**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 March 31, 2008




** ̈**
            **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**
            **94-3211687****(State
                or Other Jurisdiction of**
              **Incorporation
                or Organization)**
            **(I.R.S.
                Employer**
              **Identification
                No.)****18191
                Von Karman Avenue, Suite 300**
              **Irvine,
                CA**
            **92612****(Address
                of Principal Executive Offices)**
            **(Zip
                Code)**




**(949)
      224-1917**


**(Registrant’s
      Telephone Number, Including Area Code)**









Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
      during the preceding 12 months (or for such shorter period that the registrant
      was required to file such reports), and (2) has been subject to such filing
      requirements for the past 90 days. Yes x No  ̈




Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, a non-accelerated filer, or a smaller reporting company.
      See
      definitions of “large accelerated filer,” “accelerated filer” and “smaller
      reporting company” in Rule 12b-2 of the Exchange Act.




Large
      accelerated filer  ̈ Accelerated
      filer x Non-accelerated
      filer  ̈ Smaller
      reporting company  ̈




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). Yes  ̈ No x




The
      number of shares outstanding of the Registrant’s Common Stock as of April 30,
      2008 was 15,737,399 shares.










**UNITED
      PANAM FINANCIAL CORP.**


**FORM
      10-Q**


**March
      31, 2008**




**INDEX**


**Page**Cautionary
                  Statement
              1PART
                  I. FINANCIAL INFORMATIONItem 1.
              Financial
                  StatementsConsolidated
                  Statements of Financial Condition as of March 31, 2008 and December
                  31,
                  2007
              2Consolidated
                  Statements of Income for the three months ended March 31, 2008
                  and
                  2007
              3Consolidated
                  Statements of Changes in Shareholders’ Equity for the three months ended
                  March 31, 2008 and 2007
              4Consolidated
                  Statements of Cash Flows for the three months ended March 31, 2008
                  and
                  2007
              5Notes
                  to Consolidated Financial Statements
              6Item 2.
              Management’s
                  Discussion and Analysis of Financial Condition and Results of
                  Operations
              14Item 3.
              Quantitative
                  and Qualitative Disclosures About Market Risk
              25Item 4.
              Controls
                  and Procedures
              25PART II.
                  OTHER INFORMATIONItem 1.
              Legal
                  Proceedings
              26Item 1A.
              Risk
                  Factors
              26Item 2.
              Unregistered
                  Sales of Equity Securities and Use of Proceeds
              26Item 3.
              Defaults
                  Upon Senior Securities
              26Item 4.
              Submission
                  of Matters to a Vote of Security Holders
              26Item 5.
              Other
                  Information
              26Item 6.
              Exhibits
              26









**CAUTIONARY
      STATEMENT**




Certain
      statements contained in this Quarterly Report on Form 10-Q, as well as some
      statements by us in periodic press releases and some oral statements by our
      officials to securities analysts and shareholders during presentations about
      us
      are “forward-looking statements” within the meaning of the Private Securities
      Litigation Reform Act of 1995, or the Act. Statements which are predictive
      in
      nature, which depend upon or refer to future events or conditions, or which
      include words such as “expects,” “anticipates,” “intends,” “plans,” “believes,”
“estimates,” “hopes,” “assumes,” “may,” “project,” “will” and similar
      expressions constitute forward-looking statements. In addition, any statements
      concerning future financial performance (including future revenues, earnings
      or
      growth rates), ongoing business strategies or prospects, and possible future
      actions, which may be provided by management are also forward-looking statements
      as defined in the Act. Forward-looking statements are based upon expectations
      and projections about future events and are subject to assumptions, risks and
      uncertainties about, among other things, our company and economic and market
      factors. Actual events and results may differ materially from those expressed
      or
      forecasted in the forward-looking statements due to a number of factors. The
      principal factors that could cause our actual performance and future events
      and
      actions to differ materially from such forward-looking statements include,
      but
      are not limited to, our dependence on securitizations, our need for substantial
      liquidity to run our business, loans we made to credit-impaired borrowers,
      reliance on operational systems and controls and key employees, competitive
      pressure we face, changes in the interest rate environment, rapid growth of
      our
      businesses, general economic conditions, and other factors or conditions
      described under “Part II, Item 1A. Risk Factors” of this Quarterly Report on
      Form 10-Q. Our past performance and past or present economic conditions are
      not
      indicative of our future performance or of future economic conditions. Undue
      reliance should not be placed on forward-looking statements. In addition, we
      undertake no obligation to update or revise forward-looking statements to
      reflect changed assumptions, the occurrence of anticipated or unanticipated
      events or changes to projections over time unless required by federal securities
      law.




1




**PART
      I. FINANCIAL INFORMATION**




**Item 1.**  **Financial
      Statements.**




**United
      PanAm Financial Corp. and Subsidiaries**


**Consolidated
      Statements of Financial Condition**


**March 31,**
                **2008**
              
              **December 31,**
                **2007*****(Dollars
                  in thousands)***
              
              **(Unaudited)**
              
              **(Audited)****Assets**Cash
              
              $
              8,845
              
              $
              9,909Short
                  term investments
              
              
              4,831
              
              
              7,332Cash
                  and cash equivalents
              
              
              13,676
              
              
              17,241Restricted
                  cash
              
              
              79,716
              
              
              73,633Loans
              
              
              888,981
              
              
              882,651Allowance
                  for loan losses
              
              
              (49,552
              )
              
              (48,386
              )Loans,
                  net
              
              
              839,429
              
              
              834,265Premises
                  and equipment, net
              
              
              6,554
              
              
              6,799Interest
                  receivable
              
              
              10,201
              
              
              10,424Other
                  assets
              
              
              33,149
              
              
              34,819Total
                  assets
              
              $
              982,725
              
              $
              977,181**Liabilities
                  and Shareholders’ Equity**Securitization
                  notes payable
              
              $
              647,216
              
              $
              762,245Warehouse
                  line of credit
              
              
              154,350
              
              
              35,625Accrued
                  expenses and other liabilities
              
              
              9,906
              
              
              9,660Junior
                  subordinated debentures
              
              
              10,310
              
              
              10,310Total
                  liabilities
              
              
              821,782
              
              
              817,840Preferred
                  stock (no par value):Authorized,
                  2,000,000 shares; no shares issued and outstanding at March 31,
                  2008 and
                  2007
              
              
              —
              
              
              —Common
                  stock (no par value):Authorized,
                  30,000,000 shares; 15,737,399 shares issued and outstanding at
                  March 31,
                  2008 and December 31, 2007
              
              
              49,832
              
              
              49,504Retained
                  earnings
              
              
              111,111
              
              
              109,837Total
                  shareholders’ equity
              
              
              160,943
              
              
              159,341Total
                  liabilities and shareholders’ equity
              
              $
              982,725
              
              $
              977,181




*See
      notes to the consolidated financial statements*




2


**United
      PanAm Financial Corp. and Subsidiaries**


**Consolidated
      Statements of Income**


**(Unaudited)**


**Three
                  Months Ended**
                **March
                  31,*****(Dollars
                  in thousands, except per share data)***
              
              **2008**
              
              **2007****Interest
                  Income**Loans
              
              $
              57,707
              
              $
              52,279Short
                  term investments and restricted cash
              
              
              763
              
              
              945Total
                  interest income
              
              
              58,470
              
              
              53,224**Interest
                  Expense**Securitization
                  notes payable
              
              
              10,888
              
              
              9,200Warehouse
                  line of credit
              
              
              1,525
              
              
              1,103Other
                  interest expense
              
              
              193
              
              
              210Total
                  interest expense
              
              
              12,606
              
              
              10,513Net
                  interest income
              
              
              45,864
              
              
              42,711Provision
                  for loan losses
              
              
              17,642
              
              
              14,481Net
                  interest income after provision for loan losses
              
              
              28,222
              
              
              28,230**Non-interest
                  Income**
              
              
              471
              
              
              347**Non-interest
                  Expense**Compensation
                  and benefits
              
              
              16,915
              
              
              15,339Occupancy
              
              
              2,464
              
              
              2,183Other
                  non-interest expense
              
              
              6,201
              
              
              6,011Restructuring
                  charges
              
              
              1,034
              
              
              —Total
                  non-interest expense
              
              
              26,614
              
              
              23,533Income
                  before income taxes
              
              
              2,079
              
              
              5,044Income
                  taxes
              
              
              805
              
              
              2,018Net
                  income
              
              $
              1,274
              
              $
              3,026**Earnings
                  per share-basic:**Net
                  income
              
              $
              0.08
              
              $
              0.18Weighted
                  average basic shares outstanding
              
              
              15,737
              
              
              16,441**Earnings
                  per share-diluted:**Net
                  income
              
              $
              0.08
              
              $
              0.18Weighted
                  average diluted shares outstanding
              
              
              15,775
              
              
              17,041





*See
      notes to consolidated financial statements*


3


**United
      PanAm Financial Corp. and Subsidiaries**


**Consolidated
      Statements of Changes in Shareholders’ Equity**


**(Unaudited)**


**Number**
                **of
                  Shares**
              
              **Common****Stock**
              
              **Retained****Earnings**
              
              **Total****Shareholders’****Equity****(Dollars
                  in thousands)**Balance,
                  December 31, 2006
              
              
              16,713,838
              
              $
              60,614
              
              $
              99,251
              
              $
              159,865Net
                  income
              
              
              —
              
              
              —
              
              
              3,026
              
              
              3,026Exercise
                  of stock options, net
              
              
              26,746
              
              
              144
              
              
              —
              
              
              144Repurchase
                  of common stock
              
              
              (731,398
              )
              
              (9,249
              )
              
              —
              
              
              (9,249
              )Stock-based
                  compensation expense
              
              
              —
              
              
              570
              
              
              —
              
              
              570Balance,
                  March 31, 2007
              
              
              16,009,186
              
              $
              52,079
              
              $
              102,277
              
              $
              154,356Balance,
                  December 31, 2007
              
              
              15,737,399
              
              $
              49,504
              
              $
              109,837
              
              $
              159,341Net
                  income
              
              
              —
              
              
              —
              
              
              1,274
              
              
              1,274Stock-based
                  compensation expense
              
              
              —
              
              
              328
              
              
              —
              
              
              328Balance,
                  March 31, 2008
              
              
              15,737,399
              
              $
              49,832
              
              $
              111,111
              
              $
              160,943




*See
      notes to the consolidated financial statements*


4


**United
      PanAm Financial Corp. and Subsidiaries**


**Consolidated
      Statements of Cash Flows**


**(Unaudited)**


**Three
                  Months Ended**
                **March
                  31,*****(Dollars
                  in thousands)***
              
              **2008**
              
              **2007****Cash
                  Flows from Operating Activities:**Net
                  Income
              
              $
              1,274
              
              $
              3,026Reconciliation
                  of net income to net cash provided by operating
                  activities:Provision
                  for loan losses
              
              
              17,642
              
              
              14,481Accretion
                  of discount on loans
              
              
              (6,894
              )
              
              (6,505
              )Depreciation
                  and amortization
              
              
              616
              
              
              598Stock-based
                  compensation
              
              
              328
              
              
              570Tax
                  benefit from stock-based compensation
              
              
              (127
              )
              
              (228
              )Decrease
                  in accrued interest receivable
              
              
              223
              
              
              15Decrease
                  in other assets
              
              
              1,670
              
              
              2,671Increase
                  (decrease) in accrued expenses and other liabilities
              
              
              246
              
              
              (30
              )Net
                  cash provided by operating activities
              
              
              14,978
              
              
              14,598**Cash
                  Flows from Investing Activities:**Purchases,
                  net of repayments, of loans
              
              
              (15,912
              )
              
              (55,284
              )Purchase
                  of premises and equipment
              
              
              (371
              )
              
              (712
              )Net
                  cash used in investing activities
              
              
              (16,283
              )
              
              (55,996
              )**Cash
                  Flows from Financing Activities:**Proceeds
                  from warehouse line of credit
              
              
              126,477
              
              
              141,757Repayment
                  of warehouse line of credit
              
              
              (7,752
              )
              
              —Payments
                  on securitization notes payable
              
              
              (115,029
              )
              
              (95,050
              )Increase
                  in restricted cash
              
              
              (6,083
              )
              
              (11,457
              )Proceeds
                  from exercise of stock options
              
              
              —
              
              
              144Repurchase
                  of common stock
              
              
              —
              
              
              (9,249
              )Tax
                  benefit from stock-based compensation
              
              
              127
              
              
              228Net
                  cash (used in) provided by financing activities
              
              
              (2,260
              )
              
              26,373Net
                  decrease in cash and cash equivalents
              
              
              (3,565
              )
              
              (15,025
              )Cash
                  and cash equivalents at beginning of period
              
              
              17,241
              
              
              28,294Cash
                  and cash equivalents at end of period
              
              $
              13,676
              
              $
              13,269**Supplemental
                  Disclosures of Cash Payments Made for:**Interest
              
              $
              12,691
              
              $
              10,429Income
                  taxes
              
              $
              1
              
              $
              312




*See
      notes to the consolidated financial statements*




5




**United
      PanAm Financial Corp. and Subsidiaries**


**Notes
      to Consolidated Financial Statements**


**(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, into the Company. Unless the context indicates otherwise, all
      references to the Company include the previous Delaware corporation. The Company
      was originally organized as a holding company for PAFI, Inc. (“PAFI”) and Pan
      American Bank, FSB (the “Bank”) to purchase certain assets and assume certain
      liabilities of Pan American Federal Savings Bank.




On
      April 22, 2005, PAFI was merged with and into the Company, and United Auto
      Credit Corporation (“UACC”) became a direct wholly-owned subsidiary of the
      Company. Prior to its dissolution on February 11, 2005, the Bank was a
      direct wholly-owned subsidiary of PAFI, and UACC was a direct wholly-owned
      subsidiary of the Bank.




On
      September 2, 2005, BVG West Corp. (“BVG”) was merged with and into UPFC Sub
      I, Inc., a direct wholly-owned subsidiary of the Company. In this merger, the
      former stockholders of BVG received the same number of shares of our common
      stock which BVG owned prior to the merger, based on percentages that such
      stockholders indirectly owned such shares through BVG immediately prior to
      the
      effective time of the merger. The Company’s total outstanding shares did not
      change as a result of the merger, nor did the underlying beneficial ownership
      of
      those shares.




At
      March
      31, 2008, UACC and United Auto Business Operations, LLC (“UABO”) were direct
      wholly-owned subsidiaries of the Company, and UPFC Auto Receivables Corporation
      (“UARC”), UPFC Auto Financing Corporation (“UAFC”) and UPFC Funding Corporation
      (“UFC”) were direct wholly-owned subsidiaries of UACC. UARC and UAFC are
      entities whose business is limited to the purchase of automobile contracts
      from
      UACC and UABO in connection with the securitization of such contracts and UFC
      is
      an entity whose business is limited to the purchase of such contracts from
      UACC
      and UABO in connection with warehouse funding of such contracts.




**2.**
            **Basis
                of Presentation**




The
      consolidated financial statements include the accounts of the Company and all
      subsidiaries including certain special purpose financing trusts utilized in
      securitization transactions, which are considered variable interest entities.
      All significant inter-company accounts and transactions have been eliminated
      in
      consolidation.





These
      unaudited 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 are of normal recurring nature and
      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, 2007. In
      preparing these consolidated financial statements, management is required to
      make estimates and assumptions that affect the reported amounts of assets and
      liabilities as of the date of the consolidated financial statements and the
      reported amount of revenues and expenses during the reporting periods. Actual
      results could differ from those estimates. Significant estimates and assumptions
      included in the Company’s consolidated financial statements relate to the
      allowance for loan losses, estimates of loss contingencies, accruals and
      stock-based compensation forfeiture rates.




**3.**
            **Recent
                Accounting Developments**




In
      December 2007, FASB issued SFAS No. 160, *Non-controlling
      Interests in Consolidated Financial Statements—an amendment of ARB
      No. 51* .
      SFAS
      No. 160 requires that accounting and reporting for minority interests will
      be
      recharacterized as non-controlling interests and classified as a component
      of
      equity. SFAS No. 160 also establishes reporting requirements that provide
      sufficient disclosures that clearly identify and distinguish between the
      interests of the parent and the interests of the non-controlling owners. SFAS
      No. 160 applies to all entities that prepare consolidated financial statements,
      except not-for-profit organizations, but will affect only those entities that
      have an outstanding non-controlling interest in one or more subsidiaries or
      that
      deconsolidate a subsidiary. This Statement shall be effective for fiscal years,
      and interim periods within those fiscal years, beginning on or after December
      15, 2008. Management is currently evaluating the impact of the adoption of
      this
      statement; however, it is not expected to have a material impact on our
      consolidated financial position, results of operation or cash flows.




6




In
      December 2007, FASB issued SFAS No. 141R, *Business
      Combinations* .
      SAFA
      No. 141R replaces SFAS No. 141, *Business
      Combinations* .
      SFAS
      No. 141R establishes principles and requirements for determining how an
      enterprise recognizes and measures the fair value of certain assets and
      liabilities acquired in a business combination, including noncontrolling
      interests, contingent consideration and certain acquired contingencies. SFAS
      No.
      141R also requires acquisition-related transaction expenses and restructuring
      costs be expensed as incurred rather than capitalized as a component of the
      business combination. This Statement shall be applied prospectively to business
      combinations for which the acquisition date is on or after the beginning of
      the
      first annual reporting period beginning on or after December 15, 2008.
      Management is currently evaluating the impact of the adoption of this statement;
      however, it is not expected to have a material impact on our consolidated
      financial position, results of operation or cash flows.




In
      February 2008, the FASB issued FASB Staff Positions FAS 140-3, *Accounting
      for Transfers of Financial Assets and Repurchase Financing
      Transactions* (“FSP
      SFAS No. 140-3”). The objective of FSP SFAS 140-3 is to provide implementation
      guidance on accounting for a transfer of a financial asset and repurchase
      financing. Under the guidance in FSP SFAS 140-3, there is a presumption that
      an
      initial transfer of a financial asset and a repurchase financing are considered
      part of the same arrangement ( *i.e.,* a linked
      transaction) for purposes of evaluation under SFAS No. 140, *Accounting
      for Transfers and Servicing of Financial Assets and Extinguishment of
      Liabilities* .
      If
      certain criteria are met, however, the initial transfer and repurchase financing
      shall not be evaluated as a linked transaction and shall be evaluated separately
      under SFAS No. 140. FSP SFAS 140-3 is effective for financial statements
      issued for fiscal years beginning after November 15, 2008. Management is
      currently evaluating the impact of the adoption of this statement; however,
      it
      is not expected to have a material impact on our consolidated financial
      position, results of operation or cash flows.




In
      March
      2008, the FASB issued SFAS No. 161, *Disclosures
      about Derivative Instruments and Hedging Activities* .
      SFAS
      No. 161 amends and expands the disclosure requirements of SFAS No. 133,
“Accounting for Derivative Instruments and Hedging Activities,” and requires
      entities to provide enhanced qualitative disclosures about objectives and
      strategies for using derivatives, quantitative disclosures about fair values
      and
      amounts of gains and losses on derivative contracts, and disclosures about
      credit-risk-related contingent features in derivative agreements. This Statement
      is effective for financial statements issued for fiscal years and interim
      periods beginning after November 15, 2008. Management is currently evaluating
      the impact of the adoption of this statement; however, it is not expected to
      have a material impact on our consolidated financial position, results of
      operation or cash flows.




Other
      recent accounting pronouncements issued by the FASB (including its Emerging
      Issues Task Force), the American Institute of Certified Public Accountants,
      and
      the United States Securities and Exchange Commission did not or are not believed
      by management to have a material impact on the Company’s present or future
      consolidated financial statements.




**4.**
            **Restricted
                Cash**




Restricted
      cash relates to $34.6 million of deposits held as collateral for securitized
      obligations and warehouse liabilities at March 31, 2008 compared with $32.1
      million at December 31, 2007. Additionally, $45.1 million at March 31, 2008
      relates to cash sent to the trustee that will be applied to the pay down of
      securitized obligations and warehouse liabilities compared with $41.6 million
      at
      December 31, 2007.




**5.**
            **Loans**




Loans
      are
      summarized as follows:


**March 31, 2008**
              
              **December 31, 2007****(Dollars
                  in thousands)**Loans

                  securitized
              
              $
              714,588
              
              $
              832,947Loans
                  unsecuritized
              
              
              218,925
              
              
              94,974Unearned
                  finance charges
              
              
              (1,222
              )
              
              (1,571
              )Unearned
                  acquisition discounts
              
              
              (43,310
              )
              
              (43,699
              )Allowance
                  for loan losses
              
              
              (49,552
              )
              
              (48,386
              )Total
                  loans, net
              
              $
              839,429
              
              $
              834,265Allowance
                  for loan losses to gross loans net of unearned acquisition
                  discounts
              
              
              5.57
              %
              
              5.48
              %Unearned
                  acquisition discounts to gross loans
              
              
              4.65
              %
              
              4.72
              %Average
                  percentage rate to borrowers
              
              
              22.69
              %
              
              22.64
              %




7




Loans
      securitized represent loans transferred to the Company’s special purpose finance
      subsidiaries in securitization transactions accounted for as secured financings.
      Loans unsecuritized include $199.3 million and $70.5 million pledged under
      the
      Company’s warehouse facilities as of March 31, 2008 and December 31, 2007,
      respectively.




The
      activity in the allowance for loan losses consists of the following:


**Three Months Ended March 31,****2008**
              
              **2007****(Dollars in thousands)**Allowance
                  for loan losses at beginning of period
              
              $
              48,386
              
              $
              36,037Provision
                  for loan losses
              
              
              17,642
              
              
              14,481Net
                  charge-offs
              
              
              (16,476
              )
              
              (11,611
              )Allowance
                  for loan losses at end of period
              
              $
              49,552
              
              $
              38,907




The
      allowance for loan losses is the estimate of probable losses in our loan
      portfolio for the next twelve months as of the statement of financial condition
      date. The level of the allowance is based principally on historical loss trends
      and the remaining balance of loans. The Company believes that the allowance
      for
      loan losses is currently adequate to absorb probable loan losses in the loans
      balance as of March 31, 2008. However, ultimate losses may vary from current
      estimates. It is possible that others, given the same information, may reach
      different conclusions and such differences could be material. To the extent
      that
      the analyses considered in determining the allowance for loan losses are not
      indicative of future performance or other assumptions used by the Company do
      not
      prove to be accurate, loss experience could differ significantly from the
      estimate, resulting in higher or lower future provision for loan losses.




**6.**
            **Borrowings**




*Securitizations*




Our
      securitizations are structured as on-balance-sheet transactions and recorded
      as
      secured financings because they do not meet the accounting criteria for sale
      of
      finance receivables under SFAS No. 140, *Accounting
      for Transfers and Servicing of Financial Assets and Extinguishments of
      Liabilities* .
      Regular
      contract securitizations are an integral part of our business plan going forward
      in order to increase our liquidity and reduce risks associated with interest
      rate fluctuations. We have developed a securitization program that involves
      selling interests in pools of our automobile contracts to investors through
      the
      public issuance of AAA/Aaa rated asset-backed securities. We retain the
      servicing rights for the loans which have been securitized. Upon the issuance
      of
      securitization notes payable, we retain the right to receive over time excess
      cash flows from the underlying pool of securitized automobile contracts.




In
      our securitizations to date, we transferred automobile contracts we purchased
      from automobile dealers to a newly formed owner trust for each transaction,
      which trust then issued the securitization notes payable. The net proceeds
      of
      our first securitization were used to replace the Bank’s deposit liabilities and
      the net proceeds of our subsequent securitization transactions were used to
      fund
      our operations. At the time of securitization of our automobile contracts,
      we
      are required to pledge assets equal to a specific percentage of the
      securitization pool to support the securitization transaction. Typically, the
      assets pledged consist of cash deposited to a restricted account known as a
      spread account and additional receivables delivered to the trusts, which create
      over-collateralization. The securitization transaction documents require the
      percentage of assets pledged to support the transaction to increase over time
      until a specific level is attained. Excess cash flow generated by the trusts
      is
      used to pay down the outstanding debt of the trusts, increasing the level of
      over-collateralization until the required percentage level of assets has been
      reached. Once the required percentage level of assets is reached and maintained,
      excess cash flows generated by the trusts are released to us as distributions
      from the trusts.




We
      have arranged for credit enhancement to improve the credit rating and reduce
      the
      interest rate on the asset-backed securities issued. This credit enhancement
      for
      our securitizations has been in the form of financial guaranty insurance
      policies insuring the payment of principal and interest due on the asset-backed
      securities. Agreements with our financial guaranty insurance insurers provide
      that if portfolio performance ratios (delinquency and net charge-offs as a
      percentage of automobile contract outstanding) in a trust’s pool of automobile
      contracts exceed certain targets, the over-collateralization and spread account
      levels would be increased. Agreements with our financial guaranty insurance
      insurers also contain additional specified targeted portfolio performance
      ratios. If, at any measurement date, the targeted portfolio performance ratios
      with respect to any trust whose securities are insured were to exceed these
      additional levels, provisions of the agreements permit our financial guaranty
      insurance providers to terminate our servicing rights to the automobile
      contracts sold to that trust.




8




The
      following table lists each of our securitizations as of March 31, 2008:


**Issue**
                **Number**
              
              **Issuance Date**
              
              **Maturity Date(1)**
              
              **Original**
                **Balance**
              
              **Remaining****Balance at**
                **March 31, 2008****(Dollars in thousands)**2005A
              
              
              April
                  14, 2005
              
              
              December
                  2010
              
              $
              195,000
              
              $
              22,7612005B
              
              
              November
                  10, 2005
              
              
              August
                  2011
              
              $
              225,000
              
              $
              47,2502006A
              
              
              June
                  15, 2006
              
              
              May
                       2012
              
              $
              242,000
              
              $
              82,9802006B
              
              
              December
                  14, 2006
              
              
              August
                  2012
              
              $
              250,000
              
              $
              120,0862007A
              
              
              June
                  14, 2007
              
              
              July
                  2013
              
              $
              250,000
              
              $
              169,3562007B
              
              
              November
                  8, 2007
              
              
              July
                  2014
              
              $
              250,000
              
              $
              204,783Total
              
              $
              1,412,000
              
              $
              647,216







(1)
      Contractual maturity of the last maturity class of notes issued by the related
      securitization owner trust.




Assets
      pledged to the trusts as of March 31, 2008 and December 31, 2007 are as
      follows:


**March 31,**
                **2008**
              
              **December 31,**
                **2007****(Dollars in thousands)**Automobile
                  contracts, net
              
              $
              714,588
              
              $
              832,947Restricted
                  cash
              
              $
              30,607
              
              $
              30,647Total
                  assets pledged
              
              $
              745,195
              
              $
              863,594




A
      summary
      of our securitization activity and cash flows from the trusts is as follows:


**Three Months Ended March 31,****(Dollars in thousands)****2008**
              
              **2007**Distribution
                  from the trusts
              
              $
              20,108
              
              $
              20,569




In
      order
      to assist our borrowers who have been adversely impacted by the rise in gasoline
      prices, we increased our extension usage. As a result, under our current
      servicing agreements, we are required to repurchase loans in excess of extension
      performance targets. As a result, we repurchased $8.2 million loans during
      the
      three months ended March 31, 2008. We funded the purchase price for the
      repurchase by obtaining advances under our existing warehouse facility.




As
      of
      March 31, 2008, we were in compliance with all terms of the financial covenants
      related to our securitization transactions.




*Warehouse
      Facility*




As
      of
      March 31, 2008, our $300 million warehouse facility was drawn to $154.4 million,
      which we use to fund our automobile finance operations to purchase automobile
      contracts pending securitization. Under the terms of the facility, our indirect
      subsidiary, UFC, may obtain advances on a revolving basis by issuing notes
      to
      the participating lenders and pledging for each advance a portfolio of
      automobile contracts. UFC purchases the automobile contracts from UACC and
      UACC
      services the automobile contracts, which are held by a custodian. We have
      provided an absolute and unconditional and irrevocable guaranty of the full
      and
      punctual payment and performance, of all liabilities, agreements and other
      obligations of UACC and UFC under the warehouse facility. Whether we may obtain
      further advances under the facility depends on, among other things, the
      performance of the automobile contracts that are pledged under the facility
      and
      whether we comply with certain financial covenants contained in the sale and
      servicing agreement. We were in compliance with the terms of such financial
      covenants as of March 31, 2008. The principal and interest collected on the
      automobile contracts pledged is used to pay the interest due each month on
      the
      notes to the participating lenders and any excess cash is released to UFC.
      The
      performance, timing and amount of cash flows from automobile contracts varies
      based on a number of factors, including:




•
            the
                yields received on automobile contracts;




•
            the
                rates and amounts of loan delinquencies, defaults and net credit
                losses;
                and




•
            how
                quickly and at what price repossessed vehicles can be resold.




9




*Residual
      Credit Facility*




On
      January 24, 2007, we closed a $26 million variable rate residual credit
      facility. The facility is secured by eligible residual interests in previously
      securitized pools of automobile receivables and certain securities issued by
      UARC, UAFC, and UFC. We had provided an absolute and unconditional and
      irrevocable guaranty of the full and punctual payment and performance, of all
      liabilities, agreements and other obligations of UARC, UAFC, and UFC under
      the
      residual credit facility. This facility expired on January 24, 2008.




**7.**
            **Share
                Repurchase Program**




On
      June 27, 2006, our Board of Directors approved a share repurchase program
      and authorized us to repurchase up to 500,000 shares of our outstanding common
      stock from time to time in the open market or in private transactions in
      accordance with the provisions of applicable state and federal law, including,
      without limitation, Rule 10b-18 promulgated under the Securities Exchange Act
      of
      1934, as amended. On August 4, 2006, our Board of Directors approved an
      increase in the aggregate number of shares that we may repurchase pursuant
      to
      the previously announced share repurchase program from 500,000 shares to
      1,500,000 shares. On December 21, 2006, our Board of Directors approved a
      second increase in the aggregate number of shares of our outstanding common
      stock that we may repurchase pursuant to the previously announced share
      repurchase program from 1,500,000 shares to 3,500,000 shares. We repurchased
      731,398 shares of our common stock for an average price of $12.61 per share
      for
      an aggregate purchase price of $9.2 million during the three months ended March
      31, 2007. We did not repurchase any shares of our common stock during the three
      months ended March 31, 2008.




**8.**
            **Share
                Based Compensation**




In
      1994,
      we adopted a stock option plan and, in November 1997, June 2001, June 2002,
      and July 2007 amended and restated such plan as the United PanAm Financial
      Corp.
      1997 Employee Stock Incentive Plan (the “Plan”). The maximum number of shares
      that may be issued to officers, directors, employees or consultants under the
      Plan is 8,500,000. Options issued pursuant to the Plan have been granted at
      an
      exercise price of no less that book value on the date of grant. Options
      generally vest over a one to five year period and have a maximum term of ten
      years. Options may be exercised by using either a standard cash exercise
      procedure or a cashless exercise procedure. As of March 31, 2008 there were
      4,270,306 options outstanding.




SFAS
      No. 123(R) requires companies to estimate the fair value of share-based
      payment awards on the date of grant using an option-pricing model. The value
      of
      the portion of the award that is ultimately expected to vest is recognized
      as
      expense over the requisite service periods in our consolidated statement of
      income.




Stock-based
      compensation expense recognized during the period is based on the value of
      the
      portion of share-based payment awards that is ultimately expected to vest during
      the period. Stock-based compensation expense recognized in our consolidated
      statement of income for the three months ended March 31, 2008 and 2007 included
      compensation expense for share-based payment awards granted prior to, but not
      yet vested as of December 31, 2005 based on the grant date fair value estimated
      in accordance with the pro forma provisions of SFAS No. 123 and
      compensation expense for the share-based payment awards granted subsequent
      to
      December 31, 2005 based on the grant date fair value estimated in
      accordance with the provisions of SFAS No. 123(R). As stock-based
      compensation expense recognized in the consolidated statement of income for
      the
      three months ended March 31, 2008 and 2007 is based on awards ultimately
      expected to vest on a straight-line prorated basis, it has been reduced for
      estimated forfeitures. SFAS No. 123(R) requires forfeitures to be estimated
      at the time of grant and revised, if necessary, in subsequent periods if actual
      forfeitures differ from those estimates. In our pro forma information required
      under SFAS No. 123 for the periods prior to January 1, 2006, we
      accounted for forfeitures as they occurred.




On
      November 10, 2005, the FASB issued FASB Staff Position No. FAS
      123(R)-3, *Transition
      Election Related to Accounting for Tax Effects of Share-Based Payment
      Awards.* We have
      elected to adopt the alternative transition method provided in the FASB Staff
      Position for calculating the tax effects of stock-based compensation pursuant
      to
      SFAS No. 123(R). The alternative transition method includes simplified
      methods to establish the beginning balance of the additional paid-in capital
      pool (“APIC pool”) related to the tax effects of employee stock-based
      compensation, and to determine the subsequent impact on the APIC pool and
      consolidated statements of cash flows of the tax effects of employee stock-based
      compensation awards that are outstanding upon adoption of SFAS
      No. 123(R).




10




The
      following table summarizes stock-based compensation expense, net of tax, under
      SFAS No. 123(R) for the three months ended March 31, 2008 and 2007.


**Three Months Ended March 31,****2008**
              
              **2007****(Dollars in thousands)**Stock-based
                  compensation expense
              
              $
              328
              
              $
              570Tax
                  benefit
              
              
              (127
              )
              
              (228
              )Stock-based
                  compensation expense, net of tax
              
              $
              201
              
              $
              342Stock-based
                  compensation expense, net of tax, per diluted shares
              
              $
              0.01
              
              $
              0.02





At
      March 31, 2008, 471,415 shares of common stock were reserved for future
      stock based compensation grants.





On
      February 1, 2008, the Board of Directors approved restricted stock grants of
      94,571 shares to our executive officers. The restricted stock grants vest at
      various dates. The unvested restricted grants are included in the outstanding
      balance as of March 31, 2008.




The
      fair
      value of options under our Plan was estimated on the date of grant using the
      Black-Scholes option pricing model with the following weighted average
      assumptions: no dividend yield; volatility was the actual 39 month
      volatility on the date of grant; risk-free interest rate equivalent to the
      appropriate US Treasury constant maturity treasury rate on the date of grant
      and
      expected lives of one to five years depending on final maturity of the options.


**Three Months Ended March 31,****2008**
              
              **2007**Expected
                  dividends
              
              $
              —
              
              $
              —Expected
                  volatility
              
              
              61.66
              %
              
              44.55
              %Risk-free
                  interest rate
              
              
              2.78
              %
              
              4.66
              %Expected
                  life
              
              
              5.00
                  years
              
              
              5.00
                  years




At
      March
      31, 2008, there was $5.0 million of unrecognized compensation cost related
      to
      share based compensation, which is expected to be recognized over a weighted
      average period of 3.34 years. A summary of option activity for the three months
      ended March 31, 2008 and 2007 is as follows:


**Three Months Ended March 31,****2008**
              
              **2007****(Dollars in thousands, except per share amounts)****Shares**
              
              **Weighted**
                **Average**
                **Exercise**
                **Price**
              
              **Shares**
              
              **Weighted**
                **Average**
                **Exercise**
                **Price**Balance at
                  beginning of period
              
              
              4,110,335
              
              $
              14.02
              
              
              4,023,436
              
              $
              14.67Granted
              
              
              243,071
              
              
              6.18
              
              
              39,000
              
              
              12.62Canceled
                  or expired
              
              
              (83,100
              )
              
              16.02
              
              
              (30,300
              )
              
              21.50Exercised
              
              
              —
              
              
              —
              
              
              (28,900
              )
              
              5.93Balance
                  at end of period
              
              
              4,270,306
              
              
              13.54
              
              
              4,003,236
              
              
              14.66Weighted
                  average fair value per share of options granted during period
              
              $
              4.97
              
              
              
              
              $
              5.73


11


At
      March 31, 2008, options exercisable to purchase 3,210,861 shares of our
      common stock under the Plan were outstanding as follows:


**Range of Exercise Prices**
              
              **Number of Shares**
                **Vested**
              
              **Number of Shares**
                **Unvested**
              
              **Weighted**
                **Average**
                **Exercise Price**
              
              **Weighted**
                **Average**
                **Remaining**
                **Contractual**
                **Life (Years)**
              
              **Number of Shares**
                **Exercisable**
              
              **Exercisable**
                **Shares**
                **Weighted**
                **Average**
                **Exercise Price**$0.0000 to $3.1650
              
              
              16,469
              
              
              152,870
              
              $
              0.23
              
              
              8.91
              
              
              16,469
              
              $
              2.35$3.1651 to $6.3300
              
              
              670,392
              
              
              —
              
              
              4.22
              
              
              2.32
              
              
              670,392
              
              
              4.22$6.3301 to $9.4950
              
              
              75,600
              
              
              20,000
              
              
              7.53
              
              
              4.83
              
              
              75,600
              
              
              7.21$9.4951 to $12.6600
              
              
              1,401,000
              
              
              221,000
              
              
              10.26
              
              
              4.10
              
              
              1,401,000
              
              
              10.22$12.6601 to $15.8250
              
              
              345,150
              
              
              123,100
              
              
              14.65
              
              
              4.51
              
              
              345,150
              
              
              14.82$15.8251 to $18.9900
              
              
              145,200
              
              
              38,800
              
              
              17.63
              
              
              5.84
              
              
              145,200
              
              
              17.63$18.9901 to $22.1550
              
              
              311,700
              
              
              38,800
              
              
              20.08
              
              
              3.48
              
              
              311,700
              
              
              20.05$22.1551 to $25.3200
              
              
              44,100
              
              
              28,400
              
              
              23.36
              
              
              7.50
              
              
              44,100
              
              
              23.30$25.3201 to $28.4850
              
              
              79,600
              
              
              36,000
              
              
              26.77
              
              
              7.52
              
              
              79,600
              
              
              26.56$28.4851 to $31.6500
              
              
              121,650
              
              
              400,475
              
              
              29.96
              
              
              7.80
              
              
              121,650
              
              
              29.643,210,861
              
              
              1,059,445
              
              $
              13.54
              
              
              4.70
              
              
              3,210,861
              
              $
              11.96




The
      weighted average remaining contractual life of outstanding options was 4.70
      years at March 31, 2008 and 4.68 years at December 31, 2007.




**9.**
            **Earnings
                per Share**




Basic
      earnings per share is computed on the basis of the weighted average number
      of
      shares of common stock outstanding during the period. Diluted earnings per
      share
      is computed on the basis of the weighted average number of shares of common
      stock plus the effect of dilutive potential common shares outstanding during
      the
      period using the treasury stock method. Dilutive potential common shares include
      outstanding stock options.





The
      following table reconciles the number of shares used in the computations of
      basic and diluted earnings per share for the three months ended March 31, 2008
      and 2007:


**Three Months Ended**
                **March 31,****2008**
              
              **2007*****(In thousands)***Weighted
                  average common shares outstanding during the period to compute
                  basic
                  earnings per share
              
              
              15,737
              
              
              16,441Incremental
                  common shares attributable to exercise of outstanding
                  options
              
              
              38
              
              
              600Weighted
                  average number of common shares used to compute diluted earnings
                  per share
              
              
              15,775
              
              
              17,041




The
      above
      calculation of diluted earnings per share excluded 3,800,000 and 1,778,000
      average shares for the years ended March 31, 2008 and 2007, respectively,
      attributable to outstanding stock options because the exercise prices of the
      stock options were greater than or equal to the average price of the common
      shares, and therefore their inclusion would have been
      anti-dilutive.




**10.**
            **Trust
                Preferred Securities**




On
      July 31, 2003, the Company issued trust preferred securities of $10.0
      million through a subsidiary UPFC Trust I. The Trust issuer is a “100% owned
      finance subsidiary” of the Company and the Company “fully and unconditionally”
guaranteed the securities. The Company will pay interest on these funds at
      a
      rate equal to the three month LIBOR plus 3.05%, variable quarterly, and the
      rate
      was 7.31% as of March 31, 2008. The final maturity of these securities is 30
      years, however, they can be called at par any time after July 31, 2008 at
      the option of the Company.




12




**11.**
            **Consolidation
                of Variable Interest Entities**




FASB
      Interpretation No. 46, *Consolidation
      of Variable Interest Entities* (“FIN
      46”), was
      issued in January 2003. FIN 46 requires that if an entity is the primary
      beneficiary of a variable interest entity, the assets, liabilities and results
      of operations of the variable interest entity should be included in the
      consolidated financial statements of the entity. FASB Interpretation
      No. 46(R), *Consolidation
      of Variable Interest Entities* (“FIN
      46(R)”), was issued in December 2003. The assets, liabilities and results of
      operations of our trusts associated with securitizations and trust preferred
      securities have been included in our consolidated financial statements.




**12.**
            **Fair
                Value Option for Financial Assets and Financial
                Liabilities**





In
      February 2007, FASB issued SFAS No. 159, *The
      Fair Value Option for Financial Assets and Financial
      Liabilities* .
      SFAS
      No. 159 permits entities to choose to measure many financial instruments and
      certain other items at fair value. The objective of the statement is to improve
      financial reporting by providing entities with the opportunity to mitigate
      volatility in reported earnings caused by measuring related assets and
      liabilities differently without having to apply complex hedge accounting
      provisions. The provisions of SFAS No. 159 are effective for fiscal years
      beginning after November 15, 2007. In September 2006, FASB issued SFAS No.
      157, *Fair
      Value Measurements* .
      This
      Statement defines fair value, establishes a framework for measuring fair value
      in generally accepted accounting principles and expands disclosures about fair
      value measurements. This Statement applies under other accounting pronouncements
      that require or permit fair value measurements but does not require any new
      fair
      value measurements. The provisions of SFAS No. 157 are effective for fiscal
      years beginning after November 15, 2007, however, a proposed FASB Staff Position
      would delay the effective date of certain provisions of SFAS No. 157 that relate
      to non-financial assets and non-financial liabilities. On January 1, 2008,
      management adopted SFAS No. 159 and SFAS No. 157 which had no impact on our
      consolidated financial position, results of operation or cash flows. The
      carrying amounts of our financial instruments are included in the consolidated
      statements of financial condition. The fair value of our financial instruments
      and the methodologies and assumptions used to measure the fair value of our
      financial instruments are described in detail in Note 15 to our Notes to
      Consolidated Financial Statements presented in our 2007 Annual Report on Form
      10-K.




**13.**
            **Restructuring
                Charges**





A
      pretax
      restructuring charge of $1.0 million was recorded for costs associated with
      closure of branches in the first quarter of 2008, which included severance,
      fixed asset write-offs and post-closure costs. The restructuring charge included
      a $450,000 reserve for estimated future lease obligations.


13


**Item 2.**  **Management’s
      Discussion and Analysis of Financial Condition and Results of Operations.**




*The
      following discussion is intended to help the reader understand our results
      of
      operations and financial condition and is provided as a supplement to, and
      should be read in conjunction with, our consolidated financial statements,
      the
      accompanying notes to the consolidated financial statements, and the other
      information included or incorporated by reference herein.*




**Overview**





We
      are a
      specialty finance company engaged in automobile finance, which includes the
      purchase, warehousing, securitization and servicing of automobile installment
      sales contracts, or automobile contracts, originated by independent and
      franchised dealers of used automobiles. We conduct our automobile finance
      business through our wholly-owned subsidiaries, United Auto Credit Corporation,
      or UACC and United Auto Business Operations, LLC, or UABO, which provide
      financing to borrowers who typically have limited or impaired credit histories
      that restrict their ability to obtain loans through traditional sources.
      Financing arms of automobile manufacturers generally do not make these loans
      to
      non-prime borrowers, nor do many other traditional automotive lenders. Non-prime
      borrowers generally pay higher interest rates and loan fees than do prime
      borrowers.




While
      we
      have traditionally achieved growth in the amount of automobile contracts that
      we
      purchase through the opening of new branch offices, we began to pursue
      controlled growth in 2007 through a combination of expanding our more seasoned
      branch offices and opening fewer new branch offices. We intend to continue
      this
      controlled growth strategy in 2008, and we do not currently intend to open
      any
      new branch offices in 2008. This change is designed to improve individual branch
      profitability, enhance loan servicing and facilitate more effective branch
      management.




In
      addition, to improve overall corporate profitability, we began to close and
      consolidate certain underperforming branches in the third quarter of 2007 and
      the first quarter of 2008.  During
      the quarter ended March 31, 2008, we closed 14 branches. Subsequent to the
      quarter end, we have closed an additional 19 branches increasing the total
      number of closures in 2008 to 33 branches. As a result of the closures, we
      have
      109 branches which continue to operate in 38 states. The majority of closures
      were from the consolidation of unprofitable smaller branches within the same
      market. The loan portfolios of the closed branches represented less than 10%
      of
      the overall portfolio balance and will continue to be serviced by other branches
      within the same market or by our Business Operation Unit. The closures resulted
      in a decrease in the number of employees of approximately 150, or 15%, of our
      work force. These closures are expected to result in cost savings, including
      operating expenses, of $8.0 million to $9.0 million annually. The closures
      will
      improve operating leverage and allow us to remain profitable at lower total
      origination levels. These branch closures have been achieved with no
      deterioration in servicing quality. The delinquencies over 30 days have dropped
      to .88% at March 31, 2008 from 1.24% at December 31, 2007 and charge-offs for
      the first quarter decreased to 7.14% from 7.99% in the fourth quarter of 2007.
      We do not expect to open any new branches in 2008 and we will continue to
      consider additional branch closures as appropriate.




As
      a
      secondary platform for growth, we began to originate and service automobile
      contracts during 2007 through UABO, our newly created Business Operations Unit
      based in Dallas, Texas. We currently originate and service automobile contracts
      in West Virginia, Connecticut, Arkansas and Nebraska through the Business
      Operations Unit, and we intend to expand operations into other markets in 2008.
      We currently have no branch presence in these four states. The Business
      Operations Unit, with its lower cost structure, will allow us to penetrate
      new
      markets in states where, due to interest rate caps, our traditional retail
      branch structure is not cost effective. We expect that the average yield for
      the
      portfolio originated in these states will be approximately 24.5% as compared
      to
      27.7% in states in which we operate our national retail branch network. We
      expect to offset the lower yield by increased cost efficiencies generated from
      operating from a central location.




The
      Business Operations Unit is responsible for underwriting, purchasing contracts
      and collections. We believe that we can continue to provide a high level of
      service to the dealers through the Business Operations Unit by providing
      consistent credit decisions and two to three day funding. By following tighter
      underwriting guidelines from a single location, we should offset any potential
      drawback from managing collection activity from a central location rather than
      being local to the borrower as in our traditional retail branch. At March 31,
      2008, the Business Operations Unit had sixteen employees and $14.5 million
      in
      loan balances.




During
      2007, UPFC and the industry in general experienced a higher rate of
      delinquencies and losses which we believe have been primarily due to general
      economic conditions, and particularly due to increased gasoline prices and
      employment contraction. As a result, during the third quarter of 2007, we
      modified our underwriting criteria for purchasing automobile contracts requiring
      higher minimum income levels and higher minimum book value of the automobile
      in
      order to pursue higher-quality borrowers and more recent model year automobiles.
      In addition, under our revised underwriting criteria, we may purchase contracts
      with terms extending up to 72 months (from up to 60 months previously) for
      creditworthy borrowers who can demonstrate higher income levels and better
      credit records. Also, as part of the underwriting review, we increased pricing
      for purchasing automobile contracts in 22 states by almost 100 basis points
      in
      APR. The states affected by the new pricing account for approximately 60% of
      automobile contracts that we current purchase and we expect that the impact
      will
      result in a gradual increase of approximately 60 basis points in weighted
      average yield over the next few years.




14




**Critical
      Accounting Policies**




We
      have
      established various accounting policies, which govern the application of
      accounting principles generally accepted in the United States of America, or
      GAAP, in the preparation of our consolidated financial statements. Our
      accounting policies are integral to understanding the results reported. Certain
      accounting policies are described in detail in Note 3 to our Notes to
      Consolidated Financial Statements presented in our 2007 Annual Report on Form
      10-K.




Certain
      accounting policies require us to make significant estimates and assumptions,
      which have a material impact on the carrying value of certain assets and
      liabilities, and we consider these to be critical accounting policies. The
      estimates and assumptions we use are based on historical experience and other
      factors, which we believe to be reasonable under the circumstances. Actual
      results could differ significantly from these estimates and assumptions, which
      could have a material impact on the carrying value of assets and liabilities
      at
      the date of the statement of financial condition and our results of operations
      for the reporting periods. The following is a brief description of our current
      accounting policies involving significant management valuation judgments.




*Securitization
      Transactions*




The
      transfer of our automobile contracts to securitization trusts is treated as
      a
      secured financing under Statement of Financial Accounting Standard (“SFAS”)
      No. 140, *Accounting
      for Transfers and Servicing of Financial Assets and Extinguishments of
      Liabilities* .
      The
      trusts are considered variable interest entities. The assets, liabilities and
      results of operations of the trusts have been included in our consolidated
      financial statements. The contracts are retained on the statement of financial
      condition with the securities issued to finance the contracts recorded as
      securitization notes payable. We record interest income on the securitized
      contracts and interest expense on the notes issued through the securitization
      transactions. Debt issuance costs are amortized over the expected term of the
      securitization using the interest method.




As
      servicer of these contracts, we remit funds collected from the borrowers on
      behalf of the trustee to the trustee and direct the trustee how the funds should
      be invested until the distribution dates. We have retained an interest in the
      securitized contracts, and have the ability to receive future cash flows as
      a
      result of that retained interest.




*Allowance
      for Loan Losses*




The
      allowance for loan losses is calculated based on incurred loss methodology
      for
      the determination of the amount of probable credit losses inherent in the
      finance receivables as of the reporting date. Our loan loss allowance is
      estimated by management based upon a variety of factors including an assessment
      of the credit risk inherent in the portfolio and prior loss
      experience.




The
      allowance for credit losses is established through provisions for losses
      recorded in income as necessary to provide for estimated contract losses in
      the
      next 12 months at each reporting date. We account for such contracts by static
      pool, stratified into three-month buckets, so that the credit risk in each
      individual static pool can be evaluated independently in order to estimate
      the
      future losses within each pool. Any such adjustment is recorded in the current
      period as the assessment is made.




Despite
      these analyses, we recognize that establishing an allowance is an estimate,
      which is inherently uncertain and depends on the outcome of future events.
      Our
      operating results and financial condition are sensitive to changes in our
      estimate for loan losses and the estimate’s underlying assumptions. Our
      operating results and financial condition are immediately impacted as changes
      in
      estimates for calculating loan loss reserves are immediately recorded in our
      consolidated statement of income as an addition or reduction in provision
      expense.




*Stock-Based
      Compensation*




On
      January 1, 2006, we adopted SFAS No. 123(R), Share-Based Payment,
      which requires that the compensation cost relating to share-based payment
      transactions (including the cost of all employee stock options) be recognized
      in
      the financial statements. That cost will be measured based on the estimated
      fair
      value of the equity or liability instruments issued. SFAS No. 123(R) covers
      a wide range of share-based compensation arrangements including share options,
      restricted share plans, performance-based awards, share appreciation rights,
      and
      employee share purchase plans. SFAS No. 123(R) replaces SFAS No. 123,
      Accounting for Stock-Based Compensation, and supersedes Accounting Principles
      Board Opinion (“APB Opinion”) No. 25, Accounting for Stock Issued to
      Employees. In March 2005, the Securities and Exchange Commission issued Staff
      Accounting Bulletin No. 107 (“SAB No. 107”) relating to SFAS
      No. 123(R).




15




We
      adopted SFAS No. 123(R) using the modified prospective transition method,
      which requires the application of the accounting standard as of January 1,
      2006, the first day of our 2006 fiscal year. Our Consolidated Financial
      Statements as of and for the years ended December 31, 2007 and 2006 reflect
      the impact of SFAS No. 123(R). In accordance with the modified prospective
      transition method, our Consolidated Financial Statements for prior periods
      have
      not been restated to reflect, and do not include, the impact of SFAS
      No. 123(R). Stock-based compensation expense recognized under SFAS
      No. 123(R) was $328,000 and $570,000 for the three months ended March 31,
      2008 and 2007, respectively.




*Derivatives
      and Hedging Activities*




The
      automobile contracts purchased and held by us are written at fixed interest
      rates and, accordingly, have interest rate risk while such contracts are funded
      with warehouse borrowings because the warehouse borrowings accrue interest
      at a
      variable rate. Prior to closing our first securitization, while we were shifting
      the funding source of our automobile finance business to the public capital
      markets through securitizations and warehouse facilities, we entered into
      forward agreements in order to reduce the interest rate risk exposure on our
      securitization notes payable. The market value of these forward agreements
      was
      designed to respond inversely to changes in interest rate. Because of this
      inverse relationship, we were able to effectively lock in a gross interest
      rate
      spread for our automobile contracts held in portfolio prior to the sale of
      the
      securitization notes payable. Losses related to these agreements were recorded
      on our Consolidated Statements of Operations during 2004 because the derivative
      transactions did not meet the accounting requirements to qualify for hedge
      accounting. Accordingly, we did not amortize them over the life of the
      automotive contracts.





**Lending
      Activities**




*Summary
      of Loan Portfolio*




The
      following table sets forth the composition of our loan portfolio at the dates
      indicated.


**March 31, 2008**
              
              **December 31, 2007****(Dollars in Thousands)**Automobile
                  Contracts
              
              $
              933,513
              
              $
              927,921Unearned
                  finance charges (1)
              
              
              (1,222
              )
              
              (1,571
              )Unearned
                  acquisition discounts (1)
              
              
              (43,310
              )
              
              (43,699
              )Allowance
                  for loan losses (1)
              
              
              (49,552
              )
              
              (48,386
              )Total
                  loans, net
              
              $
              839,429
              
              $
              834,265





(1)
            See
                “—Critical Accounting Policies”




*Allowance
      for Loan Losses*




Our
      policy is to maintain an allowance for loan losses to absorb inherent losses
      which may be realized on our portfolio. These allowances are general valuation
      allowances for estimates for probable losses not specifically identified that
      will occur in the next twelve months. The total allowance for loan losses was
      $49.6 million at March 31, 2008 compared with $48.4 million at
      December 31, 2007, representing 5.57% of loans at March 31, 2008 and 5.48%
      at December 31, 2007.




Following
      is a summary of the changes in our consolidated allowance for loan losses for
      the periods indicated.


**At or For the Three Months Ended****March 31, 2008**
              
              **March 31, 2007****(Dollars in Thousands)****Allowance
                  for Loan Losses**Balance
                  at beginning of period
              
              $
              48,386
              
              $
              36,037Provision
                  for loan losses (1)
              
              
              17,642
              
              
              14,481Net
                  charge-offs
              
              
              (16,476
              )
              
              (11,611
              )Balance
                  at end of period
              
              $
              49,552
              
              $
              38,907Annualized
                  net charge-offs to average loans
              
              
              7.14
              %
              
              5.62
              %Ending
                  allowance to period end loans
              
              
              5.57
              %
              
              4.72
              %





(1)
            See
                “—Critical Accounting Policies”




16




*Past
      Due and Nonaccrual Loans*




The
      following table sets forth the remaining balances of all loans (net of unearned
      finance charges, excluding loans for which vehicles have been repossessed)
      that
      were more than 30 days delinquent at the periods indicated.


**March 31, 2008**
              
              **December 31, 2007**
              
              **March 31, 2007****(Dollars in Thousands)****Loan Delinquencies**
              
              **Balance**
              
              **% of Total**
                **Loans**
              
              **Balance**
              
              **% of Total**
                **Loans**
              
              **Balance**
              
              **% of Total**
                **Loans**30
                  to 59 days
              
              $
              5,311
              
              
              0.57
              %
              $
              7,194
              
              
              0.78
              %
              $
              3,138
              
              
              0.36
              %60
                  to 89 days
              
              
              1,734
              
              
              0.19
              %
              
              2,756
              
              
              0.30
              %
              
              892
              
              
              0.11
              %90+
                  days
              
              
              1,156
              
              
              0.12
              %
              
              1,534
              
              
              0.16
              %
              
              702
              
              
              0.08
              %Total
              
              $
              8,201
              
              
              0.88
              %
              $
              11,484
              
              
              1.24
              %
              $
              4,732
              
              
              0.55
              %




Our
      policy is to charge off loans delinquent in excess of 120 days.




The
      following table sets forth the aggregate amount of nonaccrual loans (net of
      unearned finance charges, including loans over 30 days delinquent and loans
      for
      which vehicles have been repossessed) at the periods indicated.


**March 31, 2008**
              
              **December 31, 2007**
              
              **March 31, 2007****(Dollars in Thousands)**Nonaccrual
                  loans
              
              $
              16,554
              
              $
              21,185
              
              $
              10,095Nonaccrual
                  loans to gross loans
              
              
              1.78
              %
              
              2.29
              %
              
              1.16
              %Allowance
                  for loan losses to gross loans, net of unearned acquisition
                  discounts
              
              
              5.57
              %
              
              5.48
              %
              
              4.72
              %




*Cumulative
      Losses for Contract Pools*




The
      following table reflects our cumulative losses (i.e., net charge-offs as a
      percent of original net contract balances) for contract pools (defined as the
      total dollar amount of net contracts purchased in a three-month period)
      purchased from April 2003 through December 2007. Contract pools subsequent
      to
      December 2007 were not included in this table because the loan pools were not
      seasoned enough to provide a meaningful comparison with prior periods.


**Number
                    of**
                
                **Apr-03**
                
                **Jul-03**
                
                **Oct-03**
                
                **Jan-04**
                
                **Apr-04**
                
                **Jul-04**
                
                **Oct-04**
                
                **Jan-05**
                
                **Apr-05**
                
                **Jul-05**
                
                **Oct-05**
                
                **Jan-06**
                
                **Apr-06**
                
                **Jul-06**
                
                **Oct-06**
                
                **Jan-07**
                
                **Apr-07**
                
                **Jul-07**
                
                **Oct-07****Months**
                
                **-**
                
                **-**
                
                **-**
                
                **-**
                
                **-**
                
                **-**
                
                **-**
                
                **-**
                
                **-**
                
                **-**
                
                **-**
                
                **-**
                
                **-**
                
                **-**
                
                **-**
                
                **-**
                
                **-**
                
                **-**
                
                **-****Outstanding**
                
                **Jun-03**
                
                **Sep-03**
                
                **Dec-03**
                
                **Mar-04**
                
                **Jun-04**
                
                **Sep-04**
                
                **Dec-04**
                
                **Mar-05**
                
                **Jun-05**
                
                **Sep-05**
                
                **Dec-05**
                
                **Mar-06**
                
                **Jun-06**
                
                **Sep-06**
                
                **Dec-06**
                
                **Mar-07**
                
                **Jun-07**
                
                **Sep-07**
                
                **Dec-07**1
                
                
                0.00
                %
                
                0.00
                %
                
                0.00
                %
                
                0.00
                %
                
                0.00
                %
                
                0.00
                %
                
                0.00
                %
                
                0.00
                %
                
                0.00
                %
                
                0.00
                %
                
                0.00
                %
                
                0.00
                %
                
                0.00
                %
                
                0.00
                %
                
                0.00
                %
                
                0.00
                %
                
                0.00
                %
                
                0.00
                %
                
                0.00
                %4
                
                
                0.07
                %
                
                0.05
                %
                
                0.11
                %
                
                0.02
                %
                
                0.04
                %
                
                0.08
                %
                
                0.05
                %
                
                0.03
                %
                
                0.06
                %
                
                0.12
                %
                
                0.05
                %
                
                0.02
                %
                
                0.06
                %
                
                0.09
                %
                
                0.10
                %
                
                0.05
                %
                
                0.08
                %
                
                0.08
                %
                
                0.09
                %7
                
                
                0.61
                %
                
                0.56
                %
                
                0.48
                %
                
                0.37
                %
                
                0.45
                %
                
                0.65
                %
                
                0.49
                %
                
                0.40
                %
                
                0.64
                %
                
                0.59
                %
                
                0.47
                %
                
                0.40
                %
                
                0.62
                %
                
                0.88
                %
                
                0.64
                %
                
                0.54
                %
                
                0.84
                %
                
                0.82
                %10
                
                
                1.79
                %
                
                1.41
                %
                
                1.20
                %
                
                1.37
                %
                
                1.33
                %
                
                1.29
                %
                
                1.19
                %
                
                1.35
                %
                
                1.63
                %
                
                1.36
                %
                
                1.28
                %
                
                1.61
                %
                
                2.00
                %
                
                1.84
                %
                
                1.73
                %
                
                1.77
                %
                
                2.28
                %13
                
                
                2.76
                %
                
                2.26
                %
                
                2.13
                %
                
                2.44
                %
                
                2.13
                %
                
                2.21
                %
                
                2.41
                %
                
                2.48
                %
                
                2.57
                %
                
                2.37
                %
                
                2.71
                %
                
                2.96
                %
                
                3.13
                %
                
                3.23
                %
                
                3.09
                %
                
                3.29
                %16
                
                
                3.65
                %
                
                3.50
                %
                
                3.29
                %
                
                3.20
                %
                
                2.88
                %
                
                3.12
                %
                
                3.56
                %
                
                3.32
                %
                
                3.47
                %
                
                3.56
                %
                
                4.07
                %
                
                3.90
                %
                
                4.35
                %
                
                4.95
                %
                
                4.87
                %19
                
                
                4.62
                %
                
                4.48
                %
                
                4.06
                %
                
                3.96
                %
                
                3.87
                %
                
                4.20
                %
                
                4.44
                %
                
                4.21
                %
                
                4.70
                %
                
                4.85
                %
                
                5.01
                %
                
                5.03
                %
                
                5.92
                %
                
                6.73
                %22
                
                
                5.66
                %
                
                5.19
                %
                
                4.78
                %
                
                4.87
                %
                
                4.77
                %
                
                4.95
                %
                
                5.17
                %
                
                5.50
                %
                
                5.95
                %
                
                5.76
                %
                
                5.96
                %
                
                6.42
                %
                
                7.41
                %25
                
                
                6.42
                %
                
                5.83
                %
                
                5.53
                %
                
                5.63
                %
                
                5.35
                %
                
                5.56
                %
                
                6.12
                %
                
                6.56
                %
                
                6.69
                %
                
                6.69
                %
                
                7.05
                %
                
                7.66
                %28
                
                
                7.04
                %
                
                6.55
                %
                
                6.07
                %
                
                6.16
                %
                
                5.96
                %
                
                6.31
                %
                
                7.02
                %
                
                7.23
                %
                
                7.41
                %
                
                7.67
                %
                
                8.08
                %31
                
                
                7.67
                %
                
                7.14
                %
                
                6.42
                %
                
                6.76
                %
                
                6.62
                %
                
                7.05
                %
                
                7.66
                %
                
                7.86
                %
                
                8.24
                %
                
                8.62
                %34
                
                
                8.06
                %
                
                7.54
                %
                
                6.77
                %
                
                7.37
                %
                
                7.20
                %
                
                7.47
                %
                
                8.24
                %
                
                8.52
                %
                
                9.04
                %37
                
                
                8.41
                %
                
                7.85
                %
                
                7.14
                %
                
                7.95
                %
                
                7.52
                %
                
                7.81
                %
                
                8.73
                %
                
                9.11
                %40
                
                
                8.71
                %
                
                8.21
                %
                
                7.61
                %
                
                8.24
                %
                
                7.83
                %
                
                8.21
                %
                
                9.12
                %43
                
                
                9.01
                %
                
                8.50
                %
                
                7.78
                %
                
                8.44
                %
                
                8.12
                %
                
                8.47
                %46
                
                
                9.17
                %
                
                8.64
                %
                
                7.93
                %
                
                8.63
                %
                
                8.33
                %49
                
                
                9.25
                %
                
                8.79
                %
                
                8.11
                %
                
                8.81
                %52
                
                
                9.32
                %
                
                8.87
                %
                
                8.16
                %55
                
                
                9.39
                %
                
                8.95
                %58
                
                
                9.42
                %Original
                    Pool ($000)
                
                $
                73,291
                
                $
                72,002
                
                $
                68,791
                
                $
                94,369
                
                $
                91,147
                
                $
                89,688
                
                $
                86,697
                
                $
                118,883
                
                $
                120,502
                
                $
                112,487
                
                $
                101,482
                
                $
                142,873
                
                $
                143,988
                
                $
                136,167
                
                $
                113,767
                
                $
                164,019
                
                $
                162,873
                
                $
                144,586
                
                $
                102,526Remaining
                    Pool ($000)
                
                $
                739
                
                $
                1,091
                
                $
                1,823
                
                $
                3,962
                
                $
                5,365
                
                $
                7,670
                
                $
                9,703
                
                $
                18,428
                
                $
                22,471
                
                $
                25,483
                
                $
                28,446
                
                $
                50,309
                
                $
                59,455
                
                $
                65,397
                
                $
                63,760
                
                $
                108,902
                
                $
                120,531
                
                $
                120,417
                
                $
                93,100Remaining
                    Pool (%)
                
                
                1.0
                %
                
                1.5
                %
                
                2.6
                %
                
                4.2
                %
                
                5.9
                %
                
                8.6
                %
                
                11.2
                %
                
                15.5
                %
                
                18.6
                %
                
                22.7
                %
                
                28.0
                %
                
                35.2
                %
                
                41.3
                %
                
                48.0
                %
                
                56.0
                %
                
                66.4
                %
                
                74.0
                %
                
                83.3
                %
                
                90.8
                %


17




*Loan
      Maturities*




The
      following table sets forth the dollar amount of automobile contracts maturing
      in
      our automobile contracts portfolio at March 31, 2008 based on final maturity.
      Automobile contract balances are reflected before unearned acquisition discounts
      and allowance for loan losses.


**One**
                **Year or**
                **Less**
              
              **More Than**
                **1 Year to**
                **3 Years**
              
              **More Than**
                **3 Years to**
                **5 Years**
              
              **More Than**
                **5 Years to**
                **10 Years**
              
              **Total**
                **Loans****(Dollars
                  in thousands)**Total
                  loans
              
              $
              23,767
              
              $
              331,074
              
              $
              528,029
              
              $
              49,421
              
              $
              932,291




All
      loans
      are fixed rate loans.




**Liquidity
      and Capital Resources**




*General*




We
      require substantial cash and capital resources to operate our business. Our
      primary funding sources are a warehouse credit line, securitizations and
      retained earnings.




Our
      primary uses of cash include:




•
                acquisition
                    of automobile contracts;




•
                interest
                    expense;




•
                operating
                    expenses; and




•
                securitization
                    costs.




The
          capital resources available to us include:




•
                interest
                    income and principal collections on automobile contracts;




•
                servicing
                    fees that we earn under our securitizations;




•
                releases
                    of excess cash from the spread accounts relating to the securitizations;




•
                    securitizationproceeds;




•
                borrowings
                    under our warehouse credit facility; and




•
                releases
                    of excess cash from our warehouse credit
                    facility.




Management
      believes that the resources available to us will provide the needed capital
      and
      cash flows to fund purchases of automobile contracts, investments in our branch
      network and servicing capabilities and ongoing operations for the next twelve
      months.





*Recent
      Market Developments*




We
      anticipate that a number of factors will adversely impact our liquidity in
      2008,
      including higher credit enhancement levels in our securitization transactions
      driven by disruptions in the capital markets and, to a lesser extent, the credit
      deterioration we are experiencing in our portfolio and substantially weakened
      demand for securities guaranteed by insurance policies, making the execution
      of
      securitization transactions more challenging and expensive. We may also realize
      decreased cash distributions from our securitization trusts due to weaker credit
      performance and higher borrowing costs.




The
      asset-backed securities market, along with credit markets in general, has been
      experiencing unprecedented disruptions. Market conditions began deteriorating
      in
      mid-2007 and remain impaired in early 2008. While some securitizations backed
      by
      prime quality automobile finance receivables were executed by other issuers
      in
      2008, only one securitization backed by non-prime quality receivables has been
      completed in calendar 2008. Further, the prime quality automobile
      securitizations that were executed in 2008 utilized senior-subordinated
      structures, selling only the highest rated securities. In addition, the
      financial guaranty insurance providers used by us in the past are facing
      financial stress and rating agency downgrades. As a result, demand for
      asset-backed securities backed by a financial guarantee insurance policy has
      substantially weakened and there has been a limited number of public issuances
      of insured automobile asset-backed securities since November 2007. We have
      not
      accessed the securitization market with a transaction since November
      2007.




18




Current
      conditions in the asset-backed securities market include reduced liquidity,
      increased risk premiums for issuers, reduced investor demand for asset-backed
      securities, particularly those securities backed by non-prime collateral,
      financial stress and rating agency downgrades impacting the financial guaranty
      insurance providers, and a general tightening of availability of credit. These
      conditions, which may increase our cost of funding and reduce our access to
      the
      asset-backed securities market or other types of receivable financings, may
      continue or worsen in the future. We will continue to require execution of
      securitization transactions or other types of receivable financing during 2008.
      There can be no assurance that funding will be available to us through the
      execution of these types of transactions or, if available, that the funding
      will
      be on acceptable terms. If we are unable to execute these transactions on a
      regular basis, and are otherwise unable to issue any other debt or equity,
      we
      would not have sufficient funds to finance new purchases of automobile contracts
      and, in such event, we would be required to revise the scale of our business,
      including the curtailment or cessation of our automobile contract purchasing
      activities, which would have a material adverse effect on our ability to achieve
      our business and financial objectives. For a more complete description of the
      financing risks that we face, see Item 1A. “Risk Factors” in our 2007 Annual
      Report on Form 10-K.




*Securitizations*




Our
      securitizations are structured as on-balance-sheet transactions and recorded
      as
      secured financings because they do not meet the accounting criteria for sale
      of
      finance receivables under SFAS No. 140. Regular contract securitizations
      are an integral part of our business plan going forward in order to increase
      our
      liquidity and reduce risks associated with interest rate fluctuations. We have
      developed a securitization program that involves selling interests in pools
      of
      our automobile contracts to investors through the public issuance of AAA/Aaa
      rated asset-backed securities. We retain the servicing rights for the loans
      which have been securitized. Upon the issuance of securitization notes payable,
      we retain the right to receive over time excess cash flows from the underlying
      pool of securitized automobile contracts.




In
      our securitizations to date, we transferred automobile contracts we purchased
      from automobile dealers to a newly formed owner trust for each transaction,
      which trust then issued the securitization notes payable. The net proceeds
      of
      our first securitization were used to replace the Bank’s deposit liabilities and
      the net proceeds of our subsequent securitization transactions were used to
      fund
      our operations. At the time of securitization of our automobile contracts,
      we
      are required to pledge assets equal to a specific percentage of the
      securitization pool to support the securitization transaction. Typically, the
      assets pledged consist of cash deposited to a restricted account known as a
      spread account and additional receivables delivered to the trusts, which create
      over-collateralization. The securitization transaction documents require the
      percentage of assets pledged to support the transaction to increase over time
      until a specific level is attained. Excess cash flow generated by the trusts
      is
      used to pay down the outstanding debt of the trusts, increasing the level of
      over-collateralization until the required percentage level of assets has been
      reached. Once the required percentage level of assets is reached and maintained,
      excess cash flows generated by the trusts are released to us as distributions
      from the trusts.




We
      have
      arranged for credit enhancement to improve the credit rating and reduce the
      interest rate on the asset-backed securities issued to date. This credit
      enhancement for our securitizations has been in the form of financial guaranty
      insurance policies insuring the payment of principal and interest due on the
      asset-backed securities. Agreements with our financial guaranty insurance
      providers provide that if portfolio performance ratios (delinquency and net
      charge-offs as a percentage of automobile contract outstanding) in a trust’s
      pool of automobile contracts exceed certain targets, the over-collateralization
      and spread account levels would be increased. Agreements with our financial
      guaranty insurance providers also contain additional specified targeted
      portfolio performance ratios. If, at any measurement date, the targeted
      portfolio performance ratios with respect to any trust whose securities are
      insured were to exceed these additional levels, provisions of the agreements
      permit our financial guaranty insurance providers to terminate our servicing
      rights to the automobile contracts sold to that trust.




Our
      financial guaranty insurance providers are not required to insure our future
      securitizations, and there can be no assurance that they will continue to do
      so.
      In addition, a downgrading of any of our financial guaranty insurance providers’
credit ratings or the inability to structure alternative credit enhancements,
      such as senior subordinated transactions, for our securitization program could
      result in higher interest costs for our future securitizations and larger
      initial and/or target credit enhancement requirements. The absence of a
      financial guaranty insurance policy may also impair the marketability of our
      securitizations.




19




The
      following table lists each of our securitizations and its remaining balance
      as
      of March 31, 2008.




*(Dollars
      in thousands)*


**Issue**
                **Number**
              
              
              **Issuance**
                **Date**
              
              
              **Original**
                **Balance**
              
              
              **Current**
                **Balance**
                **Class**
                **A-1**
              
              
              **Interest**
                **Rate**
              
              
              **Current**
                **Balance**
                **Class****A-2**
              
              
              **Interest**
                **Rate**
              
              
              **Current**
                **Balance**
                **Class****A-3**
              
              
              **Interest**
                **Rate**
              
              
              **Total**
                **Current**
                **Balance**
              
              
              **Current**
                **Receivables**
                **Pledged**
              
              
              **Surety**
                **Costs(1**)****
              
              
              **Back-up**
                **Servicing**
                **Fees**2005A
              
              
              April 14, 2005
              
              
              195,000
              
              
              —
              
              
              3.12
              %
              
              —
              
              
              3.85
              %
              
              22,761
              
              
              4.34
              %
              
              22,761
              
              
              24,576
              
              
              0.43
              %
              
              0.035
              %2005B
              
              
              November 10, 2005
              
              
              225,000
              
              
              —
              
              
              4.28
              %
              
              —
              
              
              4.82
              %
              
              47,250
              
              
              4.98
              %
              
              47,250
              
              
              53,389
              
              
              0.41
              %
              
              0.035
              %2006A
              
              
              June
                  15, 2006
              
              
              242,000
              
              
              —
              
              
              5.27
              %
              
              —
              
              
              5.46
              %
              
              82,980
              
              
              5.49
              %
              
              82,980
              
              
              90,802
              
              
              0.39
              %
              
              0.035
              %2006B
              
              
              December
                  14, 2006
              
              
              250,000
              
              
              —
              
              
              5.34
              %
              
              21,086
              
              
              5.15
              %
              
              99,000
              
              
              5.01
              %
              
              120,086
              
              
              132,604
              
              
              0.38
              %
              
              0.035
              %2007A
              
              
              June
                  14, 2007
              
              
              250,000
              
              
              —
              
              
              5.33
              %
              
              70,356
              
              
              5.46
              %
              
              99,000
              
              
              5.53
              %
              
              169,356
              
              
              189,208
              
              
              0.37
              %
              
              0.032
              %2007B
              
              
              November
                  8, 2007
              
              
              250,000
              
              
              12,783
              
              
              4.98685
              %
              
              93,000
              
              
              5.75
              %
              
              99,000
              
              
              6.15
              %
              
              204,783
              
              
              224,008
              
              
              0.45
              %
              
              0.035
              %$
              1,412,000
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              647,216
              
              $
              714,587





(1)
      Related to premiums on financial guaranty insurance policies.




There
      is
      an average of $1.0 million in underwriting and issuance costs associated with
      each securitization transaction, which is amortized over the term of the
      securitizations.




In
      order
      to assist our borrowers who have been adversely impacted by the rise in gasoline
      pries, we increased our extension usage. As a result, under our current
      servicing agreements, we are required to repurchase loans in excess of extension
      performance targets. We funded the purchase price for the repurchase of these
      loans by obtaining advances under our existing warehouse facility. As a result,
      we repurchased $8.2 million loans during the three months ended March 31, 2008.
      We funded the purchase price for the repurchase by obtaining advances under
      our
      existing warehouse facility.




As
      of
      March 31, 2008 we were in compliance with all terms of the financial covenants
      related to our securitization transactions.




*Warehouse
      Facility*




As
      of
      March 31, 2008, our $300 million warehouse facility was drawn to $154.4 million.
      On October 18, 2007, we executed a twelve month extension of our existing $300
      million warehouse facility with Deutsche Bank. There were no material changes
      to
      the existing warehouse agreement. Under the terms of the facility, our indirect
      subsidiary, UFC, may obtain advances on a revolving basis by issuing notes
      to
      the participating lenders and pledging for each advance a portfolio of
      automobile contracts. UFC purchases the automobile contracts from UACC and
      UABO
      and UACC services the automobile contracts, which are held by a custodian.
      The
      principal and interest collected on the automobile contracts pledged is used
      to
      pay the interest due each month on the notes to the participating lenders and
      any excess cash is released to UFC. We have provided an absolute and
      unconditional and irrevocable guaranty of the full and punctual payment and
      performance, of all liabilities, agreements and other obligations of UACC,
      UABO
      and UFC under the warehouse facility. Whether we may obtain further advances
      under the facility depends on, among other things, the performance of the
      automobile contracts that are pledged under the facility and whether we comply
      with certain financial covenants contained in the sale and servicing agreement.
      The performance, timing and amount of cash flows from automobile contracts
      vary
      based on a number of factors, including:




• the
      yields received on automobile contracts;




• the
      rates
      and amounts of loan delinquencies, defaults and net credit losses; and




• how
      quickly and at what price repossessed vehicles can be resold.




In
      addition, we are required to hold certain funds in restricted cash accounts
      to
      provide additional collateral for borrowings under the warehouse facility.
      In
      the event that we fail to satisfy certain covenants in the sale and servicing
      agreement requiring minimum financial ratios, asset quality, and portfolio
      performance ratios (portfolio net loss and delinquency ratios and pool level
      cumulative net loss ratios), we could be required to increase the amount of
      funds that we hold in restricted cash. Failure to meet any of these covenants
      could also result in an event of default under the warehouse facility. If an
      event of default occurs under the warehouse facility, the lender could elect
      to
      declare all amounts outstanding under the facility to be immediately due and
      payable, enforce the interest against collateral pledged under the agreement
      or
      restrict our ability to obtain additional borrowings under the facility. We
      were
      in compliance with the terms of such financial covenants as of March 31, 2008.




*Residual
      Credit Facility*




On
      January 24, 2007, we closed a $26 million variable rate residual credit
      facility. The facility is secured by eligible residual interests in previously
      securitized pools of automobile receivables and certain securities issued by
      UARC, UAFC, and UFC. We had provided an absolute and unconditional and
      irrevocable guaranty of the full and punctual payment and performance, of all
      liabilities, agreements and other obligations of UARC, UAFC, and UFC under
      the
      residual credit facility. This facility expired on January 24, 2008.




20




*Share
      Repurchase Program*




On
      June 27, 2006, our Board of Directors approved a share repurchase program
      and authorized us to repurchase up to 500,000 shares of our outstanding common
      stock from time to time in the open market or in private transactions in
      accordance with the provisions of applicable state and federal law, including,
      without limitation, Rule 10b-18 promulgated under the Securities Exchange Act
      of
      1934, as amended. On August 4, 2006, our Board of Directors approved an
      increase in the aggregate number of shares that we may repurchase pursuant
      to
      the previously announced share repurchase program from 500,000 shares to
      1,500,000 shares. On December 21, 2006, our Board of Directors approved a
      second increase in the aggregate number of shares of our outstanding common
      stock that we may repurchase pursuant to the previously announced share
      repurchase program from 1,500,000 shares to 3,500,000 shares. We repurchased
      731,398 shares of our common stock for an average price of $12.61 per share
      for
      an aggregate purchase price of $9.2 million during the three months ended March
      31, 2007. We did not repurchase any shares of our common stock during the three
      months ended March 31, 2008.




*Subordinated
      Debentures*




On
      July 31, 2003, the Company issued trust preferred securities of $10.0
      million through a subsidiary UPFC Trust I. The Trust issuer is a “100% owned
      finance subsidiary” of the Company and the Company “fully and unconditionally”
guaranteed the securities. The Company will pay interest on these funds at
      a
      rate equal to the three month LIBOR plus 3.05%, variable quarterly, and the
      rate
      was 7.31% as of March 31, 2008. The final maturity of these securities is 30
      years, however, they can be called at par any time after July 31, 2008 at
      the option of the Company.




*Aggregate
      Contractual Obligations*




The
      following table provides the amounts due under specified obligations for the
      periods indicated as of March 31, 2008.


**Less than**
                **1 Year**
              
              **1 Year**
                **to 3 Years**
              
              **3 Years**
                **to 5 Years**
              
              **More Than**
                **5 Years**
              
              **Total****(Dollars in thousands)**Warehouse
                  line of credit
              
              $
              154,350
              
              $
              —
              
              $
              —
              
              $
              —
              
              $
              154,350Securitization
                  notes payable
              
              
              340,281
              
              
              296,213
              
              
              10,722
              
              
              —
              
              
              647,216Operating
                  lease obligations
              
              
              6,493
              
              
              11,119
              
              
              4,934
              
              
              12,448
              
              
              34,994Junior
                  subordinated debentures
              
              
              —
              
              
              —
              
              
              —
              
              
              10,310
              
              
              10,310Total
              
              $
              501,124
              
              $
              307,332
              
              $
              15,656
              
              $
              22,758
              
              $
              846,870




The
      obligations are categorized by their contractual due dates, except
      securitization borrowings that are categorized by the expected repayment dates.
      We may, at our option, prepay the junior subordinated debentures prior to their
      maturity date. Furthermore, the actual payment of certain current liabilities
      may be deferred into future periods.




21





**Selected
      Financial Data**





*(Dollars
                in thousands)*
            
            At
                or For the
              Three
                Months EndedMarch
                31,
              2008
            
            March
                31,
              2007**Operating
                Data**Contracts
                purchased
            
            $
            129,930
            
            $
            167,640Contracts
                outstanding
            
            $
            932,291
            
            $
            866,937Unearned
                acquisition discounts
            
            $
            (43,310
            )
            $
            (42,684
            )Average
                loan balance
            
            $
            927,918
            
            $
            837,755Unearned
                acquisition discounts to gross loans
            
            
            4.65
            %
            
            4.92
            %Average
                percentage rate to borrowers
            
            
            22.69
            %
            
            22.64
            %**Loan
                Quality Data**Allowance
                for loan losses
            
            $
            (49,552
            )
            $
            (38,907
            )Allowance
                for loan losses to gross loans net of unearned acquisition
                discounts
            
            
            5.57
            %
            
            4.72
            %Delinquencies
                (% of net contracts)31-60
                days
            
            
            0.57
            %
            
            0.36
            %61-90
                days
            
            
            0.19
            %
            
            0.11
            %90+
                days
            
            
            0.12
            %
            
            0.08
            %Total
            
            
            0.88
            %
            
            0.55
            %Repossessions
                over 30 days past due (% of net contracts)
            
            
            0.73
            %
            
            0.44
            %Annualized
                net charge-offs to average loans(1)
            
            
            7.14
            %
            
            5.62
            %**Other
                Data**Number
                of branches
            
            
            128
            
            
            137Number
                of employees
            
            
            1,055
            
            
            1,002Interest
                income
            
            $
            58,470
            
            $
            53,224Interest
                expense
            
            $
            12,606
            
            $
            10,513Interest
                margin
            
            $
            45,864
            
            $
            42,711Net
                interest margin as a percentage of interest income
            
            
            78.44
            %
            
            80.25
            %Net
                interest margin as a percentage of average loans(1)
            
            
            19.88
            %
            
            20.68
            %Non-interest
                expense to average loans(1)
            
            
            11.54
            %
            
            11.39
            %Non-interest
                expense to average loans(2)
            
            
            11.09
            %
            
            11.39
            %Return
                on average assets(1)
            
            
            0.52
            %
            
            1.37
            %Return
                on average shareholders’ equity(1)
            
            
            3.21
            %
            
            7.79
            %Consolidated
                capital to assets ratio
            
            
            16.38
            %
            
            16.77
            %


_____________________________________




(1)
      Quarterly information is annualized for comparability with full year
      information.


(2)
      Excluding restructuring charges.




**Results
      of Operations**




***Comparison
      of Operating Results for the Three Months Ended March 31, 2008 and 2007***




*General*




For
      the
      three months ended March 31, 2008, our net income was $1.3 million, or $0.08
      per
      diluted share, compared with $3.0 million, or $0.18 per diluted share for the
      same period a year ago.




Interest
      income increased 10% to $58.5 million for the three months ended March 31,
      2008
      from $53.2 million for the same period a year ago. Automobile contracts
      purchased decreased $37.7 million to $129.9 million for the three months ended
      March 31, 2008 from $167.6 million for the same period a year ago. This decrease
      was the result of the slowdown in the economy and current market conditions,
      in
      addition to our focus on tighter underwriting criteria. During the three months
      ended March 31, 2008, we closed 14 underperforming branches bringing our total
      to 128 branches in 38 states.




*Interest
      Income*




Interest
      income increased by 10% to $58.5 million for the three months ended March 31,
      2008 from $53.2 million for the same period a year ago due primarily to the
      increase in average automobile contracts of $90.2 million. Interest income
      on
      loans represents finance charges taken into earnings during the quarter as
      well
      as the accretion of the acquisition discount fee on loans acquired. Investment
      income increased as a result of higher invested cash balances.




22





*Interest
      Expense*




Interest
      expense increased 20% to $12.6 million for the three months ended March 31,
      2008
      from $10.5 million for the same period a year ago. The average debt outstanding
      increased by 26% to $809.4 million for the three months ended March 31, 2008
      from $727.0 million for the same period a year ago. The average interest rate
      increased 6.6% to 6.26% for the three months ended March 31, 2008 from 5.87%
      for
      the same period a year ago. The increase was the result of higher market
      interest rates, coupled with the pay down of lower priced securitizations.





*Provision
      and Allowance for Loan Losses*




Provisions
      for loan losses are charged to income to bring our allowance for loan losses
      to
      a level which management considers adequate to absorb probable credit losses
      inherent in the portfolio of automobile loans. The provision for loan losses
      recorded in the three months ended March 31, 2008 and 2007 reflects inherent
      losses on receivables originated during those periods and changes in the amount
      of inherent losses on receivables originated in prior periods. The provision
      for
      loan losses increased to $17.6 million for the three months ended March 31,
      2008
      compared with $14.5 million for the same period a year ago. The increase in
      the provision for loan losses was due primarily to a $90.2 million increase
      in
      average automobile contracts and an increase in the annualized charge-off rate
      to 7.14% for the three months ended March 31, 2008 compared to 5.62% for the
      same period a year ago.




The
      increase in our annualized net charge-offs was the result of increased defaults
      due to the overall deteriorating economic environment.




The
      total
      allowance for loan losses was $49.6 million at March 31, 2008 compared with
      $38.9 million at March 31, 2007, representing 5.57% of automobile contracts,
      less unearned acquisition discounts, at March 31, 2008 and 4.72% at March 31,
      2007. The increase in the allowance for loan losses was due primarily to a
      $65.4
      million increase in automobile contracts outstanding, which increased to $932.3
      million at March 31, 2008 from $866.9 million at March 31, 2007 and an increase
      in the loss rate within the portfolio.




A
      provision for loan losses is charged to operations based on our regular
      evaluation of the adequacy of the 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 other market conditions or other circumstances will
      not
      result in increased losses in the loan portfolio.




For
      further information, see “—Critical Accounting Policies.”




*Non-interest
      Income*




Non-interest
      income increased $0.2 million to $0.5 million for the three months ended March
      31, 2008 from $0.3 million for the same period a year ago.




*Non-interest
      Expense*




Non-interest
      expense increased $3.1 million to $26.6 million for the three months ended
      March
      31, 2008 from $23.5 million for the same period a year ago. The increase in
      non-interest expense was due to the increase in total average number of branches
      in the first quarter of 2008 versus the first quarter of 2007. Non-interest
      expense, excluding the restructuring charges associated with branch closures,
      as
      a percentage of average loans dropped to 11.09% from 11.39% for the same period
      a year ago. A pretax restructuring charge of $1.0 million was recorded for
      costs
      associated with branch closures in the quarter ended March 31, 2008 which
      included severance, fixed asset write-offs and post-closure costs. The
      restructuring charge included a $450,000 reserve for estimated future lease
      obligations.




*Income
      Taxes*




Income
      taxes decreased $1.2 million to $0.8 million for the three months ended March
      31, 2008 from $2.0 million for the same period a year ago. This decrease
      occurred primarily as a result of a $3.0 million decrease in taxable income
      before income taxes.




**Financial
      Condition**




***Comparison
      of Financial Condition at March 31, 2008 and December 31, 2007***




Total
      assets increased $5.5 million, to $982.7 million at March 31, 2008, from $977.2
      million at December 31, 2007. The increase resulted from a $6.3 million
      increase in automobile contracts to $889.0 million, net of unearned acquisition
      discounts and unearned finance charges, at March 31, 2008 from $882.7 million
      at
      December 31, 2007.




23




Securitization
      notes payable decreased to $647.2 million at March 31, 2008 from
      $762.2 million at December 31, 2007 due to payments on the automobile
      contracts backing the securitized borrowings.




Warehouse
      line of credit borrowing increased to $154.4 million as of March 31, 2008 from
      $35.6 as of December 31, 2007 due to funding of additional automobile
      contracts during the three months ended March 31, 2008.




Shareholders’
      equity increased to $160.9 million at March 31, 2008 from $159.3 million at
      December 31, 2007, primarily as a result of net income of $1.3 million and
      recognition of expense for fair value of options of $0.3 million.





**Cash
      Flows**





***Comparison
      of Cash Flows for the Three Months Ended March 31, 2008 and
      2007***





Cash
      provided by operating activities was $15.0 million and $14.6 million for the
      three months ended March 31, 2008 and 2007, respectively. Cash provided by
      operating activities increased for the three months ended March 31, 2008
      compared to the same period in 2007 due primarily to an increase in cash
      received on interest income, partially offset by an increase in cash used on
      interest expense.





Cash
      used
      in investing activities was $16.3 million and $56.0 million for the three months
      ended March 31, 2008 and 2007, respectively. Cash used in investing activities
      decreased for the three months ended March 31, 2008 compared to the same period
      in 2007 due to a decrease of $37.7 million in automobile contracts
      purchased.





Cash
      used
      in financing activities was $2.3 million for three months ended March 31, 2008.
      Cash provided by financing activities was $26.4 million for the three months
      ended March 31, 2007. Cash used in financing activities increased for the three
      months ended March 31, 2008 compared to the same period in 2007 due primarily
      to
      $115.0 million payments on securitization notes payable and $126.5 million
      proceeds from warehouse line of credit in the three months ended March 31,
      2008
      and $95.1 million payments on securitization notes payable and $141.8 million
      proceeds from warehouse line of credit in the three months ended March 31,
      2007.




**Management
      of Interest Rate Risk**




The
      principal objective of our interest rate risk management program is to evaluate
      the interest rate risk inherent in our business activities, determine the level
      of appropriate risk given our operating environment, capital and liquidity
      requirements and performance objectives and manage the risk consistent with
      guidelines approved by our Board of Directors. Through such management, we
      seek
      to reduce the exposure of our operations to changes in interest rates.




Our
      profits depend, in part, on the difference, or “spread,” between the effective
      rate of interest received on the loans which we originate and the interest
      rates
      paid on our financing facilities, which can be adversely affected by movements
      in interest rates.




The
      automobile contracts purchased and held by us are written at fixed interest
      rates and, accordingly, have interest rate risk while such contracts are funded
      with warehouse borrowings because the warehouse borrowings accrue interest
      at a
      variable rate. Prior to closing our first securitization, while we were shifting
      the funding source of our automobile finance business to the public capital
      markets through securitizations and warehouse facilities, we entered into
      forward agreements in order to reduce the interest rate risk exposure on our
      securitization notes payable. The market value of these forward agreements
      was
      designed to respond inversely to changes in interest rate. Because of this
      inverse relationship, we were able to effectively lock in a gross interest
      rate
      spread for our automobile contracts held in portfolio prior to the sale of
      the
      securitization notes payable. Losses related to these agreements were recorded
      on our Consolidated Statements of Operations during 2004 because the derivative
      transactions did not meet the accounting requirements to qualify for hedge
      accounting. Accordingly, we did not amortize them over the life of the
      automotive contracts.




**Recent
      Accounting Developments**




See
      Note
      3 to the Consolidated Financial Statements included in Item 1 to this
      Quarterly Report on Form 10-Q for a discussion of recent accounting
      developments.




24




**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.”




**Item 4.**  **Controls
      and Procedures.**




**Disclosure
      Controls and Procedures**




Under
      the
      supervision and with the participation of our management, including our Chief
      Executive Officer and Chief Financial Officer, we conducted an evaluation of
      our
      disclosure controls and procedures, as such term is defined under Rules
      13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our
      Chief Executive Officer and Chief Financial Officer concluded that our
      disclosure controls and procedures were effective as of March 31, 2008.




**Changes
      in Internal Control Over Financial Reporting**




There
      was
      no change in our internal control over financial reporting during the quarter
      ended March 31, 2008 that has materially affected, or is reasonably likely
      to
      materially affect, our internal control over financial reporting.




25




**PART
      II. OTHER INFORMATION**




**Item 1.**  **Legal
      Proceedings.**




Not
      applicable




**Item 1A.**  **Risk
      Factors.**




In
      addition to the other information set forth in this report, you should carefully
      consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual
      Report on Form 10-K for the year ended December 31, 2007, which could
      materially affect our business, financial condition or future results. The
      risks
      described in our Annual Report on Form 10-K are not the only risks facing the
      Company. Additional risks and uncertainties not currently known to us or that
      we
      currently deem to be immaterial also may materially adversely affect our
      business, financial condition, operating results and/or cash flows.




**Item 2.**  **Unregistered
      Sales of Equity Securities and Use of Proceeds.**




**Issuer
      Purchases of Equity Securities**




During
      the quarter ended March 31, 2008, we did not repurchase any shares of our common
      stock.


**Period**
              
              **Total**
                **Number of**
                **Shares**
                **Purchased**
              
              **Average**
                **Price Paid**
                **Per Share**
              
              **Total Number of Shares**
                **Purchased as Part of**
                **Publicly Announced**
                **Plan or Program**
              
              **Approximate Number**
                **of Shares That**
                **May Yet Be**
                **Purchased Under the**
                **Plan or Program**January
                  1, 2008 to January 31, 2008
              
              
              —
              
              $
              —
              
              
              —
              
              
              1,410,262February
                  1, 2008 to February 29, 2008
              
              
              —
              
              $
              —
              
              
              —
              
              
              1,410,262March
                  1, 2008 to March 31, 2008
              
              
              —
              
              $
              —
              
              
              —
              
              
              1,410,262Total
              
              
              —
              
              $
              —
              
              
              —
              
              
              1,410,262




On
      June 27, 2006, our Board of Directors approved a share repurchase program
      and authorized us to repurchase up to 500,000 shares of our outstanding common
      stock from time to time in the open market or in private transactions in
      accordance with the provisions of applicable state and federal law, including,
      without limitation, Rule 10b-18 promulgated under the Securities Exchange Act
      of
      1934, as amended. On August 4, 2006, our Board of Directors approved an
      increase in the aggregate number of shares of our outstanding common stock
      that
      we may repurchase pursuant to the previously announced share repurchase program
      from 500,000 shares to 1,500,000 shares. On December 21, 2006, our Board of
      Directors approved a second increase in the aggregate number of shares of our
      outstanding common stock that we may repurchase pursuant to the previously
      announced share repurchase program from 1,500,000 shares to 3,500,000 shares.
      This share repurchase program does not have an expiration date.




**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.**




31.1
            Certification
                of Chief Executive Officer under Section 302 of the Sarbanes-Oxley
                Act
                2002.31.2
            Certification
                of Chief Financial Officer under Section 302 of the Sarbanes-Oxley
                Act
                2002.32.1
            Certification
                of Chief Executive Officer under Section 906 of the Sarbanes-Oxley
                Act
                2002.32.2
            Certification
                of Chief Financial Officer under Section 906 of the Sarbanes-Oxley
                Act
                2002.




26


**SIGNATURES**




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




**United
                PanAm Financial Corp.****Date:**
            May
                8, 2008
            
            By:
            /S/    Ray
                Thousand**Ray
                Thousand**
              **Chief
                  Executive Officer and President**
                **(Principal
                    Executive Officer)**May
                8, 2008
            
            By:
            /s/    Arash
                Khazei**Arash
                Khazei**
              **Chief Financial Officer and Executive Vice President**
                **(Principal
                    Financial and Accounting
                    Officer)**




27