General

White River Capital, Inc. ("White River") is an Indiana corporation incorporated on December 30, 2004 and serves as a holding company for two specialized auto finance companies.

Coastal Credit LLC ("Coastal Credit"), based in Virginia Beach, Virginia, is a specialized subprime auto finance company engaged in acquiring subprime auto receivables from both franchised and independent automobile dealers which have entered into contracts with purchasers of typically used, but some new, cars and light trucks. Coastal Credit then services the receivables it acquires. Coastal Credit operates in 21 states through 18 offices.

Union Acceptance Company LLC ("UAC"), based in Indianapolis, Indiana, is a specialized auto finance company which holds and oversees its portfolio of non-prime auto receivables. On January 5, 2007, the U.S. Bankruptcy Court for the Southern District of Indiana issued a final decree and closed UAC's Chapter 11 bankruptcy case. UAC remains contractually obligated to distribute its remaining assets in compliance with its Second Amended and Restated Plan of Reorganization (the "Plan" or the "Plan of Reorganization") approved in connection with the bankruptcy case. Under the Plan, UAC must pay net proceeds from its residual interest in its receivables portfolios and other estate assets to creditors holding notes and claims under the Plan. White River owns all of UAC's general unsecured claims, 89.1% of UAC's restructured subordinated notes ("Subordinated Notes") and 94.7% of UAC's accrual notes ("Accrual Notes") issued under the Plan. UAC was designated the Creditor Representative to oversee the distribution of is remaining assets as contractually obligated under the Plan.

On June 27, 2008, White River and First Chicago Bancorp ("First Chicago") signed a definitive agreement and plan of merger pursuant to which First Chicago will merge into White River. Terms of the agreement call for shareholders of First Chicago to receive one share of White River common stock for each two shares of First Chicago common stock. Subject to effective registration of the shares of common stock to be issued to First Chicago's shareholders in the merger with the U.S. Securities and Exchange Commission ("SEC"), and approval for listing of such shares with the NYSE Alternext US ("NYSE Alternext") the common stock issued to First Chicago shareholders will be listed on the NYSE Alternext.

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make significant estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. White River believes that the following represent the material critical accounting policies used in the preparation of its consolidated financial statements. Actual results could differ significantly from estimates.

Allowance for Loan Losses - Finance Receivables

Provisions for loan losses are charged to operations in amounts sufficient to maintain the allowance for loan losses at a level considered adequate to cover probable credit losses inherent in finance receivables.

The allowance for loan losses is established systematically by management based on the determination of the amount of probable credit losses inherent in the finance receivables as of the reporting date. Coastal Credit reviews charge off experience factors, delinquency reports, historical collection rates and other information in order to make the necessary judgments as to probable credit losses inherent in the portfolio as of the reporting date. Assumptions regarding probable credit losses are reviewed quarterly and may be impacted by actual performance of finance receivables and changes in any of the factors discussed above. Should the credit loss assumptions increase, there could be an increase in the amount of allowance for loan losses required, which could decrease the net carrying value of finance receivables and increase the provision for loan losses recorded on the consolidated statements of operations. Coastal Credit believes that the existing allowance for loan losses is sufficient to absorb all probable finance receivable losses.

Goodwill

White River has adopted the provisions of SFAS No. 142, Goodwill and Other Intangible Assets ("SFAS No. 142") for the accounting of goodwill related to the acquisition of Coastal Credit during 2005. As a result, goodwill is not amortized; rather, White River annually tests the goodwill for impairment or more frequently if events or changes in circumstances indicate that the asset might be impaired. The amount of goodwill impairment, if any, is measured as the excess of the carrying value over the fair value. Goodwill will be adjusted for adjustments related to excess tax deductibility of goodwill.

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.

The ultimate realization of the deferred tax asset depends on White River's ability to generate sufficient taxable income in the future and its ability to prevent an ownership change from occurring for tax purposes. The valuation allowance has been derived pursuant to the provisions of Statement of Financial Accounting Standards ("SFAS") No. 109, Accounting for Income Taxes, and reduces the total deferred tax asset to an amount that will "more likely than not" be realized. White River adopted FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes ("FIN No. 48") on January 1, 2007. The implementation of FIN 48 did not impact White River's consolidated financial statements. As of January 1, 2008, there were no unrecognized tax benefits.

New Accounting Pronouncements

In September 2006, the FASB issued Statement of Financial Accounting Standards ("SFAS") No. 157, Fair Value Measurements ("SFAS No. 157"), which provides guidance on how to measure assets and liabilities using fair value methods. SFAS No. 157 applies whenever another United States Generally Accepted Accounting Principle standard requires (or permits) assets or liabilities to be measured at fair value but does not expand the use of fair value to any new circumstances. This standard requires additional disclosures in both annual and quarterly reports. SFAS No. 157 is effective for White River's financial statements issued for fiscal years beginning after November 15, 2007. White River early adopted SFAS No.157 on January 1, 2007. There was no effect on the consolidated financial statements for the adoption of SFAS No. 157.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities ("SFAS No. 159"). SFAS No. 159 permits all entities to choose, at specified election dates, to measure eligible assets and liabilities at fair value. SFAS No. 159 is effective for financial statements issued for fiscal years beginning after November 15, 2007. White River early adopted SFAS No. 159 on January 1, 2007 and applied SFAS No. 159 solely to creditor notes payable.

Results of Operations

The Quarter Ended September 30, 2008 Compared to the Quarter Ended September 30, 2007 - Overview

Net loss was $20.5 million, or $5.29 per diluted share, for the quarter ended September 30, 2008, compared to net income of $1.5 million, or $0.38 per diluted share, for the quarter ended September 30, 2007. The following items contributed to the decrease of net income to a net loss:

§ Interest on receivables was $7.6 million and $7.9 million for the quarters ended September 30, 2008 and 2007, respectively. This decline is the result of the continued liquidation of the UAC receivables.

§ Accretion and other income decreased $0.5 million to $0.9 million for the quarter ended September 30, 2008 as compared to $1.4 million for the same period during 2007. This decline is the result of the decline of accretion income related to accumulated other comprehensive income.

§ A provision for estimated credit losses of $2.1 million was recognized for the quarter ended September 30, 2008 compared to $1.5 million for the quarter ended September 30, 2007.

§ Impairment to goodwill of $34.5 million was recognized during the quarter ended September 30, 2008. No such impairment occurred during the quarter ended September 30, 2007.

The above decreases in net income were partially offset by the following increases to net income:

§ Interest expense for the quarter ended September 30, 2008 decreased $0.8 million as the result of the reductions of debt and interest rates as compared to the quarter ended September 30, 2007.

§ Charge to master trust-net was $0.5 million for the quarter ended September 30, 2007. There is no such activity during 2008 with the termination of the Master Trust Agreement during December 2007.

The Nine Months Ended September 30, 2008 Compared to the Nine Months Ended September 30, 2007 - Overview

Net loss was $15.3 million, or $3.94 per diluted share, for the nine months ended September 30, 2008, compared to net income of $10.2 million, or $2.57 per diluted share, for the nine months ended September 30, 2007. The following items contributed to the decrease of net income to a net loss:

§ Interest on receivables was $23.3 million and $24.2 million for the nine months ended September 30, 2008 and 2007, respectively. This decline is the result of the continued liquidation of the UAC receivable.

§ Accretion and other income decreased $6.4 million to $6.3 million for the nine months ended September 30, 2008 as compared to $12.7 million for the same period during 2007. This decline is the result of the decline of accretion income related to accumulated other comprehensive income.

§ Provision for estimated credit losses of $4.9 million was recognized for the nine months ended September 30, 2008 compared to $3.0 million for the nine months ended September 30, 2007.

§ Salaries and benefits increased $0.4 million to $6.7 million for the nine months ended September 30, 2008 as compared to $6.3 million for the same period during 2007 as a result of performance based awards paid during the 2008.

§ Other operating expenses increased $1.0 million to $5.0 million for the nine months ended September 30, 2008 as compared to $4.0 million for the nine months ended September 30, 2007 primarily as a result of performance based awards paid during 2008.

§ Impairment to goodwill of $34.5 million was recognized during the nine months ended September 30, 2008. No such impairment occurred during 2007.

The above decreases in net income were partially offset by the following increases to net income:

§ Interest expense for the nine month ended September 30, 2008 decreased $2.8 million as the result of the reductions of debt and interest rates as compared to the nine months ended September 30, 2007.

§ Charge to master trust-net was $2.0 million for the nine months ended September 30, 2007. There is no such activity during 2008 with the termination of the Master Trust Agreement during December 2007.

Part I  Financial Information

Discussion of Results

The following table presents consolidated financial information for White River
for the periods indicated (in thousands):

       For The Quarter Ended                                              Corporate
       September 30, 2008                UAC         Coastal Credit       and Other        Consolidated

       Interest on receivables        $      217     $         7,367     $          -     $        7,584
       Accretion and other interest          926                   -                5                931

       Total interest income               1,143               7,367                5              8,515

       Interest expense                      (51 )              (564 )              -               (615 )

       Net interest margin                 1,092               6,803                5              7,900

       Recovery (provision) for
       estimated credit losses               198              (2,287 )              -             (2,089 )

       Net interest margin after
       recovery (provision) for
       estimated credit losses             1,290               4,516                5              5,811

       OTHER REVENUES (EXPENSES):
       Salaries and benefits                 (44 )            (1,812 )           (157 )           (2,013 )
       Operating expenses                    (88 )              (837 )           (339 )           (1,264 )
       Third party servicing
       expense                               (50 )                 -                -                (50 )
       Change in fair market
       valuation of creditor
       liabilities                            (4 )                 -                -                 (4 )
       Gain from extinguishment of
       debt                               (2,139 )                 -            2,139                  -
       Other income (expense)                 13                (100 )              -                (87 )

       Total other revenues
       (expenses)                         (2,312 )            (2,749 )          1,643             (3,418 )

       Goodwill impairment                     -                   -          (34,536 )          (34,536 )

       Income (loss) before income
       taxes                              (1,022 )             1,767          (32,888 )          (32,143 )

       Income tax benefit                      -                   -           11,671             11,671

       Net income (loss)              $   (1,022 )   $         1,767     $    (21,217 )   $      (20,472 )

       For The Quarter Ended                                              Corporate
       September 30, 2007                UAC         Coastal Credit       and Other        Consolidated

       Interest on receivables        $      294     $         7,649     $          -     $        7,943
       Accretion and other interest        1,382                   -               18              1,400

       Total interest income               1,676               7,649               18              9,343

       Interest expense                     (188 )              (928 )           (291 )           (1,407 )

       Net interest margin                 1,488               6,721             (273 )            7,936

       Recovery (provision) for
       estimated credit losses               509              (1,989 )              -             (1,480 )

       Net interest margin
       (deficit) after recovery
       (provision) for estimated
       credit losses                       1,997               4,732             (273 )            6,456

       OTHER REVENUES (EXPENSES):
       Salaries and benefits                (101 )            (1,859 )           (168 )           (2,128 )
       Operating expenses                   (110 )              (804 )           (300 )           (1,214 )
       Third party servicing
       expense                               (99 )                 -                -                (99 )
       (Charge) credit to master
       trust-net                            (540 )                 -                -               (540 )
       Change in fair market
       valuation of creditor
       liabilities                          (206 )                 -                -               (206 )
       Other income (expense)                133                (110 )              -                 23

       Total other revenues
       (expenses)                           (923 )            (2,773 )           (468 )           (4,164 )

       Income before income taxes          1,074               1,959             (741 )            2,292

       Income tax expense                      -                   -             (801 )             (801 )

       Net income (loss)              $    1,074     $         1,959     $     (1,542 )   $        1,491

Part I  Financial Information

The following table presents consolidated financial information for White River
for the periods indicated (in thousands):

       For The Nine Months Ended                                          Corporate
       September 30, 2008                UAC         Coastal Credit       and Other        Consolidated

       Interest on receivables        $    1,389     $        21,932     $          -     $       23,321
       Accretion and other interest        6,250                   -               11              6,261

       Total interest income               7,639              21,932               11             29,582

       Interest expense                     (174 )            (1,914 )              -             (2,088 )

       Net interest margin                 7,465              20,018               11             27,494

       Recovery (provision) for
       estimated credit losses               843              (5,750 )              -             (4,907 )

       Net interest margin after
       recovery (provision) for
       estimated credit losses             8,308              14,268               11             22,587

       OTHER REVENUES (EXPENSES):
       Salaries and benefits                (166 )            (5,738 )           (750 )           (6,654 )
       Operating expenses                   (327 )            (2,437 )         (2,191 )           (4,955 )
       Third party servicing
       expense                              (237 )                 -                -               (237 )
       Change in fair market
       valuation of creditor
       liabilities                           (51 )                 -                -                (51 )
       Gain from extinguishment of
       debt                              (11,015 )                 -           11,015                  -
       Gain from deficiency account
       sale                                  158                   -                -                158
       Other income (expense)                 56                (270 )              -               (214 )

       Total other revenues
       (expenses)                        (11,582 )            (8,445 )          8,074            (11,953 )

       Goodwill impairment                     -                   -          (34,536 )          (34,536 )

       Income (loss) before income
       taxes                              (3,274 )             5,823          (26,451 )          (23,902 )

       Income tax benefit                      -                   -            8,649              8,649

       Net income (loss)              $   (3,274 )   $         5,823     $    (17,802 )   $      (15,253 )

       For The Nine Months Ended                                          Corporate
       September 30, 2007                UAC         Coastal Credit       and Other        Consolidated

       Interest on receivables        $    1,539     $        22,690     $          -     $       24,229
       Accretion and other interest       12,616                   -               67             12,683

       Total interest income              14,155              22,690               67             36,912

       Interest expense                     (913 )            (3,081 )           (951 )           (4,945 )

       Net interest margin                13,242              19,609             (884 )           31,967

       Recovery (provision) for
       estimated credit losses             2,145              (5,124 )              -             (2,979 )

       Net interest margin
       (deficit) after recovery
       (provision) for estimated
       credit losses                      15,387              14,485             (884 )           28,988

       OTHER REVENUES (EXPENSES):
       Salaries and benefits                (233 )            (5,610 )           (437 )           (6,280 )
       Operating expenses                   (362 )            (2,516 )         (1,154 )           (4,032 )
       Third party servicing
       expense                              (453 )                 -                -               (453 )
       Bankruptcy costs                       (6 )                 -                -                 (6 )
       (Charge) credit to master
       trust-net                          (2,031 )                 -                -             (2,031 )
       Change in fair market
       valuation of creditor
       liabilities                          (393 )                 -                -               (393 )
       Gain from extinguishment of
       debt                              (15,262 )                 -           15,262                  -
       Gain from deficiency account
       sale                                   22                   -                -                 22
       Other income (expense)                374                (277 )              -                 97

       Total other revenues
       (expenses)                        (18,344 )            (8,403 )         13,671            (13,076 )

       Income (loss) before income
       taxes                              (2,957 )             6,082           12,787             15,912

       Income tax expense                      -                   -           (5,750 )           (5,750 )

       Net income (loss)              $   (2,957 )   $         6,082     $      7,037     $       10,162

The Quarter Ended September 30, 2008 Compared to the Quarter Ended September 30, 2007

Interest on receivables decreased to $7.6 million for the quarter ended September 30, 2008 as compared to $7.9 million for the same period during 2007 as a result of continued liquidation of the UAC finance receivable portfolio. Interest on receivables for Coastal Credit declined by $0.3 million. While the Coastal Credit average finance receivable balance increased to $88.8 million for the quarter ended September 30, 2008 compared to $87.1 million for the quarter ended September 30, 2007, finance receivables had been declining from May 2007 to January 2008. This receivable balance decline has resulted in the decline of interest on receivables. Since February 2008, finance receivables have steadily increased. This increase will ultimately result in an increase in interest on receivables in future periods.

Accretion and other interest decreased to $0.9 million compared to $1.4 million for the quarters ended September 30, 2008 and 2007, respectively. UAC contributed $0.5 million to this decrease from a decrease in accretion income of the accumulated other comprehensive income. The individual components of accretion and other interest income are shown in the following table (in thousands):

                                                                 Quarters Ended September 30,
                                                                 2008                   2007

       UAC discount accretion from accumulated other
       comprehensive income                                  $        923         $          1,282
       Interest on cash balances                                        8                      118

       Accretion and other interest income                   $        931         $          1,400

Interest expense decreased 56.3% to $0.6 million compared to $1.4 million for the quarters ended September 30, 2008 and 2007, respectively. As a result of the prepayment of collateralized financings during December 2007, UAC interest expense decreased by $0.2 million. Coastal Credit interest expense decreased by $0.3 million to $0.6 million from $0.9 million for the quarters ended September 30, 2008 and 2007, respectively, as a result of the decrease in average debt to $41.4 million compared to $44.1 million, and a reduction in interest rates, for the quarters ended September 30, 2008 and 2007, respectively. Interest expense of Corporate and Other was $0.3 million for the quarter ended September 30, 2007. Corporate and Other is no longer incurring interest expense since the prepayment of the secured note payable during 2007.

Provision for estimated credit losses was $2.1 million compared to $1.5 million for the quarters ended September 30, 2008 and 2007, respectively. Coastal Credit contributed a provision of $2.3 million and $2.0 million for the quarters ended September 30, 2008 and 2007, respectively. Provision for estimated credit losses is charged to income to bring Coastal Credit's allowance for estimated credit losses to a level which management considers adequate to absorb probable credit losses inherent in the portfolio of finance receivables. This provision was partially offset by a recovery of $0.2 million and $0.5 million to the provision for estimated credit losses at UAC for the quarters ended September 30, 2008 and 2007, respectively. This change in recovery for estimated credit losses is a result of declining defaulted receivables between the periods.

Salaries and benefits were relatively unchanged at $2.0 million and $2.1 million for the quarters ended September 30, 2008 and 2007, respectively.

Operating expenses were relatively unchanged at $1.3 million for the quarter ended September 30, 2008 compared to $1.2 million for the quarter ended September 30, 2007.

Third party servicing expenses decreased to $50,000 for the quarter ended September 30, 2008 compared to $99,000 for the quarter ended September 30, 2007. UAC is the only segment that incurs this expense. This decrease is the result of the decline in the number of accounts serviced by the third party servicer during the quarter ended September 30, 2008 as compared to September 30, 2007. UAC pays a monthly servicing fee per active receivable. As the number of receivable accounts decreases, the third party servicing expense decreases.

The charge to Master Trust, net was $0.5 million for the quarter ended September 30, 2007. Charge to Master Trust was an expense related to future transfers of funds to the Master Trust from securitized finance receivables. Future charges to Master Trust have been eliminated with the termination of the Master Trust Agreement during December 2007.

Income tax benefit was $11.7 million for the quarter ended September 30, 2008 compared to an income tax expense of $0.8 million for the quarter ended . . .