================================================================================
                                   FORM 10-K/A

                United States Securities and Exchange Commission
                             Washington, D.C. 20549



(Mark One)

(X)  Annual Report  Pursuant to Section 13 or 15(d) of the  Securities  Exchange
     Act of 1934

For the fiscal year ended June 30, 1998
or

( )  Transition  Report  Pursuant  to  Section  13 or  15(d)  of the  Securities
     Exchange Act of 1934

For the Transition Period from _____ to _____

Commission File Number:   0-26412


                          UNION ACCEPTANCE CORPORATION
             (Exact name of registrant as specified in its charter)


          Indiana                                            35-1908796
(State or other jurisdiction                              (I.R.S. Employer
    of incorporation                                     Identification Number)
     or organization)


250 N. Shadeland Avenue, Indianapolis, IN                     46219
(Address of principal executive office)                     (Zip Code)

Registrant's telephone number, including area code:  317-231-6400

Securities Registered Pursuant to Section 12(b) of the Act:  NONE

Securities  Registered  Pursuant  to  Section  12(g) of the Act:  Class A Common
Stock, without par value

Indicate by check mark whether  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 filing requirements
for the past 90 days.        Yes (X)           No ( )

Indicate by check mark if disclosure of delinquent  filers pursuant to Item 405,
Regulation S-K (Section  229.405 of this chapter) is not contained  herein,  and
will not be contained,  to the best of the Registrant's knowledge, in definitive
proxy or information  statements  incorporated  by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. ( X )

The  aggregate  market value of the  4,047,351  shares of the  issuer's  Class A
Common Stock held by non-affiliates,  as of September 23, 1998, was $21,754,512.
There is no trading market for the issuer's Class B Common Stock.

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

The  number of shares of Class A Common  Stock of the  Registrant,  without  par
value, outstanding as of September 23, 1998, was 4,376,446 shares. The number of
shares of Class B Common Stock of the Registrant,  without par value, as of such
date was 8,855,036.

                      DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the 1998 Annual Meeting of Shareholders  are
incorporated into Part III.


<PAGE>

Item 6, 7A and 8 of the  Registrant's  annual report,  on Form 10-K for the year
ended  June 30,  1998 as filed  September  28,  1998,  are  included  with  this
amendment to make several technical corrections.  Additionally,  Exhibit 23, the
consent of KPMG Peat  Marwick LLP,  which was  inadvertently  omitted,  is filed
herewith.

Item 6.  Selected Consolidated Financial Data
---------------------------------------------

     The following  table sets forth  certain  selected  consolidated  financial
information  reflecting the consolidated  operations and financial  condition of
the Company for each year in the five year period ended June 30, 1998. This data
should  be  read  in  conjunction  with  the  Company's  consolidated  financial
statements  and related notes thereto and "Item 7.  Management's  Discussion and
Analysis of Results of Operations and Financial  Condition"  included herein. As
described more fully in the notes to  Consolidated  Financial  Statements,  this
report  contains  financial  information  which has been restated to correct the
June 30, 1997 valuation of Retained Interest in Securitized Assets.

<TABLE>
<CAPTION>
                                                                                         Year Ended June 30,
                                                            ---------------------------------------------------------------------
                                                               1998             1997          1996         1995          1994
                                                               ----             ----          ----         ----          ----   
                                                                                      (Dollars in thousands)
Income Statement Data:
<S>                                                            <C>              <C>            <C>          <C>           <C>   
Interest income                                              $ 33,727       $   40,299     $   34,160     $ 18,638      $ 14,260
Interest expense(1)                                            26,107           25,688         22,275       12,961         7,769
                                                            ---------------------------------------------------------------------
  Net interest margin                                           7,620           14,611         11,885        5,677         6,491
Provision for estimated                                                                                              
credit losses                                                   8,050            4,188          2,875        1,074           484
                                                            ---------------------------------------------------------------------
  Net interest margin (deficit) after provision                  (430)          10,423          9,010        4,603         6,007

Gain (loss) on sales of  loans, net                           (11,926)             963         30,357        8,684         4,643
Servicing fees, net                                            26,137           25,344         16,926       14,628        11,570
Other                                                           4,087            3,820          3,096        2,783         2,735
                                                            ---------------------------------------------------------------------
     Total revenues                                            17,868           40,550         59,389       30,698        24,955

Operating expenses                                             35,546           30,502         23,841       14,913         8,995
                                                            ---------------------------------------------------------------------
  Earnings (loss) before provision for income taxes           (17,678)          10,048         35,548       15,785        15,960
  Provision (benefit) for income taxes                         (7,856)           4,166         14,406        6,396         6,384
                                                            ---------------------------------------------------------------------
     Net earnings (loss)                                    $  (9,822)      $    5,882     $   21,142     $  9,389        $9,576
                                                            =====================================================================

Operating Data:
Tier I auto receivables acquired                            $944,725        $1,076,064     $  994,834     $766,972      $614,627
Tier II auto receivables acquired                             24,027            39,610         36,030       21,511             -
Marine receivables acquired                                    2,515             6,590             50            -             -
                                                            ---------------------------------------------------------------------
     Total receivables acquired (dollars)                    $971,267       $1,122,264     $1,030,914     $788,483      $614,627
                                                            =====================================================================

Tier I auto receivables acquired                               64,152           75,844         71,070       58,409        49,307
Tier II auto receivables acquired                               1,746            3,050          2,870        1,770             -
Marine receivables acquired                                       200              496              6            -             -
                                                            ---------------------------------------------------------------------
     Total receivables acquired (number of loans)              66,098           79,390         73,946       60,179        49,307
                                                            =====================================================================

Tier I auto loans securitized                                $919,455       $1,183,190      $ 890,110     $658,703      $617,103
Tier II auto loans securitized                                                                                       
                                                               28,659           31,108         34,488            -             -
                                                            ---------------------------------------------------------------------
     Total auto loans securitized                            $948,114       $1,214,298      $ 924,598     $658,703      $617,103
                                                            =====================================================================
Ratio of operating expenses as a % of
  average servicing portfolio                                    1.78%            1.67%          1.73%        1.49%         1.21%
Servicing fees, net, as a % of operating
  expenses                                                      73.53%           83.09%         71.00%       98.09%       128.63%

Tier I credit losses as a % of avg. servicing portfolio          2.80%            2.40%          1.58%        1.36%         0.69%
Tier II credit losses as a % of avg. servicing portfolio         7.67%            5.18%          2.37%        2.97%           N/A
Marine credit losses as a % of avg. servicing portfolio          1.12%            0.25%            N/A          N/A           N/A
Tier I delinquencies of 30 days or more as a
     % of servicing portfolio                                    3.07%            2.96%          1.84%        1.40%         1.40%
Tier II delinquencies of 30 days or more as a
     % of servicing portfolio                                    8.29%            6.18%          3.35%        1.25%           N/A
Marine deliquencies of 30 days or more as a
     % of servicing portfolio                                     N/A             0.10%            N/A          N/A           N/A



</TABLE>
<PAGE>

Item 6.  Selected Consolidated Financial Data (Continued)
---------------------------------------------------------

<TABLE>
<CAPTION>


At June 30,                                               1998          1997            1996         1995           1994
-----------                                               ----          ----            ----         ----           ----
                                                                                (Dollars in thousands)
Balance Sheet Data(2):
<S>                                                     <C>           <C>             <C>          <C>           <C>      
Loans, net                                              $118,259      $121,156        $259,290     $201,022      $  96,101
Retained interest in securitized assets                  171,593       170,791         147,024      118,076         78,598
Total assets                                             411,533       391,268         451,195      349,283        181,516
Due to Union Federal                                           -             -               -      338,958        177,577
Amounts due under warehouse facilities                    73,123        44,455         187,756            -              -
Long-term debt                                           221,000       221,000         156,000            -              -
 Total shareholder equity(3)                              82,473        86,848          78,624            2              2

Other Data:
Tier I auto servicing portfolio                       $1,978,920    $1,860,272      $1,548,538   $1,159,349       $843,245
Tier II auto servicing portfolio                          66,855        68,289          47,062       19,858              -
Marine servicing portfolio                                     -         6,227              50            -              -
Other loans  serviced                                      1,642         2,488           3,420        5,203              -
                                                      ---------------------------------------------------------------------
     Total servicing portfolio                        $2,047,417    $1,937,276      $1,599,070   $1,184,410       $ 843,245
                                                      =====================================================================

Average Tier I auto servicing portfolio                1,922,977     1,759,666       1,343,770      982,875        744,149
Average Tier II auto servicing portfolio                  69,622        63,305          33,124        9,448              -
Average Marine servicing portfolio                         6,920         2,357              NM            -              -
Other loans average servicing portfolio                    1,941         2,799           4,222        6,643              -
                                                      ---------------------------------------------------------------------
     Total average servicing  portfolio               $2,001,460    $1,828,127      $1,381,116     $998,966       $744,149
                                                      =====================================================================

Number of Tier I auto loans serviced (at period end)     184,003       173,693         147,722      117,837         91,837
Number of Tier II auto loans serviced (at period end)      6,285         6,056           4,067        1,687              -
Number of Marine loans serviced (at period end)                -           472               6            -              -
Number of Other loans serviced (at period end)               256           402             537          836              -
                                                      ---------------------------------------------------------------------
     Total number of loans serviced (at period end)                                                           
                                                         190,544       180,623         152,332      120,360         91,837

Number of dealers                                                                                             
                                                           3,628         3,204           2,523        1,604            884
Number of employees (full-time equivalents)                                                                   
                                                             529           387             313          215            142
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1)      Interest  expense for the years ended June 30, 1994 and 1995, was based
         upon  the  average  monthly  balance  "Due to Union  Federal"  at Union
         Federal's all-inclusive cost of funds.

(2)      All  consolidated  balance  sheet  amounts,  except the amounts "Due to
         Union Federal", represent actual recorded assets and liabilities of the
         Company's  business.  The amount Due to Union Federal includes division
         funding by Union Federal as well as inter-company funding.

(3)      The consolidated  financial  statements  reflect no allocation of Union
         Federal's historical equity. Earnings of the Company are transferred to
         Union  Federal  through  the Due to Union  Federal  account at June 30,
         1994, and 1995.

<PAGE>
Item 7a.       Quantitative and Qualitative Disclosures About Market Risk
--------       ----------------------------------------------------------

     The Company bears the primary risk of loss due to defaults in its servicing
portfolio.  Default  and credit  loss  rates are  impacted  by general  economic
factors that affect  borrowers'  ability to continue to make timely  payments on
their  indebtedness.  Prepayments on loans in the servicing portfolio reduce the
size of the  portfolio and reduce the Company's  servicing  income.  The Gain on
Sales of Loans in connection with each securitization transaction and the amount
of Retained  Interest  recognized in each  transaction  reflect  deductions  for
estimates of future  defaults and  prepayments.  The carrying  value of Retained
Interest may be adjusted  periodically to reflect  differences between estimated
and actual credit losses and prepayments on past  securitizations.  For example,
if credit losses  increased or decreased by 1.00%,  the gain on sale of a $300.0
million  securitization  would  result in a reduction or an increase of the Gain
(Loss) on Sales of Loans by $3.0  million  pre-tax.  The same 1.00%  increase or
decrease would result in a reduction or an increase of the Retained  Interest of
approximately  $19.3  million as of June 30, 1998.  The Company does not believe
fluctuations  in interest  rates  materially  affect the rate of  prepayments on
loans.  See  "Item  7.  Management's  Discussion  and  Analysis  of  Results  of
Operations  and  Financial  Condition"  and  "Notes 1 and 4 of the  Consolidated
Financial Statements."

     The Company's  sources of funds  generally  have variable rates of interest
and its loan  portfolio  bears  interest at fixed rates.  The Company  therefore
bears  interest  rate risk on loans  until they are  securitized  and  employs a
hedging strategy to mitigate this risk. As a part of the hedging  strategy,  the
Company  executes  short  sales of U.S.  Treasury  securities  having a maturity
approximating  the average  maturity of loans to be acquired during the relevant
period.  There is no assurance that this strategy will completely offset changes
in  interest  rates.  In  particular,  such  strategy  depends  on  management's
estimates of loan acquisition volume. The Company realizes a gain on its hedging
transactions  during periods of increasing interest rates and realizes a loss on
such transactions  during periods of decreasing interest rates. The hedging gain
or loss will  substantially  offset changes in interest rates as seen by a lower
or  higher  reported  gain on  sales  of  loans,  respectively.  Recognition  of
unrealized  gains or  losses is  deferred  until  the sale of loans  during  the
securitization.  On the date of the sale,  hedging deferred gains and losses are
recognized  as a component of gain on sales of loans.  Increases or decreases in
interest   rates  reduce  or  increase   the  fair  value  of  long-term   debt,
respectively.  See "Item 7.  Management's  Discussion and Analysis of Results of
Operations  and  Financial  Condition"  and  "Notes 2 and 6 of the  Consolidated
Financial Statements."

Item 8.  Financial Statements and Supplementary Data
-------  -------------------------------------------


                          Independent Auditors' Report




The Board of Directors
Union Acceptance Corporation:


We have audited the accompanying consolidated balance sheets of Union Acceptance
Corporation  and  Subsidiaries  as of June 30,  1998 and 1997,  and the  related
consolidated  statements of earnings (loss) and  comprehensive  earnings (loss),
shareholders'  equity,  and cash  flows for each of the years in the  three-year
period ended June 30, 1998.  These  consolidated  financial  statements  are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects, the financial position of the Union Acceptance
Corporation  and  Subsidiaries  as of June 30, 1998 and 1997, and the results of
their  operations  and their cash flows for each of the years in the  three-year
period ended June 30, 1998 in  conformity  with  generally  accepted  accounting
principles.

As discussed in note 1 to the  consolidated  financial  statements,  the Company
adopted the provisions of the Financial  Accounting  Standards Board's Statement
of Financial Accounting Standard No. 125, Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities, on January 1, 1997.

As discussed in note 13 to the consolidated  financial  statements,  the Company
has restated its June 30, 1997 consolidated  financial  statements to include an
other  than  temporary  impairment   adjustment  of  the  retained  interest  in
securitized assets.



/s/ KPMG Peat Marwick LLP
-------------------------
KPMG Peat Marwick LLP

August 27, 1998
Indianapolis, Indiana

<PAGE>


UNION ACCEPTANCE CORPORATION AND SUBSIDIARIES
                                     
Consolidated Balance Sheets

June 30, 1998 and 1997

(in thousands, except share data)

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
                                                     Assets                                       1998            1997
---------------------------------------------------------------------------------------------------------------------------

<S>                                                                                          <C>                    <C>   
Cash                                                                                         $      75,612          58,801
Restricted cash                                                                                     17,823          16,657
Loans, net                                                                                         118,259         121,156
Accrued interest receivable                                                                          1,045           1,232
Property, equipment, and leasehold improvements, net                                                 7,921           2,150
Retained interest in securitized assets                                                            171,593         170,791
Other assets                                                                                        19,280          20,481
---------------------------------------------------------------------------------------------------------------------------

Total assets                                                                                 $     411,533         391,268
---------------------------------------------------------------------------------------------------------------------------


                                      Liabilities and Shareholders' Equity
---------------------------------------------------------------------------------------------------------------------------

Liabilities:
   Amounts due under warehouse facilities                                                           73,123          44,455
   Long-term debt                                                                                  221,000         221,000
   Accrued interest payable                                                                          6,280           5,793
   Amounts due to trusts                                                                            15,510          16,067
   Dealer premiums payable                                                                           1,374           1,372
   Deferred income tax payable                                                                       9,573          13,859
   Other payables and accrued expenses                                                               2,200           1,874
---------------------------------------------------------------------------------------------------------------------------

Total liabilities                                                                                  329,060         304,420
---------------------------------------------------------------------------------------------------------------------------

Shareholders' equity:
   Preferred stock, without par value, authorized 10,000,000 shares;
           none issued and outstanding                                                                  --              --
   Class A common stock, without par value, authorized 30,000,000 shares;
           4,376,446 and 4,016,788 shares issued and outstanding at June 30, 1998
           and June 30, 1997, respectively                                                          58,360          58,270
   Class B common stock, without par value, authorized 20,000,000 shares;
           8,855,036 and 9,200,000 shares issued and outstanding at June 30, 1998
           and June 30, 1997, respectively                                                              --              --
   Net unrealized gain on retained interest in securitized assets                                    7,609           2,252
   Retained earnings                                                                                16,504          26,326
---------------------------------------------------------------------------------------------------------------------------

Total shareholders' equity                                                                          82,473          86,848
---------------------------------------------------------------------------------------------------------------------------

Total liabilities and shareholders' equity                                                   $     411,533         391,268
===========================================================================================================================
</TABLE>


See accompanying notes to consolidated financial statements.

<PAGE>


UNION ACCEPTANCE CORPORATION AND SUBSIDIARIES
                       
Consolidated Statements of Earnings (Loss) and Comprehensive Earnings (Loss)

Years ended June 30, 1998, 1997, and 1996

(in thousands, except share data)

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
                                                                               1998              1997              1996
--------------------------------------------------------------------------------------------------------------------------

<S>                                                                        <C>                   <C>               <C>   
Interest on loans                                                          $    27,871           33,914            28,712
Interest on spread accounts and restricted cash                                  5,856            6,385             5,448
--------------------------------------------------------------------------------------------------------------------------

Total interest income                                                           33,727           40,299            34,160

Interest expense                                                                26,107           25,688            22,275
--------------------------------------------------------------------------------------------------------------------------

Net interest margin                                                              7,620           14,611            11,885

Provision for estimated credit losses                                            8,050            4,188             2,875
--------------------------------------------------------------------------------------------------------------------------

Net interest margin (deficit) after provision                                     (430)          10,423             9,010

Gain (loss) on sales of loans, net                                             (11,926)             963            30,357
Servicing fees, net                                                             26,137           25,344            16,926
Other revenues                                                                   4,087            3,820             3,096
--------------------------------------------------------------------------------------------------------------------------

Total revenues                                                                  17,868           40,550            59,389
--------------------------------------------------------------------------------------------------------------------------

Salaries and benefits                                                           19,427           15,673            11,985
Other expenses                                                                  16,119           14,829            11,856
--------------------------------------------------------------------------------------------------------------------------

Total operating expenses                                                        35,546           30,502            23,841
--------------------------------------------------------------------------------------------------------------------------

Earnings (loss) before provision (benefit) for income taxes                   (17,678)           10,048            35,548
Provision (benefit) for income taxes                                           (7,856)            4,166            14,406
--------------------------------------------------------------------------------------------------------------------------

Net earnings (loss)                                                            (9,822)            5,882            21,142
--------------------------------------------------------------------------------------------------------------------------

Other comprehensive earnings before taxes:
   Net unrealized gain on retained interests in securitized assets               8,527            3,785                 -
   Income taxes related to items of other comprehensive earnings                (3,170)          (1,533)                -
--------------------------------------------------------------------------------------------------------------------------

Other comprehensive earnings, net of taxes                                       5,357            2,252                 -
--------------------------------------------------------------------------------------------------------------------------

Comprehensive earnings (loss)                                              $    (4,465)           8,134            21,142
==========================================================================================================================

Net earnings (loss) per common share (basic and diluted)                   $     (0.74)            0.45              1.60
==========================================================================================================================

Weighted average number of common shares outstanding                        13,226,651       13,215,112        13,209,378
==========================================================================================================================

</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>

UNION ACCEPTANCE CORPORATION AND SUBSIDIARIES
                        
Consolidated Statements of Shareholders' Equity

For the years ended June 30, 1998, 1997, and 1996

(in thousands, except share data)

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
                                                                                             Net
                                                Number of                                unrealized 
                                              common stock                                gain on               
                                            shares outstanding                            retained                      Total
                                   ---------------------------------------    Common     interest in    Retained    shareholders'
                                    Class A              Class B               stock     securitized    earnings       equity
                                                                                           assets
---------------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>                    <C>              <C>                                          <C>   
Balance at June 30, 1995                     1                      1   $         2              -             -               2

   Issuance of common
      stock through initial
      public offering                4,000,000              9,200,000        58,000              -             -          58,000

   Regulatory equity
      distributions related
      to spin-off                          (1)                    (1)           (2)              -         (698)           (700)

   Grants of common stock               11,358                      -           180              -             -             180

   Net earnings                              -                      -             -              -        21,142          21,142
---------------------------------------------------------------------------------------------------------------------------------

Balance at June 30, 1996             4,011,358              9,200,000        58,180              -        20,444          78,624

   Grants of common stock                5,430                      -            90              -             -              90

   Net earnings                              -                      -             -              -         5,882           5,882

   Net change in unrealized
      gain on retained interest
      in securitized assets                  -                      -             -          2,252             -           2,252
---------------------------------------------------------------------------------------------------------------------------------

Balance at June 30, 1997             4,016,788              9,200,000        58,270          2,252        26,326          86,848

   Grants of common stock               14,694                      -            90              -             -              90

   Conversion of Class B
      common stock into
      Class A common stock             344,964              (344,964)             -              -             -               -

   Net loss                                  -                      -             -              -       (9,822)         (9,822)
   

   Net change in unrealized
      gain on retained interest
      in securitized assets                  -                      -             -          5,357             -           5,357
---------------------------------------------------------------------------------------------------------------------------------

Balance at June 30, 1998             4,376,446              8,855,036   $    58,360          7,609        16,504          82,473
=================================================================================================================================
</TABLE>


See accompanying notes to consolidated financial statements.



<PAGE>


UNION ACCEPTANCE CORPORATION AND SUBSIDIARIES
                       
Consolidated Statements of Cash Flows

Years ended June 30, 1998, 1997, and 1996

(in thousands)

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
                                                                     1998          1997          1996
------------------------------------------------------------------------------------------------------

Cash flows from operating activities:
<S>                                                              <C>                <C>          <C>   
   Net earnings (loss)                                           $   (9,822)        5,882        21,142
   Adjustments to reconcile net earnings (loss) to net cash
     provided (used) by operating activities:
        Loan originations in excess of liquidations                (953,252)   (1,087,065)     (982,800)
        Dealer premiums paid in excess of dealer premium
          rebates received on loans held for sale                   (40,526)      (53,461)      (50,059)
        Securitization of loans held for sale                       948,114     1,214,298       924,598
        Gain on sales of loans                                      (19,253)      (46,713)      (37,900)
        Proceeds on sale of interest only strip                      13,869        31,773        26,686
        Return of excess and servicing asset cash flows,
          net of present value effect                                23,347        24,738        37,871
        Impairment of retained interest in securitized assets        23,636        34,828            --
        Provision for estimated credit losses                         8,050         4,188         2,875
        Amortization and depreciation                                 4,689         3,979         4,395
        Spread accounts                                               3,631        (8,154)       (6,176)
        Restricted cash                                              (1,166)       (1,868)       (5,934)
        Other assets and accrued interest receivable                 (2,425)      (10,296)       (6,788)
        Amounts due to trusts                                          (557)        8,136         2,030
        Other payables and accrued expenses                          (3,383)        5,697        14,281
------------------------------------------------------------------------------------------------------
Net cash provided (used) by operating activities                     (5,048)      125,962       (55,779)
------------------------------------------------------------------------------------------------------

Cash flows from investing activities:
   Purchase of property, equipment, and leasehold improvements       (6,809)         (967)       (1,347)
------------------------------------------------------------------------------------------------------

Cash flows from financing activities:
   Net change in warehouse credit facilities                         28,668      (143,301)      187,756
   Proceeds from issuance of senior notes                                --        65,000       110,000
   Proceeds from issuance of senior subordinated notes                   --            --        46,000
   Payment of borrowing fees                                             --        (1,352)       (3,231)
   Net proceeds from issuance of common stock                            --            --        58,000
   Net change in due to Union Federal, including
     regulatory equity distribution                                      --            --      (337,423)
------------------------------------------------------------------------------------------------------
Net cash provided (used) from financing activities                   28,668       (79,653)       61,102
------------------------------------------------------------------------------------------------------

Change in cash                                                       16,811        45,342         3,976

Cash, beginning of year                                              58,801        13,459         9,483
------------------------------------------------------------------------------------------------------

Cash, end of year                                                $   75,612        58,801        13,459
=======================================================================================================

Supplemental disclosures of cash flow information:

   Income taxes paid                                             $       22         4,288        10,680
=======================================================================================================
   Interest paid                                                 $   26,472        26,475        15,648
=======================================================================================================

</TABLE>
See accompanying notes to consolidated financial statements.







<PAGE>

UNION ACCEPTANCE CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

June 30, 1998, 1997, and 1996

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

(1)     Summary of Significant Accounting Policies

        (a)   Description of Business

       Union Acceptance Corporation ("UAC") is an Indiana  corporation formed in
        December  1993.  UAC and its  subsidiaries  (collectively,  the Company)
        engage  primarily  in  the  business  of  acquiring,  securitizing,  and
        servicing retail automobile  installment  sales contracts  originated by
        dealerships  affiliated  with  major  domestic  and  foreign  automobile
        manufacturers.  The Company  currently  acquires loans from a network of
        over 3,600 manufacturer-franchised  automobile dealerships in 32 states.
        No individual  dealer or group of affiliated  dealers accounted for more
        than 1.9% of the Company's loan acquisitions  during the year ended June
        30, 1998.

        The Company's  lending  program  focuses on acquiring two levels of loan
        quality.  Primarily,  the  Company  acquires  loans from  borrowers  who
        exhibit a favorable  credit profile ("Tier I" lending)  purchasing  late
        model used and, to a lesser extent,  new  automobiles.  The Company also
        acquires loans from borrowers with adequate credit quality who would not
        qualify for the Company's  Tier I lending  quality  criteria  ("Tier II"
        lending).  Tier II loan  acquisitions  accounted  for 2.5% of total loan
        acquisitions  during fiscal 1998 and 3.3% of loan servicing portfolio at
        June 30, 1998.

        (b)   Basis of Financial Statement Presentation

        The consolidated  financial  statements included the accounts of UAC and
        its wholly-owned subsidiaries, Union Acceptance Funding Corporation, UAC
        Securitization Corporation, Performance Funding Corporation, Performance
        Securitization   Corporation,   UAC  Boat  Funding  Corp.,  UAC  Finance
        Corporation,  Circle City Car Company, and Union Acceptance  Receivables
        Corporation.

        All  significant   intercompany  balances  and  transactions  have  been
        eliminated in the consolidation.  The consolidated  financial statements
        have been  prepared in conformity  with  generally  accepted  accounting
        principles  and  with  those in the  general  practice  of the  consumer
        finance industry. In preparing the financial  statements,  management is
        required to make  estimates  and  assumptions  that affect the  reported
        amounts  of  assets  and  liabilities  at  the  date  of  the  financial
        statements and the reported  amounts of revenues and expenses during the
        reporting period.  Actual results could differ  significantly from those
        estimates.  Material  estimates  that are  particularly  susceptible  to
        significant  change in the near term relate to the valuation of retained
        interest in securitized  assets, gain (loss) on sales of loans, net, and
        the allowance for credit losses.

        Priorto the UAC's initial  public  offering in August 1995,  the Company
        was  a  wholly-owned   subsidiary  of  Union  Federal  Savings  Bank  of
        Indianapolis  Union  Federal.  The  consolidated   financial  statements
        reflect no allocation of Union Federal's historical equity.  Earnings of
        the Company were  transferred to Union Federal  through the Due to Union
        Federal account prior to the spin-off.

        (c)   Cash

        The Company considers all investments with a maturity of three months or
        less when purchased to be cash equivalents.

        (d)   Restricted Cash

        Restricted cash primarily  consists of funds held in reserve accounts in
        compliance with the terms of the Warehouse Facility Agreements.


                                                                        (cont'd)
<PAGE>



UNION ACCEPTANCE CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

        (e)   Loans, Net

        All loans in the Company's  Tier I and Tier II  portfolios  are held for
        sale and include automobile, light-truck, van, and other loans including
        dealer  premiums  (on Tier I loans).  Such loans are  packaged  and sold
        through  asset-backed  securitization  transactions  and are  carried at
        their principal amount  outstanding  (amortized cost) which approximates
        the lower of cost or market, net of unearned discount. Interest on these
        loans is accrued and  credited to interest  income  based upon the daily
        principal  amount  outstanding.  The Company  provides an allowance  for
        credit   losses   from   the  date  of   origination   to  the  date  of
        securitization.  The  allowance  is shown as a reduction  to loans.  The
        Company accrues  interest on loans until the earlier of an account being
        charged-off or becoming 120 days delinquent.

        Loans, net includes dealer premiums which are incentives paid to dealers
        in  connection  with the  acquisition  of  loans.  Dealer  premiums  are
        deferred in accordance with Statement of Financial  Accounting Standards
        No. 91,  Accounting for  Nonrefundable  Fees and Costs  Associated  with
        Originating  or Acquiring  Loans and Initial  Direct Costs of Leases.  A
        portion of the dealer  premiums  are  refundable  to the  Company in the
        event of loan prepayment or default.

        On  January  1,  1997,  the  Company  adopted   Statement  of  Financial
        Accounting  Standards No. 125, Accounting for Transfers and Servicing of
        Financial  Assets and  Extinquishments  of  Liabilities  (SFAS 125). The
        adoption of SFAS 125 had the effect of reducing fiscal 1997 net earnings
        by $1,311,000  or $0.10 per share and  increasing  retained  earnings by
        $941,000.

        (f)   Accrued Interest Receivable

         Accrued  interest   receivable   represents  interest  earned  but  not
         collected on loans held for sale.

        (g)   Property, Equipment, and Leasehold Improvements, Net

        Property,  equipment,  and leasehold  improvements are recorded at cost.
        Depreciation  is  determined on  accelerated  methods over the estimated
        useful lives of the respective assets.

        (h) Retained Interest in Securitized  Assets and Gain on Sales of Loans.

        The Company acquires loans with the primary  intention of reselling them
        as   asset-backed   securities   through    securitizations.    In   the
        securitization transactions, the Company sells a portfolio of loans to a
        wholly  owned  subsidiary  ("SPS")  which has been  established  for the
        limited  purpose of buying and reselling the  Company's  loans.  The SPS
        transfers the same loans to a trust vehicle (the "Trust"),  which issues
        interest-bearing  asset-backed  securities  (the  "Certificates").   The
        Certificates  are generally sold to investors in the public market.  The
        Company provides credit  enhancement for the benefit of the investors in
        the form of a  specific  cash  account  ("Spread  Account")  held by the
        Trust.  The Spread  Account is required by the servicing  agreement (the
        Company's  servicing  agreements  are  collectively  referred  to as the
        "Pooling  and  Servicing  Agreements")  to be  maintained  at  specified
        levels.


                                                                        (cont'd)
<PAGE>
UNION ACCEPTANCE CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

        At the closing of each  securitization,  the Company allocates its basis
        in  the  loans  between  the  portion  of the  loans  sold  through  the
        certificates   and  the   portion  of  the  loans   retained   from  the
        securitizations  ("Residuals"  and  "Servicing  Assets")  based  on  the
        relative fair values of those portions at the date of the sale. The fair
        value is based upon the cash  proceeds  received  for the loans sold and
        the  estimated  fair  value  of  the  Residuals  and  Servicing  Assets.
        Residuals  consist  of (a) the  fair  value of cash  held in the  Spread
        Account  and  (b)  the  excess  servicing  receivables  ("ESRs").   ESRs
        represent the  discounted  cash flows to be received by the Trust in the
        future  and dealer  premium  rebates  less a  discounted  allowance  for
        estimated  credit losses.  Servicing  Assets represent the present value
        benefit derived from retaining the right to service loans securitized in
        excess  of  adequate  servicer  compensation.  The  excess  of the  cash
        received over the basis  allocated to the loans sold,  less  transaction
        costs,  and  hedging  gains and  losses,  equals the net gain on sale of
        loans recorded by the Company.

        The Company  recognizes  unrealized gains or losses  attributable to the
        change  in the fair  value  of the  Residuals,  which  are  recorded  as
        "available-for-sale"  securities,  net  of  related  income  taxes  as a
        separate component of shareholders'  equity until realized.  The Company
        is not aware of an active  market for the purchase or sale of residuals,
        and accordingly,  the Company determines the estimated fair value of the
        Residuals by  discounting  the  expected  cash flows  released  from the
        Spread  Account  (the cash out method)  using a discount  rate which the
        Company  believes is commensurate  with the risks involved.  The Company
        has  utilized  discount  rates  ranging  from  9.00%  to  11.50%  on the
        estimated  cash  flows  released  from the  Spread  Account to value the
        Residuals.

        The Annual  Percentage  Rate ("APR") on the loans is relatively  high in
        comparison  to the pass through rate on the  certificates,  accordingly,
        the Residuals described above are a significant asset of the Company. In
        determining the fair value of the Residuals described above, the Company
        must estimate the future rates of prepayments,  delinquencies,  defaults
        and  default  loss  severity as they impact the amount and timing of the
        estimated cash flows.  The Company  estimates  prepayments by evaluating
        historical prepayment  performance of comparable loans and the impact of
        trends in the economy.  The Company has used annual prepayment estimates
        ranging from 20.0% to 26.5%. The Company estimates  defaults and default
        loss severity using available  historical loss data for comparable loans
        and the specific  characteristics of the loans purchased by the Company.
        The  Company  used  default  losses of 3.0% to 6.3% for Tier I loans and
        12.0%  to  15.0%  for Tier II  loans  as a  percentage  of the  original
        principal balance over the life of the loans.

        The Company receives  periodic base servicing fees for the servicing and
        collection  of the loans.  In  addition,  the Company is entitled to the
        cash flows from the Residuals that represent collections on the loans in
        excess of the amounts  required  to pay the  Certificate  principal  and
        interest,  the base servicing fees and certain other fees such as credit
        enhancement fees. In general,  at the end of each collection period, the
        aggregate  cash  collections  from the loans are allocated  first to the
        base servicing fees, then to the  Certificateholders for interest at the
        pass-through  rate on the certificates  plus principal as defined in the
        Pooling and Servicing Agreements,  and finally to the credit enhancement
        fees. If the amount of cash required for the above  allocations  exceeds
        the amount  collected  during the  collection  period,  the shortfall is
        drawn from the Spread Account.  If the cash collected  during the period
        exceeds the amount necessary for the above allocations,  and the related
        Spread Account is not at the required  level,  the excess cash collected
        is retained in the Spread Account until the specified level is achieved.
        The cash in the Spread  Accounts is restricted  from use by the Company.
        Once the  required  Spread  Account  level is  achieved,  the  excess is
        released to the  Company.  Cash held in the various  Spread  Accounts is
        invested in high quality liquid investment  securities,  as specified in
        the Pooling and Servicing  Agreements.  The specified credit enhancement
        levels are defined in the Pooling and Servicing Agreements as the Spread
        Account  balance  expressed  generally  as a  percentage  of the current
        collateral principal balance.

                                                                        (cont'd)
<PAGE>
UNION ACCEPTANCE CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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


        An other than temporary  impairment  adjustment to the carrying value of
        the  Residuals  may be required if the  present  value of an  individual
        Residual (the pool by pool  method),  discounted at a risk free rate, is
        less  than  its  carrying   value.   Other  than  temporary   impairment
        adjustments are recorded as a component of gain on sales of loans, net.

        (i)   Servicing Assets

        Servicing  Assets are the Company's  present value benefit  derived from
        retaining the right to service loans  securitized  in excess of adequate
        servicer compensation. Servicing Assets are recognized as a component of
        gain on sales of loans,  net.  Accretion of related  discount to present
        value is recognized as a component of interest income.

        Servicing  Assets are carried at their amortized cost and is included in
        other assets.  Impairment is measured  using  relative fair value of the
        individual   Servicing   Assets  and  recognized   through  a  valuation
        allowance. Impairment adjustments are recorded as a component of gain on
        sales of loans, net.

        (j)   Common Stock

        In  election  of  directors,  the  holders  of Class B Common  Stock are
        entitled to five votes per share and Class A Common  Stock are  entitled
        to one vote per  share.  On all  matters  other  than  the  election  of
        directors,  holders of Class B and A have one vote per share and vote as
        a single class.

        The  Company's  charter  provides  that  shares of Class B Common  Stock
        convert   automatically   to  shares  of  Class  A  Common  Stock  on  a
        share-for-share  basis  upon  transfer  outside  a  prescribed  group of
        initial  holders and  certain  affiliates.  Pursuant to such  provision,
        344,964 shares of Class B Common Stock were converted to shares of Class
        A Common Stock during fiscal 1998.

        (k)   Income Taxes

        Deferred tax assets and  liabilities  are  recognized for the future tax
        consequences attributable to differences between the financial statement
        carrying amounts of existing assets and liabilities and their respective
        tax basis.  Deferred  tax  assets and  liabilities  are  measured  using
        enacted tax rates  expected  to apply to taxable  income in the years in
        which  those  temporary  differences  are  expected to be  recovered  or
        settled.  The effect on deferred tax assets and  liabilities of a change
        in tax rates is  recognized  in income in the period that  includes  the
        enactment date.

        (l)   Amounts Due to Trusts

        Amounts due to trusts  represent  monies  collected  but not paid to the
        trustee  for  principal  and  interest  remittances  as well as recovery
        payments in respect of securitized  loans. All amounts  collected by the
        Company are  remitted  to the  trustee  within two  business  days,  and
        subsequently distributed by the trustee to the investors,  servicer, and
        credit enhancers on a monthly basis.

        (m)   Servicing Fees, Net

        Servicing fees, net include the contractual  fee,  typically one percent
        of  loans  serviced,  earned  from  each  trust  plus the  accretion  of
        discounted retained interest in securitized assets.


                                                                        (cont'd)
<PAGE>

UNION ACCEPTANCE CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

        (n)   Hedging

        Loan  production  is  hedged  periodically  to  such  time  as the  next
        securitization  is  estimated  to occur.  Securitizations  of the Tier I
        portfolio occur  approximately  every three months.  The primary hedging
        vehicle  is  a  short  sale  of   Treasury   Notes   having  a  maturity
        approximating  the average  maturity of the loan  production  during the
        relevant  period.  At such time as a  securitization  is committed,  the
        hedge is covered by the  purchase of a like  volume of  Treasury  Notes.
        Gains or losses on the hedge are recognized  concurrently  with the gain
        or loss at securitization.

        (o)   Earnings Per Share

        In February  1997,  the  Financial  Accounting  Standards  Board  issued
        Statement of Financial  Accounting  Standard No. 128, Earnings Per Share
        (SFAS 128). SFAS 128 provides computation,  presentation, and disclosure
        requirements for earnings per share and supersedes Accounting Principles
        Board  Opinion 15. Basic EPS for fiscal 1998,  1997,  and 1996 have been
        computed on the basis of the weighted  average  number of common  shares
        outstanding.  The  effect of stock  options  not  exercised  during  the
        periods  presented  are  anti-dilutive  and  therefore  not  included in
        diluted earnings per share.

        The initial  public  offering was  completed  on August 7, 1995.  Shares
        outstanding  from  August 7, 1995,  through  September  30,  1995,  were
        assumed to be  outstanding  for the entire three months ended  September
        30, 1995.

        (p)   Comprehensive Income

        In June 1997, the Financial  Accounting Standards Board issued Statement
        of Financial Accounting Standard No. 130, Reporting Comprehensive Income
        (SFAS 130),  which  establishes  standards for reporting and  displaying
        comprehensive  income and its  components in the  financial  statements.
        Comprehensive income is the total of net income and all nonowner changes
        in equity.  The Statement is effective for fiscal years  beginning after
        December  15,  1997 with  earlier  application  permitted.  The  Company
        elected to adopt SFAS 130 as of June 30, 1998,  and the Statement had no
        impact on the financial condition or results of operations.

        (q)   Reclassification

         Certain amounts for the prior periods have been reclassified to conform
         to the current presentation.


                                                                        (cont'd)
<PAGE>
UNION ACCEPTANCE CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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


(2)   Loans, Net

      Loans, net are as follows (in  thousands, except average loan balance) at:

--------------------------------------------------------------------------------
                                                                June 30,
                                                       -------------------------
                                                           1998          1997
--------------------------------------------------------------------------------

   Principal balance of Tier I loans held for sale,
      net of unearned discount                          $ 108,159        90,331
   Principal balance of Tier II loans held for sale,
      net of unearned discount                              7,624        19,829
   Other loans held for sale                                  171         6,227
   Loans in process                                          (154)        1,189
   Dealer premiums                                          4,375         4,360
   Allowance for credit losses                             (1,916)         (780)
--------------------------------------------------------------------------------
                                                        $ 118,259       121,156
--------------------------------------------------------------------------------

        Activity in the  allowance  for credit losses on loans held for sale (in
        thousands):

--------------------------------------------------------------------------------
                                                       Year ended June 30,
                                              ----------------------------------
                                                   1998       1997       1996
-------------------------------------------------------------------------------

  Balance at the beginning of the period      $      780      1,099        453
     Charge-offs                                 (10,635)    (7,361)    (4,556)
     Recoveries                                    3,721      2,854      2,327
     Provision for estimated credit losses         8,050      4,188      2,875
-------------------------------------------------------------------------------

  Balance at the end of the period             $   1,916        780      1,099
-------------------------------------------------------------------------------

                                                                        (cont'd)
<PAGE>
UNION ACCEPTANCE CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

        Loans serviced are as follows (in thousands) at:

--------------------------------------------------------------------------------
                                                           June 30,
                                                --------------------------------
                                                     1998            1997
--------------------------------------------------------------------------------
        Loans held for sale:
           Tier I (net of unearned discount)     $    108,159         90,331
           Tier II (net of unearned discount)           7,624         19,829
           Other                                          171          6,227
--------------------------------------------------------------------------------

                                                      115,954        116,387
--------------------------------------------------------------------------------

        Securitized loan:
           Tier I                                   1,870,750      1,769,903
           Tier II                                     59,231         48,460
--------------------------------------------------------------------------------

                                                    1,929,981      1,818,363
--------------------------------------------------------------------------------

        Other loans serviced                            1,482          2,526
--------------------------------------------------------------------------------

                                                  $ 2,047,417      1,937,276
================================================================================

        Certain characteristics of loans serviced are as follows at:

--------------------------------------------------------------------------------
                                                           June 30,
                                                --------------------------------
                                                     1998            1997
--------------------------------------------------------------------------------
        Weighted average interest rate (Tier I)         13.09%         13.18%
        Weighted average interest rate (Tier II)        19.03          19.62
        Average loan balance (Tier I)                  10,755         10,710
        Average loan balance (Tier II)               $ 10,637         11,276
--------------------------------------------------------------------------------

        During fiscal 1998, loan  acquisitions  relating to borrowers who reside
        in Texas, California, and North Carolina totaled 12.5%, 11.6%, and 9.1%,
        respectively,  of all loans  acquired.  At June 30, 1998,  borrowers who
        reside in Texas,  California,  and North Carolina totaled 15.0%,  11.0%,
        and 10.5%, respectively,  of the loan servicing portfolio. A significant
        adverse change in the economic climate in Texas,  California,  and North
        Carolina or other  states  could result in fewer loans held for sale and
        potentially less revenue.

         Notional  amounts and unrealized  losses related to outstanding  hedges
         follow (in thousands) at:

--------------------------------------------------------------------------------
                                                           June 30,
                                                --------------------------------
                                                     1998            1997
--------------------------------------------------------------------------------
       Notional amounts outstanding                 $ 210,000        204,000
       Unrealized losses on hedging transactions          394            909
--------------------------------------------------------------------------------

                                                                        (cont'd)
<PAGE>
UNION ACCEPTANCE CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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



        Notional amounts of $210 million were expected to be closed in September
        1998 for the amounts outstanding at June 30, 1998, and $180 million, $18
        million and $6 million were closed in September 1997, December 1997, and
        March 1998, respectively, for amounts outstanding at June 30, 1997.

        Hedging realized losses were approximately $2,669,000,  $6,293,000,  and
        $2,733,000 during fiscal 1998, 1997, and 1996, respectively.


(3)     Property, Equipment, and Leasehold Improvements, Net

        Property, equipment, and leasehold improvements,  net are as follows (in
        thousands) at:

--------------------------------------------------------------------------------
                                                                  June 30,
                                                         -----------------------
                                                             1998       1997
--------------------------------------------------------------------------------

        Property, equipment, and leasehold improvements   $ 11,410      4,724
        Accumulated depreciation                            (3,489)    (2,574)
--------------------------------------------------------------------------------

                                                         $   7,921      2,150
================================================================================


(4)     Retained Interest in Securitized Assets

        The carrying  amount of retained  interest in  securitized  assets is as
        follows (in thousands) at:

<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------
                                                                             June 30,
                                                                      --------------------------
                                                                         1998           1997
-----------------------------------------------------------------------------------------------
<S>                                                                   <C>              <C>    
        Estimated fair value of excess servicing receivable,
           net of estimated prepayments                               $ 175,164        145,872
        Estimated dealer premium rebates                                 25,718         26,447
        Allowance for estimated credit losses on securitized loans      (90,203)       (79,923)
        Discount to present value                                       (33,117)        (9,941)
-----------------------------------------------------------------------------------------------
                                                                         77,562         82,455

        Spread accounts                                                  68,113         71,744
        Accrued interest on securitized loans                            13,606         12,807
        Unrealized gain                                                  12,312          3,785
-----------------------------------------------------------------------------------------------

                                                                      $ 171,593        170,791
-----------------------------------------------------------------------------------------------

        Outstanding balance of securitized loans serviced           $ 1,929,981      1,818,363
-----------------------------------------------------------------------------------------------

        Allowance for estimated credit losses as a
           percentage of securitized loans serviced                        4.67%          4.40%
-----------------------------------------------------------------------------------------------
</TABLE>


                                                                        (cont'd)
<PAGE>
UNION ACCEPTANCE CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

        Retained  interest  in  securitized  assets  activity  is as follows (in
thousands):

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
                                                                                                 Year ended June 30,
                                                                                        -----------------------------------
                                                                                           1998          1997        1996
---------------------------------------------------------------------------------------------------------------------------

<S>                                                                                     <C>            <C>         <C>    
        Balance at beginning of period                                                  $ 170,791      147,024     118,036

        Amounts capitalized (including estimated dealer rebates)                           49,071       68,922      56,436
        Return of excess cash flows, net of present value effect                          (22,457)     (24,619)    (37,871)
        Change in spread accounts                                                          (3,631)       8,154       6,176
        Change in accrued interest on securitized loans                                       799        2,353       4,247
        Impairment of retained interest in securitized assets                             (23,636)     (34,828)     -
        Change in method of estimating fair value of excess
           servicing receivable                                                            (7,871)      -           -
        Change in unrealized gain                                                           8,527        3,785      -
---------------------------------------------------------------------------------------------------------------------------

        Balance at end of period                                                        $ 171,593      170,791     147,024
===========================================================================================================================
</TABLE>

        Because of current  trends with respect to credit loss and  delinquency,
        and  their  effects  on  the  valuation  of  the  retained  interest  in
        securitized assets, the Company recorded a pre-tax charge of $23,636,000
        and  $34,828,000  for  the  impairment  of  the  retained   interest  in
        securitized assets during fiscal 1998 and 1997, respectively. During the
        fourth  quarter  of fiscal  1998,  the  Company  changed  the  method of
        estimating the fair value of the retained interest in securitized assets
        from  "cash  in"  to  "cash  out."  This  change  in  method,  which  is
        inseparable from the change in estimate,  reduced the retained  interest
        in  securitized  assets by $7,871,000  as of June 30, 1998,  and had the
        effect of reducing  fiscal 1997 net earnings by  $4,864,000 or $0.37 per
        share. The change in estimate  adjustment was recorded as a component of
        gain on sales of loans, net.

        The weighted  average yield,  net of fees, on spread  accounts was 4.85%
        and 4.97% at June 30, 1998 and 1997, respectively.


(5)     Other Assets

        Other assets are as follows (in thousands) at:

-------------------------------------------------------------------------
                                                          June 30,
                                                  -----------------------
                                                      1998       1997
-------------------------------------------------------------------------

        Repossessed assets                        $   5,934      5,048
        Accrued servicing fees                        3,228      2,511
        Servicing assets                              2,743      1,374
        Deferred borrowing fees                       1,981      3,078
        Income tax receivable                         1,577      5,735
        Advance of delinquent interest                1,387      1,056
        Other                                         2,430      1,679
-------------------------------------------------------------------------

                                                   $ 19,280     20,481
=========================================================================

                                                                        (cont'd)
<PAGE>
UNION ACCEPTANCE CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

(6)     Amounts Due Under Warehouse Facilities

        At June 30,  1998 and  1997,  the  Company,  through  its  wholly  owned
        special-purpose   subsidiaries,   had  borrowing   arrangements  with  a
        financial  institution  which provided for two and three,  respectively,
        revolving  Warehouse  Facilities  (the  Facilities)  with  an  aggregate
        borrowing  capacity  of $400  million  and $450  million,  respectively.
        Borrowings  under these facilities are  collateralized  by certain loans
        held for sale.  There are separate  Facilities for the funding of Tier I
        auto,  Tier II auto,  and until  March 1998,  marine loan  acquisitions.
        Outstanding  borrowings of the Facilities at June 30, 1998 and 1997, was
        $73,123,000 and $44,455,000,  respectively. The weighted average cost of
        funds, net of income earned,  of the Facilities for the years ended June
        30, 1998 and 1997, was 6.92% and 5.94%, respectively.

        The cost of funds includes a variable  interest rate on the  outstanding
        commercial   paper,  fees  on  the  used  and  unused  portions  of  the
        Facilities,  and the amortization of prepaid warehouse fees. The largest
        portion of the cost of funds  related to the  Facilities is the variable
        rate interest on the commercial  paper issued by the financing  conduit.
        Upfront  warehouse fees are  non-recurring  costs related to the initial
        set-up of the Facilities. The Company recognized $6,622,000, $9,991,000,
        and  $12,491,000  of  interest  expense  during the years ended June 30,
        1998,  1997,  and  1996,  respectively,  related  to  amounts  due under
        Warehouse Facilities.

        The Facilities  agreements  specify a term of one year and are renewable
        annually.  Both the Tier I auto and Tier II auto  Facilities  have  been
        renewed  for an  additional  year,  and  expire  in June and July  1999,
        respectively.


(7)     Long-term Debt

        In connection with the Company's  initial public  offering,  the Company
        issued, in a private  placement,  $110 million principal amount of 8.53%
        Senior  Notes  due  2002.  Interest  on  the  Senior  Notes  is  payable
        semi-annually  on February 1 and August 1 of each year, and commenced on
        February 1, 1996, with annual principal reductions  commencing on August
        1, 1998.  The Senior Notes are  redeemable,  in whole or in part, at the
        option of the Company,  in a principal  amount not less than $1 million,
        together with accrued and unpaid  interest to the date of redemption and
        a yield-maintenance premium as defined in the note agreement.

        In April 1996, the Company issued, in a private  placement,  $46 million
        9.99%  Senior  Subordinated  Notes  due  2003.  Interest  on the  Senior
        Subordinated  Notes is payable quarterly on March 30, June 30, September
        30 and December 30 of each year,  and  commenced  on June 30, 1996.  The
        Senior  Subordinated  Notes are redeemable,  in whole or in part, at the
        option of the Company,  in a principal  amount not less than $1 million,
        together with accrued and unpaid  interest to the date of redemption and
        a yield-maintenance premium as defined in the note agreement.

        In March 1997, the Company issued, in a private  placement,  $50 million
        Series A 7.75%  Senior  Notes  due 2002 and $15  million  Series B 7.97%
        Senior  Notes  due  2002.  Interest  on  the  Senior  Notes  is  payable
        semi-annually  on March 15 and  September  15 of each  year,  commencing
        September 15, 1997,  with a principal  reduction  occurring on March 15,
        2002.  The  Senior  Notes are  redeemable,  in whole or in part,  at the
        option of the Company,  in a principal  amount not less than $1 million,
        together with accrued and unpaid  interest to the date of redemption and
        a yield-maintenance premium as defined in the note agreement.

        The Company  recognized  $19,485,000,  $15,697,000,  and  $9,784,000  of
        interest  expense during the years ended June 30, 1998,  1997, and 1996,
        respectively, related to long-term debt.

                                                                        (cont'd)
<PAGE>
UNION ACCEPTANCE CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

        Scheduled  contractual  maturities  of  long-term  debt at June 30, 1998
        follows:

--------------------------------------------------------------------------
        1999                                              $   22,000,000
        2000                                                  22,000,000
        2001                                                  22,000,000
        2002                                                  43,666,667
        2003                                                 111,333,333
--------------------------------------------------------------------------

        Total                                              $ 221,000,000
==========================================================================

(8)     Other Revenue and Expenses

        Other revenue and expenses follow (in thousands):

--------------------------------------------------------------------------------
                                                     Year ended June 30,
                                           -------------------------------------
                                                1998        1997       1996
--------------------------------------------------------------------------------

        Other revenues:
           Late charges                     $   3,283       2,618      1,922
           Origination fees                       637       1,019      1,072
           Other                                  167         183        102
--------------------------------------------------------------------------------

                                            $   4,087       3,820      3,096
================================================================================

        Other expenses:
           Loan expenses                        2,691       2,948      2,202
           Outside services                     3,223       2,767      2,515
           Office, telephone and postage        2,522       2,626      2,207
           Occupancy                            1,769       1,433        891
           Equipment                            1,190       1,013        839
           Other                                4,724       4,042      3,202
--------------------------------------------------------------------------------

                                             $ 16,119      14,829     11,856
================================================================================


(9)     Income Taxes

        The composition of income tax expense (benefit) follows (in thousands):


--------------------------------------------------------------------------------
                                                Year ended June 30,
                                         ---------------------------------------
                                             1998       1997      1996
--------------------------------------------------------------------------------

        Current tax expense (benefit)     $ (9,863)    (1,644)    9,096
        Deferred tax expense                 2,007      5,810     5,310
--------------------------------------------------------------------------------

                                          $ (7,856)     4,166    14,406
================================================================================

                                                                        (cont'd)
<PAGE>
UNION ACCEPTANCE CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

        The  effective  income  tax  rate  differs  from the  statutory  federal
corporate tax rate as follows:

--------------------------------------------------------------------------------
                                                          Year ended June 30,
                                                     ---------------------------
                                                       1998       1997      1996
--------------------------------------------------------------------------------
        Statutory rate                                 35.0%      35.0      35.0
             State income taxes                         3.2        5.5       5.5
             Change in commercial domicile              4.9        -         -
             Other                                      1.3        1.0       -
--------------------------------------------------------------------------------
           
        Effective rate                                 44.4%      41.5      40.5
================================================================================
                                                
        The  composition  of  deferred  income  taxes  payable is as follows (in
        thousands):

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
                                                                                   June 30,
                                                                        ------------------------
                                                                            1998          1997
------------------------------------------------------------------------------------------------
        Deferred tax assets:
<S>                                                                      <C>              <C>  
           Net operating losses carryforward                             $ 11,304         1,841
           Allowance for estimated credit losses                              732           316
           Mark to market and allowance for credit losses                   5,713         2,073
------------------------------------------------------------------------------------------------

                                                                           17,749         4,230
------------------------------------------------------------------------------------------------

        Deferred tax liabilities:
           Retained interest in securitized assets                         22,619        16,556
           Unrealized gain on retained interest in securitized assets       4,703         1,533
------------------------------------------------------------------------------------------------

                                                                           27,322        18,089
------------------------------------------------------------------------------------------------

        Deferred income taxes payable                                   $   9,573        13,859
===============================================================================================
</TABLE>

       The Company believes the deferred tax assets will more likely than not be
       realized  due to the reversal of deferred  tax  liabilities  and expected
       future  taxable  income.  Accordingly,  no deferred  tax asset  valuation
       allowance has been established.

(10)   Estimated Fair Value of Financial Instruments

       Loans  held for  sale--Cost  approximates  fair  value as loans are sold
       shortly after origination.

       Accrued interest receivable--Cost approximates fair value.

       Retained interest in securitized assets--Amount carried at fair value.

       Spread  accounts--Cost  approximates  fair  value as the  interest  rate
       earned is at a variable rate.

       Repossessed assets--Cost approximates fair market value.

                                                                        (cont'd)
<PAGE>
UNION ACCEPTANCE CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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


        All liabilities, except long-term debt--Cost approximates fair value.

        Long-term  debt--Carrying  amount of  $221,000,000  at June 30, 1998 and
        1997,  has  been  calculated  to  have a  fair  value  of  approximately
        $195,000,000  and   $221,000,000,   respectively,   by  discounting  the
        scheduled  loan payments to maturity using rates that are believed to be
        currently available for debt of similar terms and maturities.


(11)    Commitments and Contingencies

        Future minimum payments under noncancelable operating leases on premises
and equipment with terms of one year or more as of June 30, 1998 are as follows:

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

        1999                                               $ 1,341,000
        2000                                                 1,161,000
        2001                                                   954,000
        2002                                                   911,000
        2003                                                   759,000
        Thereafter                                             -
--------------------------------------------------------------------------------

        Total                                              $ 5,126,000
================================================================================


        These agreements include, in certain cases,  various renewal options and
        contingent rental agreements.  Rental expense for premises and equipment
        amounted to approximately $1,900,000, $1,572,000, and $1,015,000 for the
        years ended June 30, 1998,  1997 and 1996,  respectively.  A majority of
        the  rental  expense  relates  to the lease of the  Company's  principal
        offices with a company owned by the majority shareholders of UAC.

        The Company is party to litigation  in the ordinary  course of business,
        often involving  claims by consumers under the consumer  protection laws
        described  above.  Other claims  brought are  primarily  allegations  of
        wrongdoing by the motor vehicle dealer which  originated the contract or
        sold the  vehicle  financed  by the  Company.  The Company is named as a
        co-defendant  in such  actions  because  of its  status as holder of the
        contract. Such litigation is common for industry participants.

        The Company is currently a defendant in an action commenced  October 23,
        1997,  in the  Common  Pleas  Court  of  Cuyahoga  County,  Ohio,  Civil
        Division,  by plaintiff Barohda Rucker. Suit was initially filed against
        the Company and Jackshaw  Chevrolet,  Inc.  ("Jackshaw"),  alleging that
        Jackshaw  committed  unfair,   deceptive  and  unconscionable   acts  in
        connection  with the sale of a vehicle,  and further  alleging  that the
        Company  committed  disclosure  and other  violations of the Ohio Retail
        Installment  Sales Act.  Plaintiff  seeks  rescission  of the  contract,
        injunctive relief and damages.  Although the suit was considered routine
        when  initiated,  the plaintiff  has now sought to amend the  complaint,
        asserting class action claims and seeking  monetary  damages.  The class
        claims relate to the claims set forth in the original  complaint and new
        claims  under or related to the Ohio  Mortgage  Loan Act.  The court has
        not, at this time, granted the motion to amend.

        The Company is also a  defendant  in an action  brought in the  District
        Court for Boulder  County,  Colorado,  on April 10,  1998,  by plaintiff
        Cristy  Waggoner.  The suit alleges  usury,  contending  that the retail
        installment  contracts  purchased by the Company were,  in fact,  direct
        loans by the Company subject to a lower usury limitation.  The complaint
        seeks  certification of a class of Colorado residents  similarly injured
        but no class has been certified at this time.

                                                                        (cont'd)
<PAGE>

UNION ACCEPTANCE CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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


        The Company is a defendant in an adversary  action brought in the United
        States Bankruptcy Court for the Northern  District of Illinois,  Eastern
        Division  on August  23,  1998,  by  plaintiff,  Keith D.  Ferrell.  The
        plaintiff alleges the Company  overstated the value of its collateral in
        connection with his Chapter 13 bankruptcy proceedings. The plaintiff has
        also  asserted  claims  on  behalf of a class  consisting  of  similarly
        situated debtors involved in Chapter 13 proceedings. The plaintiff seeks
        injunctive relief, actual and punitive damages and attorney fees.

        Management  of the Company,  based on advice of outside  legal  counsel,
        does not expect any pending proceeding to have a material adverse effect
        on the Company, and such proceedings are being vigorously defended.

(12)    Stock-Based Compensation

        The Company has one stock-based  compensation  plan,  which is described
        below.  The Company  applies APB  Opinion No. 25,  Accounting  for Stock
        Issued to Employees and related  Interpretations in accounting for these
        plans. Had compensation  cost been determined based on the fair value at
        the grant date for awards under those plans  consistent  with the method
        of Statement of Financial  Accounting  Standards No. 123, Accounting for
        Stock-Based  Compensation  (SFAS  123),  the  Company's  net  income and
        earnings  per share  would have been  reduced  to the pro forma  amounts
        indicated below (in thousands, except share data):

<TABLE>
<CAPTION>

--------------------------------------------------------------------------------------------------
                                                                               June 30,
                                                                   --------------------------------
                                                                      1998       1997      1996
--------------------------------------------------------------------------------------------------
<S>                                                                <C>           <C>       <C>   
        Net earnings (loss):
           As reported                                             $ (9,822)     5,882     21,142
           Pro forma                                                (10,951)     4,543     19,449
        Net earnings (loss) per common share (basic and diluted):
           As reported                                                (0.74)      0.45       1.60
           Pro forma                                                  (0.83)      0.34       1.47
==================================================================================================
</TABLE>


        The Union  Acceptance  Corporation  1994 Incentive Stock Plan (Incentive
        Stock Plan) is the Company's  long-term  incentive  plan for  directors,
        executive  officers and other key  employees.  The Incentive  Stock Plan
        authorizes  the  Company's  Compensation  Committee  to award  executive
        officers  and other key  employees  incentive  and  non-qualified  stock
        options  and  restricted  shares  of  Class A Common  Stock.  A total of
        500,000  shares of Class A Common Stock have been  reserved for issuance
        under the Incentive  Stock Plan, of which options for 271,875  shares of
        Class A Common  Stock were granted at an issue price of $16 per share to
        senior  officers  upon  consummation  of the  Company's  initial  public
        offering of the Class A Common Stock.

        Options or other  grants to be received by  executive  officers or other
        employees  in the  future are within  the  discretion  of the  Company's
        Compensation  Committee and are not determinable.  Stock options granted
        under the Incentive  Stock Plan are exercisable at such times (not after
        ten years and one day from the date of the grant)  and at such  exercise
        prices (not less than 85% of the fair market value of the Class A Common
        Stock at date of grant) as the Committee  determines and will, except in
        limited circumstances,  terminate if the grantee's employment terminates
        prior to exercise.  The outstanding  options' maximum term is ten years.
        Such options vest over a period of five years,  with one-fifth  becoming
        exercisable on each anniversary of the option grant.

                                                                        (cont'd)
<PAGE>
UNION ACCEPTANCE CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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


        The fair value of each option  grant is  estimated  on the date of grant
        using  the  Black-Scholes  options  pricing  model  with  the  following
        weighted  average  assumptions  used for grants in 1998, 1997, and 1996;
        dividend yield of 0.0% for all three years;  expected volatility of 100%
        for all three years; weighted average risk-free interest rates of 5.45%,
        6.50%, and 6.41%, respectively;  and expected lives of ten years for all
        three years.

        A summary of the status of the  Company's  stock option plans as of June
        30,  1998 and 1997  changes  during  the years  ended on those  dates is
        presented below:

<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------------------------------
                                                        1998                      1997                       1996
                                               ----------------------    -----------------------    -------------------------------
                                                           Weighted                   Weighted                    Weighted
                                                            average                    average                     average
                                                           exercise                   exercise                    exercise
                                                Shares       price        Shares        price        Shares         price
-----------------------------------------------------------------------------------------------------------------------------------

        Options outstanding at
<S>                                            <C>         <C>             <C>        <C>                        <C>  
             beginning of year                 314,485     $ 16.02         276,915    $ 16.03          -         $   -
        Options granted                         74,000        9.69          39,750      16.00        280,600        16.04
        Options exercised                        -            -              -           -             -             -
        Options canceled                        19,810       14.63           2,180      17.48          3,685        16.31
-----------------------------------------------------------------------------------------------------------------------------------

        Options outstanding at
             end of year                       368,675     $ 14.86         314,485    $ 16.02        276,915      $ 16.03
-----------------------------------------------------------------------------------------------------------------------------------

        Weighted average fair value of
             options granted during the year         $ 8.86                      $14.71                   $ 14.79
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

        The  following  table   summarizes   information   about  stock  options
        outstanding at June 30, 1998:


<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
                                 Options outstanding                     Options exercisable
                    ----------------------------------------------   -----------------------------
                    Weighted prices    Weighted
                       average        remaining        Average                         Average
                       number        contractual       exercise         Number         exercise
                     outstanding         life           price        exercisable        price
--------------------------------------------------------------------------------------------------

<C>                     <C>              <C>           <C>                <C>         <C>     
$  9.69                 67,500           9.10          $  9.69            3,500       $   9.69
  16.00                298,375           7.27            16.00          109,288          16.00
  17.88                  2,800           7.53            17.88            1,120          17.88
---------------------------------------------------------------------------------------------------
                       368,675           7.67          $ 14.86          113,908        $ 15.90
---------------------------------------------------------------------------------------------------
</TABLE>

        In addition  to the options  outstanding  at June 30,  1998,  there were
        99,843  shares of Class A Common Stock were  available for future grants
        or awards.

        The Incentive Stock Plan also provides that each director of the Company
        who is not an executive officer is automatically granted shares of Class
        A Common Stock with a fair market value of $15,000 following each annual
        meeting of  shareholders.  Shares so granted have a six-month  period of
        restriction  during which they may not be  transferred.  Shares  granted
        under this section of the Incentive  Stock Plan totaled  14,694,  5,430,
        and  11,358  in  fiscal  1998,   1997,  and  1996,   respectively,   and
        compensation  cost charged  against income was $90,000 in 1998 and 1997,
        and $180,000 in 1996.

                                                                        (cont'd)
<PAGE>
UNION ACCEPTANCE CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

(13)    Restatement of Consolidated Financial Statements

        The Company determined in August 1998 that it should have been measuring
        other than  temporary  impairment  of Retained  Interest in  Securitized
        Assets,  previously captioned Excess Servicing,  on a disaggregate basis
        (the   pool-by-pool   method).   The  adjustments   resulting  from  the
        measurement of other than temporary  impairment on a disaggregate  basis
        were  of  sufficient   significance   to  require   restatement  of  the
        consolidated  financial statements since the implementation of SFAS 125.
        This  restatement  had the effect of reducing  fiscal  1997  earnings by
        $1,890,000  (net of income taxes of $1,288,000) or $0.14 per share.  The
        restatement had no effect on  shareholders'  equity at June 30, 1997. In
        conjunction  with the restatement,  the Company made other  adjustments,
        which were not individually significant,  that increased fiscal 1997 net
        earnings  by $372,000  (net of income  taxes of  $259,000)  or $0.03 per
        share and increased shareholders' equity at June 30, 1997 by $733,000.

(14)    Quarterly Financial Information (unaudited)

        Quarterly  financial  information  is as follows (in  thousands,  except
        share data):

<TABLE>
<CAPTION>

--------------------------------------------------------------------------------------------------
                              First          Second          Third           Fourth         Total                        
Year ended June 30, 1998
--------------------------------------------------------------------------------------------------
<S>                            <C>            <C>             <C>             <C>           <C>         
Interest on loans        $     6,627        $ 6,473         $ 7,133         $ 7,638        $27,871       
Interest on spread           
   accounts and              
   restricted cash             1,572          1,461           1,443           1,380          5,856
Interest expense              (6,053)        (6,167)         (6,990)         (6,897)       (26,107)
Provision for                
   estimated credit          
   losses on loans           
   held for sale              (1,505)        (1,770)         (1,900)         (2,875)        (8,050)
--------------------------------------------------------------------------------------------------
Net interest margin          
   (deficit)                 
   after provision               641             (3)           (314)           (754)          (430)
Gain (loss) on sales of      
   loans, net                (10,847)         2,020           3,113          (6,212)       (11,926)
Servicing fees, net            6,286          6,533           6,529           6,789         26,137
Other revenues                 1,020            985           1,065           1,017          4,087
--------------------------------------------------------------------------------------------------
Total revenues                (2,900)         9,535          10,393             840         17,868
--------------------------------------------------------------------------------------------------
Salaries and benefits          4,610          4,871           4,815           5,131         19,427
Other expenses                 4,013          4,165           4,007           3,934         16,119
--------------------------------------------------------------------------------------------------
Operating expenses             8,623          9,036           8,822           9,065         35,546
--------------------------------------------------------------------------------------------------
Provision (benefit) for      
   income taxes               (4,656)          (711)            654          (3,143)        (7,856)
--------------------------------------------------------------------------------------------------
Net earnings (loss)      $    (6,867)       $ 1,210        $    917        $ (5,082)       $(9,822)        
==================================================================================================
Net earnings (loss)          
   per common                
   share (basic and          
   diluted)              $     (0.52)          0.09            0.07           (0.38)         (0.74)
==================================================================================================
Weighted average common      
   shares outstanding    $13,216,788     13,227,010      13,231,482       13,231,482    13,226,651
==================================================================================================

</TABLE>

<PAGE>


SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended,  the Registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly authorized.

                                     UNION ACCEPTANCE CORPORATION

September 29, 1998                   By:  /S/   Rick A. Brown
                                          -------------------------------------
                                          Rick A. Brown
                                          Vice President, Treasurer, and 
                                          Chief Financial Officer



<PAGE>
                                  EXHIBIT INDEX

Exhibit No.           Description                                 Page (Ex. No.
                                                             Cross Reference)(1)
-------------------------------------------------------------------------------
3.1         Registrant's  Articles of  Incorporation,  as amended       S-1, 3.1
            and restated.

3.2         Registrant's   Code  of   By-Laws,   as  amended  and       S-1, 3.2
            restated.

3.3         Form of Share Certificate for Class A Common Stock.         S-1, 3.3

4.1         Articles  V and VI of the  Registrant's  Articles  of       S-1, 4.1
            Incorporation  respecting  the  terms * of  shares of
            Common Stock,  are  incorporated  by reference to the
            Registrant's    Articles   of   Incorporation   filed
            hereunder as Exhibit 3.1

4.2         Article III -  "Shareholder  Meetings,"  Article VI -       S-1, 4.2
            "Certificates  for Shares,"  Article VII - "Corporate
            Books  and  Records  -  Section  3" and  Article  X -
            "Control   Share   Acquisitions   Statute"   of   the
            Registrant's  Code of  By-Laws  are  incorporated  by
            reference  to  the  Registrant's   Restated  Code  of
            By-Laws filed herewith as Exhibit 3.2.

4.3         Transfer   and    Administration    Agreement   among      S-1, 4.3
            Enterprise  Funding  Corporation,   Union  Acceptance
            Funding Corporation and Union Acceptance Corporation,
            dated as of June 27, 1995 ("UAFC Transfer and
            Administration Agreement").

4.3(a)      Amendment  No. 1  to UAFC Transfer and  Administration      10Q 9/95
            Agreement dated September 8, 1995                             4.3(a)

4.3(b)      Amendment  No. 2  to UAFC Transfer and  Administration      10Q 9/95
            Agreement dated September 29, 1995                            4.3(b)

4.3(c)      Letter    Agreement    regarding  UAFC  Transfer   and      10K 1996
            Administration Agreement dated November 13, 1995              4.3(c)

4.3(d)      Amendment  No. 3  to  UAFC Transfer and  Administration     10K 1996
            Agreement dated March 1, 1996                                 4.3(d)

4.3(e)      Letter  Agreement UAFC regarding  UAFC  Transfer  and       10K 1996
            Administration Agreement dated May 30, 1996                   4.3(e)

4.3(f)      Amendment No. 4  to UAFC Transfer and  Administration       10K 1996
            Agreement dated September 5, 1996                             4.3(f)

4.3(g)      Amendment No. 5 to UAFC Transfer  and  Administration       10K 1997
            Agreement dated October 31, 1996                              4.3(g)

4.3(i)      Amendment No. 6  to UAFC Transfer and  Administration      10Q 12/96
            Agreement dated December 23, 1996                                4.1

4.3(h)      Amendment No. 7  to UAFC Transfer and  Administration       10K 1997
            Agreement dated March 31, 1997                                4.3(h)

4.3(j)      Letter  Agreement  No. 3 with respect to UAFC Transfer      10K 1997
            and Administration Agreement, dated April 28, 1997            4.3(j)

4.4         Note  Purchase  Agreement  between  Union  Acceptance       10K 1995
            Corporation and certain lenders dated as of August 7,            4.4
            1995.

4.4(a)      Amendment  No.  1 to Note  Purchase  Agreement  dated      10Q 12/95
            November 22, 1995                                             4.4(a)

4.5         Transfer   and    Administration    Agreement   among       S-1, 4.5
            Enterprise Funding  Corporation,  Performance Funding
            Corporation and Union Acceptance  Corporation,  dated
            as of July 24, 1995.


<PAGE>

4.5(a)      Amendment  No.  1  to  Transfer  and   Administration      10Q 12/95
            Agreement dated September 8, 1995                             4.5(a)

4.5(b)      Letter    Agreement     regarding     Transfer    and       10K 1996
            Administration Agreement dated October 12, 1995               4.5(b)

4.5(c)      Amendment  No.  2  to  Transfer  and   Administration       10K 1996
            Agreement dated May 10, 1996                                  4.5(c)

4.5(d)      Letter    Agreement     regarding     Transfer    and       10K 1996
            Administration Agreement dated July 11, 1996                  4.5(d)

4.5(e)      Letter    Agreement     regarding     Transfer    and       10K 1996
            Administration Agreement dated August 20, 1996                4.5(e)

4.5(f)      Amendment  No.  3  to  Transfer  and   Administration      10Q 12/96
            Agreement,  dated  December  23, 1996                            4.2

4.5(g)      Letter    Agreement  No. 4  to   Transfer  and              10K 1997
            Administration Agreement dated April 25, 1997                 4.5(g)

4.5(h)      Amendment  No.  5  to  Transfer  and   Administration       10K 1997
            Agreement dated June 6, 1997                                  4.5(h)

4.5(i)      Letter   Agreement   with  regard  to  Transfer   and       10K 1997
            Administration Agreement dated June 24, 1997                  4.5(i)

4.5(j)      Amendment No. 6 to Transfer and Administration Agreement    10K 1997
            dated as of July 29, 1997                                     4.5(j)

4.6         Note  Purchase  Agreement  dated as of April 3,  1996       10Q 3/96
            among  Union   Acceptance   Corporation  and  several            4.1
            purchasers of Senior Subordinated Notes due 2003

4.7         Note Purchase Agreement,  dated March 24, 1997, among       10Q 3/97
            Union Acceptance  Corporation and certain  purchasers           10.1
            of Senior Notes, due 2002.

4.8(a)      Note  Purchase  Agreement,  dated April 3, 1997 among       10K 1997
            UAC   Boat   Funding   Corp.,    Enterpirse   Funding         4.8(a)
            Corporation and NationsBank, N.A.

4.8(b)      Security Agreement, dated April 3, 1997, among UAC Boat     10K 1997
            Funding Corp., Enterpirse Funding Corp., et. al.              4.8(b)

4.9(a)      Note Purchase Agreement among Union Acceptance Funding 
            Corporation, Enterprise Funding Corporation, Nationsbank, 
            N.A., Dated as of September 18, 1998                          _____

4.9(b)      Security Agreement among Enterprise Funding Corporation,
            Union Acceptance Funding Corporation, Union Acceptance 
            Corporation, Mbia Insurance Corporation and Nationsbank, 
            N.A., dated as of September 18, 1998                          _____

9(a)        Voting Trust Agreement  among Richard D.  Waterfield,      S-1, 9(a)
            as trustee,  and  certain  existing  shareholders  of
            Union Holding Company, Inc., dated June 10, 1994.

9(b)        First  Amendment to Voting Trust Agreement dated June      S-1, 9(b)
            1, 1995.

10.1        Remittance  Processing Agreement by and between Union     S-1, 10.5
            Federal  Savings  Bank  of  Indianapolis   and  Union
            Acceptance Corporation dated June 29, 1994.

10.2        Mail and Printing  Services  Agreement by and between     S-1, 10.6
            Union Federal Savings Bank of Indianapolis  and Union
            Acceptance Corporation dated June 29, 1994.

10.3        Telephone  Equipment  Lease  Agreement by and between     S-1, 10.7
            Union Federal Savings Bank of Indianapolis  and Union
            Acceptance Corporation dated June 29, 1994.

10.4        Telecommunications  Agreement  by and  between  Union     S-1, 10.8
            Federal  Savings  Bank  of  Indianapolis   and  Union
            Acceptance Corporation dated June 29, 1994.

10.5        Communications  Equipment and Software License by and     S-1, 10.9
            between  Union Federal  Savings Bank of  Indianapolis
            and Union Acceptance Corporation dated June 29, 1994.


<PAGE>

10.6        Software  License and  Maintenance  Agreement  by and    S-1, 10.10
            between  Union Federal  Savings Bank of  Indianapolis
            and Union Acceptance Corporation dated June 29, 1994.

10.7        Loan Servicing Agreement by and between Union Federal    S-1, 10.11
            Savings  Bank of  Indianapolis  and Union  Acceptance
            Corporation dated June 29, 1994.

10.8        General  Subservicing  Agreement by and between Union    S-1, 10.12
            Federal  Savings  Bank  of  Indianapolis   and  Union
            Acceptance Corporation dated as of January 1, 1995.

10.9        Loan  Collection   Agreement  by  and  between  Union    S-1, 10.13
            Federal  Savings  Bank  of  Indianapolis   and  Union
            Acceptance Corporation dated June 29, 1994.

10.10       Letter  respecting  Terms of Bank Accounts from Union    S-1, 10.14
            Federal   Savings  Bank  of   Indianapolis  to  Union
            Acceptance Corporation dated May 25, 1994.

10.11       Supplement  to Account  Agreement  Re:  Drafts by and    S-1, 10.15
            between  Union Federal  Savings Bank of  Indianapolis
            and Union Acceptance Corporation dated June 29, 1994.

10.12       Tax Allocation Agreement by and between Union Holding    S-1, 10.16
            Company,  Inc. and its subsidiaries dated February 1,
            1991, as amended.

10.13       Form of Remote  Outsourcing  Agreement by and between    S-1, 10.18
            Systematics   Financial  Services,   Inc.  and  Union
            Acceptance Corporation.

10.13(a)    Letter Agreement by and among  Systematics  Financial  S-1, 10.18(a)
            Services,   Inc.,   Union  Federal  Savings  Bank  of
            Indianapolis and Union Acceptance  Corporation  dated
            July 13, 1994 respecting Provision of Data Processing
            Services.

10.13(b)    Memorandum respecting Billing Procedure in connection  S-1, 10.18(b)
            with Remote  Outsourcing  Agreement from  Systematics
            System  Financial  Services,  Inc.  to Union  Federal
            Savings  Bank of  Indianapolis  and Union  Acceptance
            Corporation dated October 25, 1994.

10.14       Union  Acceptance  Corporation  Annual Bonus Plan For     S-1, 10.23
            Senior Officers.


<PAGE>

10.15   Union Acceptance Corporation Incentive Stock Plan.            S-1, 10.24

10.16   Letter  respecting  Access  to  Records  from  Union          S-1, 10.25
        Acceptance Corporation to Union Federal Savings Bank
        of Indianapolis dated September 13, 1994.

10.17   Letter   Agreement  by  and  between  Union  Federal         S-1,  10.26
        Savings Bank of  Indianapolis  and Union  Acceptance
        Corporation  dated  December  14, 1994  amending and
        initiating    terms   of    certain    Inter-Company
        Agreements.

10.18   Letter  respecting  terms  and  conditions  of  bank          S-1, 10.27
        accounts   from  Union   Federal   Savings  Bank  of
        Indianapolis to Union Acceptance  Corporation  dated
        December 16, 1994.

10.19   Lease Agreement between Waterfield Mortgage Company,           10Q 12/95
        Incorporated, and Union Acceptance Corporation dated               10.19
        as of November 1, 1995

10.20   Purchase  Agreement among Union  Acceptance  Funding            10Q 3/96
        Corporation,  Union Acceptance Corporation and Union                10.1
        Federal  Savings  Bank of  Indianapolis  dated as of
        January 18, 1996

10.21   Sublease    Agreement   between   Union   Acceptance            10K 1996
        Corporation   and  Union  Federal  Savings  Bank  of               10.26
        Indianapolis dated as of August 1, 1996

10.22   Annual Bonus Plan for Management Employees, dated              10Q 12/97
        July 1, 1997                                                        10.1
     
10.23   Annual Bonus and Deferral Plan for Senior Officers,            10Q 12/97
        dated July 1, 1997                                                  10.2


21      Subsidiaries of the Registrant                                     _____

23      Consent of KPMG Peat Marwick LLP.                                  _____

27      Financial Data Schedule                                            _____

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

(1)  Exhibits  set  forth  above  that are not  included  with this  filing  are
     incorporated by reference to the Registrant's previously filed registration
     statement or reports (and the indicated exhibit number) as indicated in the
     right hand column above, as follows:

     S-1 -- Refers to Registrant's  Registration Statement on Form S-1 (Reg. No.
     33-82254

     10K 1995 -- Refers to  Registrant's  Form 10-K for the year  ended June 30,
     1995

     10K 1997 -- Refers to  Registrant's  Form 10-K for the year  ended June 30,
     1996

     10K 1996 -- Refers to  Registrant's  Form 10-K for the year  ended June 30,
     1997

     10Q (month/year) -- Refers to Registrant's  Form 10-Q for the quarter ended
     at the end of such month in such calendar year