United PanAm Financial Corp. Announces First Quarter 2010 Results and Completion of Sale of Residual Interests and Transfer of Servicing Obligations

United Panam Financial Corp. (UPFC) (Pink Sheets:UPFC) today announced results for its first quarter ended March 31, 2010 and completion of the sale of certain residual securitization interests and rights to repurchase previously-sold automobile installment sales contracts, as well as the transfer of servicing obligations related thereto.

Results for the Period Ended March 31, 2010

For the quarter ended March 31, 2010 UPFC reported a net loss of $1.3 million, compared to a net loss of $4.0 million for the same period a year ago. Interest income decreased to $22.5 million for the quarter ended March 31, 2010 from $40.8 million for the same period a year ago. UPFC reported a net loss of $0.08 per diluted share for the quarter ended March 31, 2010 compared to net loss of $0.25 per diluted share for the same period a year ago.

The reported net loss for the quarter ended March 31, 2010 includes a charge of $1.94 million ($1.18 million after-tax) or $0.13 ($0.08 after-tax) per diluted share for restructuring charges and other non-recurring charges associated with the closure of six branches during the quarter and a one-time charge for a legal settlement.

UPFC purchased approximately $13.6 million of automobile contracts during the first quarter of 2010.

The change in earnings for the quarter ended March 31, 2010 compared to the same period a year ago primarily reflects the following:

• Provision for loan losses decreased to $6.7 million from $14.3 million due primarily to a decrease in average balance of loans outstanding. The annualized charge-off rate increased to 12.3% for the quarter ended March 31, 2010 from 11.7% for the same period last year.
• Interest income decreased 45% to $22.5 million from $40.8 million due primarily to a decrease in average loans outstanding as a result of UPFC’s strategy of downsizing its operations.

• Interest expense decreased 44% to $6.3 million from $11.3 million primarily due to lower average debt outstanding, partially offset by higher market interest rates on the term financing with Santander Consumer USA Inc. Net Interest margin as a percentage of interest income decrease to 71.6% for the quarter ended March 31, 2010 from 72.3% for the same period last year.

During the quarter ended March 31, 2010, UPFC closed an additional six branches, leaving 11 remaining branches in operation as of March 31, 2010. Please see further developments below.

Completion of Asset Sale and Servicing Transfer

On May 10, 2010, UPFC, by and through its wholly-owned subsidiary United Auto Credit Corporation ("UACC”), entered into a transaction with Santander Consumer USA Inc. ("Santander”) pursuant to which UACC transferred and sold to Santander the servicing rights and residual interests in its outstanding securitization transactions. In addition, Santander paid UACC for UACC to surrender its option to repurchase certain loans previously sold to Santander pursuant to the May 2009 transaction. UACC is also transferring the servicing of those loans to Santander.

Cash proceeds received by UPFC in connection with the consummation of these transactions totaled $58.6 million. These transactions and related forthcoming restructuring charges are not expected to generate a material gain or loss to the Company’s Shareholders’ Equity. As a result of these transactions, UPFC will not have any remaining debt related to the financing of its automobile installment sales contracts. The Company plans to use the proceeds for general corporate purposes.

As part of these transactions and related restructurings, UACC ceased servicing activities in 10 of the 11 branches that remained open as of March 31, 2010. UACC plans to consolidate the servicing of all automobile installment sales contracts in its Hurst, Texas branch office and to continue purchasing automobile installment sales contracts through its regional underwriting offices and field marketing staff.

Management anticipates that UPFC’s operating results will be negatively impacted in the near-term by the small aggregate size of its remaining portfolio of automobile installment sales contracts in light of high remaining infrastructure expenses.

The unaudited pro forma balance sheet provided below gives effect to the transaction described above as if it was consummated on March 31, 2010 and is based, in part, upon a number of management estimates and assumptions regarding, among others things, transaction expenses and post-closing restructuring costs; actual amounts may differ significantly from management’s estimates, and such differences might have resulted in a substantially different balance sheet than the pro forma balance sheet presented below.

Pursuant to a previously-disclosed share repurchase program enacted in June 2006, UPFC is authorized to repurchase up to an additional 1,004,100 shares of its common stock.

United PanAm Financial Corp.

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

Forward Looking Statements

Any statements set forth above as well as some oral statements by our officials to securities analysts and shareholders during presentations about us are "forward-looking statements.” Statements which are predictive in nature, which depend upon or refer to future events or conditions, or which include words such as "expects,” "anticipates,” "intends,” "plans,” "believes,” "estimates,” "hopes,” "assumes,” "may,” "project,” "will” and similar expressions constitute forward-looking statements. In addition, any statements concerning future financial performance (including future revenues, earnings or growth rates), ongoing business strategies or prospects, and possible future actions, which may be provided by management, are also forward-looking statements. Forward-looking statements are based upon expectations and projections about future events and are subject to assumptions, risks and uncertainties about, among other things, our company and economic and market factors. Actual events and results may differ materially from those expressed or forecasted in the forward-looking statements due to a number of factors. The principal factors that could cause our actual performance and future events and actions to differ materially from such forward-looking statements include, but are not limited to, our dependence on securitizations, our need for substantial liquidity to run our business, loans we made to credit-impaired borrowers, reliance on operational systems and controls and key employees, competitive pressure we face, changes in the interest rate environment, general economic conditions, the effects of accounting changes, inability to manage consolidating operations, and other factors or conditions. Our past performance and past or present economic conditions are not indicative of our future performance or of future economic conditions. Undue reliance should not be placed on forward-looking statements. In addition, we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of anticipated or unanticipated events or changes to projections over time unless required by federal securities law.