  Prior to 1992 he served as Executive Vice
President or Vice President since joining the Company in 1962.  He was
previously employed by General Finance Loan Company.  Mr. Clonts received his
M.B.A. degree from Northwestern University, Evanston, Illinois.  Mr. Clonts
is the brother-in-law of Charles F. Wonderlic.

    ROBERT J. BRAASCH was named President of the Company in July, 1996.  He
joined the Company in January, 1994 as Chief Financial Officer and Treasurer
and was also named Senior Vice President in April, 1994.  Prior to joining
the Company, Mr. Braasch spent seven years with USA Financial Services, Inc.
as Chief Financial Officer and subsequently Chief Executive Officer.  Mr.
Braasch spent his previous 12 years in various positions with Household
Finance Corporation including six years as Treasurer.  Mr. Braasch graduated
from DePaul University, Chicago, Illinois.



                                       6


<PAGE>

    SAMUEL M. KEITH joined the company in August, 1996 as Chief Operating
Officer.  Prior to joining the Company, Mr. Keith spent 24 years with General
Electric Capital Corporation.  Mr. Keith held management positions in the sales
and marketing, credit administration, customer service, operations and
collections functions.  Mr. Keith graduated from the University of Mississippi,
Oxford, Mississippi.

    RICHARD E. WONDERLIC formally joined the Company in May, 1988 following
graduation from the University of Iowa and was named a Director of the Company
in 1994.  The son of Charles F. Wonderlic, he became Executive Vice President of
the Company in April, 1994.  Mr. Wonderlic supervises the Company's operations
serviced from its  Gurnee, Illinois location.  Mr. Wonderlic has served in
various Company locations as Assistant Supervisor, Manager and Vice President
and was instrumental in the development of the Company's automobile finance
program.

    Officers are appointed by the Board of Directors and, except for those
officers with whom the Company has entered into employment agreements (Messrs.
Charles Wonderlic, Clonts and Braasch), serve at the pleasure of the Board.
Each employment agreement has a one-year term, with one-year extensions
thereafter unless the agreement is terminated, or the Company or executive
officer has provided a notice of non-renewal at least 180 days prior to the
anniversary thereof.

EMPLOYEES

    The Company employs personnel experienced in areas of credit origination,
documentation, collection, recovery and administration.  Most traditional
financing companies utilize personnel with multiple responsibilities.  In order
to maximize efficiency, the Company employs specialists in each area with a
minimal crossover of duties.  With custom-designed software and sufficient
staffing levels, the Company believes it achieves prompt and effective
communication with automobile dealers.

    As of December 31, 1996, the Company had 258 full-time equivalent
employees, 47 of whom were involved in management, administration, information
systems or accounting, 8 in marketing and 203 in credit processing,
documentation, collection and recovery.  The Company's five most senior officers
have an average of 26 years experience in the consumer finance industry.  None
of the Company's employees is represented by a union and the Company considers
employee relations to be excellent.

ITEM 2.  PROPERTIES

PROPERTIES

    As of December 31, 1996, the Company maintained its corporate headquarters
and a regional office in Gurnee, Illinois, and also operated two regional
offices located in Florida.  The Company has begun to consolidate portions of
the Orlando operation into the Tampa regional office.  The Company intends to
reduce the amount of the operations conducted at the Orlando regional office, or
close such office, during 1997.  Although the Company believes it is beneficial
for its regional offices to be accessible to customers and automobile dealers,
the Company does not believe that the particular locations of its offices are
material to its business and believes that other satisfactory office locations
are available for lease at comparable rates and for comparable terms in each
market where the Company maintains regional offices.  The following table sets
forth certain information with respect to the Company's offices:

                                       7


<PAGE>


                     YEAR OFFICE   APPROXIMATE          BASE
LOCATION                OPENED     SQUARE FEET      MONTHLY RENT
---------------      -----------   -----------      ------------
Gurnee, IL (1)           1995         21,944           $18,688
Orlando, FL (2)          1975          5,600             4,378
Tampa, FL (2)            1968          9,000             6,765

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

(1) The information presented reflects the combined data for the Company's
    headquarters (5,064 square feet) and the Illinois regional office (16,053
    square feet), which are located in the same building, and a Kenosha,
    Wisconsin payment processing office (827 square feet).  The Gurnee facility
    is leased from an unrelated party under three leases.  One lease has a
    thirty-four month term, which expires on May 31, 1998; one has a three-year
    term, which expires on April 30, 1998; and one has a twenty-six month term,
    which expires on November 30, 1997.  Each lease provides for two three-year
    extensions at the option of the Company.  Initial occupancy occurred on
    March 1, 1995.

(2) The Orlando and Tampa offices are leased from unrelated parties.  The lease
    for the Orlando office has a three-year term that expires on December 31,
    1997 and provides for one three-year extension at the option of the
    Company.  The lease for the Tampa office has a five-year term that expires
    on December 31, 2000.

    Total property rental expense for the Company approximated $412,000,
$341,000 and $190,000 in 1996, 1995 and 1994, respectively.

ITEM 3.  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
96C 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 still in its initial stages although it has been pending for
almost one year.  The parties are awaiting a ruling on that motion.  No
discovery has been taken by either party.  Due to the early stage of the
litigation, it is not possible to determine the likelihood of an unfavorable
outcome, however, 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.  Due to the early stage of the litigation, it is not possible to
determine the likelihood of an unfavorable outcome, however, the Company intends
to defend vigorously the claims made in the complaint.

                                       8


<PAGE>


    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.

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

    None.

                                       PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

    The Company's common stock is listed for quotation on the National Market
tier of the Nasdaq Stock MarketSM under the symbol ""EFCW.''  The high and
low bid quotations for the common stock during 1995 and 1996, as reported by
the National Association of Securities Dealers, Inc., are set forth in the
following table.  Such over-the-counter bid quotations reflect inter-dealer
prices, without retail mark-up, mark-down or commission, and may not
necessarily represent actual transactions.

QUARTER ENDED                       1996                          1995
-------------              ----------------------        -----------------------
                            HIGH             LOW          HIGH            LOW
                           ------           -----        ------          -----
March 31                   $14 1/4         $8 1/2        $16             $13 1/4
June 30                    $ 9 1/4         $6 1/2        $19 1/4         $13 1/4
September 30               $ 6 7/8         $5 1/4        $24 1/2         $18
December 31                $ 8 1/4         $5            $23             $12 1/2

    Harris Trust and Savings Bank serves as the transfer agent for the
Company's common stock.  As of March 25, 1997, the Company had 80 stockholders
of record, exclusive of holders who own their shares in "street" or nominee
names and approximately 1,450 beneficial stockholders.

    The Company has not paid and does not presently intend to pay cash
dividends on its common stock.  The Company anticipates that its earnings for
the foreseeable future will be retained for use in the operation and expansion
of its business.  Payment of cash dividends, if any, in the future will be at
the sole discretion of the Company's Board of Directors and will depend upon the
Company's financial condition, earnings, current and anticipated capital
requirements, terms of indebtedness and other factors deemed relevant by the
Company's Board of Directors.  The Company is restricted as to the payment of
dividends by its amended and restated revolving credit agreement with a group of
nine commercial banks (the "Revolving Credit Agreement").

                                       9


<PAGE>


ITEM 6.  SELECTED FINANCIAL DATA

    The following selected financial data as of and for each of the years in
the five-year period ended December 31, 1996 are derived from the financial
statements of the Company.  The selected financial data should be read in
conjunction with the Financial Statements, including the Notes thereto, and
other financial data included elsewhere herein and the following "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

                     SELECTED FINANCIAL AND OPERATING INFORMATION

<TABLE>
<CAPTION>

                                                                 AS OF OR FOR THE YEARS ENDED DECEMBER 31,
                                                       --------------------------------------------------------------------
                                                          1996         1995         1994 (1)        1993        1992
                                                         ------       ------       ----------      ------      ------
                                                                 (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

<S>                                                    <C>          <C>          <C>              <C>         <C>
STATEMENT OF INCOME DATA:
Automobile portfolio interest and fee income           $  26,326    $  26,779    $  12,328        $  5,278    $  5,312
                                                       ---------    ---------    ---------        --------    --------
Total interest and fee income                          $  26,653    $  27,100    $  12,723        $  5,517    $  5,692
Total interest expense                                     9,060        8,093        2,712           1,232       1,705
Net interest income before provision for
    credit losses                                         17,593       19,007       10,011           4,285       3,987
Provision for credit losses                               13,184        9,538          254             455         373
                                                       ---------    ---------    ---------        --------    --------
Net interest income after provision for credit losses      4,409        9,469        9,757           3,830       3,614
Servicing income                                           5,107        2,119          841             586          --
Gain on securitization                                       612           --           --              --          --
Insurance commissions                                         66          255          147              65          64
Operating expenses                                        16,202       11,321        5,627           2,795       2,608
Income tax expense (benefit)(2)                             (659)         197        1,167              --          --
                                                       ---------    ---------    ---------        --------    --------
Net income (loss)                                        $(5,349)    $    325    $   3,951        $  1,686    $  1,070
                                                       ---------    ---------    ---------        --------    --------
                                                       ---------    ---------    ---------        --------    --------
Earnings per common share                                 $(1.28)       $0.08        $0.93           $0.37       $0.23
Weighted average number of
    common shares outstanding(3)                       4,189,100    4,183,490    3,377,973       2,800,000   2,800,000

OPERATING AND OTHER DATA:
Net finance receivables (owned or serviced)             $151,630     $184,882     $100,620         $28,847     $26,565

Average interest rate on net finance receivables(5)        22.82%       22.43%       26.72%          23.94%      21.64%
Average interest rate on interest bearing liabilities       9.23         9.17         8.56            7.82        8.59
                                                       ---------    ---------    ---------        --------    --------
Net interest spread                                        13.59%       13.26%       18.16%          16.12%      13.05%
Net interest margin                                        15.06%       15.73%       21.02%          18.60%      15.16%
Total allowance for credit losses, dealer reserves
    and nonrefundable acquisition
    discount as a percentage of average
    net finance receivables                                14.22        14.09        12.67           15.44       13.94
Net charge-offs as a percentage of average net
    finance receivables (owned or serviced) (6)            19.60        15.57        10.89           10.24       12.87
Operating expenses as a percentage of average net
    finance receivables (owned or serviced)                 9.37         7.35        10.48           10.14        9.92
Ratio of earnings to fixed charges(7)                       0.51x        1.06x        2.81x           2.22x       1.59x
Return (loss) on average assets                            (5.03)%       0.29%        9.32%           8.18%       4.44%
Return (loss) on average equity                           (34.85)%       1.86%       46.76%          42.57%      30.20%
Net income as a percentage of revenues(8)                 (16.49)        1.52        35.92           34.16       26.41

BALANCE SHEET DATA:
Finance receivables, net(9)                            $  54,664     $145,719     $ 78,864         $24,297     $26,565
Nonrefundable acquisition discount                        (1,443)      (9,428)      (8,671)         (2,749)     (2,446)
Allowance for credit losses                               (6,046)     (10,808)      (1,249)         (1,000)       (650)
Total assets                                              63,768      139,058       71,245          20,998      24,120
Total debt                                                50,806      118,697       52,528          15,922      19,590
Dealer reserves                                              287          293           74               2         607
Stockholders' equity                                      10,308       15,656       15,209         $ 4,088       3,674

</TABLE>

                                       10

<PAGE>
--------------------------
(1) The December 31, 1994 data reflect the effect of the Company's July, 1994
    initial public offering in which the Company sold 1,380,000 shares of its
    common stock.

(2) In connection with the Company's July, 1994 initial public offering, the
    Company elected to terminate its election to be treated as a subchapter S
    corporation for tax purposes.  As a result of this change in tax status,
    1994 became the first year in which the Company recorded any income tax
    expense.

(3) Earnings per common share reflect a 38.8% income tax adjustment
    to subchapter S corporation earnings for the periods prior to July 21,
    1994, the date the Company terminated its subchapter S corporation
    election.

(4) Weighted average number of common shares outstanding for periods prior to
    April 14, 1994 reflect the effect of the Company's 11,666.667-for-1 stock
    split effected on that date.

(5) For the 1992 through 1995 periods, average interest rates earned were less
    than average APRs charged to consumers due to the Company's policy of
    allocating, at the time Installment Contracts were purchased, a portion of
    contract interest (that would otherwise have been recorded as unearned
    finance charges) to nonrefundable acquisition discount when the credit risk
    and potential for losses warranted such an allocation.  For the years ended
    December 31, 1994, 1993, and 1992, average interest rate earned includes
    the impact of the accretion to income from nonrefundable acquisition
    discount of $1.3 million, $580,000, and $375,000, respectively.  SEE
    "Management's Discussion and Analysis of Financial Condition and Results of
    Operations -- Credit Loss Experience."

(6) 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
    (120 days for securitized receivables) contractually delinquent.  SEE
    "Management's Discussion and Analysis of Financial Condition and Results of
    Operations -- Credit Loss Experience -- Allowance and Provision for Credit
    Losses/Charge-Offs."

(7) For purposes of calculating the historical ratio of earnings to fixed
    charges, earnings consist of income before income taxes and fixed charges.
    Fixed charges consist of interest charges and one-third of rentals.

(8) Revenues consist of net interest income, servicing income and insurance
    commissions.

(9) Net of unearned finance charges.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

    The following management's discussion and analysis provides information
regarding the Company's financial condition as of December 31, 1996 and 1995
and its results of operations for the years ended December 31, 1996, 1995 and
1994. The management's discussion and analysis should be read in conjunction
with the preceding "Selected Financial Data" and the Company's Financial
Statements and the Notes thereto and the other financial data included
elsewhere in this Annual Report on Form 10-K.  The financial information
provided below has been rounded in order to simplify its presentation.
However, the ratios and percentages provided below are calculated using the
detailed financial information contained in the Company's Financial
Statements, the Notes thereto and the financial data included elsewhere
herein.

GENERAL

    The Company's outstanding balance of owned or serviced (i.e., managed)
Installment Contracts declined $33.3 million during 1996 to $151.1 million
(net).  This decline reflects the Company's emphasis on addressing credit
losses (rather than portfolio growth) during 1996.

    Interest and servicing income on the Company's portfolio of managed
Installment Contracts accounts for most of the Company's revenue.  The net
amount of Installment Contracts purchased declined to $105.9 million during
the year ended December 31, 1996 from $186.2 million during the year ended
December 31, 1995.  During the fourth quarter of 1995, the Company began
reducing its purchases of Installment Contracts, and continued this trend
throughout 1996.  This decision was prompted by unacceptable credit
performance trends on previously purchased Installment Contracts.

                                      11
<PAGE>

    As reflected in the following table, the finance receivables originated
by the Company during the periods presented below consist primarily of
Installment Contracts.

                                          FOR THE YEARS ENDED DECEMBER 31,
                                         -----------------------------------
                                            1996        1995         1994
                                         ----------  ----------   ----------
                                               (DOLLARS IN THOUSANDS)
Net Installment Contracts purchased(1)..   $105,906    $186,162     $104,263
Net Other Loans originated(1)...........        528         417          877
                                         ----------  ----------   ----------
Total...................................   $106,434    $186,579     $105,140
                                         ----------  ----------   ----------
                                         ----------  ----------   ----------
------------------------------
(1) Net of unearned finance charges.

    As part of its funding strategy, the Company sold $64.8 million and $44.3
million of net Installment Contracts to General Electric Capital Corporation
("GECC") during the years ended December 31, 1996 and 1995, respectively.
(Additionally during 1996, the Company sold $9.6 million of net Installment
Contracts originated from dealers located in Texas to Search Capital.  This
sale reflects the Company's decision to substantially reduce its business in
Texas. The Company did not retain servicing rights on the Installment
Contracts sold to Search Capital.)  No gains or losses were recorded at the
time the Installment Contracts were sold.  The Company retained servicing
rights on the Installment Contracts sold to GECC.  The Company does recognize
servicing income over the life of the related receivables as a percentage of
receivables outstanding.  The Company is also eligible to receive bonus
servicing fees based on portfolio performance.  Bonus servicing fees are
recognized as income when earned. SEE "--Liquidity and Capital Resources"
and Notes 4 and 5 to the Company's Financial Statements.

    During the fourth quarter of 1996, the Company completed the
securitization of approximately $35.2 million (net) of Installment Contracts
through a transaction agented by Greenwich Capital Markets, Inc.  The
transaction was structured to create three classes of certificates, which
were rated by Duff & Phelps Credit Rating Co. and Fitch Investors Service
L.P.  The Company recognized a gain on the transaction of approximately
$612,000.  The Company capitalized the retained servicing rights on the
Installment Contracts securitized.  The net amount of Installment Contracts
serviced by the Company for third parties was $97.0 million and $39.2 million
at December 31, 1996 and 1995, respectively.  SEE "-- Liquidity and Capital
Resources" and Notes 4 and 5 to the Company's Financial Statements.

PROFITABILITY AND RECENT TRENDS

    The Company experienced a net loss of $5.3 million during 1996 compared
to net income of $325,000 during 1995.  The decline of $5.7 million in
earnings was primarily a result of a $3.6 million increase in the provisions
for credit losses and a $4.9 million increase in operating expenses, which
were partially offset by, among other things, a $3.0 million increase in
servicing income.

    The following table sets forth certain data relating to the Company's net
income before provision for credit losses for the years ended December 31,
1996, 1995 and 1994:



                                      12
<PAGE>

<TABLE>
<CAPTION>
                                                           FOR THE YEARS ENDED DECEMBER 31,
                                                         -----------------------------------
                                                            1996        1995         1994
                                                         ----------  ----------   ----------
                                                               (DOLLARS IN THOUSANDS)
<S>                                                        <C>         <C>          <C>
Average net finance receivables(1)                         $116,797    $120,830     $ 47,615
Average interest bearing liabilities                         98,202      88,276       31,699
Total interest and fee income                                26,653      27,100       12,723
Total interest expense                                        9,059       8,093        2,712
                                                           --------    --------     --------
Net interest income before provision for credit losses     $ 17,594    $ 19,007     $ 10,011
                                                           --------    --------     --------
                                                           --------    --------     --------
Average interest rate on net finance receivables(2)           22.82%      22.43%       26.72%
Average interest rate on interest bearing liabilities          9.23%       9.17%        8.56%
                                                           --------    --------     --------
Net interest spread                                           13.59%      13.26%       18.16%
                                                           --------    --------     --------
                                                           --------    --------     --------
Net interest margin(3)                                        15.06%      15.73%       21.02%
                                                           --------    --------     --------
                                                           --------    --------     --------
</TABLE>
---------------------------
(1) Excludes average net finance receivables serviced for third parties of
    $56.0 million, $33.1 million and $6.1 million for the years ended December
    31, 1996, 1995 and 1994, respectively.

(2) For the 1995 and 1994 periods, average interest rates earned were less than
    average APRs charged to consumers due to the Company's allocation to
    nonrefundable acquisition discount, at the time Installment Contracts were
    purchased, of a portion of contract interest (that would otherwise have
    been recorded as unearned finance charges).  SEE "-- Accounting Matters."

(3) Net interest margin represents net interest income 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 interest rates, fees, premiums and other
charges at or near the maximum amounts 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 Installment Contracts sold or securitized, with
servicing retained, by the Company.  Servicing income is derived from base
servicing fees for loan administration and collection services and bonus or
excess servicing fees paid based on the performance of the Installment
Contracts sold or securitized.  The increase in servicing income was due to
higher levels of loans serviced by the Company.  Of the $5.1 million of
servicing income earned in 1996, $3.7 million represented bonus or excess
servicing fees.  Of the $2.1 million of servicing income earned in 1995, $1.1
million represented bonus or excess servicing fees.

    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 and intends to continue to explore additional opportunities to fix
or cap the interest rate on a portion of its adjustable rate borrowings.
SEE "-- Liquidity and Capital Resources."  Additionally, the Company may
utilize alternative financing structures, such as fixed rate senior

                                      13
<PAGE>

or subordinated debt, securitizations or whole loan sales to attempt to
mitigate the adverse effect of interest rate increases.

    Pursuant to a September, 1996 amendment to the Revolving Credit
Agreement, the Company has the option of borrowing funds at an interest rate
equal to either the prime rate of the agent bank or the LIBOR rate plus 2.5%
(which was increased from LIBOR plus 2.0%).  On December 31, 1996, the
three-month LIBOR borrowing rate under the Revolving Credit Agreement was
8.06% compared to 7.63% on December 31, 1995.  The prime rate was 8.25% on
December 31, 1996 and the three-month LIBOR rate was 5.56% on such date.

    Another component of the Company's profitability is the level of its
operating expenses.  The increase in operating expenses was attributable to
higher salaries and benefits costs, and related operating expenses due to the
increase in the number of employees and infrastructure improvements.  The
increase in the number of employees was caused primarily by an increase in
the number of collections personnel in order to handle credit losses.

FINANCIAL CONDITION

    Total assets decreased $75.3 million (54.1%) to $63.8 million at December
31, 1996 from $139.1 million at December 31, 1995 primarily due to decreases
in finance receivables (net of dealer reserves, nonrefundable acquisition
discount and allowance for credit losses) to $47.2 million at December 31,
1996 from $125.5 million at December 31, 1995.  The decline in assets and
finance receivables is, in part, attributable to the sale of approximately
$64.8 million and $9.6 million (net) of Installment Contracts to GECC and
Search Capital, respectively, during 1996 and the securitization of
approximately $35.2 million of Installment Contracts during 1996.  The sale
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 $151.1 million at December 31, 1996 from
$184.4 million at December 31, 1995.

    Total liabilities decreased $69.9 million (56.7%) to $53.5 million at
December 31, 1996 from $123.4 million at December 31, 1995 primarily due to a
decrease in total debt to $50.8 million at December 31, 1996 from $118.7
million at December 31, 1995.  The decrease in total debt was primarily the
result of decreased borrowings under the Revolving Credit Agreement to $31.8
million at December 31, 1996 from $99.6 million at December 31, 1996.



                                      14


<PAGE>
RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994

    The following table sets forth certain data relating to the Company's
results of operations for the years ended December 31, 1996, 1995 and 1994:

<TABLE>
<CAPTION>
                                                           FOR THE YEARS ENDED DECEMBER 31,
                                                        --------------------------------------
                                                          1996            1995          1994
                                                       ----------      ----------    ----------
                                                                (DOLLARS IN THOUSANDS)
<S>                                                     <C>             <C>           <C>
Automobile portfolio interest and fee income............ $26,326         $26,779       $12,328
                                                        --------        --------      --------
Total interest and fee income........................... $26,653         $27,100       $12,723
Total interest expense..................................   9,060           8,093         2,712
                                                         -------         -------       -------
Net interest income before provision for credit losses..  17,594          19,007        10,011
Provision for credit losses.............................  13,184           9,538           254
                                                         -------         -------       -------
Net interest income after provision for credit losses...   4,410           9,469         9,757
                                                         -------         -------       -------
Other income:
    Servicing income (from Installment Contracts).......   5,107           2,119           841
    Gain on sale of finance receivables (net)...........     612              --            --
    Insurance Products commissions......................      66             255           147
                                                         -------         -------       -------
Total other income......................................   5,785           2,374           988
                                                         -------         -------       -------
Salaries and related costs..............................   8,011           5,745         2,998
Other operating expenses................................   8,191           5,576         2,629
                                                         -------         -------       -------
Total operating expenses................................  16,202          11,321         5,627
                                                         -------         -------       -------
Income tax expense......................................    (659)            197         1,167
                                                         -------         -------       -------
Net income.............................................. $(5,349)        $   325       $ 3,951
                                                         -------         -------       -------
                                                         -------         -------       -------
</TABLE>

    COMPARISON OF 1996 TO 1995.  The Company experienced a net loss of $5.3
million for the year ended December 31, 1996 compared to net income of
$325,000 for the year ended December 31, 1995.

    Net interest income before the provision for credit losses decreased by
5.8% to $17.9 million for the year ended December 31, 1996 from $19.0 million
for the year ended December 31, 1995, primarily as the result of increased
sales and securitizations of Installment Contracts, thereby reducing the
number of interest income-producing assets.  The negative effect on interest
and fee income resulting from the sale and securitization, with servicing
retained, of $100 million of finance receivables (net) during 1996, compared
to $44.3 million in 1995, was partially offset by a significant increase in
servicing income.

    Total interest expense increased to $9.1 million for the year ended
December 31, 1996 from $8.1 million for the year ended December 31, 1995.
The increase resulted from an increase in the average amount of borrowed
funds outstanding throughout the year as well as increases in interest rates
charged for borrowed funds.  The average debt outstanding during 1996
increased to $98.2 million from $88.3 million during 1995, and the average
interest rate paid for borrowed funds increased to 9.23% in 1996 from 9.17%
in 1995.

    The most significant factor in the Company's $5.7 million decline in
earnings between 1995 and 1996 was a $3.7 million increase in the provision
for credit losses.  This increase was a function of deteriorating credit
quality.  Credit quality suffered due to higher charge-off rates for
Installments Contracts purchased during the last half of 1995 and the first
half of 1996. The Company believes that credit quality has also suffered, in
part, due to historically high levels of consumer indebtedness nationally.
SEE "-- Credit Loss Experience -- Allowance and Provision for Credit
Losses/Charge-offs." As more fully discussed in " -- Accounting Matters," the
increase in the provision for credit losses for 1996 is also due to the fact
that, unlike in 1995 (and prior years), no contract interest was allocated to
nonrefundable acquisition discount during 1996.

                                      15
<PAGE>

    Other income, including servicing income and commissions from the sale of
Insurance Products, increased 141.7% to $5.8 million for the year ended
December 31, 1996 from $2.4 million for the year ended December 31, 1995,
primarily due to an increase in servicing income to $5.2 million for the year
ended December 31, 1996 from $2.1 million for the year ended December 31,
1995.  This increase reflects the increased amount of servicing-retained
sales and securitizations of finance receivables by the Company in 1996.  The
Company derives its servicing income from base servicing fees and bonus or
excess servicing fees based on the performance of the finance receivables
serviced by the Company.  Of the $5.1 million of servicing income earned in
1996, $3.7 million represented bonus or a excess servicing fees.  Of the $2.1
million of servicing income earned in 1995, $1.1 million represented bonus or
excess servicing fees.  During 1996, the Company recognized a $612,000 gain
from the sale of $35.2 million (net) of Installment Contracts to the Eagle
Auto Trust 1996-A in October, 1996 and the corresponding issuance to
investors of automobile receivable-backed certificates.

    Operating expenses increased 43.4% to $16.2 million for the year ended
December 31, 1996 compared to $11.3 million for the year ended December 31,
1995.  Salaries and related costs increased 40.4% from the prior year to $8.0
million for the year ended December 31, 1996, due primarily to an increase in
the number of employees, normal pay increases and increased benefits costs.
The Company's other operating expenses increased 46.4% to $8.2 million for
the year ended December 31, 1996 compared to the year ended December 31,
1995, due to higher collection expenses and higher professional fees.
Operating expenses as a percentage of average net finance receivables owned
or serviced increased to 9.37% for the year ended December 31, 1996 as
compared to 7.35% for the year ended December 31, 1995.  The Company believes
that it will not require an increase in the number of employees needed to
operate the Company for the foreseeable future, although there can be no
assurance in this regard.

    The Company recorded an income tax benefit of ($659,000) for the year
ended December 31, 1996 as compared to an income tax expense of $197,000 for
the year ended December 31, 1995.  This resulted from the pretax loss of $6.0
million in 1996 versus pretax income of $523,000 in 1995.  The effective tax
rates on income before income taxes were (11.0%) and 37.7% in 1996 and 1995,
respectively.

    COMPARISON OF 1995 TO 1994.  Net income decreased by 91.8% to $325,000
for the year ended December 31, 1995 from $4.0 million for the year ended
December 31, 1994.

    Net interest income before the provision for credit losses increased by
90.0% to $19.0 million for the year ended December 31, 1995 from $10.0
million for the year ended December 31, 1994, primarily as the result of
increased income from the Installment Contracts portfolio.  Total interest
and fee income was adversely affected by changes relating to the
nonrefundable acquisition discount account.  The Company's credit loss
experience during 1995 resulted in no accretion to income from nonrefundable
acquisition discount during 1995, as compared to a $1.3 million accretion to
income during 1994.  Based on a review of portfolio performance and of the
adequacy of the amount of the nonrefundable acquisition discount, during
1995, the Company allocated $9.8 million of contract interest (that would
otherwise have been recorded as unearned finance charges) to nonrefundable
acquisition discount, as compared to a $5.0 million allocation during 1994.
The allocations for each year represented approximately 10.4% of the original
aggregate contract interest on the Installment Contracts purchased during
each year.  Such allocations and increased credit losses on the Company's
portfolio of finance receivables reduced the average interest rate earned on
net finance receivables in 1995 to 22.43% from 26.72% in 1994.  SEE "--
Credit Loss Experience -- Nonrefundable Acquisition Discount and Dealer
Reserves."  The sale of $39.9 million of finance receivables during 1995 had
a negative effect on interest and fee income; however, these sales resulted
in a significant increase in servicing income.

    Total interest expense increased to $8.1 million for the year ended
December 31, 1995 from $2.7 million for the year ended December 31, 1994.
The increase resulted from an increase in the amount of borrowed funds, the
issuance of $17 million of subordinated notes, as well as increases in
interest rates charged for borrowed



                                      16
<PAGE>

funds.  The total debt outstanding at December 31, 1995 increased to $118.7
million from $52.5 million at December 31, 1994 and the average interest rate
paid for borrowed funds, principally due to the higher cost of subordinated
debt versus senior debt, increased to 9.17% in 1995 from 8.56% in 1994.

    The provision for credit losses increased to $9.5 million for the year
ended December 31, 1995 from $254,000 for the year ended December 31, 1994.
This significant increase was made in connection with the adjustment,
effective the fourth quarter of 1995, whereby the Company reduced the 1995
allocation to nonrefundable acquisition discount of contract interest (that
would otherwise have been recorded as unearned finance charges).  The
allowance for credit losses along with nonrefundable acquisition discount and
dealer reserves is available to absorb credit losses in the Company's finance
receivables portfolio.  SEE "-- Credit Loss Experience --Allowance and
Provision for Credit Losses/Charge-offs."

    Other income, including servicing income and commissions from the sale of
Insurance Products, increased 140% to $2.4 million for the year ended
December 31, 1995 from $988,000 for the year ended December 31, 1994,
primarily due to an increase in servicing income to $2.1 million for the year
ended December 31, 1995 from $841,000 for the year ended December 31, 1994.
This increase reflects the increased amount of servicing-retained sales of
finance receivables by the Company in 1995 and 1994.  Insurance Product
income was $255,000 in 1995 as compared to $147,000 in 1994.

    Operating expenses increased 101% to $11.3 million for the year ended
December 31, 1995 compared to the year ended December 31, 1994.  Salaries and
related costs increased 92% from the prior year to $5.7 million for the year
ended December 31, 1995, due primarily to a substantial increase in the
number of employees, normal pay increases and increased benefits costs.  The
Company's other operating expenses increased 112% to $5.6 million for the
year ended December 31, 1995 compared to the year ended December 31, 1994,
due to a larger base of owned or serviced finance receivables.  Operating
expenses as a percentage of average net finance receivables owned or serviced
declined to 7.35% for the year ended December 31, 1995 as compared to 10.48%
for the year ended December 31, 1994.

    Income tax expense decreased 83% to $197,000 for the year ended December
31, 1995 from $1.2 million for the year ended December 31, 1994.  The
decrease resulted from a lower level of pretax income in 1995 versus 1994.
The effective tax rates on income before income taxes were 37.7% and 22.8% in
1995 and 1994, respectively.

CREDIT LOSS EXPERIENCE

    The Company's credit loss reserves are comprised of three components:
nonrefundable acquisition discount; an allowance for credit losses; and, for
non-Installment Contracts finance receivables, refundable dealer reserves.
The total of allowance for credit losses, nonrefundable acquisition discount
and dealer reserves equaled 14.22% and 14.09% of net owned finance
receivables at December 31, 1996 and 1995, respectively.  The following
discussion reflects the Company's increased emphasis on the allowance for
credit losses and its reduced emphasis on nonrefundable acquisition discount
in establishing credit loss reserves for the Company's Installment Contracts
portfolio.

    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 discounts with
dealers based upon various criteria, including the credit risk associated



                                      17
<PAGE>

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 years ended
December 31, 1996, 1995 and 1994:

                                         FOR THE YEARS ENDED DECEMBER 31,
                                      --------------------------------------
                                           1996        1995       1994
                                      ------------- ---------- -------------
                                             (DOLLARS IN THOUSANDS)
Balance at January 1,                   $  9,721     $  8,745    $  2,752
Additions applicable to new volume        11,547       30,319      15,576
Payments to dealers                         (833)      (2,077)         --
Accreted to income                            --           --      (1,329)
Reductions applicable to accounts sold    (8,439)      (5,524)     (2,719)
Losses charged, net of recoveries        (10,266)     (21,742)     (5,535)
                                        --------     --------    --------
Balance at end of period                $  1,730     $  9,721    $  8,745
                                        --------     --------    --------
                                        --------     --------    --------

    The substantial decrease in "additions applicable to new volume" from
1995 to 1996 reflects the fact that purchases of Installment Contracts
declined and that, unlike in 1994 and 1995, nonrefundable acquisition
discount was not increased during 1996 by allocations of contract interest
that otherwise would have been recorded as unearned finance charges.  SEE
"-- Accounting Matters."

    ALLOWANCE AND PROVISION FOR CREDIT LOSSES/CHARGE-OFFS.  The Company
maintains an allowance for credit losses at a level that management believes
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 Company has experienced higher charge-off
rates during 1996 than during 1995. SEE "-- Results of Operations for the
Years Ended December 31, 1996, 1995 and 1994 -- Comparison of 1996 to 1995"

    The following table reflects the Company's allowance for credit losses
and provision for credit losses for each of the years ended December 31,
1996, 1995 and 1994:

<TABLE>
<CAPTION>
                                                           FOR THE YEARS ENDED DECEMBER 31,
                                                       --------------------------------------
                                                             1996        1995       1994
                                                       ------------- ---------- -------------
                                                               (DOLLARS IN THOUSANDS)

<S>                                                       <C>          <C>         <C>
Balance at beginning of period                            $  10,808    $  1,249    $  1,000
Provision charged to expense                                 13,184       9,538         254
Finance receivables charged off, net of recoveries          (17,946)        (21)         (5)
                                                          ---------    --------    --------
Balance at end of period                                  $   6,046    $ 10,808    $  1,249
                                                          ---------    --------    --------
                                                          ---------    --------    --------
Allowance as a percentage of
 net owned finance receivables at year-end                    11.06%       7.42%       1.58%
</TABLE>

    The substantial increase in the allowance for credit losses in 1996 was
the result of a $13.2 million provision for credit losses.  The substantial
increase in the provision for credit losses was due to higher credit



                                      18

<PAGE>

losses and the Company not allocating during 1996 any contract interest to
non-refundable acquisition discount.  SEE "-- Results of Operations for the
Years Ended December 31, 1996, 1995 and 1994 -- Comparison of 1996 to 1995"
and "--Accounting Matters."

    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 $16.6 million, $15.2 million and $9.8 million,
representing 11.0%, 8.2% and 9.7% of net managed finance receivables, as of
December 31, 1996, 1995 and 1994, respectively.  The Company attributes the
increase in delinquencies in 1996 to a deterioration in overall consumer
credit quality trends and the purchase of lower quality Installment Contracts
in late 1995 and early 1996.  SEE "Business -- Servicing and Collection."

    The following table reflects delinquencies experienced by the Company in
its managed finance receivables portfolio as of December 31, 1996, 1995 and
1994:

                                                      AS OF DECEMBER 31,
                                                 ----------------------------
                                                   1996      1995      1994
                                                 --------  --------  --------
                                                    (Dollars in thousands)
 Net amount outstanding(1) ...................   $151,630  $184,882  $100,620
                                                 --------  --------  --------
 Delinquencies
    30-59 days ...............................   $ 13,256  $ 11,701  $  7,430
    60-89 days ...............................      2,965     3,507     2,434
    90+ days(2) ..............................        396         1        --
                                                 --------  --------  --------
        Total ................................   $ 16,617  $ 15,209  $  9,774
                                                 --------  --------  --------
                                                 --------  --------  --------
Total delinquencies as a percentage of
    net managed finance receivables ..........       11.0%      8.2%      9.7%

-----------------------
(1) Includes Installment Contracts sold or securitized, with servicing
    retained, by the Company and Other Loans, in each case net of unearned
    finance charges.

(2) The Company charges off all Installment Contracts and Other Loans greater
    than 89 days delinquent.  The Company charges off all securitized
    Installment Contracts greater than 120 days delinquent.

    REPOSSESSIONS ON HAND AND CHARGE-OFF EXPERIENCE.  Repossessed collateral
consists primarily of automobiles and is valued at the lower of cost or
market. Repossessions on hand (including titled assets) were valued at $4.2
million (2.8% of net managed Installment Contracts), $4.4 million (2.4% of
net managed Installment Contracts), and $666,000 (0.7% of net managed
Installment Contracts) at December 31, 1996, 1995 and 1994, respectively.
Titled assets included repossessed assets pending recovery (I.E., in respect
of a charged-off account, but not yet in the Company's possession) which,
effective December 31, 1995, are carried at their estimated fair value, less
the estimated costs of disposition. Additionally, accounts charged off as a
result of bankruptcy filings are carried as a titled asset at a value based
on the terms of the resolution of the bankruptcy.  At both December 31, 1996
and 1995, the value of titled assets was approximately $1.6 million.

    The following table reflects charge-offs in the managed finance
receivables portfolio as of and for the years ended December 31, 1996, 1995
and 1994:

                                      19
<PAGE>

                                                   As of or for the years ended
                                                            December 31,
                                                    ---------------------------
                                                      1996      1995     1994
                                                    --------  --------  -------
                                                       (Dollars in thousands)
  Net average principal amount outstanding(1) ..... $172,838  $153,955  $53,719
  Number of accounts charged-off during period ....    6,768     4,990    1,383
  Net charge-offs during period ................... $ 33,878  $ 23,978  $ 5,847
  Net charge-offs as a percentage of average
   net managed principal amount outstanding .......    19.60%    15.57%   10.89%

-------------------------
(1) Includes Installment Contracts sold or securitized, with servicing
    retained, by the Company and Other Loans, in each case net of unearned
    finance charges.

LIQUIDITY AND CAPITAL RESOURCES

    The Company finances its operations through cash flow from operations,
borrowings under 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 $(23.7)
million, $3.3 million and $11.6 million during the years ended December 31,
1996, 1995 and 1994, respectively.  During these periods, the primary source
or use of net cash provided by (used in) operating activities has been net
income, the net change in the allowance for credit losses, the net change in
the nonrefundable acquisition discount account and the amount of net finance
receivables charged off.

    Net cash provided by (used in) investing activities totaled $91.0
million, ($67.4 million) and ($54.6 million) during the years ended December
31, 1996, 1995 and 1994, respectively.  The Company reduced its need for
borrowed funds through the sale of Installment Contracts (net) of $109.4
million, $39.9 million and $19.7 million during the years ended December 31,
1996, 1995 and 1994, respectively.  The Company reduced its need for borrowed
funds during 1996 by purchasing less finance receivables than in 1995.

    Net cash provided by (used in) financing activities, primarily as a
result of borrowings and repayments under the Revolving Credit Agreement,
totaled $(68.3) million, $65.3 million and $43.8 million during the years
ended December 31, 1996, 1995 and 1994, respectively.  SEE the Statements of
Cash Flows in the Company's Financial Statements.

    The self-liquidating nature of Installment Contracts and Other Loans
enables the Company to assume a higher debt-to-equity ratio 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.

    During September, 1996, the Company entered into an amendment to the
Revolving Credit Agreement that, among other things, reduced the maximum
availability under the facility to $90 million at September 30, 1996 and $60
million at December 31, 1996 (this amount declines to $50 million by March,
1997), extended the maturity date to June 30, 1997 and modified certain other
terms of the revolving credit facility, including the cost of LIBOR
borrowings (which was increased to LIBOR plus 2.5% from LIBOR plus 2.0%).
These changes were motivated by, among other things, the Company's breach of
financial covenants under the Revolving Credit Agreement and general economic
conditions in the sub-prime automobile finance industry.  In October, 1996,
the Company completed its first securitization, and anticipates relying more
heavily upon alternative funding sources, such as securitization financing.

                                      20
<PAGE>

    The Company must comply with customary financial and other covenants
under the Revolving Credit Agreement.  At December 31, 1996, 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 March 31, 1997.  The Company expects to remain in
violation of these covenants for the near term.  The waiver received in
respect of the breaches of the Revolving Credit Agreement had the effect of,
among other things; (i) reducing the amount of the facility to $50 million;
(ii) reducing the borrowing base, generally, to 82.5% (from 85%) of eligible
receivables under the Revolving Credit Agreement; and (iii) under certain
circumstances, reducing the borrowing base, generally, to 80% and 75% of
eligible receivables.

    No assurance can be given that the Company's lenders and GECC will not
take adverse action.  The Company is continuing negotiations with its current
lenders and alternative lenders to provide financing beyond June 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 June 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 December 31, 1996, the Company had total debt of $50.8 million as
compared to $118.7 million at December 31, 1995 and $52.5 million at December
31, 1994.  At December 31, 1996, $28.2 million was available under the
Revolving Credit Agreement.  SEE Note 6 to the Company's Financial
Statements.  The following table presents the Company's debt instruments and
the weighted average interest rates on such instruments at the dates
indicated:

<TABLE>
<CAPTION>

                                                                At December 31,
                                         --------------------------------------------------------------
                                               1996                   1995                   1994
                                         -----------------     ------------------     -----------------
                                         Balance    Rate       Balance     Rate       Balance     Rate
                                         -------    ------     --------    ------     -------     -----
                                                                 (Dollars in thousands)
<S>                                      <C>        <C>        <C>         <C>        <C>         <C>
SENIOR
  Revolving Credit Agreement ........    $31,763     8.05%     $ 99,650     7.89%     $50,790     8.50%
  Loan from affiliated company ......      1,065     6.75%        1,002     6.75%         445     6.75%
SUBORDINATED
  Notes payable .....................     17,978    12.15%       18,045    12.14%       1,293     9.50%
                                         -------               --------               -------
  Total debt ........................    $50,806     9.47%     $118,697     8.52%     $52,528     8.56%
                                         -------               --------               -------
                                         -------               --------               -------
</TABLE>

    In May, 1995, through a public offering underwritten by Kemper
Securities, Inc. (now EVEREN Securities, Inc.), The Chicago Corporation and
Piper Jaffray Inc., the Company issued $17 million of subordinated notes,
with a maturity date of May 2005.  Interest on the notes accrues at the rate
of 10% from the date of their original issuance, and is payable monthly.  The
rate at which interest accrues under the notes will increase, generally by 25
basis points, each year beginning June 1, 1996.  The notes are redeemable by
the Company, in whole or in part, beginning on their second anniversary date,
with a 1% premium imposed if the notes are redeemed prior to their third
anniversary.  The Company is required to redeem $750,000 (subject to certain
adjustments) of aggregate principal amount of notes (or make corresponding
contributions to a sinking fund) on each of the fourth through ninth
anniversaries of the notes.  The notes were issued under an Indenture that
contains financial and operating covenants that restrict, among other things,
the Company's ability to pay dividends, to incur additional indebtedness and
to engage in certain extraordinary transactions.

                                      21
<PAGE>

    The following table sets forth information with respect to maturities of
senior and subordinated debt at December 31, 1996:

                                             Loan from
                              Senior Bank    Affiliated  Subordinated
    Year                    Lines of Credit   Company    Notes Payable    Total
    ----                    ---------------  ----------  -------------   -------
                                        (Dollars in thousands)
    1997 ................       $31,763       $1,065       $   115       $32,943
    1998 ................            --           --            40            40
    1999 ................            --           --           858           858
    2000 ................            --           --           804           804
    2001 ................            --           --           864           864
    Thereafter ..........            --           --        15,296        15,296
                                -------       ------       -------       -------
         Total ..........       $31,763       $1,065       $17,977       $50,805
                                -------       ------       -------       -------
                                -------       ------       -------       -------

    The Company has purchased interest rate caps and interest rate collars in
an aggregate notional amount of $55 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, in an aggregate notional amount of $40
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.

    On October 25, 1996, the Company completed a sale of $35.2 million (net)
of Installment Contracts to the Eagle Auto Trust 1996-A, which issued
automobile loan-backed certificates.  The proceeds that the Company received
were used to repay borrowings under the Revolving Credit Agreement.  The
certificates were sold in three classes:  Class A certificates total $30.6
million bearing a 7.45% coupon; the Class B and C certificates each total
$2.3 million and bear coupons of 8.50% and 12.75%, respectively.

    In order to meet funding needs, in 1996 the Company sold approximately
$64.8 million of net Installment Contracts to GECC under the Asset Purchase
Agreement dated as of June 25, 1996, as amended, between the Company and
GECC. The agreement provides for the purchase by GECC of Installment
Contracts from the Company on a revolving basis of up to a maximum principal
amount of $80 million outstanding at any time through June 25, 1997 with an
automatic one-year extension through June 25, 1998.  The Company also sold
approximately $9.6 million of net Installment Contracts to Search Capital in
connection with de-emphasizing its Texas operations.

    Total stockholders' equity at December 31, 1996 was $10.3 million as
compared to $15.7 million at December 31, 1995.  At December 31, 1996,
stockholders' equity stated as a percentage of total assets was 16.2% as
compared to 11.3% at December 31, 1995.

ACCOUNTING MATTERS

    Historically, the Company recorded, at the time it purchased Installment
Contracts, a portion of contract interest (which would otherwise have been
recorded as unearned finance charges) as nonrefundable acquisition discount
when the credit risk and potential for future losses warranted such an
allocation. For 1996, however, the Company did not allocate any portion of
contract interest from Installment Contracts purchased during the period to
nonrefundable acquisition discount.  Instead, the Company established
additional reserves for credit losses on

                                      22
<PAGE>

its portfolio of Installment Contracts through the recognition of a provision
for credit losses that supplemented the balance of nonrefundable acquisition
discount.  SEE "Credit Loss Experience."

    Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of"
("SFAS 121"), issued in March, 1995, requires entities to perform separate
calculations for long-lived assets to determine whether recognition of an
impairment loss is required and, if so, to measure that impairment.  SFAS 121
is effective for fiscal years beginning after December 15, 1995.  The Company
has adopted SFAS 121, which has not had any material impact on the Company's
financial position or results of operations.

    Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" ("SFAS 123"), issued in October, 1995, allows
companies to retain the current approach for recognizing stock-based expense
in the financial statements; however, companies are encouraged to adopt a new
accounting method based on the estimated fair value of employee stock
options.  Companies that do not elect the new fair value based method will be
required to provide expanded disclosures in the footnotes.  SFAS 123 is
effective for fiscal years beginning after December 15, 1995.  The Company
has elected to provide the disclosure alternative provided by SFAS 123.

    As of January 1, 1997, the Company adopted Financial Accounting Standards
Board Statement No. 125, "Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities" ("Statement No. 125").  Statement
No. 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.  Statement No. 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 Statement No. 125 is not expected to have a material impact on the
Company's financial position, results of operations or liquidity.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
<CAPTION>

DESCRIPTION:                                                                    PAGE
-----------                                                                     ----
<S>                                                                              <C>
Independent Auditors' Report...................................................  24

Balance Sheets as of December 31, 1996 and 1995................................  25

Statements of Income for the Years Ended December 31, 1996, 1995 and 1994......  26

Statements of Changes in Stockholders' Equity for the Years Ended
December 31, 1996, 1995 and 1994...............................................  27

Statements of Cash Flows for the Years Ended December 31, 1996, 1995 and 1994..  28

Notes to Financial Statements..................................................  29
</TABLE>



                                      23

<PAGE>

                       INDEPENDENT AUDITORS' REPORT



The Board of Directors
Eagle Finance Corp.:

We have audited the accompanying balance sheets of Eagle Finance Corp. (the
Company) as of December 31, 1996 and 1995, and the related statements of
income, changes in stockholders' equity and cash flows for each of the years
in the three-year period ended December 31, 1996. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Eagle Finance Corp. as of
December 31, 1996 and 1995, and the results of its operations and its cash
flows for each of the years in the three-year period ended December 31, 1996
in conformity with generally accepted accounting principles.

As discussed in note 7, effective July 21, 1994, the Company changed its tax
status by terminating the subchapter S corporation election. Concurrent with
this change, the Company adopted the provisions of the Financial Accounting
Standards Board's SFAS No. 109, "Accounting for Income Taxes."



Chicago, Illinois
March 27, 1997


                                      24


<PAGE>

                              EAGLE FINANCE CORP.
                                BALANCE SHEETS
                       AS OF DECEMBER 31, 1996 AND 1995

                                    ASSETS
                                                          DECEMBER 31,
                                                 -----------------------------
                                                       1996          1995
                                                 --------------- -------------
Finance receivables, net (note 2)................   $54,663,926   $145,718,866
Nonrefundable acquisition discount (note 3)......    (1,443,164)    (9,428,152)
Allowance for credit losses (note 3).............    (6,045,514)   (10,807,835)
                                                    -----------   ------------
                                                     47,175,248    125,482,879
Cash.............................................     1,271,594      2,069,217
Money market investments.........................       552,651        545,000
Prepaid expenses and debt issuance costs.........     1,554,082      1,142,925
Repossessed or titled assets.....................     4,249,443      4,429,140
Income tax receivable............................     4,732,346             --
Deferred income tax benefit (note 7).............     1,004,912      4,136,270
Excess servicing receivable (note 6).............     1,050,590             --
Other assets.....................................     2,176,696      1,253,046
                                                    -----------   ------------
                                                    $63,767,562   $139,058,477
                                                    -----------   ------------
                                                    -----------   ------------

                     LIABILITIES AND STOCKHOLDERS' EQUITY

Senior debt (note 8).............................   $32,827,893   $100,651,557
Subordinated debt (note 8).......................    17,977,720     18,045,298
Accrued interest payable.........................       468,533        502,834
Accrued income tax payable.......................            --        683,144
Accounts payable and accrued liabilities.........     1,893,737      3,180,328
Unearned insurance commissions...................         5,158         46,115
Dealer reserves (note 3).........................       286,783        292,864
                                                    -----------   ------------
Total liabilities................................    53,459,824    123,402,140

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 in 1996 and 1995...............        41,891         41,891
Additional paid-in capital.......................    13,514,422     13,514,422
Retained earnings (deficit)......................    (3,248,575)     2,100,024
                                                    -----------   ------------
Total stockholders' equity.......................    10,307,738     15,656,337
                                                    -----------   ------------
                                                    $63,767,562   $139,058,477
                                                    -----------   ------------
                                                    -----------   ------------


                See accompanying notes to financial statements.



                                      25
<PAGE>

                              EAGLE FINANCE CORP.
                             STATEMENTS OF INCOME
                 YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994

<TABLE>
<CAPTION>
                                                             YEAR ENDED DECEMBER 31,
                                                    ----------------------------------------
                                                        1996          1995          1994
                                                    ------------  ------------  ------------
<S>                                                 <C>            <C>           <C>
Interest income:
 Interest and fee income..........................  $26,653,260    $27,100,358   $12,722,601
 Interest expense.................................    9,059,458      8,092,984     2,711,951
                                                    -----------   ------------   -----------
Net interest income...............................   17,593,802     19,007,374    10,010,650
Provision for credit losses (note 3)..............   13,184,278      9,537,949       253,638
                                                    -----------   ------------   -----------
Net interest income after provision for
 credit losses....................................    4,409,524      9,469,425     9,757,012
                                                    -----------   ------------   -----------
Other income:
 Service fee income (note 5)......................    5,107,585      2,119,374       841,242
 Gain on sale of finance receivables, net (note 4)..    611,796             --            --
 Commissions and other............................       65,811        254,853       146,837
                                                    -----------   ------------   -----------
Total other income................................    5,785,192      2,374,227       988,079
                                                    -----------   ------------   -----------
Income before operating expenses..................   10,194,716     11,843,652    10,745,091
Operating expenses:
 Salaries and related costs.......................    8,011,223      5,744,920     2,997,959
 Collection expenses..............................    1,774,186             --            --
 Other operating expenses.........................    6,416,781      5,576,100     2,629,188
                                                    -----------   ------------   -----------
Total operating expenses..........................   16,202,190     11,321,020     5,627,147
                                                    -----------   ------------   -----------
Income (loss) before income taxes.................   (6,007,474)       522,632     5,117,944
Applicable income taxes (note 7)..................     (658,875)       197,187     1,166,804
                                                    -----------   ------------   -----------
Net income (loss).................................  $(5,348,599)  $    325,445   $ 3,951,140
                                                    -----------   ------------   -----------
                                                    -----------   ------------   -----------
Per share data:
 Net income (loss) per common share...............       $(1.28)         $0.08        $1.17
 Weighted average number of common shares
  outstanding.....................................    4,189,100      4,183,490    3,377,973
</TABLE>

                     See accompanying notes to financial statements.



                                      26
<PAGE>

                                 EAGLE FINANCE CORP.
                    STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                    YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994

<TABLE>
<CAPTION>

                                                           ADDITIONAL        RETAINED
                                          COMMON STOCK  PAID-IN CAPITAL  EARNINGS (DEFICIT)     TOTAL
                                          ------------  ---------------  ------------------  -----------
<S>                                       <C>           <C>              <C>                 <C>
Balance at January 1, 1994 . . . . . . .    $24,000       $   566,206       $ 3,497,838      $ 4,088,044
Net income . . . . . . . . . . . . . . .         --                --         3,951,140        3,951,140
Dividends paid . . . . . . . . . . . . .         --                --        (3,956,693)      (3,956,693)
Transfer to paid in capital. . . . . . .         --         2,004,892        (2,004,892)              --
Sale of 1,380,000 shares of
   common stock net of
   offering expenses . . . . . . . . . .     17,800        10,821,339                --       10,839,139
Net deferred taxes on
   termination of subchapter S
   corporation status. . . . . . . . . .         --                --           287,186          287,186
                                            -------       -----------       -----------      -----------
Balance at December 31, 1994 . . . . . .     41,800        13,392,437         1,774,579       15,208,816
Stock options exercised. . . . . . . . .         91            81,809                --           81,900
Tax benefit from stock option
   exercised . . . . . . . . . . . . . .         --            40,176                --           40,176
Net income . . . . . . . . . . . . . . .         --                --           325,445          325,445
                                           --------      ------------       -----------      -----------
Balance at December 31, 1995 . . . . . .     41,891        13,514,422         2,100,024       15,656,337
Net loss . . . . . . . . . . . . . . . .         --                --        (5,348,599)      (5,348,599)
                                           --------      ------------       -----------      -----------
Balance at December 31, 1996 . . . . . .   $ 41,891      $ 13,514,422       $(3,248,575)     $10,307,738
                                           --------      ------------       -----------      -----------
                                           --------      ------------       -----------      -----------

</TABLE>

                  See accompanying notes to financial statements.

                                       27
<PAGE>


<TABLE>
<CAPTION>

                                 EAGLE FINANCE CORP.
                               STATEMENTS OF CASH FLOWS
                    YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994



                                                                                      YEAR ENDED DECEMBER 31,
                                                                            ----------------------------------------
                                                                                  1996           1995        1994
                                                                            -------------    ----------  -----------
<S>                                                                         <C>              <C>         <C>
Cash flows from operating activities:
  Net income (loss)                                                         $  (5,348,599)   $  325,445  $ 3,951,140
  Adjustments to reconcile net income to net cash provided by
    operating activities:
      Provision for credit losses                                              13,184,278     9,537,949      253,638
      Net finance receivables (charge-offs) recoveries against allowance      (17,946,599)       21,086       (4,838)
      Decrease (increase) in:
        Prepaid expenses                                                         (200,451)      (77,175)      24,635
        Repossessed or titled assets                                              179,697    (3,762,715)    (519,400)
        Excess servicing receivable                                            (1,050,590)           --           --
        Other assets                                                             (923,650)     (953,062)    (188,755)
        Income tax receivable                                                  (4,732,346)           --           --
        Deferred tax                                                            3,131,358    (3,777,229)    (359,041)
      Increase (decrease) in:
        Accrued interest                                                          (34,301)      383,405       95,418
        Accrued income tax                                                       (683,144)      442,839      204,305
        Accounts payable and accrued liabilities                               (1,286,591)      209,724    2,113,226
        Unearned insurance commissions                                            (40,957)      (57,782)      35,353
        Dealer reserves                                                            (6,081)      218,936       72,012
        Nonrefundable acquisition discount                                     (7,984,988)      757,032    5,921,787
                                                                            -------------    ----------  -----------
Net cash provided by operating activities                                     (23,742,964)    3,268,453   11,599,480
                                                                            -------------    ----------  -----------
Cash flows from investing activities:
   Purchase of Investments                                                         (7,651)     (545,000)          --
   Proceeds from bulk sale/securitization of vehicle retail
     installment notes                                                        109,329,697    39,869,544   19,670,548
   Principal collected on finance receivables                                  44,570,359    37,299,405   17,235,081
   Finance receivables originated or acquired (net of write-offs)             (62,845,116) (144,023,772) (91,472,593)
                                                                            -------------    ----------  -----------
Net cash provided by (used in) investing activities                            91,047,289   (67,399,823) (54,566,964)
                                                                            -------------    ----------  -----------
Cash flows from financing activities:
   Proceeds from draws on bank lines                                           48,471,793   602,004,545   64,380,468
   Repayments of borrowings                                                  (116,359,075) (553,144,545) (27,820,468)
   Debt to affiliate                                                               63,618       555,745     (304,482)
   Proceeds from issuance of other debt                                           103,731    17,140,482      444,931
   Repayment of other debt                                                       (171,309)     (387,790)     (94,570)
   Debt issuance costs                                                           (210,706)     (945,311)      25,624
   Dividends paid                                                                      --            --   (3,956,693)
   Deferred tax credit to additional paid in capital                                   --            --      287,186
   Sale of common stock, net of offering expenses                                      --            --   10,839,139
   Stock options exercised                                                             --        81,900           --
   Tax benefit from stock options exercised                                            --        40,176           --
                                                                            -------------    ----------  -----------
Net cash provided by (used in) financing activities                           (68,101,948)   65,345,202   43,801,135
                                                                            -------------    ----------  -----------
Cash, net change                                                                 (797,623)    1,213,832      833,651
Cash at beginning of period                                                     2,069,217       855,385       21,734
                                                                            -------------    ----------  -----------
Cash at end of period                                                        $  1,271,594  $  2,069,217   $  855,385
                                                                            -------------    ----------  -----------
                                                                            -------------    ----------  -----------
Supplemental disclosures of cash flow information - cash paid during
   the period for:
        Interest                                                             $  9,093,759  $  7,712,731   $2,527,799
        Income taxes and Illinois replacement tax                            $  1,625,282  $  3,260,500   $1,026,000

</TABLE>

                  See accompanying notes to financial statements.

                                       28
<PAGE>


                                EAGLE FINANCE CORP.
                            NOTES TO FINANCIAL STATEMENTS
                          DECEMBER 31, 1996, 1995, AND 1994


(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND BUSINESS

    Eagle Finance Corp. (the Company) provides consumer finance services under
the name "Eagle Finance."  Since 1988 the Company has focused its activities on
the business of purchasing installment contracts originated by franchised and
independent car dealers, generally referred to as indirect consumer lending.
Indirect auto financing currently represents over 99% of the Company's
receivables base.

INCOME ON FINANCE RECEIVABLES

    The Company recognizes finance charges on the interest (actuarial) method.
Under this method, interest is earned over the lives of the loans to produce
constant rates of interest (yields).  The accrual of interest income on direct
loans is suspended when no payments have been received for 90 days or more.
Interest accrual on finance leases and retail installment notes is suspended
when they become 90 days or more contractually delinquent.

SERVICING INCOME

    The Company recognizes servicing income as received over the life of the
related receivables based upon a percentage of receivables outstanding.  The
Company is also eligible to receive bonus servicing fees based on portfolio
performance.  In accordance with the Company's accounting policy, bonus
servicing income is recognized as earned.

GAIN ON SALE OF FINANCE RECEIVABLES

    Gains or losses are determined based upon the difference between the sales
proceeds for the portion of Installment Contracts sold and the Company's
recorded investment in the Installment Contracts sold.  The Company allocates
the recorded investment in the Installment Contracts between the portion of the
Installment Contracts sold and the portion retained based on the relative fair
values of those portions on the date of sale.

NONREFUNDABLE ACQUISITION DISCOUNT

    As part of the Company's financing of vehicle secured retail installment
notes, the difference between (i) the total principal amount to be repaid under
the notes and (ii) the net funds advanced to the dealer is recorded as a
nonrefundable acquisition discount and is available to the Company to absorb
charges related to repossession and reconditioning expenses and other losses of
principal that may arise in connection with defaulted retail installment notes.
Prior to 1996, the Company, based on its credit loss analysis, allocated to
nonrefundable acquisition discount, at the time it purchased vehicle secured
retail installment notes, amounts that would otherwise have been recorded as
unearned finance charges.

EXCESS SERVICING RECEIVABLE

    Excess servicing receivable (ESR) represents the Company's subordinated
interest in the Eagle Auto Trust 1996-A (the "Trust").  The excess servicing
receivable is equal to the present value of estimated future collections and
recoveries on the finance receivables sold to the Trust less the present
value of required principal and interest payments to the investors, base
servicing fees payable to the Company and certain other fees.  The
calculation of excess servicing receivable includes estimates of future
credit losses and prepayment rates for the remaining term of the finance
receivables sold, since these factors impact the amount and timing of future
collections and recoveries on the pool of finance receivables.
                                29

<PAGE>


To the extent that actual performance of the finance receivables results in
less excess cash flows than the Company estimated, ESR will be adjusted
through a charge to operations.  Favorable credit loss and prepayment
experience compared to the Company's estimates would result in additional
servicing fee income.  The excess servicing receivable is amortized using the
interest method against realized excess servicing fee income.

DEALER RESERVES

    As part of the Company's financing of secured retail installment notes,
refundable dealer reserves are established to protect the Company from potential
losses associated with such notes.  A portion of the proceeds from these retail
installment notes are retained by the Company and are available to the Company
to charge losses on related receivables against.  The amount of reserves is
based upon various criteria, one of which is the credit risk associated with the
secured retail installment notes.

ALLOWANCE FOR CREDIT LOSSES

    The allowance for credit losses is maintained by direct charges to
operations in amounts that are intended to provide adequate reserves on the
Company's finance receivables portfolio to absorb possible credit losses in
the foreseeable future in excess of the nonrefundable acquisition discount
and refundable dealer reserves with respect to the Company's finance
receivables.

    In connection with its periodic review of credit loss experience and
delinquency trends using static pool analysis, management evaluates the adequacy
of the allowance for credit losses.  If nonrefundable acquisition discount and
refundable dealer reserves associated with an individual pool of installment
contracts are deemed insufficient in comparison to the amount management
believes necessary to absorb projected losses on that pool's vehicle secured
installment notes that are expected to become impaired in the foreseeable
future, a provision for credit losses would be charged against earnings.

    The Company's general policy is to charge off delinquent loans, retail or
direct, and finance leases (net of unearned finance charges) when they are
deemed uncollectible and, in any event, to charge off monthly accounts prior to
their becoming 90 days contractually delinquent.

REPOSSESSED OR TITLED ASSETS

    Repossessed collateral and titled assets are valued at the lower of cost or
estimated net realizable value.

INSURANCE COMMISSIONS

    Commissions on credit life and credit accident and health insurance are
taken into income over the average terms of the related policies on the sum of
the digits method.  Property insurance, auto club, vehicle warranties, and other
insurance commissions are taken into income when written.

TAXES

    Effective July 21, 1994, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes."  Under
the asset and liability method of SFAS 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 enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled.  Prior to that date, the Company had maintained subchapter S
corporation status under the Internal Revenue Code.  As such, the Company's
taxable income was included in the individual income tax returns of its
shareholders for federal and state purposes.

                                       30

<PAGE>

USE OF ESTIMATES

    The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes.  The areas which are subject to estimation
techniques most significantly include the allocation of unearned finance
charges to nonrefundable acquisition discount (which allocations did not
occur at all during 1996) and the determination of the level of the allowance
for credit losses.  Actual results could differ from these estimates.

(2) FINANCE RECEIVABLES

    Finance receivables as of December 31, 1996 and 1995 consisted of the
following:

                                             1996              1995
                                        ------------      ------------
Retail installment notes:
  Vehicle .......................       $ 73,038,666      $198,589,885
  Other .........................             43,620            86,885
Direct installment loans:
  Interest-bearing ..............            317,218           305,962
  Discount-basis ................            131,793            39,906
Finance leases ..................             25,582            79,182
                                        ------------      ------------
Total ...........................         73,556,879       199,101,820
                                        ------------      ------------
Unearned finance charges ........        (18,892,954)      (53,382,954)
                                        ------------      ------------
Finance receivables, net ........       $ 54,663,926      $145,718,866
                                        ------------      ------------
                                        ------------      ------------

    Direct installment loans are originated by the Company. Retail vehicle
secured installment notes are purchased without recourse.  Certain retail
secured installment notes are purchased on a recourse basis to the extent of
available dealer reserve balances.  As a result of the Company's policy to
charge-off accounts prior to their becoming 90 days past-due, no accounts
were on nonaccrual status at December 31, 1996 or 1995.

    Direct installment loans are generally collateralized by household goods,
vehicles, or real estate, with maximum terms of 60 months for
interest-bearing loans and 84 months for discount-basis loans.  Finance
leases, all discount basis, are generally collateralized by office and
industrial equipment with maximum terms of 60 months.  Retail installment
notes, discount basis and interest bearing, arise principally from the sale
of new and used vehicles, and generally have a maximum term of 60 months.

    Net outstanding vehicle retail installment notes serviced, but not owned,
by the Company totaled $96,965,804, $39,163,574 and $21,755,509 at December
31, 1996, 1995 and 1994, respectively.

    The following table reflects delinquencies experienced by the Company in
its finance receivables portfolio as of December 31, 1996, 1995 and 1994:

                                                    As of December 31,
                                        ---------------------------------------
                                              1996          1995          1994
                                        -----------   ------------  -----------
  Net amount outstanding .............  $54,663,926   $145,718,866  $78,864,043
                                        -----------   ------------  -----------
  Delinquencies
    30-59 days .......................  $ 5,900,287   $ 10,073,834  $ 6,322,833
    60-89 days .......................      885,178      3,000,299    2,305,890
                                        -----------   ------------  -----------
      Total ..........................  $ 6,785,465   $ 13,074,133  $ 8,628,723
                                        -----------   ------------  -----------
                                        -----------   ------------  -----------
Total delinquencies as a percentage
  of net finance receivables .........        12.4%           9.0%        10.9%

         Contractual maturities of retail and direct installment loan
receivables by year are not readily available.  The Company's experience has
shown that the average life of the Company's finance receivables is
substantially less than

                                      31
<PAGE>

the average original contract term of such receivables due to the amount of
payoffs and repossessions that occur prior to contract maturity.

    A summary of principal cash collections is provided below:

<TABLE>
<CAPTION>
                                                                 1996             1995
                                                              -----------     -----------
<S>                                                           <C>             <C>
Retail installment notes:
  Interest bearing loans:
    Principal cash collections .............................  $ 2,160,046     $   619,232
    Principal cash collections as a percentage
      of average net outstanding balances ..................           46%             26%
  Discount basis loans:
    Principal cash collections other .......................  $42,022,211     $36,227,153
    Principal cash collections other as a percentage
      of average net outstanding balances ..................           38%             30%
Direct installment loans:
  Principal cash collections ...............................  $   339,931     $   384,537
  Principal cash collections as a percentage of average
    net outstanding balances ...............................           98%             98%
Finance leases:
  Principal cash collections ...............................  $    48,171     $    68,483
  Principal cash collections as a percentage of average
    net outstanding balances ...............................          111%             85%
</TABLE>

    No dealer accounted for more than 8% of vehicle retail installment notes
purchases during 1996.

(3) ALLOWANCE FOR CREDIT LOSSES, NONREFUNDABLE ACQUISITION DISCOUNT, AND
    DEALER RESERVES

    Changes in the allowance for credit losses for the years ended December
31, 1996, 1995, and 1994 were as follows:

Balance at January 1, 1994. . . . . . . . . . .      $ 1,000,000
  Provision for credit losses. . . . . . . . .           253,638
  Losses charged off . . . . . . . . . . . . .          (118,198)
  Recoveries     . . . . . . . . . . . . . . .           113,360
                                                     -----------
Balance at December 31, 1994. . . . . . . . . .      $ 1,248,800
  Provision for credit losses. . . . . . . . .         9,537,949
  Losses charged off . . . . . . . . . . . . .          (174,841)
  Recoveries     . . . . . . . . . . . . . . .           195,927
                                                     -----------
Balance at December 31, 1995. . . . . . . . . .      $10,807,835
  Provision for credit losses. . . . . . . . .        13,184,278
  Losses charged off . . . . . . . . . . . . .       (18,028,677)
  Recoveries     . . . . . . . . . . . . . . .            82,078
                                                     -----------
Balance at December 31, 1996. . . . . . . . . .      $ 6,045,514
                                                     -----------
                                                     -----------

                                      32
<PAGE>

    Changes in nonrefundable acquisition discount and dealer reserves for the
years ended December 31, 1996, 1995 and 1994 were as follows:

                                                   NONREFUNDABLE    REFUNDABLE
                                                    ACQUISITION       DEALER
                                                      DISCOUNT       RESERVES
                                                    ------------   ------------
Balance at January 1, 1994. . . . . . . . . . .     $  2,749,333   $      1,916
  Additions applicable to new volume. . . . . .       15,485,109        477,630
  Accreted to income. . . . . . . . . . . . . .       (1,328,515)            --
  Payments to dealers . . . . . . . . . . . . .               --       (385,240)
  Accounts sold . . . . . . . . . . . . . . . .       (2,719,457)            --
  Losses charged, net of recoveries . . . . . .       (5,515,350)       (20,378)
                                                    ------------   ------------
Balance at December 31, 1994. . . . . . . . . .     $  8,671,120   $     73,928
  Additions applicable to new volume. . . . . .       28,023,470      2,295,776
  Payments to dealers . . . . . . . . . . . . .               --     (2,076,840)
  Accounts sold . . . . . . . . . . . . . . . .       (5,524,932)            --
  Losses charged, net of recoveries . . . . . .      (21,741,506)            --
                                                    ------------   ------------
Balance at December 31, 1995. . . . . . . . . .     $  9,428,152   $    292,864
  Additions applicable to new volume. . . . . .       10,720,447        826,220
  Payments to dealers . . . . . . . . . . . . .               --       (832,301)
  Accounts sold . . . . . . . . . . . . . . . .       (8,439,100)           --
  Losses charged, net of recoveries . . . . . .      (10,266,335)           --
                                                    ------------   ------------
Balance at December 31, 1996. . . . . . . . . .     $  1,443,164   $   286,783
                                                    ------------   ------------
                                                    ------------   ------------

    The additions applicable to new volume include allocations, at the time
of Installment Contract purchases, of contract interest that would otherwise
have been recorded as unearned finance charges of $0, $9,815,829 and
$5,048,720 for 1996, 1995 and 1994, respectively.

    Total charge-offs as a percentage of average net finance receivables were
24.16%, 17.98% and 11.64% for 1996, 1995 and 1994, respectively.

(4) SALE OF RECEIVABLES

    On February 26, 1996, June 25, 1996, October 18, 1996 and December 20,
1996, the Company sold to GECC portfolios of net vehicle retail installment
notes aggregating $12.8 million, $21.5 million, $17.0 million and $13.6
million, respectively.  On March 31, 1995 and September 18, 1995, the Company
sold to GECC portfolios of net vehicle retail installment notes aggregating
$19.0 million and $25.3 million, respectively.  The purchaser will earn a
fixed spread over the two-year U.S. Treasury bill rate at the time of sale.
The purchaser retained 10% of the purchase price at the time of sale as a
reserve for losses. The holdback has been reflected as a reduction of
nonrefundable acquisition discount.  The Company maintained servicing of the
portfolios and receives an annualized base servicing fee equal to 3% of net
outstandings from the seller. The Company is eligible to receive additional
bonus servicing fees based on portfolio performance, as reflected in Notes 5
and 6 below.

    On October 25, 1996, the Company completed the securitization of
approximately $35.2 million (net) of Installment Contracts through a
transaction agented by Greenwich Capital Markets, Inc.  The transaction was
structured to create three classes of certificates, which were rated by Duff
& Phelps Credit Rating Co. and Fitch Investors Service L.P.  The Class A
certificates total $30.6 million bearing a 7.45% coupon; the Class B and C
certificates each total $2.3 million and bear coupons of 8.50% and 12.75%,
respectively.  The Class B and Class C certificates are subordinated to the
Class A certificates.  A 4% cash reserve was established at the time of the
sale as a reserve for losses. The reserve builds to 9% as excess cash is
available.  At December 31, 1996, the amount of restricted cash and deferred
assets was $1,681,317.  The Company recognized a gain on the transaction of
$611,796, net of related transactions costs of $749,487.  The Company
capitalized the excess servicing rights on the Installment Contracts
securitized.  Servicing fees are reported as income when earned, net of
related amortization of retained servicing rights.  The Company maintained
servicing of the portfolios and receives an annualized base

                                      33
<PAGE>

servicing fee equal to 3% of net outstandings from the seller.  The Company
is eligible to receive additional excess servicing fees based on portfolio
performance, as reflected in Notes 5 and 6 below.

    On September 27, 1996, the Company sold approximately $9.6 million (net)
of Texas-originated Installment Contracts to Search Capital Group, Inc.
("Search Capital").  This Installment Contract sale reflects the Company's
deemphasis of its Texas operations.  The Company did not retain servicing of
the Installment Contracts sold to Search Capital.  No gain was recorded as
the sales price approximated book value.

(5) SERVICING

    Servicing fees are reported as income when earned, net of related
amortization of excess servicing.  Servicing costs are charged to expense as
incurred.  Servicing fees for the periods shown included the following
components:

                                                     YEAR ENDED DECEMBER 31,
                                              ----------------------------------
                                                 1996         1995        1994
                                              ----------   ----------   --------
Base servicing fees  . . . . . . . . . . .    $1,712,437   $1,009,560   $165,267
Bonus/excess servicing fees. . . . . . . .     3,705,841    1,109,814    675,975
Amortization of excess servicing . . . . .      (310,693)          --         --
                                              ----------   ----------   --------
Net servicing fees . . . . . . . . . . . .    $5,107,585   $2,119,374   $841,242
                                              ----------   ----------   --------
                                              ----------   ----------   --------

     At December 31, 1996, the Company was in violation of certain covenants
relating to a purchase and servicing agreement with a third-party purchaser.
The Company obtained waivers for the covenant breaches through April 1, 1997.
Should the Company remain in violation of these covenants beyond April 1,
1997, the purchaser, at its option, could terminate the agreement, which
would result in a loss of future servicing and bonus servicing income.

(6) EXCESS SERVICING RECEIVABLE (ESR)

    The following table summarizes ESR activity for the periods shown:

                                                     Year ended December 31,
                                              ----------------------------------
                                                 1996         1995        1994
                                              ----------   ----------   --------
Balance at beginning of period . . . . . .    $       --   $       --   $     --
Additions to ESR   . . . . . . . . . . . .     1,361,283           --         --
Amortization of ESR  . . . . . . . . . . .      (310,693)          --         --
                                              ----------   ----------   --------
Balance, end of period . . . . . . . . . .    $1,050,590   $       --   $     --
                                              ----------   ----------   --------
                                              ----------   ----------   --------

(7)  INCOME TAXES

    Total income tax expense (benefit) reported in the statements of income
for the years ended December 31, 1996, 1995 and 1994 included the following
components:

                                             1996          1995         1994
                                          -----------   -----------  ----------
Current:
  Federal  . . . . . . . . . . . . . .    $(3,368,177)  $ 3,466,929  $1,057,472
  State. . . . . . . . . . . . . . . .       (422,056)      507,487     181,188
                                          -----------   -----------  ----------
  Total. . . . . . . . . . . . . . . .     (3,790,233)    3,974,416   1,238,660
                                          -----------   -----------  ----------
Deferred:
  Federal. . . . . . . . . . . . . . .      2,624,758    (3,303,132)    (62,837)
  State. . . . . . . . . . . . . . . .        506,600      (474,097)     (9,019)
                                          -----------   -----------  ----------
  Total. . . . . . . . . . . . . . . .      3,131,358    (3,777,229)    (71,856)
                                          -----------   -----------  ----------
Total income tax expense (benefit) . .    $  (658,875)  $   197,187  $1,166,804
                                          -----------   -----------  ----------
                                          -----------   -----------  ----------

    Temporary differences, which represent the difference between the amounts
reported in the financial statements and the tax bases of assets and
liabilities, result in deferred taxes.  Deferred tax assets and liabilities
at December 31, 1996 and 1995, were as follows:

                                      34

<PAGE>

                                                        1996           1995
                                                     ----------     ----------
    Gross deferred tax assets:
         Allowances for credit losses. . . . . .     $2,350,496     $4,202,086
         Deferred income . . . . . . . . . . . .          2,005         17,930
         State net operating loss. . . . . . . .        129,870             --
         Other . . . . . . . . . . . . . . . . .        148,023         39,565
                                                     ----------     ----------
    Gross deferred tax assets. . . . . . . . . .      2,630,394      4,259,581
    Valuation allowance. . . . . . . . . . . . .     (1,563,826)            --
                                                     ----------     ----------
    Subtotal . . . . . . . . . . . . . . . . . .      1,066,568      4,259,581
                                                     ----------     ----------
    Gross deferred tax liabilities:
         Accrued finance charges . . . . . . . .         61,184        122,367
         Other . . . . . . . . . . . . . . . . .            472            944
                                                     ----------     ----------
    Gross deferred tax liabilities . . . . . . .         61,656        123,311
                                                     ----------     ----------
    Net deferred tax assets. . . . . . . . . . .     $1,004,912     $4,136,270
                                                     ----------     ----------
                                                     ----------     ----------

    A valuation allowance of $1,563,826 has been established at December 31,
1996 against the deferred tax assets because of the uncertainty surrounding
the realization of these tax assets.

    The differences between the statutory federal income tax rate of 34% and
the effective tax rate for the year ended December 31, 1996, 1995 and 1994
are as follows:

<TABLE>
<CAPTION>

                                                              1996         1995       1994
                                                            --------     --------    -------
<S>                                                         <C>          <C>         <C>
Statutory federal income tax rate........................    (34.0%)       34.0%      34.0%
Decrease in tax resulting from S corporation net income..        --           --     (14.4%)
Change in valuation allowance for deferred
    tax assets ..........................................     26.0%           --         --
State income taxes, less benefit of federal
    income tax deduction ................................     (2.4%)        4.2%       2.2%
Other, net ..............................................     (0.6%)       (0.5%)      1.0%
                                                            --------     --------    -------
Effective tax rate ......................................    (11.0%)       37.7%      22.8%
                                                            --------     --------    -------
                                                            --------     --------    -------

</TABLE>

    Prior to July 21, 1994, the Company, for tax reporting purposes, had
elected subchapter S corporation status under the Internal Revenue Code.  As
such, the Company's shareholders, not the Company, paid taxes on the
Company's taxable income.  Effective July 21, 1994, the Company changed its
tax status by terminating its subchapter S corporation election.  As a result
of this change, the Company now pays taxes on its taxable income.  Under
Statement of Financial Accounting Standards No. 109, the Company recognized
the effect of the change in its tax status by establishing a net deferred tax
asset of $287,186.  The effect of the change in tax status has been
recognized in the statement of changes in stockholders' equity for the year
ended December 31, 1994.

                                      35

<PAGE>

(8) DEBT

<TABLE>

    Debt on December 31, 1996 and 1995 consisted of the following:

<CAPTION>
                                                                                   1996          1995
                                                                               ------------   ------------
<S>                                                                           <C>            <C>
Senior debt:
  Revolving credit facility, expiring June 30, 1997.........................   $ 31,762,718   $ 99,650,000
  Debt to affiliate ........................................................      1,065,175      1,001,557
                                                                               ------------   ------------
    Total senior debt ......................................................     32,827,893    100,651,557
                                                                               ------------   ------------
Subordinated debt:
    10.25%, RISRS due June 1, 2005 (0.25% increase per year through
    maturity)...............................................................     16,990,000     17,000,000
    7.00% to 10.75% Private Placement Notes with various maturities
    through August 1, 2004 .................................................        781,159        741,972
    7.00% to 11.00% Long Term Notes with various maturities through
    August 1, 2006 .........................................................        206,561        303,326
                                                                               ------------   ------------
      Total subordinated debt ..............................................     17,977,720     18,045,298
                                                                               ------------   ------------
      Total debt ...........................................................   $ 50,805,613  $ 118,696,855
                                                                               ------------   ------------
                                                                               ------------   ------------

</TABLE>

    The senior and subordinated debt agreements contain provisions relating
to the maintenance of consolidated net worth, as defined in such agreements,
limitations on borrowings, the payment of cash dividends, and acquisitions of
the Company's capital stock.  At December 31, 1996, consolidated net worth,
as defined in the Company's revolving credit agreement, was $10,307,738,
which was below the minimum requirement of $14,714,023.  Additionally, the
Company was in violation of other covenants, including interest coverage and
subordinated debt limitations.  The Company's lenders have either provided
waivers through the term of their agreement or reduced the minimum
requirements for the limitations. The Company expects to remain in violation
of the interest coverage ratio, consolidated net worth and subordinated debt
limitation covenants for the near term.  Based on its discussions with its
existing lenders, management expects no adverse actions by its lenders
regarding the Company's breach, although there can be no assurance in this
regard.

    The Company is negotiating with its existing lenders to obtain financing
beyond the June 30, 1997 maturity of the revolving credit agreement. No
assurance can be given that these pursuits will be successful or that the
Company will be able to replace the revolving credit agreement on terms
acceptable to the Company, although management believes that alternative
funding sources or greater reliance upon securitizations and loan sales will
provide the Company with sufficient liquidity to maintain its existing
operations.

    The Company has pledged its $552,651 money market investments as cash
collateral at December 31, 1996 in accordance with the requirements of the
revolving credit agreement.  The cash collateral may be utilized by the agent
bank under the revolving credit agreement for the purpose of making interest
payments on the RISRS (as defined below) in the event of a default under the
Indenture for the RISRS.

    The revolving credit agreement is an agented facility with nine banks.
The total available under the revolving credit agreement was $60,000,000
(which amount declines to $50,000,000 by March 1997) of which $31,762,718
was outstanding at December 31, 1996.  The credit facility provides for
interest at floating rates, at the Company's option, either equal to the
reference bank's prime rate or 2.5% above LIBOR rate.  The weighted average
interest rate paid on outstanding borrowings were 8.05% and 7.89% at December
31, 1996 and 1995, respectively.  The revolving credit agreement matures on
June 30, 1997.  On December 31, 1996, the Company had unused bank commitments
in the amount of $28,237,282.  The Company pays a commitment fee equal to
3/8% of the unused portion of the agreement.  Substantially all of the
Company's finance receivables have been pledged to secure debt outstanding
under the revolving credit agreement.

    The unsecured debt to affiliate is due on demand and bore a 6.75%
interest rate on December 31, 1996.

    On May 5, 1995, the Company completed a public offering of $17,000,000 of
its Subordinated Notes due 2005 (the "Notes").  The Notes were priced at
par and the net proceeds to the Company were approximately $16.3 million.
The Notes, known as Rising Interest Subordinated Redeemable Securities
("RISRS"), bear an interest rate, payable monthly, of 10% per annum, which
rate increased 0.25% on June 1, 1996 and will increase 0.25% each June 1st
thereafter through June 1, 2003.  During the last year of their term,
following a 0.50% increase in the interest

                                      36

<PAGE>

rate on June 1, 2004, the Notes will bear an interest rate of 12.50% per
annum.  The Company may at its option redeem the RISRS, in whole or in part,
on or after June 1, 1997.  From June 1, 1997 through May 31, 1998 the
redemption price would be 101% of the principal amount, and on or after June
1, 1998, the redemption price would be 100% of the principal amount.  Annual
interest on the notes is expensed using the level yield method.  In 1996, the
effective rate on the notes was 12.15%. Other than the early redemption
option, no conditions existed at December 31, 1996 that would cause
acceleration of amounts owing under the RISRS.

    The Company has periodically offered subordinated debt pursuant to a
private placement which was intended to qualify as a non-public offering
under Regulation D promulgated by the SEC under the Securities Act of 1933.
The total subordinated notes issued pursuant to the private placement and
outstanding on December 31, 1996 was $781,159; these notes have interest
rates from 7.00% to 10.75% with various maturities through August 1, 2004.
The Company has other subordinated long term notes outstanding at December
31, 1996 totaling $206,561; these notes have interest rates from 7.00% to
11.00% with various maturities through August 1, 2006.

    The subordinated notes are subordinate to the Company's senior debt and
rank equally with "RISRS" issued during 1995.

    The aggregate minimum annual maturities of total debt (excluding bank
lines of credit and debt to affiliate) at December 31, 1996 are:

         YEAR                                          AMOUNT
         ----                                        ----------
         1997 ..................................... $   115,425
         1998 .....................................      40,445
         1999 .....................................     857,805
         2000 .....................................     804,253
         2001 .....................................     863,829
         2002 and beyond ..........................  15,295,963
                                                    -----------
           Total .................................. $17,977,720
                                                    -----------
                                                    -----------

(9) DERIVATIVE FINANCIAL INSTRUMENTS

    In connection with its asset/liability management program and in the
normal cause of business, the Company enters into transactions involving
derivative financial instruments.  These instruments are used to manage the
Company's exposure to fluctuations in interest rates.  The Company has only
limited involvement with derivative financial instruments (consisting of
interest rate caps, collars and floors ranging in maturity from three to five
years, and totaling $55 million in notional principal amount) and does not
use them for trading purposes.

    Interest rate cap and collar agreements are used to reduce the potential
impact of increases in interest rates on floating-rate, short-term debt.  At
December 31, 1996 and 1995, the Company was a party to a $15 million interest
rate cap agreement which entitles the Company to receive payments from a
counterparty whenever, and based upon the amount by which, the three-month
LIBOR rate exceeds 10.5%.  At December 31, 1996, the Company was a party to
four interest rate collar agreements totaling $40 million.  These agreements
entitle the Company to receive payments from counterparties whenever, and
based upon the amount by which, the three-month LIBOR rate exceeds 8%.  The
interest rate collar agreements require the Company to make payments to the
counterparties whenever, and based upon the amount by which, the three-month
LIBOR rate is less than 5%.

    The Company is exposed to credit-related losses in the event of
nonperformance by counterparties to financial instruments, but it does not
expect any counterparties to fail to meet their obligations given their high
credit ratings.  Premiums paid for interest rate caps and collars are
amortized into interest expense over the term of the instrument.  Interest
expense will be reduced (increased) on a current basis if payments are
received (paid) under these instruments.

                                      37

<PAGE>

(10) DIVIDEND RESTRICTIONS

    Payment of dividends by the Company are subject to certain limitations in
the various debt agreements and the revolving credit facility.  Under the most
restrictive provisions of these agreements, no amount of retained earnings of
the Company were available for distribution at December 31, 1996.

(11) STOCK OPTIONS

    Prior to January 1, 1996, the Company accounted for its stock option plan
in accordance with the provisions of Accounting Principles Board ("APB")
Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, and related
interpretations. As such, compensation expense would be recorded on the date
of grant only if the current market price of the underlying stock exceeded
the exercise price.  On January 1, 1996, the Company adopted SFAS No. 123,
ACCOUNTING FOR STOCK-BASED COMPENSATION, in the manner that allows the
Company to continue to apply the provisions of APB Opinion No. 25 and provide
pro forma net income and pro forma earnings per share disclosures for
employee stock option grants as if the fair-value-based method defined in
SFAS No. 123 had been applied.

    Under the terms of the Company's 1994 Stock Incentive Plan, as amended,
600,000 shares of Common Stock were reserved for future granting of options
to key individuals providing services to the Company as well as non-employee
directors.  The plan generally provides for options to be granted, become
exercisable, and terminate upon terms established by a committee of the Board
of Directors.  Options granted to non-employee directors have ten year terms
and vest and became fully exercisable at the end of two years of service.
Options granted to personnel with beneficial ownership of more than 5% of the
Company's common stock have five year terms and vest and become fully
exercisable at the end of three to four years of service.  Options granted to
remaining personnel have ten year terms and vest and become fully exercisable
at the end of three to five years of service.  Options are issued at fair
value on the date of grant and, accordingly, no compensation cost is
recognized for stock options in the accompanying financial statements.

    At December 31, 1996, there were 122,100 additional shares available for
grant under the Plan.  The per share weighted-average fair value of stock
options granted during 1996 and 1995 was $2.92 and $6.46, respectively, on
the date of the grant using the Black Scholes option-pricing model with the
following weighted-average assumptions:  1996 - expected dividend yield 0%,
risk-free interest rate of 6.29%, a volatility factor of the expected market
price of the Company's common stock of .463 and an expected life of 4.6
years; 1995 - expected dividend yield 0%, risk-free interest rate of 6.52%, a
volatility factor of the expected market price of the Company's common stock
of .463 and an expected life of 4.5 years.

    Had the Company determined compensation cost based on the fair value at the
grant date for its stock options under SFAS No. 123, the Company's net income
would have been reduced to the pro forma amounts indicated below:

                                                         1996           1995
                                                    -------------   -----------
Net income                   As reported            $ (5,348,599)    $ 325,445
                             Pro forma              $ (5,367,766)    $ 175,819

Earnings per share           As reported                  $(1.28)        $0.08
                             Pro forma                    $(1.28)        $0.04

    Pro forma net income reflects only options granted in 1996 and 1995.
Therefore, the full impact of calculating compensation cost for stock options
under SFAS No. 123 is not reflected in the pro forma net income amounts
presented above because compensation cost is reflected over the options'
vesting periods detailed above and compensation cost for options granted
prior to January 1, 1995 is not considered.

    Stock option activity during the periods indicated is as follows:

                                      38
<PAGE>
<TABLE>
<CAPTION>
                                    NUMBER OF SHARES         WEIGHTED-AVERAGE EXERCISE PRICE
                                    ----------------         -------------------------------
<S>                                     <C>                             <C>
Balance at July 1, 1994............           --                            --
    Granted........................      233,000                        $ 9.49

Balance at December 31, 1994.......      233,000                          9.49
    Granted .......................      215,000                         14.94
    Exercised .....................       (9,100)                         9.00
    Forfeited / Surrendered .......       (2,000)                        14.25
    Expired .......................           --                            --
                                        --------                        ------
Balance at December 31, 1995 ......      436,900                         12.16
    Granted .......................      248,000                          6.63
    Exercised .....................           --                            --
    Forfeited / Surrendered .......     (207,000)                        14.64
    Expired .......................           --                            --
                                        --------                        ------
Balance at December 31, 1996 ......      479,900                        $ 8.25
                                        --------                        ------
                                        --------                        ------
</TABLE>

    At December 31, 1996, the range of exercise prices and the
weighted-average remaining contractual life of outstanding options was $5.75
to $14.50 and 6.6 years, respectively.

    At December 31, 1996 and 1995, the number of options exercisable was
157,162 and 74,828, respectively, and the weighted-average exercise price of
those options was $10.12 and $9.97, respectively.

(12)     COMMITMENTS AND CONTINGENCIES

         Future minimum rental payments required under operating leases that
have initial or remaining noncancelable lease terms in excess of one year as
of December 31, 1996, are as follows:
<TABLE>
<CAPTION>

                        EQUIPMENT AND
                          LEASEHOLD
                         IMPROVEMENTS           OFFICE LEASES             TOTAL
                        -------------           -------------             -----
 <S>                      <C>                      <C>                  <C>
 1997                     $1,104,245               $368,289             $1,472,534
 1998                        597,141                162,760                759,901
 1999                         51,232                 93,122                144,354
 2000                             --                 95,474                 95,474
 2001                             --                     --                     --
 2002 and beyond                  --                     --                     --
                          ----------               --------             ----------
                          $1,752,618               $719,645             $2,472,263
                          ----------               --------             ----------
                          ----------               --------             ----------
</TABLE>

    It is expected that, in the normal course of business, leases that expire
will be renewed or replaced by leases on other properties; therefore, it is
believed that future minimum annual rental commitments will not be less than
the amount of rental expense incurred.  Office space and equipment rental
expenses for the years ended December 31, 1996, 1995, and 1994 were
$1,495,471, $1,199,046 and $346,258, respectively.

    The Company is involved in litigation in the normal course of business.
The Company believes that the resolution of such 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.

(13)     EMPLOYEE BENEFITS

    The Company offers no post-retirement or post-employment benefits to its
employees other than those available under its Section 401(k) Profit Sharing
Plan.  The Company's defined contribution retirement plan provides for base
contributions by the Company of 3% of compensation and a 100% matching
contribution by the Company of an additional 2% of the contributing
employee's compensation.  Employee contributions are limited to 15% of
compensation.  The total expense for the plans for the years ended December
31, 1996, 1995 and 1994 was $95,395, $94,476 and $65,882, respectively.

                                      39
<PAGE>

(14)     RELATED-PARTY TRANSACTIONS

    Effective January 1, 1994, the Company and certain affiliates entered
into an Intercompany Services Agreement, as amended.  The agreement provides
for the Company to render specified accounting and administrative services to
the affiliates for a monthly fee which approximates the Company's cost of
rendering such services.  For the year ended December 31, 1996, 1995 and
1994, fees totaling $137,588, $157,252 and $200,400, respectively, are
included in interest and fee income in the statement of income.

    The Company terminated the lease agreement without penalty on October 6,
1995, for space in an office building owned by Upland Farms, a general
partnership (an affiliate).  The total rent paid by the Company to Upland
Farms during each of the years 1996, 1995 and 1994 was $0, $55,758 and
$96,756, respectively, for 9,733 total square feet of space (average $10 per
square foot).

    The Company had outstanding senior debt in the amount of $1,065,175 and
$1,001,557 at December 31, 1996 and 1995, respectively, held by Prominent
Mortgage (an affiliate) as discussed in footnote (6), Debt.

    The Company leases furniture and computer equipment from Wonderlic
Personnel Test, Inc. (an affiliate), pursuant to a Master Lease Agreement.
Payments under that agreement (and any related predecessor agreements) were
$1,075,340, $850,293 and $95,210 for the years ending December 31, 1996, 1995
and 1994, respectively.

    The Company paid a total of $77,015 during 1996 to Wonderlic Personnel
Test, Inc. (an affiliate) to develop a proprietary credit scoring model.

    The Company paid a total of $60,000 plus expenses during 1994, pursuant
to the terms of a consulting agreement with two companies which provided
general management consulting services to the Company.  A director of the
company is the president and sole shareholder of one of the companies.

    The Company's Chief Executive Officer and Vice Chairman, members of their
families and certain of the Company's affiliates have outstanding principal
amounts of subordinated notes at December 31, 1996, approximating, for the
Chief Executive Officer and President or members of their families, $682,560
(including $600,000 of publicly offered subordinated notes known as RISRS),
respectively.  Such subordinated notes currently bear interest at various
rates between 10% and 11% and mature at various times through June 2005,
although they are callable.

                                       40

<PAGE>

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

    None.

                                       PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

    The Company hereby incorporates by reference the information called for
by Item 10 of this Form 10-K regarding directors of the Company from the
section entitled ""Election of Directors'' of the Company's 1997 Proxy
Statement.  The required information with respect to the Company's executive
officers is provided in Item 1 hereof under the heading ""Executive Officers
of the Company.''

ITEM 11. EXECUTIVE COMPENSATION

    The Company hereby incorporates by reference the information called for
by Item 11 of this Form 10-K from the section entitled ""Executive
Compensation'' of the Company's 1997 Proxy Statement; provided, however, the
section entitled ""Board Compensation Committee Report on Executive
Compensation'' is specifically not incorporated into this Form 10-K.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    The Company hereby incorporates by reference the information called for
by Item 12 of this Form 10-K from the section entitled ""Security Ownership
Of Certain Beneficial Owners'' of the Company's 1997 Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    The Company hereby incorporates by reference the information called for
by Item 13 of this Form 10-K from the section entitled ""Transactions with
Directors, Officers and Associates'' of the Company's 1997 Proxy Statement.

                                       PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
          ON FORM 8-K

          (a) 1.   Financial Statements:                                    PAGE
                                                                           ----
              Report of Independent Public Accountants . . . . . . . . . . .24

              Balance Sheets-. . . . . . . . . . . . . . . . . . . . . . . .25
              As of December 31, 1996 and 1995

              Statements of Income-. . . . . . . . . . . . . . . . . . . . .26
              For the Years Ended December 31, 1996, 1995 and 1994

              Statements of Changes in Stockholders' Equity- . . . . . . . .27
              For the Years Ended December 31, 1996, 1995 and 1994

              Statements of Cash Flows-. . . . . . . . . . . . . . . . . . .28
              For the Years Ended December 31, 1996, 1995 and 1994 . . . . . .

              Notes to the Financial Statements . . . . . . . . . . . . . . 29

                                      41

<PAGE>

    2.   The following financial schedules for the years 1996, 1995 and 1994
         are submitted herewith:

         None.

    3.   Exhibits

         The following list sets forth the exhibits to this Form 10-K as
    required by Item 601 of Regulation S-K.  Certain exhibits are filed
    herewith, while the remaining exhibits are hereby incorporated by
    reference to documents previously filed with the Securities and Exchange
    Commission. Exhibits hereto incorporated by reference to such other filed
    documents are indicated by an asterisk (*).

        EXHIBIT
          NO.        DESCRIPTION
       ---------    -----------------------------------------------------------
          3.1*      Restated Certificate of Incorporation of the Company

          3.2*      Restated Bylaws of the Company

          4.1*      Form of certificate evidencing Common Stock of the Company

          4.2*      Indenture dated as of April 15, 1995 between the Company and
                    LaSalle National Bank, as Trustee

          4.3*      First Supplemental Indenture dated as of April 28, 1995
                    between the Company and LaSalle National Bank, as Trustee,
                    including form of note

          10.1*     Lease Agreements dated June 1, 1993 between Upland Farms and
                    Wonderlic & Associates, Inc.

          10.2*     Intercompany Services Agreement dated as of January 1, 1994

          10.3*     Tax Indemnification Agreement

          10.4*     Servicing Agreement dated February 26, 1993 between
                    Wonderlic & Associates, Inc. and General Electric Capital
                    Corporation

          10.5*     Amendment No. 1 to Servicing Agreement dated March 22,
                    1993 between Wonderlic & Associates, Inc. and General
                    Electric Capital Corporation

          10.6*     Amended and Restated Revolving Credit Agreement dated as
                    of June 30, 1995 among Eagle Finance Corp., CoreStates
                    Bank, N.A., Harris Trust and Savings Bank, BankOne,
                    Chicago, N.A., Cole Taylor Bank, NatWest Bank, N.A., NBD
                    Bank, LaSalle National Bank, The Daiwa Bank, Limited and
                    CoreStates Bank, N.A., as agent

          10.7*     Interest Rate Protection Agreement dated July 1, 1992
                    between the Company and Harris Trust and Savings Bank

          10.8*     Eagle Finance Corp. 1994 Stock Incentive Plan

          10.9*     Form of Stock Option Agreement

          10.10*    Form of Employment Agreement of Charles F. Wonderlic

          10.11*    Form of Employment Agreement of Ronald B. Clonts

          10.11(a)  Amendment to Employment Agreement of Ronald B. Clonts, dated
                    January 1, 1997.

          10.12*    Form of Employment Agreement of Robert J. Braasch

          10.13*    Form of Indemnification Agreement


                                       42


<PAGE>

        EXHIBIT
          NO.        DESCRIPTION
       ---------    -----------------------------------------------------------
          10.14*    Computer System Lease dated July 31, 1993 between Wonderlic
                    Personnel Test, Inc. and Wonderlic & Associates, Inc.

          10.15*    Master Note Agreement dated as of January 1, 1994 between
                    Wonderlic & Associates, Inc. and Prominent Mortgage Corp.

          10.16*    First Amendment to Master Note Agreement dated as of
                    August 1, 1994 between Eagle Finance Corp. and Prominent
                    Mortgage Corp.

          10.17*    Form of Debenture Agreement

          10.18*    Form of Subordinated Debentures

          10.19*    Form of Subordinated Notes

          10.20*    Form of Dealer Agreement

          10.21*    Form of Company Credit Application

          10.22*    Asset Purchase Agreement dated as of September 27, 1994
                    between General Electric Capital Corporation and Eagle
                    Finance Corp.

          10.23*    Amendment No. 1 to Asset Purchase Agreement, dated as of
                    March 31, 1995, between General Electric Capital
                    Corporation and Eagle Finance Corp.

          10.24*    Form of Master Lease Agreement

          10.25*    Assignment and Assumption Agreement dated as of August 1,
                    1994 between Wonderlic Personnel Test, Inc. and Eagle
                    Finance Corp.

          10.26*    First Amendment to Amended and Restated Revolving Credit
                    Agreement dated September 1, 1995

          10.27*    Second Amendment to Amended and Restated Revolving Credit
                    Agreement dated June 30, 1996

          10.28*    Asset Purchase Agreement dated as of June 25, 1996 between
                    General Electric Capital Corporation and Eagle Finance Corp.

          10.29*    Amended and Restated Servicing Agreement dated as of
                    June 25, 1996 between General Electric Capital
                    Corporation and Eagle Finance Corp.

          10.30*    Third Amendment to Amended and Restated Revolving Credit
                    Agreement dated June 30, 1996

          10.31     Form of Acknowledgment and Waiver with respect to
                    Amended and Restated Revolving Credit Agreement dated
                    March 27, 1997

          10.32     Pooling and Servicing Agreement dated as of September 1,
                    1996 among Eagle Auto Funding Corp., Eagle Finance Corp.
                    and Harris Trust and Savings Bank

          10.33     Loan Sale and Contribution Agreement dated as of September
                    1, 1996 between Eagle Finance Corp. and Eagle Auto
                    Funding Corp.

          10.34     Waiver Letter from General Electric Capital Corporation
                    dated March 26, 1997

          11.       Statement Regarding Computation of Net Earnings Per Share

          12.       Statement Regarding Computation of Ratio of Earnings to
                    Fixed Charges

          23        Consent of KPMG Peat Marwick LLP


                                       43


<PAGE>

        EXHIBIT
          NO.        DESCRIPTION
       ---------    -----------------------------------------------------------
          27        Financial Data Schedule


(b)       The Company did not file any Current Report on Form 8-K during
          the fourth quarter of 1996.

(c)       Exhibits - those exhibits listed above without an asterisk are
          filed herewith.

(d)       There are no financial statement schedules required by Regulation
          S-X that are excluded from the Financial Statements included under
          Item 8 of this report.










                                       44


<PAGE>

                                      SIGNATURES

    Pursuant to the requirements of Section 13 or 15(d) 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, on March 28, 1997.

                                       EAGLE FINANCE CORP.


                                       By:  CHARLES F. WONDERLIC
                                          -------------------------------------
                                            Charles F. Wonderlic
                                            Chairman and Chief Executive Officer

    Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.

     SIGNATURE                        TITLE                         DATE
     ---------                        -----                         -----

CHARLES F. WONDERLIC         Chairman, Chief Executive     )
-----------------------      Officer and Director          )
Charles F. Wonderlic         (Principal Executive Officer) )
                                                           )
                                                           )
RONALD B. CLONTS             Vice Chairman and Director    )
-----------------------                                    )
Ronald B. Clonts                                           )
                                                           )
                                                           )
ROBERT J. BRAASCH            President and Chief Financial )
-----------------------      Officer (Principal Financial  )
Robert J. Braasch            and Accounting Officer)       )
                                                           )
                                                           )
RICHARD E. WONDERLIC         Executive Vice President      )
-----------------------      and Director                  )
Richard E. Wonderlic                                       )     March 28, 1997
                                                           )
                                                           )
ROBERT H. ARNOLD             Director                      )
-----------------------                                    )
Robert H. Arnold                                           )
                                                           )
                             Director                      )
-----------------------                                    )
Anne Hamblin Schiave                                       )
                                                           )
                                                           )
WALTER J. O'BRIEN            Director                      )
----------------------                                     )
Walter J. O'Brien                                          )
                                                           )
                                                           )
E. BRUCE FREDRIKSON          Director                      )
----------------------                                     )
E. Bruce Fredrikson                                        )


                                       45

<PAGE>

                               BOARD OF DIRECTORS
--------------------------------------------------------------------------------
Charles F. Wonderlic                    Robert H. Arnold
Chairman and Chief Executive Officer    President of R.H. Arnold & Co.

Ronald B. Clonts                        E. Bruce Fredrikson
Vice Chairman                           Professor of Finance
                                        Syracuse University
Richard E. Wonderlic
Executive Vice President                Walter J. O'Brien
                                        President of National Advertising Review
                                        Council, Inc.

                                        Anne Hamblin Schiave
                                        Partner, McBride, Baker & Coles

                               EXECUTIVE OFFICERS
--------------------------------------------------------------------------------
Charles F. Wonderlic                    Robert J. Braasch
Chairman and Chief Executive Officer    President and Chief Financial Officer

Ronald B. Clonts                        Richard E. Wonderlic
Vice Chairman                           Executive Vice President

Samuel M. Keith
Chief Operating Officer

                            STOCKHOLDER INFORMATION
--------------------------------------------------------------------------------
CORPORATE HEADQUARTERS                  FORM 10-K
Eagle Finance Corp.                     Copies of Eagle Finance Corp.'s annual
1425 Tri-State Parkway, Suite 140       report and 10-K, as filed with the
Gurnee, Illinois 60031-4060             Securities and Exchange Commission, may
(847) 855-7150                          be obtained from the Shareholder
                                        Relations Department.

SHAREHOLDER RELATIONS OFFICER           STOCK TRADING
Howard J. Adamski, Vice President       Eagle Finance Corp. common stock is
and Treasurer                           traded on the Nasdaq National Market
(847) 855-7118                          under the symbol EFCW

TRANSFER AGENT AND REGISTRAR            INDEPENDENT AUDITORS
Harris Trust and Savings Bank           KPMG Peat Marwick LLP
P.O. Box 7455                           303 East Wacker Drive
Chicago, Illinois 60690                 Chicago, Illinois 60601
Attention:  Shareholder Services

ANNUAL MEETING                          LEGAL COUNSEL
The annual stockholders' meeting        Barack Ferrazzano Kirschbaum Perlman &
will be held Tuesday, May 20, 1997      Nagelberg
at 10:00 a.m. at the Holiday Inn,       333 West Wacker Drive
6161 West Grand Avenue,                 Suite 2700
Gurnee, Illinois 60031                  Chicago, Illinois 60606


                                       46

<PAGE>

                         [BACK COVER OF ANNUAL REPORT]


<PAGE>

                                   SIGNATURES

    Pursuant to the requirements of Section 13 or 15(d) 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, on March 28,
1997.

                                        EAGLE FINANCE CORP.


                                        By: CHARLES F. WONDERLIC
                                           -------------------------------------
                                            Charles F. Wonderlic
                                            Chairman and Chief Executive Officer

    Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.

     SIGNATURE                  TITLE                         DATE
     ---------                  -----                         ----


CHARLES F. WONDERLIC   Chairman, Chief Executive     )
--------------------   Officer and Director          )
Charles F. Wonderlic   (Principal Executive Officer) )
                                                     )
RONALD B. CLONTS       Vice Chairman and Director    )
--------------------                                 )
Ronald B. Clonts                                     )
                                                     )
                                                     )
ROBERT J. BRAASCH      President and Chief Financial )
--------------------                                 )
Robert J. Braasch      Officer (Principal Financial  )
                       and Accounting Officer)       )
                                                     )
RICHARD E. WONDERLIC   Executive Vice President      )
--------------------                                 )
Richard E. Wonderlic   and Director                  )    March 28, 1997
                                                     )
                                                     )
ROBERT H. ARNOLD       Director                      )
--------------------                                 )
Robert H. Arnold                                     )
                                                     )
                                                     )
                       Director                      )
--------------------                                 )
Anne Hamblin Schiave                                 )
                                                     )
                                                     )
WALTER J. O'BRIEN      Director                      )
--------------------                                 )
Walter J. O'Brien                                    )
                                                     )
                                                     )
E. BRUCE FREDRIKSON    Director                      )
--------------------                                 )
E. Bruce Fredrikson                                  )


                                      S-1

<PAGE>
                                 EXHIBIT INDEX

 EXHIBIT
   NO.                             DESCRIPTION
---------                          -----------

3.1       Restated Certificate of Incorporation of the Company
          (incorporated by reference to Exhibit No. 3.1 to Registration
          Statement on Form S-1, File No. 33-77828)

3.2       Restated Bylaws of the Company (incorporated by reference to
          Exhibit No. 3.2 to Registration Statement on Form S-1, File No.
          33-77828)

4.1       Form of certificate evidencing Common Stock of the Company
          (incorporated by reference to Exhibit No. 4.1 to Registration
          Statement on Form S-1, File No. 33-77828)

4.2       Indenture dated as of April 15, 1995 between the Company and
          LaSalle National Bank, as Trustee (incorporated by reference to
          Exhibit No. 2 to Current Report on Form 8-K, dated May 5, 1995)

4.3       First Supplemental Indenture dated as of April 28, 1995 between
          the Company and LaSalle National Bank, as Trustee, including form
          of note (incorporated by reference to Exhibit No. 3 to Current
          Report on Form 8-K, dated May 5, 1995)

10.1      Lease Agreements dated June 1, 1993 between Upland Farms and
          Wonderlic & Associates, Inc. (incorporated by reference to
          Exhibit No. 10.1 to Registration Statement on Form S-1, File No.
          33-77828)

10.2      Intercompany Services Agreement dated as of January 1, 1994
          (incorporated by reference to Exhibit No. 10.2 to Registration
          Statement on Form S-1, File No. 33-77828)

10.3      Tax Indemnification Agreement (incorporated by reference to
          Exhibit No. 10.3 to Registration Statement on Form S-1, File No.
          33-77828)

10.4      Servicing Agreement dated February 26, 1993 between Wonderlic &
          Associates, Inc. and General Electric Capital Corporation
          (incorporated by reference to Exhibit No. 10.4 to Registration
          Statement on Form S-1, File No. 33-77828)

10.5      Amendment No. 1 to Servicing Agreement dated March 22, 1993
          between Wonderlic & Associates, Inc. and General Electric Capital
          Corporation (incorporated by reference to Exhibit No. 10.5 to
          Registration Statement on Form S-1, File No. 33-77828)

10.6      Amended and Restated Credit Agreement dated as of June 30, 1995
          among Eagle Finance Corp., CoreStates Bank, N.A., Harris Trust
          and Savings Bank, BankOne, Chicago, N.A., Cole Taylor Bank,
          NatWest Bank, N.A., NBD Bank, LaSalle National Bank, The Daiwa
          Bank, Limited and CoreStates Bank, N.A., as agent (incorporated
          by reference to Exhibit No. 10 to Quarterly Report on Form 10-Q
          for the Quarterly Period ended June 30, 1995)

10.7      Interest Rate Protection Agreement dated July 1, 1992 between the
          Company and Harris Trust and Savings Bank (incorporated by
          reference to Exhibit No. 10.11 to Registration Statement on Form
          S-1, File No. 33-77828)

10.8      Eagle Finance Corp. 1994 Stock Incentive Plan (incorporated by
          reference to Exhibit No. 10.12 to Registration Statement on Form
          S-1, File No. 33-77828)

<PAGE>

 EXHIBIT
   NO.                             DESCRIPTION
---------                          -----------

10.9      Form of Stock Option Agreement (incorporated by reference to
          Exhibit No. 4.4 to Registration Statement on Form S-8, File No.
          33-89132)

10.10     Form of Employment Agreement of Charles F. Wonderlic
          (incorporated by reference to Exhibit No. 10.13 to Registration
          Statement on Form S-1, File No. 33-77828)

10.11     Form of Employment Agreement of Ronald B. Clonts (incorporated by
          reference to Exhibit No. 10.14 to Registration Statement on Form
          S-1, File No. 33-77828)

10.11(a)  Amendment to Employment Agreement of Ronald B. Clonts, dated
          January 1, 1997

10.12     Form of Employment Agreement of Robert J. Braasch (incorporated
          by reference to Exhibit No. 10.15 to Registration Statement on
          Form S-1, File No. 33-77828)

10.13     Form of Indemnification Agreement (incorporated by reference to
          Exhibit No. 10.16 to Registration Statement on Form S-1, File No.
          33-77828)

10.14     Computer System Lease dated July 31, 1993 between Wonderlic
          Personnel Test, Inc. and Wonderlic & Associates, Inc.
          (incorporated by reference to Exhibit No. 10.17 to Registration
          Statement on Form S-1, File No. 33-77828)

10.15     Master Note Agreement dated as of January 1, 1994 between
          Wonderlic & Associates, Inc. and Prominent Mortgage Corp.
          (incorporated by reference to Exhibit No. 10.18 to Registration
          Statement on Form S-1, File No. 33-77828)

10.16     First Amendment to Master Note Agreement dated as of August 1,
          1994 between Eagle Finance Corp. and Prominent Mortgage Corp.
          (incorporated by reference to Exhibit No. 10.18(a) to the
          Quarterly Report on Form 10-Q for the Quarterly Period Ended
          September 30, 1994)

10.17     Form of Debenture Agreement (incorporated by reference to Exhibit
          No. 10.19 to Registration Statement on Form S-1, File No. 33-77828)

10.18     Form of Subordinated Debentures (incorporated by reference to
          Exhibit No. 10.20 to Registration Statement on Form S-1, File No.
          33-77828)

10.19     Form of Subordinated Notes (incorporated by reference to Exhibit
          No. 10.21 to Registration Statement on Form S-1, File No. 33-77828)

10.20     Form of Dealer Agreement (incorporated by reference to Exhibit
          No. 10.22 to Registration Statement on Form S-1, File No. 33-77828)

10.21     Form of Company Credit Application (incorporated by reference to
          Exhibit No. 10.23 to Registration Statement on Form S-1, File No.
          33-77828)

10.22     Asset Purchase Agreement dated as of September 27, 1994 between
          General Electric Capital Corporation and Eagle Finance Corp.
          (incorporated by reference to Exhibit No. 10.26 to the Quarterly
          Report on Form 10-Q for the Quarterly Period ending September 30,
          1994)

10.23     Amendment No. 1 to the Asset Purchase Agreement, dated as of
          March 31, 1995, between General Electric Capital Corporation and
          Eagle Finance Corp.

<PAGE>

 EXHIBIT
   NO.                             DESCRIPTION
---------                          -----------

          (incorporated by reference to Exhibit No. 10.25(a) to Registration
          Statement on Form S-1, File No. 33-90754)

10.24     Form of Master Lease Agreement (incorporated by reference to
          Exhibit No. 10.26 to the Annual Report on Form 10-K for the Year
          ended December 31, 1994)

10.25     Assignment and Assumption Agreement dated as of August 1, 1994
          between Wonderlic Personnel Test, Inc. and Eagle Finance Corp.
          (incorporated by reference to Exhibit No. 10.27 to the Annual
          Report on Form 10-K for the Year Ended December 31, 1994)

10.26     First Amendment to Amended and Restated Revolving Credit
          Agreement dated September 1, 1995 (incorporated by reference to
          Exhibit No. 10.1 to the Quarterly Report on Form 10-Q for the
          Quarterly Period Ended June 30, 1996)

10.27     Second Amendment to Amended and Restated Revolving Credit
          Agreement dated June 30, 1996 (incorporated by reference to
          Exhibit No. 10.2 to the Quarterly Report on Form 10-Q for the
          Quarterly Period Ended June 30, 1996)

10.28     Asset Purchase Agreement dated as of June 25, 1996 between
          General Electric Capital Corporation and Eagle Finance Corp.
          (incorporated by reference to Exhibit No. 10.3 to the Quarterly
          Report on Form 10-Q for the Quarterly Period Ended June 30, 1996)

10.29     Amended and Restated Servicing Agreement dated as of June 25,
          1996 between General Electric Capital Corporation and Eagle
          Finance Corp. (incorporated by reference to Exhibit No. 10.4 to
          the Quarterly Report on Form 10-Q for the Quarterly Period Ended
          June 30, 1996)

10.30     Third Amendment to Amended and Restated Revolving Credit
          Agreement dated June 30, 1996 (incorporated by reference to
          Exhibit No. 10.1 to the Quarterly Report on Form 10-Q for the
          Quarterly Period Ended September 30, 1996)

10.31     Form of Acknowledgment and Waiver with respect to Amended and
          Restated Revolving Credit Agreement dated March 27, 1997

10.32     Pooling and Servicing Agreement dated as of September 1, 1996
          among Eagle Auto Funding Corp., Eagle Finance Corp. and Harris
          Trust and Savings Bank

10.33     Loan Sale and Contribution Agreement dated as of September 1,
          1996 between Eagle Finance Corp. and Eagle Auto Funding Corp.

10.34     Waiver Letter from General Electric Capital Corporation dated
          March 26, 1997

11        Statement Regarding Computation of Net Earnings Per Share

12        Statement Regarding Computation of Ratio of Earnings to Fixed
          Charges

23        Consent of KPMG Peat Marwick LLP

27        Financial Data Schedule