<PAGE>

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

                                   FORM 10-Q

(Mark one)

[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
    Exchange Act of 1934
               For the quarterly period ended September 30, 2001

                                      Or

[_] Transition Report Pursuant to Section 13 or 15(d) of the Securities
    Exchange Act of 1934
               For the transition period from __________ to ___________

                       Commission File Number 000-24051

                         UNITED PANAM FINANCIAL CORP.
            (Exact name of Registrant as specified in its charter)

          California                                        95-3211687
 (State or other jurisdiction of                         (I.R.S. Employer
 incorporation or organization)                        Identification Number)

                        3990 Westerly Place, Suite 200
                            Newport Beach, CA 92660
              (Address of principal executive offices) (Zip Code)

                                (949) 224-1917
             (Registrant's telephone number, including area code)

                                Not applicable
  (Former name, former address and former fiscal year, if changed since last
                                    report)


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______
                                         ----

The number of shares outstanding of the Registrant's Common Stock as of November
6, 2001 was 15,562,400 shares.
<PAGE>

                         UNITED PANAM FINANCIAL CORP.
                                   FORM 10-Q
                              SEPTEMBER 30, 2001

                                     INDEX

<TABLE>
<CAPTION>
PART I.             FINANCIAL INFORMATION                                      Page
                                                                               ----
<S>                                                                            <C>
Item 1.   Financial Statements (unaudited)

          Consolidated Statements of Financial Condition as of
             September 30, 2001 and December 31, 2000                            1

          Consolidated Statements of Operations
             for the three and nine months ended September 30, 2001
             and September 30, 2000                                              2

          Consolidated Statements of Comprehensive Income (Loss) for
             the three and nine months ended September 30, 2001
             and September 30, 2000                                              3

          Consolidated Statements of Cash Flows
             for the three and nine months ended September 30, 2001
             and September 30, 2000                                              4

          Notes to Consolidated Financial Statements                             6

Item 2.   Management's Discussion and Analysis of
             Financial Condition and Results of Operations                       9

Item 3.   Quantitative and Qualitative Disclosures About Market Risk            25

PART II.  OTHER INFORMATION

Item 1.   Legal Proceedings                                                     26

Item 2.   Changes in Securities and Use of Proceeds                             26

Item 3.   Defaults Upon Senior Securities                                       26

Item 4.   Submission of Matters to a Vote of Security Holders                   26

Item 5.   Other Information                                                     26

Item 6.   Exhibits and Reports on Form 8-K                                      26
</TABLE>
<PAGE>

PART I.                       FINANCIAL INFORMATION

Item 1.   Financial Statements.
          --------------------

                 United PanAm Financial Corp. and Subsidiaries
                Consolidated Statements of Financial Condition


<TABLE>
<CAPTION>
                                                                               September 30,        December 31,
                                                                                  2001                 2000
    (Dollars in thousands, except share data)                                  (unaudited)           (audited)
                                                                             ----------------    -----------------
    <S>                                                                      <C>                 <C>
    Assets

    Cash and due from banks                                                      $     5,088         $      6,115
    Short term investments                                                           155,103               36,477
                                                                             ---------------     ----------------
      Cash and cash equivalents                                                      160,191               42,592
    Securities available for sale, at fair value                                     243,646              223,265
    Residual interests in securitizations, at fair value                                 ---                8,861
    Loans, net                                                                       224,132              192,368
    Loans held for sale                                                                  180                  712
    Premises and equipment, net                                                        1,933                1,591
    Federal Home Loan Bank stock, at cost                                              4,725                3,000
    Accrued interest receivable                                                        3,587                  814
    Real estate owned, net                                                                 8                  871
    Other assets                                                                      14,797               15,904
                                                                              --------------      ---------------
         Total assets                                                            $   653,199         $    489,978
                                                                              ==============      ===============

    Liabilities and Shareholders' Equity

    Deposits                                                                     $   361,846         $    348,230
    Federal Home Loan Bank advances                                                   94,500               60,000
    Reverse repurchase agreements                                                    108,905                  ---
    Accrued expenses and other liabilities                                            13,812               12,431
                                                                              --------------      ---------------
         Total liabilities                                                           579,063              420,661
                                                                              --------------      ---------------
    Common stock (no par value):
        Authorized, 30,000,000 shares
        Issued and outstanding, 15,643,400 and 16,149,650 shares at
        September 30, 2001 and December 31, 2000, respectively                        64,014               65,291
    Retained earnings                                                                  9,070                3,524
    Unrealized gain on securities available for sale, net                              1,052                  502
                                                                              --------------      ---------------
         Total shareholders' equity                                                   74,136               69,317
                                                                              --------------      ---------------

         Total liabilities and shareholders' equity                              $   653,199         $    489,978
                                                                              ==============      ===============
</TABLE>

See accompanying notes to consolidated financial statements.                   1
<PAGE>

                 United PanAm Financial Corp. and Subsidiaries
                     Consolidated Statements of Operations
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                               Three Months                   Nine Months
 (In thousands, except per share data)                                     Ended September 30,            Ended September 30,
                                                                      -----------------------------   ----------------------------
                                                                           2001            2000            2001           2000
                                                                      --------------   ------------   -------------  -------------
<S>                                                                   <C>              <C>            <C>            <C>
Interest Income
    Loans                                                             $       11,852   $      8,969   $      33,199  $      25,024
    Securities                                                                 2,880          3,103           9,988          6,075
                                                                      --------------   ------------   -------------  -------------
      Total interest income                                                   14,732         12,072          43,187         31,099
                                                                      --------------   ------------   -------------  -------------
 Interest Expense
    Deposits                                                                   4,464          3,763          14,295          8,605
    Federal Home Loan Bank advances                                               71            654             979            890
    Reverse repurchase agreements                                                 86            ---             118            ---
                                                                      --------------   ------------   -------------  -------------
      Total interest expense                                                   4,621          4,417          15,392          9,495
                                                                      --------------   ------------   -------------  -------------
           Net interest income                                                10,111          7,655          27,795         21,604
    Provision for loan losses                                                    108             30             276            107
                                                                      --------------   ------------   -------------  -------------
           Net interest income after provision for loan losses                10,003          7,625          27,519         21,497
                                                                      --------------   ------------   -------------  -------------
 Non-interest Income
    Loss on residual interests in securitizations                                ---         (5,324)            ---        (10,324)
    Net gain on sale of loans                                                    ---            ---           1,607            ---
    Service charges and fees                                                     164            153             497            460
    Loan related charges and fees                                                 68             51             209            155
    Other income                                                                  35             33             102             97
                                                                      --------------   ------------   -------------  -------------
      Total non-interest income (loss)                                           267         (5,087)          2,415         (9,612)
                                                                      --------------   ------------   -------------  -------------
 Non-interest Expense
    Compensation and benefits                                                  4,060          3,343          12,921          9,648
    Occupancy                                                                    788            646           2,305          1,756
    Other                                                                      1,913          3,830           5,618          7,051
                                                                      --------------   ------------   -------------  -------------
      Total non-interest expense                                               6,761          7,819          20,844         18,455
                                                                      --------------   ------------   -------------  -------------

      Income (loss) from continuing operations before income taxes             3,509         (5,281)          9,090         (6,570)

 Income taxes (benefit)                                                        1,369         (1,970)          3,544         (2,436)
                                                                      --------------   ------------   -------------  -------------

 Income (loss) from continuing operations                                      2,140         (3,311)          5,546         (4,134)
                                                                      --------------   ------------   -------------  -------------

 Loss on disposal of discontinued operations, net of tax                         ---            ---             ---         (3,291)
                                                                      --------------   ------------   -------------  -------------

 Net income (loss)                                                    $        2,140   $     (3,311)  $       5,546  $      (7,425)
                                                                      ==============   ============   =============  =============

 Earnings (loss) per share-basic:

      Continuing operations                                           $         0.13   $      (0.20)  $        0.34  $       (0.25)
                                                                      ==============   ============   =============  =============

      Discontinued operations                                         $          ---   $        ---   $         ---  $       (0.20)
                                                                      ==============   ============   =============  =============

      Net income (loss)                                               $         0.13   $      (0.20)  $        0.34  $       (0.45)
                                                                      ==============   ============   =============  =============

      Weighted average shares outstanding                                     16,171         16,281          16,164         16,475
                                                                      ==============   ============   =============  =============
 Earnings (loss) per share-diluted:

      Continuing operations                                           $         0.12   $      (0.20)  $        0.33  $       (0.25)
                                                                      ==============   ============   =============  =============

      Discontinued operations                                         $          ---   $        ---   $         ---  $       (0.20)
                                                                      ==============   ============   =============  =============

      Net income (loss)                                               $         0.12   $      (0.20)  $        0.33  $       (0.45)
                                                                      ==============   ============   =============  =============

      Weighted average shares outstanding                                     17,860         16,348          16,859         16,602
                                                                      ==============   ============   =============  =============
</TABLE>

See accompanying notes to consolidated financial statements.                   2
<PAGE>

                 United PanAm Financial Corp. and Subsidiaries
            Consolidated Statements of Comprehensive Income (Loss)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                             Three Months                  Nine Months
 (Dollars in thousands)                                                   Ended September 30,           Ended September 30,
                                                                      -------------------------     --------------------------
                                                                          2001           2000           2001          2000
                                                                      -----------    -----------    -----------   ------------
<S>                                                                   <C>            <C>            <C>           <C>
 Net income (loss)                                                     $   2,140     $    (3,311)   $     5,546   $     (7,425)
 Other comprehensive income, net of tax:
     Unrealized gain (loss) on securities available for sale                 264              54            550            (15)
                                                                      ----------     ------------   ------------  ------------

  Comprehensive income (loss)                                         $    2,404     $    (3,257)   $     6,096   $     (7,440)
                                                                      ==========     ===========    ===========   ============
</TABLE>

See accompanying notes to consolidated financial statements.                   3
<PAGE>

                 United PanAm Financial Corp. and Subsidiaries
                     Consolidated Statements of Cash Flows
                                  (Unaudited)

<TABLE>
<CAPTION>
(Dollars in thousands)                                                                   Nine Months
                                                                                      Ended September 30,
                                                                                -----------------------------
                                                                                    2001             2000
                                                                                -----------      ------------
<S>                                                                             <C>              <C>
Cash Flows from Operating Activities
Net income (loss)                                                               $    5,546       $     (7,425)



Adjustments to reconcile net income (loss)
To net cash provided by operating activities:
    Compensation expense for converting option plan                                  1,368                ---
     Discontinued operations                                                           ---              3,291
     Originations of loans held for sale                                               ---            (76,368)
     Sales of loans held for sale                                                   16,616            193,895
     Provision for loan losses                                                         276                107
     Gain on sale of mortgage loans                                                 (1,607)               ---
     Depreciation and amortization                                                     640                985
     FHLB stock dividend                                                              (150)              (125)
     Decrease in residual interest in securitizations                                8,861                ---
     Decrease (increase) in accrued interest receivable                             (2,772)                (7)
     Decrease (increase) in other assets                                               894             10,211
     (Decrease) increase in accrued expenses and other liabilities                   1,596             (6,219)
     Amortization of premiums (discounts) on securities                                409             (3,350)
     Other net                                                                         (62)                34
                                                                                ----------       ------------
    Net cash provided by operating activities                                       31,615            115,029
                                                                                ----------       ------------
Cash Flows from Investing Activities
     Proceeds from maturities of investment securities                             267,607            125,000
     Purchase of investment securities                                            (287,482)          (294,322)
     Repayments of mortgage loans                                                      849             11,185
     Originations and purchases, net of repayments, of non-mortgage loans          (47,344)           (32,616)
     Purchases of premises and equipment                                              (982)              (577)
     Purchase of FHLB stock, net                                                    (1,575)              (120)
     Proceeds from sales of real estate owned                                          899              5,551
     Other net                                                                        (366)               322
                                                                                ----------       ------------

          Net cash (used in) investing activities                                  (68,394)          (185,577)
                                                                                ----------       ------------
Cash Flows from Financing Activities
     Issuance of capital stock                                                          86                ---
     Net increase (decrease) in deposits                                            13,616             10,563
     Repurchase of common stock                                                     (2,729)              (454)
     Repayments of warehouse lines of credit                                           ---            (54,415)
     Proceeds, net of repayments, from FHLB advances                                34,500             45,000
     Proceeds, net of repayments, from reverse repurchase agreements               108,905                ---
                                                                                ----------       ------------

      Net cash provided by financing activities                                    154,378                694
                                                                                ----------       ------------

Net (decrease) increase in cash and cash equivalents                               117,599            (69,854)

Cash and cash equivalents at beginning of period                                    42,592             90,357
                                                                                ----------       ------------

Cash and cash equivalents at end of period                                      $  160,191       $     20,503
                                                                                ==========       ============
</TABLE>

See accompanying notes to consolidated financial statements                    4
<PAGE>

                 United PanAm Financial Corp. and Subsidiaries
               Consolidated Statements of Cash Flows, Continued
                                  (Unaudited)

<TABLE>
<CAPTION>
(Dollars in thousands)                                                Nine Months
                                                                  Ended September 30,
                                                             ----------------------------
                                                                  2001           2000
                                                             ------------    ------------
<S>                                                          <C>             <C>
Supplemental Disclosures of Cash Flow Information

     Cash paid for:

       Interest                                                $   14,894     $    12,803
                                                             ============    ============

       Taxes                                                   $      556     $       233
                                                             ============    ============

Supplemental Schedule of Non-cash Investing and Financing
       Activities

       Acquisition of real estate owned through
         foreclosure of related mortgage loans                 $       36     $     3,209
                                                             ============    ============

       Loans transferred to held for sale                      $   14,187             ---
                                                             ============    ============
</TABLE>

See accompanying notes to consolidated financial statements
                                                                               5
<PAGE>

                 United PanAm Financial Corp. and Subsidiaries
                  Notes to Consolidated Financial Statements
            Three and Nine Months Ended September 30, 2001 and 2000
                                  (Unaudited)

1.   Organization

     United PanAm Financial Corp. (the "Company") was incorporated in California
on April 9, 1998 for the purpose of reincorporating its business in California,
through the merger of United PanAm Financial Corp., a Delaware corporation (the
"Predecessor"), into the Company. Unless the context indicates otherwise, all
references herein to the "Company" include the Predecessor. The Company was
originally organized as a holding company for Pan American Financial, Inc.
("PAFI") and Pan American Bank, FSB (the "Bank") to purchase certain assets and
assume certain liabilities of Pan American Federal Savings Bank from the
Resolution Trust Corporation (the "RTC") on April 29, 1994. The Company, PAFI
and the Bank are considered to be Hispanic owned. PAFI is a wholly owned
subsidiary of the Company, and the Bank is a wholly owned subsidiary of PAFI.

2.   Basis of Presentation

     The accompanying unaudited consolidated financial statements include the
accounts of United PanAm Financial Corp., Pan American Financial, Inc. and Pan
American Bank, FSB. Substantially all of the Company's revenues are derived from
the operations of the Bank and they represent substantially all of the Company's
consolidated assets and liabilities as of September 30, 2001 and December 31,
2000. Significant inter-company accounts and transactions have been eliminated
in consolidation.

     These consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America
("GAAP") for interim financial information and the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by GAAP for complete financial statements. In
the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation of the Company's
financial condition and results of operations for the interim periods presented
in this Form 10-Q have been included. Operating results for the interim periods
are not necessarily indicative of financial results for the full year. These
unaudited consolidated financial statements should be read in conjunction with
the audited consolidated financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31, 2000.

     The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. Actual results could differ
from those estimates.

                                                                               6
<PAGE>

3.   Earnings Per Share From Continuing Operations

     Basic EPS and diluted EPS are calculated as follows for the three and
nine months ended September 30, 2001 and 2000:

<TABLE>
<CAPTION>
                                                                               Three Months                     Nine Months
(In thousands, except per share amounts)                                    Ended September 30,             Ended September 30,
                                                                      -----------------------------     -------------------------
                                                                         2001             2000             2001          2000
                                                                      ------------     ------------     ----------    -----------
<S>                                                                   <C>              <C>              <C>           <C>
Earnings (loss) per share from continuing operations - basic:
     Income (loss) from continuing operations                         $      2,140     $     (3,311)    $    5,546    $    (4,134)
                                                                      ============     ============     ==========    ===========
     Average common shares outstanding                                      16,171           16,281         16,164         16,475
                                                                      ============     ============     ==========    ===========
     Earnings (loss) per share from continuing operations             $       0.13     $      (0.20)    $     0.34    $     (0.25)
                                                                      ============     ============     ==========    ===========
Earnings (loss) per share from continuing operations - diluted:
     Income (loss) from continuing operations                         $      2,140     $     (3,311)    $    5,546    $    (4,134)
                                                                      ============     ============     ==========    ===========
     Average common shares outstanding                                      16,171           16,281         16,164         16,475
     Add: Stock options                                                      1,689               67            695            127
                                                                      ------------     ------------     ----------    -----------
     Average common shares outstanding - diluted                            17,860           16,348         16,859         16,602
                                                                      ============     ============     ==========    ===========
     Earnings (loss) per share from continuing operations             $       0.12     $      (0.20)    $     0.33    $     (0.25)
                                                                      ============     ============     ==========    ===========
</TABLE>

4.   Operating Segments

     The Company has three reportable segments: auto finance, insurance premium
finance and banking. The auto finance segment acquires, holds for investment and
services nonprime retail automobile installment sales contracts generated by
franchised and independent dealers of used automobiles. The insurance premium
finance segment, through a contractual agreement, underwrites and finances
automobile and commercial insurance premiums in California. The banking segment
operates a four-branch federal savings bank and is the principal funding source
for the Company's auto and insurance premium finance segments.

     The accounting policies of the segments are the same as those of the
Company's except for funds provided by the banking segment to the other
operating segments which are accounted for at a predetermined transfer price
(including certain overhead costs).

                                                                               7
<PAGE>

         The Company's reportable segments are strategic business units that
offer different products and services. They are managed and reported upon
separately within the Company.

<TABLE>
<CAPTION>
                                                            At or For Three Months Ended September 30, 2001
                                                       ----------------------------------------------------------
(In thousands)                                                          Insurance
                                                           Auto          Premium
                                                         Finance         Finance        Banking         Total
                                                       -------------   ------------    -----------    -----------
<S>                                                    <C>             <C>             <C>            <C>
Net interest income                                       $  8,004       $    522       $  1,585       $ 10,111
Provision for loan losses                                      ---            108            ---            108
Non-interest income                                             81            118             68            267
Non-interest expense                                         4,922             61          1,778          6,761
                                                       -------------   ------------    -----------    -----------
Segment profit (loss), pre-tax                            $  3,163       $    471       $   (125)      $  3,509
                                                       =============   ============    ===========    ===========
Total assets                                              $189,474       $ 38,215       $425,510       $653,199
                                                       =============   ============    ===========    ===========
</TABLE>

<TABLE>
<CAPTION>
                                                            At or For Three Months Ended September 30, 2000
                                                       ----------------------------------------------------------
(In thousands)                                                          Insurance
                                                           Auto          Premium
                                                         Finance         Finance        Banking         Total
                                                       -------------   ------------    -----------    -----------
<S>                                                    <C>             <C>             <C>            <C>
Net interest income                                       $  5,666       $    647       $  1,342       $  7,655
Provision for loan losses                                      ---             30            ---             30
Non-interest income (1)                                         61             94         (5,242)        (5,087)
Non-interest expense                                         3,526            353          3,940          7,819
                                                       -------------   ------------    -----------    -----------
Segment profit (loss), pre-tax                            $  2,201       $    358       $ (7,840)      $ (5,281)
                                                       =============   ============    ===========    ===========
Total assets                                              $133,455       $ 30,289       $262,920       $426,664
                                                       =============   ============    ===========    ===========
</TABLE>

<TABLE>
<CAPTION>
                                                            At or For Nine Months Ended September 30, 2001
                                                       ----------------------------------------------------------
(In thousands)                                                          Insurance
                                                            Auto          Premium
                                                          Finance         Finance        Banking         Total
                                                       -------------   ------------    -----------    -----------
<S>                                                    <C>             <C>             <C>            <C>
Net interest income                                       $ 21,909        $ 1,806       $  4,080       $ 27,795
Provision for loan losses                                      ---            276            ---            276
Non-interest income                                            237            372          1,806          2,415
Non-interest expense                                        13,602            290          6,952         20,844
                                                       -------------   ------------    -----------    -----------
Segment profit (loss), pre-tax                            $  8,544        $ 1,612       $ (1,066)      $  9,090
                                                       =============   ============    ===========    ===========
Total assets                                              $189,474        $38,215       $425,510       $653,199
                                                       =============   ============    ===========    ===========
</TABLE>

<TABLE>
<CAPTION>
                                                            At or For Nine Months Ended September 30, 2000
                                                       ----------------------------------------------------------
(In thousands)                                                          Insurance
                                                           Auto          Premium
                                                         Finance         Finance        Banking         Total
                                                       -------------   ------------    -----------    -----------
<S>                                                    <C>             <C>             <C>            <C>
Net interest income                                       $ 15,502       $  1,840       $  4,262       $ 21,604
Provision for loan losses                                      ---             53             54            107
Non-interest income (1)                                        176            276        (10,064)        (9,612)
Non-interest expense                                         9,808          1,041          7,606         18,455
                                                       -------------   ------------    -----------    -----------
Segment profit (loss), pre-tax                            $  5,870       $  1,022       $(13,462)      $ (6,570)
                                                       =============   ============    ===========    ===========
Total assets                                              $133,455       $ 30,289       $262,920       $426,664
                                                       =============   ============    ===========    ===========
</TABLE>

(1) Non-interest income of the Banking segment includes a $5.0 million write
down in the second quarter of 2000 and a $5.3 million write down in the third
quarter of 2000 of the residual interests in securitizations arising from the
Company's subprime mortgage securitizations completed in 1999.

         For the reportable segment information presented, substantially all
expenses are recorded directly to each industry segment. For the three and nine
months ended September 30, 2000, segment assets differ from consolidated assets
because the Company allocated certain assets to the discontinued mortgage
segment from the banking segment. There were no differences between segment
assets and total consolidated assets as of September 30, 2001.

                                                                               8
<PAGE>

5.       Residual Interests in Securitizations

         The Company classified its residual interest in securitizations as
trading securities and recorded them at fair market value with any unrealized
gains or losses recorded in the results of operations. The Company sold the
residual interests in securities in January 2001. Accordingly, as of December
31, 2000 these residual interests were valued based on the terms and conditions
of the sales contract and the cash proceeds received at the settlement date in
January 2001.

6.       Accounting Pronouncements

         In June 1998, the Financial Accounting Standards Board (the "FASB")
issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities" ("SFAS 133") which establishes accounting and reporting standards
for derivative instruments and for hedging activities. SFAS 133 requires that an
entity recognize all derivatives as either assets or liabilities in the
statements of financial condition and measure those instruments at fair value.
SFAS 133, as amended by SFAS No. 137 and No. 138 "Accounting for Derivative
Instruments for Hedging Activities - Deferral of the Effective Date of FASB
Statement No 133" ("SFAS 137") is effective for all fiscal quarters of fiscal
years beginning after June 15, 2000. The adoption of SFAS No. 133, as amended by
SFAS No. 137 and No. 138, did not have a material impact on the results of
operations or financial condition of the Company.

         In September 2000, the FASB issued SFAS 140, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities" ("SFAS
140"), which replaces SFAS 125. It revises the standards for accounting for
securitizations and other transfer of financial assets and collateral and
requires certain disclosures, but it carries over most of SFAS 125's provisions
without change. SFAS 140 is effective for transfers occurring after March 31,
2001 and for disclosures relating to securitization transactions and collateral
for fiscal years ending after December 15, 2000. The adoption of SFAS 140 did
not have a material impact on the results of operations or the financial
condition of the Company.

         In July 2001, the FASB issued Statement No. 141, "Business
Combinations", and Statement No. 142, "Goodwill and Other Intangible Assets".
Statement No. 141, effectively immediately, requires that the purchase method of
accounting be used for all business combinations initiated or completed after
June 30, 2001. Statement No. 142, to be adopted on January 1, 2002, requires
that goodwill and intangible assets with indefinite useful lives no longer be
amortized, but instead tested for impairment at least annually and intangible
assets with definite useful lives be amortized over their respective estimated
useful lives and reviewed for impairment. The adoption of the provisions of
these statements is not expected to have a material effect on the results of
operations or financial condition of the Company.

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

         Certain statements in this Quarterly Report on Form 10-Q, including
statements regarding United PanAm Financial Corp.'s (the "Company") strategies,
plans, objectives, expectations and intentions, may include forward-looking
information 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.
These forward-looking statements involve certain risks and uncertainties that
could cause actual results to differ materially from those expressed or implied
in such forward-looking statements. Such risks and uncertainties include, but
are not limited to, the following factors: limited operating history; loans made
to credit-impaired borrowers; need for additional sources of financing;
concentration of business in California; reliance on operational systems and
controls and key employees; competitive pressure in the banking industry;
changes in the interest rate environment; growth of the Company's businesses;
general economic conditions; and those items disclosed under the caption
"Factors That May Affect Future Results of Operations" in our Annual Report on
Form 10K

                                                                               9
<PAGE>

for the year ended December 31, 2000. All investors should carefully read the
Annual Report on Form 10-K, together with this 10Q and consider all such risks
and other risks, some of which may be identified from time to time in the
Company's filings with the Securities and Exchange Commission (the "SEC") before
making an investment decision with respect to the Company's stock.

General

     The Company

         The Company is a specialty finance company engaged primarily in
originating and acquiring retail automobile installment sales contracts and
insurance premium finance contracts financed by retail bank deposits. The
Company markets to customers who generally cannot obtain financing from
traditional lenders. These customers usually pay higher interest rates than
those charged by traditional lenders to gain access to consumer financing. The
Company has funded its operations to date principally through retail deposits,
brokered deposits, Federal Home Loan Bank ("FHLB") advances, and commercial
repurchase agreements.

         The Company commenced operations in 1994 by purchasing from the RTC
certain assets and assuming certain liabilities of the Bank's predecessor, Pan
American Federal Savings Bank. The Company has used the Bank as a base for
expansion into its current specialty finance businesses. In 1995, the Company
commenced its insurance premium finance business through an agreement with BPN
Corporation ("BPN") and in 1996; the Company commenced its automobile finance
business.

         In September 2000 the Bank filed its application with the California
Department of Financial Institutions (DFI) for approval to convert from a
federally chartered savings association to a state-chartered commercial bank
due, in principal part, to lending restrictions that apply to federally
chartered thrifts. As a result of the discontinuation of the Bank's sub-prime
mortgage business, it will be more difficult for the Bank to remain in
compliance with the qualified thrift lender (QTL) test and certain other
consumer lending restrictions. California-chartered commercial banks are not
subject to compliance with the QTL test or certain other consumer lending
limitations. In the event that a Charter Conversion is not approved by the DFI,
or is approved but not completed by the Bank, the Bank would have to adjust its
lending activities to ensure that it continues to comply with the QTL test and
other consumer lending limitations in the future. The Charter Conversion is
still pending. Other risk factors relating to the Charter Conversion are
discussed in our Annual Report/Form 10K for the year ended December 31, 2000.

     Automobile Finance

         In 1996, the Bank commenced its automobile finance business through its
subsidiary, United Auto Credit Corporation ("UACC"). UACC acquires, holds for
investment and services nonprime retail automobile installment sales contracts
("auto contracts") generated by franchised and independent dealers of used
automobiles. UACC's customers are considered "nonprime" because they typically
have limited credit histories or credit histories that preclude them from
obtaining loans through traditional sources. As UACC provides all marketing,
origination, underwriting and servicing activities for its loans, income is
generated from a combination of spread and non-interest income and is used to
cover all operating costs, including compensation, occupancy and systems
expense.

     Insurance Premium Finance

         In May 1995, the Bank entered into an agreement with BPN, a corporation
("BPN"), under the name "ClassicPlan" (such business, "IPF"). Under this
agreement, which commenced operations in September 1995, the Bank underwrites
and finances private passenger automobile and small business insurance premiums
in California and BPN markets the financing program and services the loans for
the Bank. The Bank lends to individuals or small businesses for the purchase of
single premium insurance policies and the Bank's collateral is the unearned
insurance premium held by the insurance company. The unearned portion of the
insurance

                                                                              10
<PAGE>

premium is refundable to IPF in the event the underlying insurance policy is
canceled. The Company does not sell or have the risk of underwriting the
underlying insurance policy.

         As a result of BPN Corporation performing substantially all marketing
and servicing activities, the Company's role is primarily that of an underwriter
and funder of loans. Therefore, IPF's income is generated primarily on a spread
basis, supplemented by non-interest income generated from late payment and
returned check fees. The Bank uses this income to cover the costs of
underwriting and loan administration, including compensation, occupancy and data
processing expenses.

     The Bank

         The Company currently funds its operations primarily through the Bank's
deposits, FHLB advances and reverse repurchase agreements. As of September 30,
2001, the Bank was a four-branch federal savings bank with $361.8 million in
deposits.

         The Bank generates spread income not only from loans originated or
purchased by each of the Company's principal businesses, but also from its
securities portfolio and consumer loans originated by its retail branches. This
income is supplemented by non-interest income from its branch banking activities
(e.g., deposit service charges, safe deposit box fees) and is used to cover
operating costs and other expenses.

                                                                              11
<PAGE>

     Average Balance Sheets

         The following table sets forth information relating to the Company for
the three and nine-month periods ended September 30, 2001 and 2000. The yields
and costs are derived by dividing income or expense by the average balance of
assets or liabilities allocated to continuing operations, respectively, for the
periods shown. The yields and costs include fees, which are considered
adjustments to yields.

<TABLE>
<CAPTION>
                                                                Three Months Ended September 30,
                                       -----------------------------------------------------------------------------------
                                                         2001                                      2000
                                       ----------------------------------------- -----------------------------------------
                                                                     Average                                   Average
(Dollars in thousands)                   Average                      Yield/       Average                      Yield/
                                       Balance(2)     Interest         Cost      Balance(1)(2) Interest(1)       Cost
                                       ------------  ------------  ------------- ------------- ------------- -------------
<S>                                    <C>           <C>           <C>           <C>           <C>           <C>
Assets
Interest earning assets
   Securities                            $238,586        $ 2,880          4.79%     $189,732        $ 3,103         6.51%
   Mortgage loans, net(3)                     277              6          8.59%       17,846            363         8.09%
   IPF loans, net(4)                       35,821          1,285         14.23%       29,573          1,187        15.97%
   Automobile installment
    contracts, net(5)                     179,696         10,561         23.32%      127,576          7,419        23.14%
                                       ------------  ------------                ------------- -------------
      Total interest earning assets       454,380         14,732         12.86%      364,727         12,072        13.17%
                                                     ------------                              -------------
Non-interest earnings assets               27,292                                     32,625
                                       ------------                              -------------
       Total assets                      $481,672                                   $397,352
                                       ============                              =============
Liabilities and Equity
Interest bearing liabilities
   Customer deposits                     $374,191        $ 4,464          4.73%     $272,440        $ 3,763         5.49%
   FHLB advances                           11,049             71          2.55%       40,000            654         6.50%
   Reverse Repurchase Agreements            9,601             86          3.55%          ---            ---
                                       ------------  ------------                ------------- -------------
       Total interest bearing
         liabilities                      394,841          4,621          4.64%      312,440          4,417         5.62%
                                                     ------------                              -------------
Non-interest bearing liabilities           11,310                                     13,617
                                       ------------                              -------------
       Total liabilities                  406,151                                    326,057
Equity                                     75,521                                     71,295
                                       ------------                              -------------
       Total liabilities and equity      $481,672                                   $397,352
                                       ============                              =============
Net interest income before
  provision for loan losses                              $10,111                                    $ 7,655
                                                     ============                              =============
Net interest rate spread(6)                                               8.22%                                     7.55%
Net interest margin(7)                                                    8.83%                                     8.35%
Ratio of interest earning assets to
       interest bearing liabilities                                        115%                                      117%
</TABLE>

_____________________
(1)  The table above excludes average assets and liabilities of the Company's
     mortgage operations, as interest income and interest expense associated
     with the subprime mortgage finance business are reported as discontinued
     operations in the unaudited consolidated statements of operations.
     Allocated assets and liabilities for 2000 are shown below. There were no
     allocations for 2001.

<TABLE>
<CAPTION>
     (Dollars in thousands)                                                        Three Months Ended September 30, 2000
                                                                                   -------------------------------------
     <S>                                                                           <C>
     Average assets of continuing operations                                                     $397,353
     Average mortgage loans of discontinued operations                                             27,110
                                                                                   -------------------------------------
     Total average assets                                                                        $424,463
                                                                                   =====================================
     Average liabilities and equity of continuing operations                                     $397,353
     Average customer deposits allocated to discontinued operations                                27,110
     Average warehouse lines of credit of discontinued operations                                    ----
                                                                                   -------------------------------------
     Total average liabilities and equity                                                        $424,463
                                                                                   =====================================
</TABLE>

(2)  Average balances are measured on a month-end basis.
(3)  Net of deferred loan origination fees, unamortized discounts and premiums;
     includes non-performing loans.
(4)  Includes non-performing loans.
(5)  Net of unearned finance charges includes non-performing loans.
(6)  Net interest rate spread represents the difference between the yield
     on interest earning assets and the cost of interest bearing liabilities.
(7)  Net interest margin represents net interest income divided by average
     interest earning assets.

                                                                              12
<PAGE>

<TABLE>
<CAPTION>
                                                                  Nine Months Ended September 30,
                                       ----------------------------------------------------------------------------------
                                                           2001                                    2000
                                       ---------------------------------------   ----------------------------------------
                                                                      Average                                   Average
(Dollars in thousands)                    Average                      Yield/       Average                      Yield/
                                        Balance(2)     Interest        Cost      Balance(1)(2)  Interest(1)      Cost
                                       ------------    ---------     ---------   -------------  -----------    ----------
<S>                                    <C>            <C>           <C>           <C>           <C>            <C>
Assets
Interest earning assets
   Securities                            $245,038       $  9,988          5.45%     $124,476       $  6,075         6.52%
   Mortgage loans, net(3)                   5,177            458         11.83%       19,149          1,206         8.41%
   IPF loans, net(4)                       34,602          3,944         15.24%       29,849          3,484        15.60%
   Automobile installment
    contracts, net(5)                     165,824         28,797         23.22%      116,751         20,334        23.26%
                                       ----------      ---------                   ---------      ---------
      Total interest earning assets       450,641         43,187         12.81%      290,225         31,099        14.31%
                                                       ---------                                  ---------
Non-interest earnings assets               26,468                                     34,673
                                       ----------                                  ---------
       Total assets                      $477,109                                   $324,898
                                       ==========                                  =========
Liabilities and Equity
Interest bearing liabilities
   Customer deposits                     $363,527       $ 14,295          5.26%     $217,840       $  8,605         5.28%
   FHLB advances                           25,351            979          5.16%       18,095            890         6.57%
   Reverse repurchase agreements            3,973            118          3.97%          ---            ---          ---
                                       ----------      ---------                   ---------      ---------
       Total interest bearing
        liabilities                       392,851         15,392          5.24%      235,935          9,495         5.38%
                                                       ---------                                  ---------
Non-interest bearing liabilities           11,650                                     14,441
                                       ----------                                  ---------
       Total liabilities                  404,501                                    250,376
Equity                                     72,608                                     74,522
                                       ----------                                  ---------
       Total liabilities and equity      $477,109                                   $324,898
                                       ==========                                  =========
Net interest income before provision
       for loan losses                                  $ 27,795                                   $ 21,604
                                                       =========                                  =========
Net interest rate spread(6)                                               7.57%                                     8.93%
Net interest margin(7)                                                    8.25%                                     9.94%
Ratio of interest earning assets to
       interest bearing liabilities                                        115%                                      123%
</TABLE>

________________________
(1)  The table above excludes average assets and liabilities of the Company's
     mortgage operations, as interest income and interest expense associated
     with the subprime mortgage finance business are reported as discontinued
     operations in the unaudited consolidated statements of operations.
     Allocated assets and liabilities for 2000 are shown below. There were no
     allocations for 2001.

<TABLE>
<CAPTION>
     (Dollars in Thousands)                                              Nine Months Ended September 30, 2000
                                                                         ------------------------------------
     <S>                                                                 <C>
     Average assets of continuing operations                                        $324,898
     Average mortgage loans of discontinued operations                                81,584
                                                                         ------------------------------------
     Total average assets                                                           $406,482
                                                                         ====================================

     Average liabilities and equity of continuing operations                        $324,898
     Average customer deposits allocated to discontinued operations                   79,190
     Average warehouse lines of credit of discontinued operations                      2,394
                                                                         ------------------------------------
     Total average liabilities and equity                                           $406,482
                                                                         ====================================
</TABLE>

(2)  Average balances are measured on a month-end basis.
(3)  Net of deferred loan origination fees, and unamortized discounts, premiums;
     includes non-performing loans.
(4)  Includes non-performing loans.
(5)  Net of unearned finance charges; includes non-performing loans.
(6)  Net interest rate spread represents the difference between the yield on
     interest earning assets and the cost of interest bearing liabilities.
(7)  Net interest margin represents net interest income divided by average
     interest earning assets.

Comparison of Operating Results for the Three Months Ended September 30, 2001
and September 30, 2000

   General

     For the quarter, the Company reported income from continuing operations of
$2.1 million, or $0.12 per diluted share, compared with a loss from continuing
operations of $3.3 million, or $0.20 per diluted share for the same period a
year ago.

     The 2001 results reported include an increase in net interest income of
$2.5 million as a result of the planned increase in the auto finance unit
receivables.

                                                                              13
<PAGE>

     The 2000 results included three major items. A pre-tax charge of $5.3
million (approximately $3.3 million on an after-tax basis) to write-down the
value of the Company's residual interests arising from its 1999-1 subprime
mortgage securitization, a $1.3 million charge to recognize the impairment of
the value of goodwill in connection with the insurance premium finance segment
and a $700,000 pre-tax provision for the relocation of corporate and executive
offices from San Mateo, California to Newport Beach, California.

     Auto contracts purchased increased from $45.3 million for the three months
ended September 30, 2000 to $58.7 million for the three months ended September
30, 2001, while insurance premium finance originations increased from $24.3
million for the three months ended September 30, 2000 to $28.2 million for the
three months ended September 30, 2001

  Interest Income

     Interest income increased from $12.1 million for the three months ended
September 30, 2000 to $14.7 million for the three months ended September 30,
2001, due primarily to a $89.7 million increase in average interest earning
assets, partially offset by a 0.31% decrease in the weighted average interest
rate on interest earning assets. The largest growth components in average
interest earning assets were automobile installment contracts, which increased
by $52.1 million and investment securities, which increased by $48.9 million.
The increase in auto contracts principally resulted from the purchase of
additional dealer contracts in existing and new markets consistent with the
planned growth of this business unit. The increase in investment securities was
principally due to the Company's need to meet the QTL test of the Office of
Thrift Supervision (the "OTS") and reflects increased short term borrowings from
FHLB, reverse repurchase agreements and the liquidation of mortgage related
assets from the discontinuation of the mortgage operation.

     The decline in the average yield on interest earning assets was principally
due to the decline in the average yield on investment securities from 6.51% in
the quarter ended September 30, 2000 to 4.79% in the quarter ended September 30,
2001 due to decreases in market interest rate.

  Interest Expense

     Interest expense increased from $4.4 million for the three months ended
September 30, 2000 to $4.6 million for the three months ended September 30,
2001, due to a $82.4 million increase in average interest bearing liabilities
partially offset by a 0.98% decrease in the weighted average interest rate on
interest bearing liabilities. The largest component of growth in average
interest bearing liabilities was Bank deposits, which increased from an average
balance of $272.4 million during the quarter ended September 30, 2000 to $374.2
million during the quarter ended September 30, 2001. The increase in average
deposits was due primarily to the reallocation of average deposits to continuing
operations compared to the year ago quarter, as sales of subprime mortgage loans
(discontinued operations) reduced the average deposits allocated to these
discontinued operations. The average cost of deposits decreased from 5.49% for
the three months ended September 30, 2000 to 4.73% for the three months ended
September 30, 2001, generally as a result of a decrease in market interest rates
and the repricing of deposits to these lower market rates.

  Provision for Loan Losses

     Provision for loan losses was $108,000 for the three months ended September
30, 2001 compared to $30,000 for the three months ended September 30, 2000. The
provision for loan losses reflects estimated losses associated with the
Company's insurance premium finance business. The total allowance for loan
losses was $17.1 million at September 30, 2001 compared with $16.8 million at
September 30, 2000, representing 7.63% of loans held for investment at September
30, 2001 and 8.73% at September 30, 2000. Annualized net charge-offs to average
loans were 4.87% for the three months ended September 30, 2001 compared with
6.94% for the three months ended September 30, 2000.

                                                                              14
<PAGE>

     In addition to its provision for losses, the Company's allowance for loan
losses is also increased by its allocation of acquisition discounts related to
the purchase of automobile installment contracts. The Company allocates the
estimated amount of its acquisition discounts attributable to credit risk to the
allowance for loan losses. During the third quarter, the Company allocated 8.5%
from acquisition discounts to allowance for loan losses.

     A provision for loan losses is charged to operations based on the Company's
regular evaluation of its loans held for investment and the adequacy of its
allowance for loan losses. While management believes it has adequately provided
for losses and does not expect any material loss on its loans in excess of
allowances already recorded, no assurance can be given that economic conditions
or other circumstances will not result in increased losses in the loan
portfolio.

  Non-interest Income

     Non-interest income increased $5.4 million from a loss of $5.1 million for
the three months ended September 30, 2000 to a gain of $267,000 for the three
months ended September 30, 2001 as a result a $5.3 million pre-tax write-down of
the value of residual interests in securitizations during 2000.

  Non-interest Expense

     Non-interest expense decreased $1.0 million from $7.8 million for the three
months ended September 30, 2000 to $6.8 million for the three months ended
September 30, 2001. The decrease in non-interest expense was driven primarily by
a $1.3 million charge during 2000 to recognize the impairment of the value of
goodwill in connection with the IPF segment and a $700,000 provision in 2000 for
the relocation of corporate and executive offices from San Mateo, California to
Orange County, California, partially offset by an increase in salaries, employee
benefit costs and occupancy expenses associated with the planned growth of the
auto finance business segment. During the last 12 months, the Company expanded
its automobile finance operations, resulting in an increase from 187 employees
in 27 offices, as of September 30, 2000, to 264 employees in 38 offices, as of
September 30, 2001.

  Income Taxes

     Income taxes increased $3.3 million from a benefit of $2.0 million for
the three months ended September 30, 2000 to a charge of $1.4 million for the
three months ended September 30, 2001. This increase occurred as a result of a
$5.5 million increase in income from continuing operations before income taxes
between the two periods.

  Discontinued Operations - Mortgage Finance

     As announced on February 9, 2000, the Company discontinued its subprime
mortgage origination operations and recorded the estimated loss from
discontinuing these activities in its 1999 financial statements.

     In determining net interest income charged to discontinued operations for
2000, the Company included all interest income from its mortgage finance
business less an allocation for interest expense. The Company allocated average
deposits of $27.1 million for the three months ended September 30, 2000 to the
discontinued mortgage operations in computing interest expense. No such
allocations were made during 2001.

                                                                              15
<PAGE>

Comparison of Operating Results for the Nine Months Ended September 30, 2001 and
September 30, 2000

  General

     For the nine months ended September 30, 2001, the Company reported income
from continuing operations of $5.5 million or $0.33 per diluted share. This
compares with a loss from continuing operations of $4.1 million or $0.25 per
diluted share, for the comparable period a year ago. Including discontinued
operations, the Company reported net income of $5.5 million, or $0.33 per
diluted share, for the nine months ended September 30, 2001, compared with a net
loss of $7.4 million, or $0.45 per diluted share, for the same period a year
ago.

     The 2001 results reported include the following three major items. Net
interest income increased $6.2 million as a result of the planned increase in
the auto finance unit receivables. The Company recognized a gain on sale of
loans of $1.3 million as a result of the sale of substantially all of the
remaining mortgage related assets, and a $1.4 million one-time non-cash increase
in compensation expense as a result of the conversion of an option plan in the
UACC subsidiary to options of the Company.

     Contributing to the nine-month period net loss in 2000 were two charges
relating to the Company's subprime mortgage activities that were discontinued
during early 2000. A pre-tax charge of $10.3 million, (approximately $6.3
million on an after-tax basis) to write-down the value of the Company's residual
interest arising from its 1999-1 subprime mortgage securitization and a charge
of $3.3 million, on an after-tax basis, in connection with a write-down of the
Company's remaining subprime mortgage loan portfolio to estimated market value.

     Auto contracts purchased increased from $128.3 million for the nine months
ended September 30, 2000 to $177.0 million for the nine months ended September
30, 2001, while insurance premium finance originations increased from $71.2
million for the nine months ended September 30, 2000 to $77.2 million for the
nine months ended September 30, 2001.

  Interest Income

     Interest income increased from $31.1 million for the nine months ended
September 30, 2000 to $43.2 million for the nine months ended September 30,
2001, due primarily to a $160.4 million increase in average interest earning
assets, partially offset by a 1.50% decrease in the weighted average interest
rate on interest earning assets. The largest growth components in average
interest earning assets were automobile installment contracts, which increased
by $49.0 million and investment securities, which increased by $120.6 million.
The increase in auto contracts principally resulted from the purchase of
additional dealer contracts in existing and new markets consistent with the
planned growth of this business unit. The increase in investment securities was
principally due to the Company's need to meet the qualified Thrift Lender Test
of the OTS, and reflects increased short-term borrowings from Federal Home Loan
Bank, reverse repurchase agreements and the liquidation of mortgage related
assets from the discontinuation of the mortgage operations.

     The decline in the average yield on interest earning assets was principally
due to an increase in the proportion of investment securities, which have lower
yields, compared to loans. Investment securities, with an average yield of 5.45%
comprised 54.4% of average earning assets for the nine month period ended
September 30, 2001, compared to 42.9% of average earning assets for the nine
month period ended September 30, 2000. Also, the yield on investment securities
declined from 6.52% for the nine months ended September 30, 2000 to 5.45% for
the nine-month period ended September 30, 2001 due to a decline in market
interest rates.

                                                                              16
<PAGE>

  Interest Expense

     Interest expense increased from $9.5 million for the nine months ended
September 30, 2000 to $15.4 million for the nine months ended September 30,
2001, due to a $156.9 million increase in average interest bearing liabilities.
The largest component of growth in average interest bearing liabilities was Bank
deposits, which increased from an average balance of $217.8 million during the
nine months ended September 30, 2000 to $363.5 million during the nine months
ended September 30, 2001. The increase in average deposits was due primarily to
the reallocation of average deposits to continuing operations compared to the
prior year, as the liquidation of sub prime mortgage loans (discontinued
operations) reduced the average deposits allocated to these discontinued
operations. The average cost of deposits for the nine months ended September 30,
2001 decreased to 5.26% from 5.28% for the comparable period in 2000. The
average cost of deposits for the nine months ended September 30, 2000 was lower
than it otherwise would have been due to the allocation of deposits to
discontinued operations.

Provision for Loan Losses

     Provision for loan losses was $276,000 for the nine months ended September
30, 2001 compared to $107,000 for the nine months ended September 30, 2000. The
provision for loan losses reflects estimated losses associated with the
Company's insurance premium finance business.

     In addition to its provision for losses, the Company's allowance for loan
losses is also increased by its allocation of acquisition discounts related to
the purchase of automobile installment contracts. The Company allocates the
estimated amount of its acquisition discounts attributable to credit risk to the
allowance for loan losses. During the third quarter, the Company allocated 8.5%
from acquisition discounts to allowance for loan losses.

     A provision for loan losses is charged to operations based on the Company's
regular evaluation of its loans held for investment and the adequacy of its
allowance for loan losses. While management believes it has adequately provided
for losses and does not expect any material loss on its loans in excess of
allowances already recorded, no assurance can be given that economic or real
estate market conditions or other circumstances will not result in increased
losses in the loan portfolio.

     The total allowance for loan losses was $17.1 million at September 30, 2001
compared with $16.8 million at September 30, 2000, representing 7.63% of loans
held for investment at September 30, 2001 and 9.07% at September 30, 2000.
Annualized net charge-offs to average loans were 4.44% for the nine months ended
September 30, 2001, compared with 3.95% for the nine months ended September 30,
2000.

  Non-interest Income

     Non-interest income increased $12.0 million, from a loss of $9.6 million
for the nine months ended September 30, 2000 to a profit of $2.4 million for the
nine months ended September 30, 2001 as a result of a $10.3 million pre-tax
write-down of the value of residual interests in securitizations during 2000 and
a $1.6 million gain on sale of loans from the sale of substantially all the
remaining mortgage assets during 2001.

  Non-interest Expense

     Non-interest expense increased $2.3 million from $18.5 million for the nine
months ended September 30, 2000 to $20.8 million for the nine months ended
September 30, 2001. The increase in non-interest expense was driven primarily by
an increase in salaries, employee benefit costs and occupancy expenses
associated with the planned growth of the auto finance business segment. During
the last 12 months, the Company expanded its automobile finance operations,
resulting in an increase from 182 employees in 27 offices, as of September 30,
2001 to 264 employees in 38 offices, as of September 30, 2001. During 2001, the
Company recognized a one-

                                                                              17
<PAGE>

time non-cash charge of $1.4 million for compensation expense as a result of
converting an option plan in the UACC subsidiary to options in the Company.

  Income Taxes

     Income taxes increased $6.0 million; from a benefit of $2.4 million for the
nine months ended September 30, 2000 to $3.5 million for the nine months ended
September 30, 2001. This increase occurred as a result of a $15.7 million
increase in income from continuing operations before income taxes between the
two periods.

  Discontinued Operations - Mortgage Finance

     As announced on February 9, 2000 the Company discontinued its subprime
mortgage origination operations and recorded the estimated loss from
discontinuing these activities in its 1999 financial statements. In connection
with the wind down of these operations, the Company originated $76.4 million in
mortgage loans during the first nine months of 2000.

     In determining net interest income charged to discontinued operations, the
Company included all interest income from its mortgage finance business less an
allocation for interest expense. The Company allocated average deposits of $79.2
million for the nine months ended September 30, 2000 and average warehouse lines
of credit of $2.4 million for the nine months ended September 30, 2000 to the
discontinued mortgage operations in computing interest expense. No allocation
was required in 2001

Comparison of Financial Condition at September 30, 2001 and December 31, 2000

     Total assets increased $163.2 million, from $490.0 million at December 31,
2000 to $653.2 million at September 30, 2001. This increase occurred primarily
as a result of a $31.2 million increase in loans, from $193.1 million at
December 31, 2000 to $224.3 million at September 30, 2001, and a $137.9 million
increase in cash and securities, from $265.9 million at December 31, 2000 to
$403.8 million at September 30, 2001. The increase in loans resulted from a
$46.8 million increase in auto loans partially offset by a decrease in mortgage
loans.

     Cash and cash equivalents increased $117.6 million, from $42.6 million at
December 31, 2000 to $160.2 million at September 30, 2001. Securities available
for sale increased from $223.3 million at December 31, 2000 to $243.6 million at
September 30, 2001. These net increases reflected the reinvestment of the
proceeds received from expanded usage of reverse repurchase agreements and
brokered certificates of deposits.

     Residual interests in securitizations consist of beneficial interests in
the form of an interest-only strip representing the subordinated right to
receive cash flows from a pool of securitized loans after payment of required
amounts to the holders of the securities and certain costs associated with the
securitization. The Company sold the residual interests in securitizations in
January 2001. Accordingly, as of December 31, 2000, these residual interests
were valued based on the terms and conditions of the sales contract and the
proceeds received at the settlement date in January 2001.

     Deposits increased $13.6 million, from $348.2 million at December 31, 2000
to $361.8 million at September 30, 2001. Retail deposits decreased $16.2
million, from $299.2 million at December 31, 2000 to $282.9 million at September
30, 2001. Wholesale deposits increased $29.8 million, from $49.1 million at
December 31, 2000 to $78.9 million at September 30, 2001. This reflects expanded
usage of brokered deposits in a favorable rate environment.

     Other interest bearing liabilities include commercial repurchase agreements
and FHLB advances. Outstanding FHLB advances were $94.5 million at September 30,
2001 compared to $60.0 million at December 31, 2000. Overnight reverse
repurchase agreements were $108.9 million at September 30, 2001. There were no
reverse repurchase agreements at December 31, 2000.

                                                                              18
<PAGE>

     Shareholders' equity increased from $69.3 million at December 31, 2000 to
$74.1 million at September 30, 2001, primarily as a result of net income of $5.5
million during the nine months ended September 30, 2001, a $550,000 increase
after taxes in unrealized gain on securities available for sale, a $100,000
exercise of employee stock options and a $1.4 million increase to equity as a
result of a $1.4 million non-cash charge to compensation expense in connection
with the conversion of a subsidiary stock option plan partially offset by a $2.7
million repurchase of the Company's outstanding common stock. The Company
repurchased 565,000 shares of its outstanding common stock during the third
quarter at prices varying from $4.60 to $5.00 per share.

Management of Interest Rate Risk

     The principal objective of the Company's interest rate risk management
program is to evaluate the interest rate risk inherent in the Company's business
activities, determine the level of appropriate risk given the Company's
operating environment, capital and liquidity requirements and performance
objectives and manage the risk consistent with guidelines approved by the Board
of Directors. Through such management, the Company seeks to reduce the exposure
of its operations to changes in interest rates. The Board of Directors reviews
on a quarterly basis the asset/liability position of the Company, including
simulation of the effect on capital of various interest rate scenarios.

     The Company's profits depend, in part, on the difference, or "spread,"
between the effective rate of interest received on the loans it originates and
the interest rates paid on deposits and other financing facilities, which can be
adversely affected by movements in interest rates.

     The Bank's interest rate sensitivity is monitored by the Board of Directors
and management through the use of a model, which estimates the change in the
Bank's net portfolio value ("NPV") over a range of interest rate scenarios. NPV
is the present value of expected cash flows from assets, liabilities and off-
balance sheet instruments, and "NPV Ratio" is defined as the NPV in that
scenario divided by the market value of assets in the same scenario. The Company
reviews a market value model (the "OTS NPV model") prepared quarterly by the
OTS, based on the Bank's quarterly Thrift Financial Reports filed with the OTS.
The OTS NPV model measures the Bank's interest rate risk by approximating the
Bank's NPV under various scenarios which range from a 300 basis point increase
to a 300 basis point decrease in market interest rates. The OTS has incorporated
an interest rate risk component into its regulatory capital rule for thrifts.
Under the rule, an institution whose sensitivity measure, as defined by the OTS,
in the event of a 200 basis point increase or decrease in interest rates exceeds
20% would be required to deduct an interest rate risk component in calculating
its total capital for purposes of the risk-based capital requirement.

     At June 30, 2001, the most recent date for which the relevant OTS NPV model
is available, the Bank's sensitivity measure resulting from a 200 basis point
decrease in interest rates was 60 basis points and would result in a $5.8
million increase in the NPV of the Bank, and from a 200 basis point increase in
interest rates was 92 basis points and would result in a $7.1 million decrease
in the NPV of the Bank. At June 30, 2001, the Bank's sensitivity measure was
below the threshold at which the Bank could be required to hold additional risk-
based capital under OTS regulations.

     Although the NPV measurement provides an indication of the Bank's interest
rate risk exposure at a particular point in time, such measurement is not
intended to and does not provide a precise forecast of the effect of changes in
market interest rates on the Bank's net interest income and will differ from
actual results. Management monitors the results of this modeling, which are
presented to the Board of Directors on a quarterly basis.

     The following table shows the NPV and projected change in the NPV of the
Bank at June 30, 2001 assuming an instantaneous and sustained change in market
interest rates of 100, 200 and 300 basis points ("bp"). This table is based on
data prepared by the OTS.

                                                                              19
<PAGE>

               Interest Rate Sensitivity of Net Portfolio Value

<TABLE>
<CAPTION>
                                                                                          NPV as % of Portfolio
                                                Net Portfolio Value                          Value of Assets
                                    --------------------------------------------    ---------------------------------
         Change in Rates             $ Amount        $ Change        % Change         NPV Ratio           % Change
         ---------------            ------------    ------------    ------------    --------------    ---------------
<S>                                 <C>             <C>             <C>             <C>               <C>
(Dollars in thousands)
+300 bp                                 $70,903       $ (13,362)           -16%            11.57%             -178 bp
+200 bp                                  77,142          (7,124)            -8%            12.43%              -92 bp
+100 bp                                  81,491          (2,775)            -3%            13.01%              -35 bp
   0 bp                                  84,265              --              --            13.35%                  --
 -100 bp                                 85,901           1,636             +2%            13.54%              +19 bp
 -200 bp                                 89,265           4,999             +6%            13.96%              +60 bp
 -300 bp                                 91,114           6,849             +8%            14.17%              +81 bp
</TABLE>

Liquidity and Capital Resources

  General

     The Company's primary sources of funds are deposits at the Bank, FHLB
advances, reverse repurchase agreements, principal and interest payments on
loans, and, to a lesser extent, interest payments on short-term investments and
proceeds from the maturation of securities. While maturities and scheduled
amortization of loans are a predictable source of funds, deposit flows and loan
prepayments are greatly influenced by general interest rates, economic
conditions and competition. Management, through its Asset and Liability
Committee, monitors rates and terms of competing sources of funds to use the
most cost-effective source of funds wherever possible.

     The major source of funds consists of deposits obtained through the Bank's
four retail branches in California. The Bank ofers checking accounts, various
money market accounts, regular passbook accounts, fixed interest rate
certificates with varying maturities and retirement accounts. Interest rates
paid, maturity terms, service fees and withdrawal penalties are established by
the Bank periodically based on liquidity and financing requirements, rates paid
by competitors, growth goals and federal regulations. At September 30, 2001,
such retail deposits were $283.0 million or 78.2% of total deposits.

     The Bank uses wholesale and broker-originated deposits to supplement its
retail deposits and, at September 30, 2001, such wholesale deposits were $78.8
million or 21.8% of total deposits. The Bank solicits wholesale deposits by
posting its interest rates on a national on-line service, which advertises the
Bank's wholesale products to investors, and by utilizing brokered deposits.
Generally, most of the wholesale deposit account holders are institutional
investors, commercial businesses or public sector entities. Brokered deposits
are originated through major dealers specializing in such products.

     The following table sets forth the balances and rates paid on each category
of deposits for the dates indicated.

<TABLE>
<CAPTION>
                                     September 30,                                  December 31,
                                                              ---------------------------------------------------------
                                         2001                           2000                            1999
                                -------------------------     ---------------------------      ------------------------
                                               Weighted                        Weighted                      Weighted
                                               Average                         Average                        Average
                                 Balance        Rate            Balance          Rate           Balance         Rate
                               -----------   -----------      ------------    -----------      ----------   -----------
  <S>                          <C>           <C>              <C>             <C>              <C>          <C>
  (Dollars in thousands)
  Passbook accounts            $    45.279          2.50%     $     39,152           4.28%     $   47,151         4.35%
  Checking accounts                 13,753          1.12%           14,828           2.24%         16,764         2.02%
  Certificates of deposit
     Under $100,000                164,802          4.88%          211,427           5.97%        163,874         5.35%
     $100,000 and over             138,012          4.97%           82,823           6.18%         64,155         5.51%
                               -----------                    ------------                     ----------
       Total                   $   361,846          4.47%     $    348,230           5.57%     $  291,944         5.03%
                               ===========                    ============                     ==========
</TABLE>

                                                                    20
<PAGE>

         The following table sets forth the time remaining until maturity for
all CDs at September 30, 2001, December 31, 2000 and 1999.

<TABLE>
<CAPTION>
                                                          September 30,           December 31,             December 31,
                                                               2001                   2000                     1999
                                                       --------------------     -----------------      --------------------
(Dollars in thousands)
<S>                                                    <C>                      <C>                    <C>
Maturity within one year                               $            239,922     $         257,710      $            199,110
Maturity within two years                                            56,767                36,440                    28,770
Maturity within three years                                           6,125                   100                       149
                                                       --------------------     -----------------      --------------------

Total certificates of deposit                          $            302,814     $         294,250      $            228,029
                                                       ====================     =================      ====================
</TABLE>

     Although the Bank has a significant amount of deposits maturing in less
than one year, the Company believes the Bank's current pricing strategy will
enable it to retain a significant portion of these accounts at maturity and that
it will continue to have access to sufficient amounts of CDs which, together
with other funding sources, will provide the necessary level of liquidity to
finance its lending businesses. However, as a result of these shorter-term
deposits, the rates on these accounts may be more sensitive to movements in
market interest rates, which may result in a higher cost of funds.

         At September 30, 2001, the Bank exceeded all of its regulatory capital
requirements with core capital of $47.5 million, or 7.30% of total adjusted
assets, which is above the required level of $25.3 million, or 4.0%; and risk-
based capital of $57.6 million, or 16.14% of risk-weighted assets, which is
above the required level of $25.6 million, or 8.0%.

         As used herein, leverage ratio means the ratio of core capital to
adjusted total assets, Tier 1 risk-based capital ratio means the ratio of core
capital to risk-weighted assets, and total risk-based capital ratio means the
ratio of total capital to risk-weighted assets, in each case as calculated in
accordance with current OTS capital regulations. Under the Federal Deposit
Insurance Corporation Act of 1991 ("FDICIA"), the Bank is deemed to be "well
capitalized" as of September 30, 2001.

         The Company has other sources of liquidity, including FHLB advances;
reverse repurchase agreements and its liquidity and securities portfolio.
Through the Bank, the Company can obtain advances from the FHLB, collateralized
by its securities and enter into reverse repurchase agreements utilizing its
securities. The FHLB functions as a central reserve bank providing credit for
thrifts and certain other member financial institutions. Advances are made
pursuant to several programs, each of which has its own interest rate and range
of maturities. Limitations on the amount of advances are based generally on a
fixed percentage of net worth or on the FHLB's assessment of an institution's
credit-worthiness. As of September 30, 2001, the Bank's borrowing capacity under
this credit facility was $97.7 million.

         The following table sets forth certain information regarding the
Company's short-term borrowed funds (consisting of FHLB advances and reverse
repurchase agreements) at or for the periods ended on the dates indicated.

<TABLE>
<CAPTION>
                                                                          September 30,                   December 31,
                                                                                              -------------------------------------
                                                                              2001                 2000                 1999
                                                                        ------------------    ----------------     ----------------
(Dollars in thousands)
<S>                                                                     <C>                   <C>                  <C>
FHLB advances
     Maximum month-end balance                                          $          94,500     $        60,000      $         2,300
     Balance at end of period                                                      94,500              60,000                   --
     Average balance for period                                                    25,351              22,877                    6
     Weighted average interest rate on balance at end of period                       3.5%               6.81%                  --%
     Weighted average interest rate on average balance for period                    5.16%               6.58%                5.84%
Warehouse lines of credit
     Maximum month-end balance                                          $              --     $        26,623      $       159,342
     Balance at end of period                                                          --                  --               54,415
     Average balance for period                                                        --               1,796               45,404
     Weighted average interest rate on balance at end of period                        --%                 --%                5.78%
     Weighted average interest rate on average balance for period                      --%               6.27%                5.84%
</TABLE>
<PAGE>

<TABLE>
<S>                                                                     <C>                               <C>                  <C>
Reverse repurchase agreements
     Maximum month end balance                                          $         108,905                 ---                  ---
     Balance at end of period                                                     108,905                 ---                  ---
     Average balance for period                                                     3,973                 ---                  ---
     Weighted average interest rate on balance at end of period                       3.5%                ---                  ---
     Weighted average interest rate on average balance for period                    3.97%                ---                  ---
</TABLE>

         The Company had no material contractual obligations or commitments for
capital expenditures at September 30, 2001.

Lending Activities

         Summary of Loan Portfolio. At September 30, 2001, the Company's net
loan portfolio constituted $224.3 million, or 34.3% of the Company's total
assets.

         The following table sets forth the composition of the Company's loan
portfolio at the dates indicated.

<TABLE>
<CAPTION>
(Dollars in thousands)                                       September 30,          December 31,          December 31,
                                                                 2001                   2000                  1999
                                                           -----------------     ------------------     -----------------
<S>                                                        <C>                   <C>                    <C>
Consumer Loans
Automobile installment contracts                           $         223,019     $          176,255     $         128,093
Insurance premium finance                                             27,441                 25,843                23,846
Other consumer loans                                                      92                    577                   864
                                                           -----------------     ------------------     -----------------
          Total consumer loans                                       250,552                202,675               152,803
                                                           -----------------     ------------------     -----------------
Mortgage Loans
Mortgage loans                                                          ----                 16,784                21,835
Subprime mortgage loans                                                  444                  1,845               149,876
                                                           -----------------     ------------------     -----------------
          Total mortgage loans                                           444                 18,629               171,711
                                                           -----------------     ------------------     -----------------

Commercial Loans
Insurance premium finance                                             10,774                  8,342                 6,488
Other commercial loans                                                    65                     55                    15
                                                           -----------------     ------------------     -----------------
          Total commercial loans                                      10,839                  8,397                 6,503
                                                           -----------------     ------------------     -----------------

          Total loans                                                261,835                229,701               331,017
Unearned discounts and premium                                           ---                   (728)                 (954)
Unearned finance charges                                             (20,417)               (20,737)              (21,181)
Allowance for loan losses                                            (17,106)               (15,156)              (14,139)
                                                           -----------------     ------------------     -----------------
     Total loans, net                                      $         224,312     $          193,080     $         294,743
                                                           =================     ==================     =================
</TABLE>

         Loan Maturities. The following table sets forth the dollar amount of
loans maturing in the Company's loan portfolio at September 30, 2001 based on
final maturity. Loan balances are reflected before unearned discounts and
premiums, unearned finance charges and allowance for loan losses.

<TABLE>
<CAPTION>
                                                               September 30, 2001
                        -------------------------------------------------------------------------------------------------
                                      More Than 1   More Than 3    More Than 5     More Than
                         One Year       Year to       Years to       Years to      10 Years      More Than        Total
                          or Less       3 Years       5 Years        10 Years     to 20 Years     20 Years        Loans
                        ------------  ------------- -------------  -------------  ------------  -------------  ----------
(Dollars in thousands)
<S>                     <C>           <C>           <C>            <C>            <C>           <C>            <C>
Mortgage loans          $        ---  $         --- $          60  $        ----  $         72  $         312  $      444

Commercial loans              10,839             --           ---             --           ---            ---      10,839
Consumer loans                34,105         91,492       124,657            298            --             --     250,552
                        ------------  ------------- -------------  -------------  ------------  -------------  ----------
     Total              $     44,944  $      91,492 $     124,717  $         298  $         72  $         312  $  261,835
                        ============  ============= =============  =============  ============  =============  ==========
</TABLE>
<PAGE>

     Classified Assets and Allowance for Loan Losses

     The Company maintains an asset classification process for the purposes of
assessing loan portfolio quality and the adequacy of its loan loss allowances.
The Company's Internal Asset Review Committee reviews classification procedures
and adequacy of the allowance and reports the results of its review to the Board
of Directors quarterly. The loans in the automobile finance and insurance
premium finance portfolios are very homogeneous in nature, individual loans are
relatively small which makes long-term loss rates relatively stable. The Company
utilizes classification of loans designated as substandard and doubtful.
The classifications in these categories for non-mortgage loans are based
primarily on the delinquency status of the loan. Generally a loan with payments
delinquent by 60 to 90 days is considered substandard, loans with payments
delinquent 90 to 120 days is considered doubtful and a loan over 120 days
delinquent is considered as uncollectible and of such little value that
continuance as an asset is not warranted. In addition any loan with
repossessions of collateral is considered substandard regardless of past due
status.
         At September 30, 2001, the Company had $ 965,000 in assets classified
as special mention, $3.2 million of assets classified as substandard, $284,000
in assets classified as doubtful and no assets classified as loss.

         The following table sets forth the remaining balances of all loans
(before specific allowances for losses) that were more than 30 days delinquent
at September 30, 2001, December 31, 2000 and 1999.

<TABLE>
<CAPTION>
Loan
-----                 September 30,    % of Total       December 31,       % of Total      December 31,      % of Total
Delinquencies             2001           Loans             2000              Loans            1999            Loans
-------------      --------------- ---------------  ------------------ ----------------  ---------------- ---------------
(Dollars in
thousands)
<S>                <C>             <C>              <C>                <C>               <C>              <C>
30 to 59 days      $         1,118              .5% $              953              0.5% $          3,071             1.0%
60 to 89 days                1,207              .5%                494              0.3%            2,443             0.8%
90+ days                       503              .2%              2,374              1.2%           13,307             4.6%
                   --------------- ---------------  ------------------ ----------------  ---------------- ---------------
Total              $         2,828             1.2% $            3,821              2.0% $         18,821             6.4%
                   =============== ===============  ================== ================  ================ ===============
</TABLE>

         Nonaccrual and Past Due Loans. A non-mortgage loan is placed on
nonaccrual status when it is delinquent for 120 days or more. When a loan is
reclassified from accrual to nonaccrual status, all previously accrued interest
is reversed. Interest income on nonaccrual loans is subsequently recognized only
to the extent that cash payments are received or the borrower's ability to make
periodic interest and principal payments is in accordance with the loan terms,
at which time the loan is returned to accrual status. Accounts, which are deemed
fully or partially uncollectible by management, are generally fully reserved or
charged off for the amount that exceeds the estimated fair value (net of selling
costs) of the underlying collateral.

         The following table sets forth the aggregate amount of nonaccrual loans
(net of unearned discounts, premiums and unearned finance charges) at September
30, 2001, December 31, 2000 and 1999.

<TABLE>
<CAPTION>

                                                                                                December 31,
                                                                  September 30,     -------------------------------------
                                                                       2001               2000                1999
                                                                 ------------------ ------------------  -----------------
(Dollars in thousands)
<S>                                                              <C>                <C>                <C>
Nonaccrual loans
     Single-family residential                                       $     180         $     2,281        $    15,825
     Multi-family residential and commercial                               ---                 ---                100
     Consumer and other loans                                              200               1,323              1,060
                                                                 -----------------  ------------------ ------------------
          Total                                                      $     380         $     3,604        $    16,985
                                                                 =================  ================== ==================

Nonaccrual loans as a percentage of
     Total loans held for investment                                      0.17%               1.87%             10.73%
     Total assets                                                         0.06%               0.74%              3.88%

Allowance for loan losses as a percentage of
     Total loans held for investment                                      7.63%               7.88%              8.93%
</TABLE>

                                                                              23
<PAGE>

     Real Estate Owned. Real estate acquired through foreclosure or by deed in
lieu of foreclosure ("REO") is recorded at the lower of cost or fair value at
the time of foreclosure. Subsequently, an allowance for estimated losses is
established when the recorded value exceeds fair value less estimated selling
costs. Holding and maintenance costs related to real estate owned are recorded
as expenses in the period incurred. Real estate owned was $8,000 at September
30, 2001 and $871,000 at December 31, 2000 and consisted of one to four family
residential properties.

         Allowance  for Loan Losses.  The following is a summary of the changes
in the  consolidated  allowance for loan losses of the Company for the period
indicated.

<TABLE>
<CAPTION>

                                                                    At or For the                At or For the
                                                                     Nine Months                   Year Ended
                                                                        Ended                     December 31,
                                                                    September 30,
                                                                                      -------------------------------------
                                                                        2001                2000               1999
                                                                  ------------------  -----------------  ------------------
(Dollars in thousands)
<S>                                                               <C>                <C>                <C>
Allowance for Loan Losses
Balance at beginning of period                                    $       15,156      $      14,139      $       10,183
     Provision for loan losses                                               276                201                 432
     Provision for loan losses - discontinued operations                   -----              2,396               7,376
     Charge-offs
          Mortgage loans                                                  (1,250)            (6,402)             (7,525)
          Consumer loans                                                  (5,944)            (6,025)             (4,395)
                                                                  ------------------  -----------------  ------------------
                                                                          (7,194)           (12,427)            (11,920)
     Recoveries
          Mortgage loans                                                     140                327                 296
          Consumer loans                                                     221                286                 414
                                                                  ------------------  -----------------  ------------------
                                                                             361                613                 710
                                                                  ------------------  -----------------  ------------------
     Net charge-offs                                                      (6,833)           (11,814)            (11,210)
     Acquisition discounts allocated to loss allowance                     8,507             10,234               7,358
                                                                  ------------------  -----------------  ------------------
Balance at end of period                                          $       17,106      $      15,156      $       14,139
                                                                  ==================  =================  ==================
     Annualized net charge-offs to average loans                           4.44%               5.03%               2.95%
     Ending allowance to period end loans, net                             7.63%               7.88%               8.93%
</TABLE>

         The Company's policy is to maintain an allowance for loan losses to
absorb future losses, which may be realized on its loan portfolio. The Company's
allowance for loan losses is also increased by its allocation of acquisition
discounts related to the purchase of automobile installment contracts. During
the third quarter, the Company allocated 8.5% from acquisition discounts to
allowance for loan losses.

         The determination of the adequacy of the allowance for loan losses is
based on a variety of factors, including an assessment of the credit risk
inherent in the portfolio, prior loss experience, the levels and trends of
non-performing loans, the concentration of credit, current and prospective
economic conditions and other factors.

         The Company's management uses its best judgment in providing for
possible loan losses and establishing allowances for loan losses. However, the
allowance is an estimate, which is inherently uncertain and depends on the
outcome of future events. In addition, regulatory agencies, as an integral part
of their examination process, periodically review the Bank's allowance for loan
losses. Such agencies may require the Bank to increase the allowance based upon
their judgment of the information available to them at the time of their
examination. The Bank's most recent examination by its regulatory agencies was
completed in February 2001 and no adjustment to the Bank's allowance for loan
losses was required.

Cash Equivalents and Securities Portfolio

         The Company's cash equivalents and securities portfolios are used
primarily for liquidity and investment income purposes. Cash equivalents and
securities satisfy regulatory requirements for liquidity.




                                                                              24
<PAGE>

     The following is a summary of the Company's short term investments and
securities portfolios as of the dates indicated.

<TABLE>
<CAPTION>
                                                                             December 31,
                                                  September 30,    ---------------------------------
                                                      2001              2000               1999
                                                 --------------    --------------    ---------------
<S>                                              <C>               <C>               <C>
(Dollars in thousands)
Balance at end of period
  Overnight deposits                                 $ 159,090         $  36,477           $ 85,500
  U.S. agency securities                               181,105           166,838              9,918
  U. S. mortgage backed securities                      38,392            46,376
  Mutual funds                                          20,162            10,051                 --
                                                 --------------    --------------    ---------------
  Total                                              $ 398,749         $ 259,742           $ 95,418
                                                 ==============    ==============    ===============
Weighted average yield at end of period
  Overnight deposits                                     2.43%             5.69%              3.25%
  U.S. agency securities                                 4.00%             6.27%              7.11%
  U.S. mortgage backed securities                        7.00%             7.35%                --%
  Mutual funds (mortgage backed securities)              4.68%             6.59%                --%
Weighted average maturity at end of period
  Overnight deposits                                     1 day             1 day              1 day
  U.S. agency securities                              8 months          5 months          62 months
  U.S. mortgage backed securities                   214 months        267 months                 --
  Mutual funds (mortgage backed securities)              1 day             1 day                 --
</TABLE>

  Item 3.      Quantitative and Qualitative Disclosures About Market Risk
               ----------------------------------------------------------

     See "Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations -management of Interest Rate Risk."

                                                                              25
<PAGE>

PART II.                        OTHER INFORMATION

Item 1.   Legal Proceedings.
          -----------------

     Not applicable

Item 2.   Changes in Securities and Use of Proceeds.
          -----------------------------------------

     Not applicable

Item 3.   Defaults Upon Senior Securities.
          -------------------------------

     Not applicable

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

     Not applicable

Item 5.   Other Information.
          -----------------

     Not applicable


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

     (a)  List of Exhibits

          None

     (b)  Reports on Form 8-K

          None


                                                                              26
<PAGE>

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.




                                             United PanAm Financial Corp.



Date: November 7, 2001                  By:  /s/  Guillermo Bron
                                             -------------------

                                             Guillermo Bron
                                             Chairman
                                             and Chief Executive Officer
                                             (Principal Executive Officer)



      November 7, 2001                  By:  /s/  Garland W. Koch
                                             --------------------

                                             Garland W. Koch
                                             Vice President
                                             and Chief Financial Officer
                                             (Principal Financial and Accounting
                                              Officer)

                                                                              27