United PanAm Financial Corp. Announces Fourth Quarter 2007 Results

IRVINE, Calif.--(Business Wire)--United PanAm Financial Corp. (Nasdaq:UPFC) today announced results
for its fourth quarter and year ended December 31, 2007.

For the quarter ended December 31, 2007, UPFC reported income of
$365,000 from continuing operations, compared to income of $1.8
million for the same period a year ago. Interest income increased
14.2% to $59.5 million for the quarter ended December 31, 2007 from
$52.1 million for the same period a year ago. UPFC reported income of
$0.02 per diluted share from continuing operations for the quarter
ended December 31, 2007 compared to $0.10 per diluted share for the
same period a year ago.

For the year ended December 31, 2007, UPFC reported income of
$10.6 million from continuing operations, compared to income of $19.7
million for the same period a year ago. Interest income increased
17.5% to $229.5 million for the year ended December 31, 2007 from
$195.3 million for the same period a year ago. UPFC reported income of
$0.65 per diluted share from continuing operations for the year ended
December 31, 2007 compared to $1.06 per diluted share for the same
period a year ago.

UPFC purchased $106.0 million of automobile contracts during the
fourth quarter of 2007, compared with $116.6 million during the same
period a year ago, representing a 9.1% decrease. This decrease was the
result of UPFC's focus on tighter underwriting criteria and slower
branch expansion in anticipation of a slowdown in the economy and
potential for further employment contraction in 2008. Contracts
outstanding totaled $926.4 million at December 31, 2007, compared with
$813.5 million at December 31, 2006, representing a 13.9% increase.
The increase was the result of additional automobile contracts
purchased in existing and new markets during 2007.

In 2007, UPFC opened 15 new auto finance branches and closed 4
underperforming branches. In January 2008, UPFC closed an additional 6
branches. These closed branches represent less than 1% of the overall
portfolio balance and will provide UPFC approximately $3.4 million in
cost savings and improvement in operating leverage for 2008. The
portfolio of these branches will continue to be serviced by other
branches within the same market. The impairment charge for the costs
associated with the closure of these branches did not have a material
impact on UPFC's financial statements.

The decrease in income from continuing operations for the quarter
ended December 31, 2007 compared to the same period a year ago
primarily reflects the following:

-- Interest income increased 14.2% to $59.5 million from $52.1
million due primarily to the increase in average loans of
$128.2 million as a result of the purchase of additional
automobile contracts.

-- Interest expense increased 25.5% to $12.8 million from $10.2
million primarily due to higher market interest rates, the
growth in the loan portfolio, and the pay down of lower priced
securitizations of prior years. As a result, net interest
margin decreased from 80.4% for the quarter ended December 31,
2006 to 78.5% for the quarter ended December 31, 2007.

-- Provision for loan losses increased due to an increase in the
annualized charge-off rate to 7.99% for the quarter ended
December 31, 2007 from 6.91% for the same period a year ago
and a larger loan portfolio. The two major factors that
continue to impact our charge-off rate are increase in
gasoline prices and increase in unemployment; primarily in key
states such as California, Florida, Illinois and Michigan.

-- Non-interest expense increased to $25.2 million from $22.0
million during 2007 as branches require additional personal as
they mature. Non-interest expense as a percentage of average
loans, however, decreased to 10.67% from 10.75%.

On October 18, 2007, UPFC executed a twelve month extension of its
existing $300 million warehouse facility with Deutsche Bank.

Securitizations

On November 8, 2007, the Company completed its 2007B
securitization for $250 million. The securitization had three
sequential pay tranches as follows: $58,000,000 Class A-1 4.98685%,
$93,000,000 Class A-2 5.75%, and $99,000,000 Class A-3 6.15%. The
following table lists each of UPFC's securitizations as of December
31, 2007:

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Remaining
Balance
at
December
Issue Original 31,
Number Issuance Date Maturity Date(1) Balance 2007
(Dollars in thousands)

2004A September 22, 2004 September 2010 $ 420,000 $ --
2005A April 14, 2005 December 2010 $ 195,000 $ 29,713
2005B November 10, 2005 August 2011 $ 225,000 $ 58,785
2006A June 15, 2006 May 2012 $ 242,000 $100,796
2006B December 14, 2006 August 2012 $ 250,000 $142,543
2007A June 14, 2007 July 2013 $ 250,000 $193,103
2007B November 8, 2007 July 2014 $ 250,000 $237,305
------------- ----------
Total $1,832,000 $762,245
============= ==========

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

United PanAm Financial Corp.

UPFC is a specialty finance company engaged in automobile finance,
which includes the purchasing, warehousing, securitizing and servicing
of automobile installment sales contracts originated by independent
and franchised dealers of used automobiles. UPFC conducts its
automobile finance business through its wholly-owned subsidiary,
United Auto Credit Corporation, with branch offices in 39 states.

Forward Looking Statements

Any statements set forth above that are not historical facts are
forward-looking statements made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act ("SLRA") of 1995,
including statements concerning the Company's strategies, plans,
objectives, intentions and projections. Generally, the words
"believe," "expect," "intend," "estimate," "anticipate," "project,"
"realize," "will" and similar expressions identify forward-looking
statements, which generally are not historical in nature. Such
statements are subject to a variety of estimates, risks and
uncertainties, known and unknown, which may cause the Company's actual
results to differ materially from those anticipated in such
forward-looking statements. Potential risks and uncertainties include,
but are not limited to, such factors as our recent shift of the
funding source of our business; our dependence on securitizations; our
need for substantial liquidity to run our business; loans we made to
credit-impaired borrowers; reliance on operational systems and
controls and key employees; competitive pressures which we face; rapid
growth of our business; fluctuations in market rates of interest;
general economic conditions; the effects of accounting changes; and
other risks discussed in our Company's filings with the Securities and
Exchange Commission (SEC), including our Annual Report on Form 10-K,
which filings are available from the SEC. You should not place undue
reliance on forward-looking statements, which speak only as of the
date they are made. UPFC undertakes no obligation to publicly update
or revise any forward-looking statements.

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

December December
31, 31,
2007 2006
(Dollars in thousands)
Assets
Cash $ 9,909 $ 8,389
Short term investments 7,332 19,905
--------- ---------
Cash and cash equivalents 17,241 28,294
Restricted cash 73,633 67,987
Loans 882,651 774,075
Allowance for loan losses (48,386) (36,037)
--------- ---------
Loans, net 834,265 738,038
Premises and equipment, net 6,799 5,034
Interest receivable 10,424 9,018
Other assets 34,819 31,118
--------- ---------
Total assets $977,181 $879,489
========= =========

Liabilities and Shareholders' Equity
Securitization notes payable $762,245 $698,337
Warehouse line of credit 35,625 --
Accrued expenses and other liabilities 9,660 10,977
Junior subordinated debentures 10,310 10,310
--------- ---------
Total liabilities 817,840 719,624
--------- ---------

Preferred stock (no par value):
Authorized, 2,000,000 shares; no shares issued
and outstanding at December 31, 2007 and 2006 -- --
Common stock (no par value):
Authorized, 30,000,000 shares; 15,737,399 and
16,713,838 shares issued and outstanding at
December 31, 2007 and 2006, respectively 49,504 60,614
Retained earnings 109,837 99,251
--------- ---------

Total shareholders' equity 159,341 159,865
--------- ---------

Total liabilities and shareholders'
equity $977,181 $879,489
========= =========
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United PanAm Financial Corp. and Subsidiaries
Consolidated Statements of Income

(In thousands, except per share Three Months Twelve Months
data) Ended December 31, Ended December 31,
------------------ ------------------
2007 2006 2007 2006
---------- ------- -------- ---------
Interest Income
Loans $58,461 $51,157 $225,427 $192,156
Short term investments and
restricted cash 992 969 4,031 3,114
---------- ------- -------- ---------
Total interest income 59,453 52,126 229,458 195,270
---------- ------- -------- ---------
Interest Expense
Securitization notes payable 10,799 7,416 38,721 26,954
Warehouse line of credit 1,758 2,576 7,682 8,007
Other interest expense 245 215 1,046 830
---------- ------- -------- ---------
Total interest expense 12,802 10,207 47,449 35,791
---------- ------- -------- ---------
Net interest
income 46,651 41,919 182,009 159,479
Provision for loan losses 21,228 17,245 69,764 46,800
---------- ------- -------- ---------
Net interest income
after provision
for loan losses 25,423 24,674 112,245 112,679
---------- ------- -------- ---------

Non-interest Income
Redemption of preferred stock-
investment in AirTime
Technologies, Inc. -- -- -- 520
Other non-interest income 414 349 1,730 1,217
---------- ------- -------- ---------
Total non-interest income 414 349 1,730 1,737
---------- ------- -------- ---------

Non-interest Expense
Compensation and benefits 16,182 14,064 62,169 51,905
Occupancy 2,518 1,995 9,336 7,360
Other non-interest expense 6,542 5,901 25,201 21,844
---------- ------- -------- ---------
Total non-interest
expense 25,242 21,960 96,706 81,109
---------- ------- -------- ---------

Income from continuing
operations before income taxes 595 3,063 17,269 33,307
Income taxes 230 1,303 6,683 13,562
---------- ------- -------- ---------
Income from continuing
operations 365 1,760 10,586 19,745
Loss from discontinued
operations, net of tax -- 8 -- (676)
---------- ------- -------- ---------
Net income $ 365 $ 1,768 $ 10,586 $ 19,069
========== ======= ======== =========
Earnings (loss) per share-basic:
Continuing operations $ 0.02 $ 0.11 $ 0.66 $ 1.13
Discontinued operations -- -- -- (0.04)
---------- ------- -------- ---------
Net income $ 0.02 $ 0.11 $ 0.66 $ 1.09
========== ======= ======== =========
Weighted average basic
shares outstanding 15,734 16,771 15,926 17,444
========== ======= ======== =========
Earnings (loss) per share-
diluted:
Continuing operations $ 0.02 $ 0.10 $ 0.65 $ 1.06
Discontinued operations -- -- -- (0.04)
---------- ------- -------- ---------
Net income $ 0.02 $ 0.10 $ 0.65 $ 1.02
========== ======= ======== =========
Weighted average diluted
shares outstanding 15,927 17,378 16,357 18,699
========== ======= ======== =========
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United PanAm Financial Corp. and Subsidiaries
Consolidated Statement of Changes in Shareholders' Equity

Total
Number Common Retained Shareholders'
of Shares Stock Earnings Equity

(Dollars in thousands)
Balance, December
31, 2006 16,713,838 $ 60,614 $ 99,251 $159,865
Net income -- -- 10,586 10,586
Exercise of stock
options, net 36,774 166 -- 166
Tax effect of
exercised stock
options -- 112 -- 112
Repurchase of common
stock (1,013,213) (13,188) -- (13,188)
Stock-based
compensation
expense -- 1,800 -- 1,800
---------- ------- ------- -------
Balance, December
31, 2007 15,737,399 $ 49,504 $109,837 $159,341
=========== =========== =========== =============
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United PanAm Financial Corp. and Subsidiaries
Selected Financial Data

(Dollars in thousands) At or For the At or For the
Three Months Ended Twelve Months Ended
---------------------------------------
December December December December
31, 31, 31, 31,
2007 2006 2007 2006
--------- ------------------- ---------

Operating Data
Contracts purchased $106,026 $116,637 $590,767 $550,563
Contracts outstanding $926,350 $813,524 $926,350 $813,524
Unearned acquisition discounts $(43,699) $(39,449) $(43,699) $(39,449)
Average loan balance $938,421 $810,229 $898,851 $755,881
Unearned acquisition discounts
to gross loans 4.72% 4.85% 4.72% 4.85%
Average percentage rate to
borrowers 22.64% 22.66% 22.64% 22.66%

Adjusted EBITDA (1)
Income from continuing
operations $ 365 $ 1,760 $ 10,586 $19,745
Add interest expense 12,802 10,207 47,449 35,791
Add income taxes 230 1,303 6,683 13,562
Add depreciation and
amortization 606 560 2,385 1,963
Add option expense 400 720 1,800 2,474
Add provision for loan
losses 21,228 17,245 69,764 46,800
Subtract charge-offs 18,892 14,113 57,415 39,873
--------- --------- --------- ---------
Adjusted EBITDA $ 16,739 $ 17,682 $ 81,252 $80,462

Loan Quality Data
Allowance for loan losses $(48,386) $(36,037) $(48,386) $(36,037)
Allowance for loan losses to
gross loans net of
unearned acquisition discounts 5.48% 4.66% 5.48% 4.66%
Delinquencies (% of net
contracts)
31-60 days 0.78% 0.60% 0.78% 0.60%
61-90 days 0.30% 0.21% 0.30% 0.21%
90+ days 0.16% 0.12% 0.16% 0.12%
--------- --------- --------- ---------
Total 1.24% 0.93% 1.24% 0.93%
Repossessions over 30 days
past due (% of net contracts) 0.89% 0.56% 0.89% 0.56%
Annualized net charge-offs to
average loans (2) 7.99% 6.91% 6.39% 5.22%

Other Data
Number of branches 142 131 142 131
Number of employees 1,147 954 1,147 954
Interest income $ 59,453 $ 52,126 $229,458 $195,270
Interest expense $ 12,802 $ 10,207 $ 47,449 $35,791
Interest margin $ 46,651 $ 41,919 $182,009 $159,479
Net interest margin as a
percentage of interest income 78.47% 80.42% 79.32% 81.67%
Net interest margin as a
percentage of average loans
(2) 19.72% 20.53% 20.25% 21.10%
Non-interest expense to
average loans (2) 10.67% 10.75% 10.76% 10.73%
Return on average assets from
continuing operations (2) 0.15% 0.81% 1.11% 2.44%
Return on average
shareholders' equity (2) 0.91% 4.37% 6.74% 12.44%
Consolidated capital to assets
ratio 16.31% 18.18% 16.31% 18.18%

(1) Adjusted EBITDA is defined as earnings before interest expense,
income taxes, depreciation and amortization. In addition, it is
adjusted to exclude certain non-cash items such as provision expense
and option expense but includes actual credit losses. Adjusted EBITDA
is used by management to evaluate the operating performance of our
businesses for comparable periods. Adjusted EBITDA should not be used
by investors or other third parties as the sole basis for formulating
investment decisions as it excludes a number of important cash and
non-cash items. Management compensates for this limitation by using
GAAP financial measures as well in managing our businesses.

(2) Quarterly information is annualized for comparability with full
year information.
*T

United PanAm Financial Corp.
Arash A. Khazei
Chief Financial Officer
949-224-1227
akhazei@upfc.com

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