CENTRAL FINANCIAL ACCEPTANCE CORP, 10-K, 1998-03-31

CENTRAL FINANCIAL ACCEPTANCE CORP
10-K, 1998-03-31
PERSONAL CREDIT INSTITUTIONS

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 31, 1998.

===============================================================================

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997

[ ] 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: 001-11815

CENTRAL FINANCIAL ACCEPTANCE CORPORATION
(Exact name of Registrant as specified in its charter)

DELAWARE 95-4574983
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)

5480 EAST FERGUSON DRIVE
COMMERCE, CALIFORNIA 90022
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (213) 720-8600

Securities registered pursuant to Section 12(b) of the Act: NONE

Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(Title of Class)

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of 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 Common Stock held by non-affiliates of the
Registrant based upon the closing sale price of the Common Stock on March 3,
1998, as reported on the Nasdaq National Market, was approximately $24,460,500.

Number of shares outstanding of the Registrant's Common Stock, as of March 4,
1998: 7,277,000

DOCUMENTS INCORPORATED BY REFERENCE

DOCUMENT INCORPORATED PART OF FORM 10-K INTO WHICH INCORPORATED
DEFINITIVE PROXY STATEMENT FOR THE PART III
1998 ANNUAL MEETING OF SHAREHOLDERS

==============================================================================
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TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
PART I ........................................................................ 3

Item 1. BUSINESS .............................................................. 3

Item 2. PROPERTIES ............................................................ 22

Item 3. LEGAL PROCEEDINGS ..................................................... 22

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ................... 22

PART II ....................................................................... 23

Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS . 23

Item 6. SELECTED FINANCIAL DATA ............................................... 23

Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS ......................................................... 25

Item 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK ............ 38

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ........................... 38

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE .................................................. 38

PART III ...................................................................... 39

Item 10.DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT ........................ 39

Item 11.EXECUTIVE COMPENSATION ................................................ 39

Item 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT ............................................................ 39

Item 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ........................ 39

PART IV ....................................................................... 40

Item 14.EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K ....... 40
</TABLE>

<PAGE> 3
PART I

ITEM 1. BUSINESS

INTRODUCTION

Certain matters discussed in this Annual Report on Form 10-K may
constitute forward-looking statements under Section 27A of the Securities Act of
1933, as amended (the "Securities Act") and Section 21E of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). These statements may
involve risks and uncertainties. These forward-looking statements relate to,
among other things, expectations of the business environment in which Central
Financial Acceptance Corporation and its subsidiaries (the "Company" which may
be referred to as "we" or "us," or "Central" when referring only to the parent
company) operate in, projections of future performance, perceived opportunities
in the market and statements regarding our mission and vision. Our actual
results, performance, or achievements may differ significantly from the results,
performance, or achievements expressed or implied in such forward-looking
statements. For discussion of the factors that might cause such a difference,
see "-- Business Considerations and Certain Factors that May Affect Future
Results of Operations and Stock Price."

RECENT DEVELOPMENTS

In February 1998, we entered into a definitive agreement to acquire
Mission Savings and Loan Association, a federally chartered savings association
based in Riverside, California (the "Bank") with deposits insured by the Federal
Deposit Insurance Corporation (the "FDIC"). The cost of the acquisition will
equal 1.47 times the Bank's adjusted stockholders' equity at the end of the
month immediately prior to the date of acquisition. This amount is currently
estimated to be approximately $4.7 million. The acquisition is subject to, among
other things, the approval of the Office of Thrift Supervision (the "OTS") and
the approval of the shareholders of the Bank. At December 31, 1997, the Bank had
approximately $49.2 million in total assets and $3.3 million in total
stockholders' equity. The Bank had net income of $0.3 million during 1997.

Although we expect the Bank to continue to accept deposits and provide
other financial services, the primary purpose of the acquisition is to expand
our consumer lending business through the issuance of a credit card
substantially similar to our Efectiva Card.

COMPANY OVERVIEW

We are a specialized consumer finance company that primarily serves the
financing needs of the rapidly growing low income Hispanic population. We
believe this market is underserved. Through our consumer finance services, we:

- Provide small, unsecured personal loans to our customers

- Purchase and service consumer finance receivables our customers
generate for purchases of high quality brand name consumer
products, appliances and furniture sold by Banner's Central
Electric, Inc. ("Banner"), an affiliate of the Company, and by
independent retailers

- Sell airline tickets and originate and service travel-related
finance receivables

- Provide insurance products and insurance premium financing to
our customers

<PAGE> 4
We have catered to the low income Hispanic population during our 40
years of operation by locating our facilities primarily in Hispanic communities,
advertising in Spanish, and employing Spanish as the primary language at our
locations. While we operate primarily in the greater Los Angeles area and face
substantial competition with respect to our lines of business, our objective is
to become the leading provider of consumer credit and other financial services
to the low income Hispanic population in urban areas within California and
elsewhere in the United States.

Our customers are typically between the ages of 21 and 45, earn less
than $25,000 per year, have little or no savings, and have limited or short-term
employment histories. In addition, our customers typically have no or limited
prior credit histories and are generally unable to secure credit from
traditional lending sources. We base our credit decisions on our assessment of a
customer's ability to repay the obligation. In making a credit decision, in
addition to the size of the obligation, we generally consider a customer's
income level, type and length of employment, stability of residence, personal
references, and prior credit history with us. We also obtain a credit bureau
report and rating, if available, and seek to confirm other credit-related
information. We, however, are more susceptible to the risk that our customers
will not satisfy their repayment obligations than are less specialized consumer
finance companies or consumer finance companies that have more stringent
underwriting criteria. See "-- Business Considerations and Certain Factors that
May Affect Future Results of Operations and Stock Price -- Credit Risk
Associated with Customers; Lack of Collateral" and "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Financial Trends," "-- Credit Quality" and "-- Delinquency Experience and
Allowance for Credit Losses."

The Company was incorporated in Delaware on April 11, 1996. Our
principal executive offices are located at 5480 East Ferguson Drive, Commerce,
California 90022, and our telephone number is (213) 720-8600.

DEMOGRAPHIC TRENDS AND MARKET OPPORTUNITY

Since 1950 Hispanics have been the fastest growing minority group in the
United States, increasing from 4.0 million in 1950 to approximately 27.0 million
in 1996, a compound annual growth rate of 4.3%. According to the 1996 U.S.
Bureau of the Census Current Population Report (the "1996 Report"), this trend
is expected to continue. The 1996 Report projects that the Hispanic population
will total 36.0 million by 2005. California is home to the largest Hispanic
population in the United States and this population is estimated to grow from
9.4 million in 1995 to 13.0 million by 2005. At this time the Hispanic
population will comprise approximately 34% of California's total population. We
believe that, despite the current size and projected population growth of the
Hispanic population in the United States, this segment of the population will
continue to have limited access to traditional sources of credit.

We have identified certain metropolitan markets in which we believe we
can successfully introduce our financial products and services. Specifically, we
have determined that significant opportunities exist in markets having large
Hispanic populations but in which such populations account for less than 30% of
such area's total population. We believe that Hispanic consumers in these
markets are more likely to be underserved than Hispanics in locations in which
they comprise a greater proportion of an area's total population.

BUSINESS STRATEGY

Recognizing these demographic trends, our strategy has been to identify
new financial products and services that we believe could be introduced
successfully to the low income Hispanic population in urban areas within
California and increase the number of locations through which we can distribute
our products and services. From 1991, when we were acquired by our current
management, until our initial public offering

<PAGE> 5
in June 1996, we grew primarily by introducing such financial products and
services and increased pricing. Our most significant growth has occurred as a
result of the introduction of unsecured small loans in the fourth quarter of
1992, a product which we believe offers significant continued growth potential.
In 1995, we began offering company-financed sales of airline tickets and in
1996, we began selling automobile insurance and offering insurance premium
financing and expanded our independent retail financing business. In 1996 we
expanded our distribution network through acquisitions of travel and auto
insurance businesses primarily serving the Hispanic community.

In May 1997, we introduced a new financial product involving the
issuance of a card, called an "Efectiva Card." The Efectiva Card provides our
customers with the ability to access their established lines of credit with us
by withdrawing cash from our cash dispensing machines. Our cash dispensing
machines are proprietary and are not part of any networked system. Initially we
installed our cash dispensing machines in 15 locations owned or leased by the
Company or Banner and two locations owned or leased by unaffiliated parties.

In October 1997, we entered into an agreement with K-Mart Corporation
("K-Mart") to install our cash dispensing machines at 10 K-Mart locations in
Southern California. We also place our employees at the K-Mart stores to receive
and process applications for lines of credit and Efectiva Cards with the
Company. The agreement, which can be terminated for any reason by either K-Mart
or us at any time after the first six months, requires us to pay a monthly
license fee to K-Mart for each location and to pay all costs and expenses
related to the installation and maintenance of our cash dispensing machines and
our on-site employees. In addition, in January 1998, we and K-Mart agreed to
expand the relationship and install cash dispensing machines in an additional 9
K-Mart stores. We expect these additional cash dispensing machines to be
installed by March 31, 1998. Further, we are talking to K-Mart about expanding
to additional stores after March 31, 1998 and expanding the services we offer at
these locations to include travel services.

During 1998, we will concentrate on expanding our Efectiva Card program
with other major retailers. We believe this is a more efficient way to
distribute our products and services than through purchasing consumer finance
receivables that Banner and other independent retailers generate. As a result,
we have determined to phase out our relationship with the smaller independent
retailers.

BUSINESS ACTIVITIES

At December 31, 1997, our gross receivables portfolio was approximately
$120.2 million, consisting of our portfolios of

- Loan contracts (the "Small Loan Portfolio")

- Consumer product contracts from sales by Banner (the "Consumer
Product Portfolio")

- Consumer finance contracts from sales by independent retailers
(the "Independent Retail Finance Portfolio")

- Travel finance contracts (the "Travel Finance Portfolio")

- Insurance premium finance contracts (the "Premium Finance
Portfolio")

- Automobile finance contracts (the "Automobile Finance
Portfolio")

<PAGE> 6
Installment Credit and Related Businesses

We provide credit to low income consumers who want to purchase consumer
products and services on credit. By granting credit, we provide these consumers
with an increased number of purchasing options. We purchase and service consumer
finance receivables generated through Banner's sales of brand name consumer
products. We also purchase and service consumer finance receivables generated by
independent retailers and originate and service consumer finance receivables
generated through our sales of airline tickets and insurance products. From 1995
through May 30, 1997, we also financed the sale of used automobiles.

Consumer Product Finance. We purchase and service consumer finance
receivables generated through Banner's sales of brand name consumer products
through six stores in the greater Los Angeles area and one store in San
Francisco. Consumer products that we finance include televisions, stereos,
refrigerators, washers and dryers, ovens, freezers, furniture, household
accessories and special order items.

Independent Retail Installment Finance. We also provide financing to
consumers for the purchase of products and services that independent retailers
sell. At present, we have independent retail installment financing arrangements
with approximately 100 retailers in the greater Los Angeles area, most with one
or two locations. However, since we plan to concentrate on expanding our
Efectiva Card with major retailers, we will begin to phase out our relationship
with the smaller retailers.

Travel Sales and Finance. As a complementary business line, in mid-1995
we began our travel business, offering sales of airline tickets, as well as the
financing of such purchases. We believe that we are currently the largest
provider of travel services to the low income Hispanic population in California.
Substantially all of our ticket sales are for international travel, which
generally provides a higher commission structure than does domestic travel.
Prior to our initial public offering, we were conducting this business at five
of Banner's installment credit stores in the greater Los Angeles area and two
finance centers offering small loans and travel finance in the greater Los
Angeles area that were opened in December 1995. At December 31, 1997, we
operated through 75 locations, of which 53 are located in Southern California,
16 are located in Northern California and 6 are located outside of California.
We believe that both our small loan and travel product lines can be offered out
of 1,000 - 1,500 square foot locations, and that these locations can efficiently
offer additional financial products and services which we anticipate we will
make available in the future.

Automobile Finance. From mid 1995 to May 30, 1997 (when we discontinued
the sale of used automobiles), we also provided financing to consumers for the
purchase of automobiles that Banner sold. Banner offered used automobiles for
prices ranging from $6,500 to $8,500. We offered financing terms on sales of
automobiles of up to 42 months. All financing that we extended on automobiles
that Banner sold is with full recourse back to Banner in the event the customer
defaults.

Small Loan Business

In December 1992, we began offering unsecured, closed-end, small loans
generally ranging from $350 to $1,500 for personal, family or household purposes
at Banner's flagship installment credit store. Prior to beginning this business,
we determined that there was a significant demand for small loans, and that
financial institutions in our geographic market were not making loans of less
than $1,500 and did not have adequate underwriting experience to serve the low
income Hispanic population. Beginning in May 1997, we began offering unsecured
open-end small loans which can be accessed through the Efectiva Card. At
December 31, 1997, we had issued approximately 93,000 Efectiva Cards. At
December 31, 1997, our small loan business was operating through 39 facilities,
6 of which were at Banner locations and 23 of which were finance centers and 10
of which were at K-Mart locations.

<PAGE> 7
Other Business Activities

We act as an intermediary for an independent insurance carrier who sells
credit life and credit accident and health insurance to our customers. Through
this arrangement, we sell policies to our customers within limitations
established by agency contracts with that insurer. Credit life insurance
provides for the payment in full of the borrower's credit obligation to the
lender if the borrower dies. Credit accident and health insurance provides for
repayment of loan installments to the lender during the insured's period of
involuntary unemployment resulting from disability, illness or injury. Premiums
for such credit insurance are at the maximum authorized rates and are stated
separately in our disclosure to customers, as required by the Truth-in-Lending
Act and applicable state statutes. We do not act as an intermediary with respect
to the sale of credit insurance to non-borrowers. We earn a commission from the
insurance carrier on the sale of credit insurance which is based in part on the
claims experience on policies that the insurance carrier sells through us.
Beginning in mid-1996, the independent insurance carrier reinsured the credit
life and credit accident and health risk with a newly formed subsidiary of the
Company. As a result of this reinsurance arrangement, the credit risk remains
with us. In 1996, we also began our automobile insurance and insurance premium
financing businesses. Our income tax service company began servicing our
customers in January 1998.

COMPANY OPERATIONS

Credit Procedures

In late 1996, we took a number of steps to improve collections and
credit quality. We hired two senior executives in the credit and collections
fields. In December 1996, we installed an autodialer to assist our collections
personnel in successfully contacting past due borrowers. Finally, we hired CCN,
Inc. to develop a proprietary credit scoring system for us, which we expect to
implement during 1998.

We have developed uniform guidelines and procedures for evaluating
credit applications for installment credit sales and small loans. We take credit
applications at all of our locations, at each of Banner's stores and at each
K-Mart location that has our cash dispensing machines. We then generally
transmit them electronically through our computer system to our credit
processing facility, where all credit approval and verification is centralized.
We also take credit applications at each of the independent retail locations for
which we provide financing, and generally transmit them to our credit processing
facility via facsimile. We believe that our underwriting policies and procedures
allow us to respond quickly to credit requests. We typically respond to credit
applicants within one hour. We believe that because of our prompt response, many
customers prefer to deal with us instead of our competitors.

Our credit managers and credit approvers make their decisions on a case
by case basis and are influenced by, among other things, whether an applicant is
a new or existing customer. New applicants complete standardized credit
applications which contain information concerning income level, employment
history, stability of residence, driver's license or state identification card,
social security number, capacity to pay and personal references. We also obtain
a credit bureau report and rating, if available, and seek to confirm other
credit-related information. For an established customer, in all instances the
credit process currently includes a review of the customer's credit and payment
history with us. Because we offer multiple lines of credit, we review the
aggregate amount that a customer owes. In cases where a customer makes a request
for a substantial increase in his or her aggregate outstanding balance, we will
obtain a credit bureau report and will seek to confirm employment. In instances
where the applicant has no or limited credit history, we may require a co-signer
with appropriate credit status to sign the contract and may, in the installment
credit business, also require a down payment. Depending on the size of the
transaction and other relevant factors, we may also verify the applicant's
employment and residence with our credit verifiers. See " --

<PAGE> 8
Business Considerations and Certain Factors that May Affect Future Results of
Operations and Stock Price -- Credit Risk Associated with Customers; Lack of
Collateral."

Payment and Collections

Industry studies estimate that more than 25% of the adult population in
the United States does not maintain a checking account, which is a standard
prerequisite for obtaining a consumer loan, credit card or other form of credit
from most consumer credit sources. Our customers are required to make their
monthly payments using a payment schedule that we provide to them. The vast
majority of our customers make their payments in cash at our locations or at our
payment facilities in Banner's stores. For our customers who are paid their
wages by check but who do not maintain checking accounts, we cash such checks at
no charge in order to facilitate account payments.

We consider payments past due if a borrower fails to make any payment in
full on or before its due date, as specified in the installment credit or small
loan contract the customer signs. We currently attempt to contact borrowers
whose payments are not received by the due date within 10 days after such due
date. We contact these borrowers by both letter and telephone. In December 1996,
we installed an autodialer which makes up to 500 telephone calls per hour to
assist our collections personnel in successfully contacting past due borrowers.
If no payment is remitted to us after the initial contact, we make additional
contacts every seven days, and, after a loan becomes 31 days delinquent, we
generally turn over the account to our credit collectors. Under our guidelines,
we generally charge off and turn over an account to a collection agency when we
determine that the account is uncollectible, which is typically when the account
is between 91 and 150 days past due.

Finance Contracts

We use different types of financing contracts, depending on the dollar
amount of the financing and the product financed. Each of the contracts is in
Spanish and English and requires monthly financing payments. State and federal
regulations govern many of the terms, conditions and disclosures in the finance
contracts. See " -- Regulation of the Company." When a qualifying customer with
an open account balance increases the amount outstanding with an additional
purchase or loan, the customer executes a new contract for the new aggregate
balance and, with the proceeds, pays off the original contract.

Insurance

We maintain various insurance policies of the type, and in the amounts,
which are usual for our business. We maintain coverage for business
interruptions, including interruptions resulting from computer failure. We
believe that our insurance coverage is adequate.

Management Information Systems

Under an Operating Agreement dated June 24, 1996 among us, Banner and
Banner Holdings, Inc. ("Holdings"), the sole shareholder of Banner, we use
Banner's management information systems and have been granted a license to use
Banner's management information systems' software. Banner has invested
significant resources to develop a proprietary system that integrates all major
aspects of the businesses of the Company and Banner. The computer system uses a
high-range IBM AS-400 as the Company server, which provides on-line, real-time
information processing services to terminals located in each of Banner's
locations and in our centralized credit processing facility. The system allows
for complete processing of our (i) consumer product finance, automobile finance,
travel finance and small loan businesses, including application processing and
credit-approval, (ii) acquisition of credit bureau reports, accessing the
payment

<PAGE> 9
history of all active accounts, (iii) preparation of contracts, (iv) payment
posting, and (v) all other collection-monitoring activities. In addition, the
system provides customized reports to analyze each of our portfolios on a daily,
weekly and monthly basis. We believe that the computer system is sufficient to
permit significant growth in each of our business lines and portfolios without
the need for a material additional investment in management information systems.
Banner has adopted procedures designed to minimize the effect of systems
failures and other types of potential problems, including routine backup and
off-site storage of computer tapes, as well as redundancy and "mirroring" of
certain computer processes.

COMPETITION

The small loan consumer finance industry is a highly fragmented segment
of the consumer finance industry. There are numerous small loan consumer finance
companies operating in the United States. Many of these companies have
substantially greater resources than us, and their entry or expansion within our
markets could have a material adverse effect on our business strategy and
results of operations and financial condition. We do not believe we currently
compete with commercial banks, savings and loans and most other consumer finance
lenders, because these institutions typically do not make loans of less than
$1,500 that become due within one year or less. If the acquisition of the Bank
is consummated, we would also compete with these more traditional financial
institutions to the extent of the Bank's traditional lines of business which we
believe will represent a limited portion of our business as a whole.

The installment credit business is highly competitive. We, through our
relationship with Banner and other retailers, compete with those department
stores, discount stores and other retail outlets which also provide credit to
low income consumers. The largest national and regional competitors have
significantly greater resources than us. Competition may arise from new sources
having the expertise and resources to enter our markets either through expansion
of operations or acquisitions.

Each of our other businesses, including travel sales and automobile
insurance sales, operate in highly competitive industries. We compete against a
large number of national and regional firms engaged in such businesses. Many of
these competitors have substantially greater financial, marketing and sales
resources than us. We cannot assure that our present competitors or companies
that choose to enter the marketplace in the future will not exert significant
competitive pressures on us.

REGULATION OF THE COMPANY

General

Our consumer finance operations are subject to extensive regulation.
Violation of statutes and regulations applicable to us may result in actions for
damages, claims for refunds of payments made, certain fines and penalties,
injunctions against certain practices and the potential forfeiture of rights to
repayment of loans. Changes in state and federal statutes and regulations may
affect us. We, together with industry associations, actively lobby in the states
in which we operate. Although we are not aware of any pending or proposed
legislation that could have a material adverse effect on our business, we cannot
assure that future regulatory changes will not adversely affect our lending
practices, operations, profitability or prospects.

State Regulation

Consumer Product and Travel Finance. In California, the California
Retail Installment Sales Act (the "Unruh Act") regulates our consumer product
finance and travel finance businesses. The Unruh Act requires us to disclose to
our customers, among other matters, (i) the conditions under which we may impose
a finance charge, (ii) the method of determining the balance which is subject to
a finance charge, (iii) the

<PAGE> 10
method used to determine the amount of the finance charge, and (iv) the minimum
periodic payment required. In addition, the Unruh Act provides consumer
protection against unfair or deceptive business practices by (i) regulating the
contents of retail installment sales contracts, (ii) setting forth the
respective rights and obligations of buyers and sellers, and (iii) regulating
the maximum legal finance rate or charge on installment credit sales.

Small Loan Business. Small loan consumer finance companies are subject
to extensive regulation, supervision and licensing under various federal and
state statutes, ordinances and regulations. In general, these statutes establish
maximum loan amounts and interest rates and the types and maximum amounts of
fees and other costs that may be charged. In addition, state laws regulate
collection procedures, the keeping of books and records and other aspects of the
operation of small-loan consumer finance companies. State agency approval
generally is required to open new branch offices. Accordingly, our ability to
expand by acquiring existing offices and opening new offices will depend in part
on obtaining the necessary regulatory approvals.

Each facility that offers small loans must be separately licensed under
the laws of California. Licenses granted by the regulatory agencies are subject
to renewal every year and may be revoked for failure to comply with applicable
state and federal laws and regulations. In California, licenses may be revoked
only after an administrative hearing.

Insurance Premium Finance. The State of California Department of
Financial Institutions regulates our insurance premium finance business. In
general, state law and regulations set forth requirements and procedures for (i)
the cancellation of policies and collection of unearned premiums, (ii)
regulating the form and content of premium finance agreements, (iii) limiting
the amount of finance, delinquency, cancellation and other fees we may charge,
and (iv) prescribing notice periods for the cancellation of policies for
nonpayment.

Insurance Businesses. In California, the State of California Department
of Insurance regulates our insurance businesses. In general, this agency issues
regulations which require us to, among other things, maintain fiduciary fund and
trust accounts and follow specific market, general business and claims
practices.

Federal Regulation

We are subject to extensive federal regulation as well, including the
Truth-in-Lending Act, the Equal Credit Opportunity Act and the Fair Credit
Reporting Act and the regulations thereunder and the Federal Trade Commission's
Credit Practices Rule. These laws require us to provide complete disclosure of
the principal terms of each loan to every prospective borrower, prohibit
misleading advertising, protect against discriminatory lending practices and
proscribe unfair credit practices. Among the principal disclosure items under
the Truth-in-Lending Act are the terms of repayment, the total finance charge
and the annual rate of finance charge or "Annual Percentage Rate" on each loan.
The Equal Credit Opportunity Act prohibits creditors from discriminating against
loan applicants on the basis of race, color, sex, age or marital status.
Regulation B issued under the Equal Credit Opportunity Act requires creditors to
make certain disclosures regarding consumer rights and advise consumers whose
credit applications are not approved of the reasons for the rejection. The Fair
Credit Reporting Act requires us to provide certain information to consumers
whose credit applications are not approved on the basis of a report obtained
from a consumer reporting agency. The Credit Practices Rule limits the types of
property a creditor may accept as collateral to secure a consumer loan.

<PAGE> 11
Travel Agency Regulation

Each of our travel locations are travel agencies which are regulated by
the Airline Reporting Corporation ("ARC"). The ARC represents the major
scheduled air carriers and sets the operating rules for travel agencies. We are
required to submit weekly reports to the ARC and to meet certain procedural,
funding and bonding requirements that the ARC sets.

REGULATION AND SUPERVISION OF THE BANK AND CENTRAL

General

If the acquisition of the Bank is consummated, Central will be a savings
and loan holding company and, as result, will be subject to OTS regulation,
examination, supervision and reporting requirements. This regulation is intended
primarily for the protection of depositors and the Savings Association Insurance
Fund ("SAIF") and not for the benefit of Central's stockholders. The Bank is a
federally chartered savings bank and a member of the Federal Home Loan Bank
("FHLB") of San Francisco. The FDIC insures the Bank's deposits through the SAIF
to the maximum extent permitted by law. The Bank is subject to extensive
regulation by the OTS, as its chartering agency, and by the FDIC, as its deposit
insurer. The Board of Governors of the Federal Reserve System also regulates the
Bank with respect to certain aspects of its business.

Changes in, and the interpretations of, legislation and regulatory
policy have materially affected the business of the Bank and other financial
institutions in the past and are likely to do so in the future. We cannot assure
that future changes in the regulations or their interpretation will not
adversely affect the Bank's business. Future legislation and regulatory policy
could also alter the structures and competitive relationships among financial
institutions. Regulatory authorities also have the power, in certain
circumstances, to prohibit or limit the payment of dividends to holders of the
Bank's common stock. In addition, certain regulatory actions may increase the
Bank's operating expenses in future periods and may have a material adverse
impact on the Bank's capital levels and results of operations. Such regulatory
actions include general increases in federal deposit insurance premiums,
additional insurance premium assessments to recapitalize the SAIF or the
application of the risk-based insurance premium system to the Bank.

The following information describes certain aspects of federal
regulation applicable to Central and the Bank, and does not purport to be
complete. The discussion is qualified in its entirety by reference to applicable
statutory or regulatory provisions.

Holding Company Regulation

If the acquisition of the Bank is consummated, Central will be a
"unitary" savings and loan holding company under the terms of the Home Owners'
Loan Act, as amended ("HOLA"). As a unitary savings and loan holding company,
the OTS will require Central to be registered with the OTS. In addition, the OTS
will subject Central to its regulations, examinations, supervision and reporting
requirements. Among other things, the OTS has enforcement authority which
permits it to restrict or prohibit activities that it determines to be a serious
risk to the subsidiary savings institution.

There are generally no regulatory restrictions on the activities of a
unitary savings and loan holding company. However, if the savings institution
subsidiary of such a holding company fails to meet the qualified thrift lender
("QTL") test, then the holding company also will become subject to the
activities restrictions applicable to multiple savings and loan holding
companies. Unless the savings institution requalifies as a QTL within one year
after it fails to meet the QTL test, its parent company will have to register
as, and

<PAGE> 12
become subject to, the restrictions applicable to a bank holding company. See
"--Qualified Thrift Lender Test."

Insurance of Deposit Accounts.

The FDIC may terminate a savings association's deposit insurance upon a
finding that the institution (i) has engaged in unsafe or unsound practices,
(ii) is in an unsafe or unsound condition to continue operations or (iii) has
violated any applicable law, regulation, rule, order or condition imposed by the
FDIC or the institution's primary regulator.

Regulatory Capital Requirements.

The OTS capital regulations include three separate minimum capital
requirements for the savings institution industry: (i) a "tangible capital
requirement," (ii) a "leverage limit," and (iii) a "risk-based capital
requirement." The Bank must meet each of these standards in order to be deemed
in compliance with OTS capital requirements. In addition, the OTS may require a
savings association to maintain capital above the minimum capital levels.

The industry minimum capital requirements are as follows:

- Tangible capital of at least 1.5% of adjusted total assets (the
"tangible capital requirement").

Tangible capital consists of (1) common stockholders' equity, (2)
noncumulative perpetual preferred stock and related earnings, (3)
nonwithdrawable accounts and pledged deposits qualifying as core capital and (4)
minority interests in the equity accounts of fully consolidated subsidiaries,
after deducting (a) certain qualifying intangible assets and certain mortgage
servicing rights, (b) the amount by which investments in subsidiaries engaged as
principal in activities not permissible for national banks exceeds the amount of
such investments as of April 12, 1989 and (c) the lesser of the institution's
investments in and extensions of credit to such subsidiaries, net of any
reserves established against such investments, (i) as of April 12, 1989 or (ii)
as of the date on which the institution's tangible capital is being determined.
In general, adjusted total assets equal the institution's consolidated total
assets, minus any assets that are deducted in calculating capital.

- Core capital of at least 3% of adjusted total assets (the
"leverage limit").

Core capital consists of tangible capital plus goodwill resulting from
pre-April 12, 1989 acquisitions of troubled savings institutions. Certain
qualifying intangible assets, mortgage servicing rights and deferred tax assets
must be deducted from core capital.

- Total capital of at least 8% of risk-weighted assets (the
"risk-based capital requirement").

Total capital includes both core capital and "supplementary" capital
items considered less permanent than core capital, such as subordinated debt and
general loan loss allowances (subject to certain limits). Equity investments
(with the exception of investments in subsidiaries and investments permissible
for national banks) and portions of certain high-risk land loans and
nonresidential construction loans must be deducted from total capital. If
interest rate risk exceeds a certain threshold, total capital will be reduced by
a specified amount. At least half of total capital must consist of core capital.

Risk-weighted assets are determined by multiplying each category of an
institution's assets, including off balance sheet asset equivalents, by an
assigned risk weight based on the credit risk associated with those

<PAGE> 13
assets, and adding the resulting products. The four risk weight categories range
from zero percent for cash and government securities to 100% for assets
(including past-due loans and real estate owned) that do not qualify for
preferential risk-weighting.

The OTS has proposed to amend its leverage capital requirements. Under
the proposed regulation, a savings association which is assigned a composite
rating of 1 under the Uniform Financial Institutions Rating System, would be
required to maintain a minimum leverage capital ratio equal to 3% of total
adjusted assets. All other savings associations would be required to maintain a
minimum leverage capital ratio equal to 4% of total adjusted assets.

The OTS views these capital requirements as minimum standards, and
expects most institutions to maintain capital levels well above the minimum. In
addition, the OTS regulations provide that the OTS may establish minimum capital
levels higher than those provided in the regulations for individual savings
associations, upon a determination that the savings association's capital is or
may become inadequate in view of its circumstances. The OTS regulations provide
that higher individual minimum regulatory capital requirements may be
appropriate in circumstances where, among others, a savings association may be
adversely affected by activities or condition of its holding company,
affiliates, subsidiaries or other persons with which it has significant business
relationships.

FDICIA Prompt Corrective Action Regulations

The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") required federal banking regulators, including the OTS, to implement
a system requiring regulatory sanctions against institutions that are not
adequately capitalized. These sanctions grow more severe as the institution's
capital lowers. The OTS has established specific capital ratios under the prompt
corrective action regulations for five separate capital categories: (i) well
capitalized, (ii) adequately capitalized, (iii) undercapitalized, (iv)
significantly undercapitalized and (v) critically undercapitalized. Under the
regulations, an institution's risk-based capital, leverage capital and tangible
capital ratios are used to determine the institution's capital classification.

The OTS regulations implementing FDICIA treat an institution as well
capitalized if (i) its ratio of total capital to risk-weighted assets is at
least 10.0%, (ii) its ratio of core capital to risk-weighted assets is at least
6.0%, (iii) its ratio of core capital to adjusted total assets (leverage ratio)
is at least 5.0%, and (iv) the OTS has not placed any order or directive on the
institution to meet a specific capital level. An institution is adequately
capitalized if its (i) ratio of total capital to risk-weighted assets is at
least 8.0%, (ii) ratio of core capital to risk-weighted assets is at least 4.0%,
and (iii) ratio of core capital to adjusted total assets (leverage ratio) is at
least 4.0% (3.0% if the institution receives the highest rating on the OTS
financial institutions rating system).

An institution which does not meet the capital amounts required in order
to be adequately capitalized will be treated as undercapitalized. If an
undercapitalized institution's capital ratios are less than (i) 6.0% total
capital to risk-weighted assets, (ii) 3.0% core capital to risk-weighted assets
or (iii) 3.0% core capital to adjusted total assets, it will be treated as
significantly undercapitalized. Finally, an institution will be treated as
critically undercapitalized if its ratio of "tangible equity" (core capital plus
cumulative perpetual preferred stock minus intangible assets other than
supervisory goodwill and purchased mortgage servicing rights) to adjusted total
assets is equal to or less than 2.0%.

FDICIA directs banking regulators to take increasingly strong corrective
steps, based on the capital tier of any subject insured depository institution,
to cause banks to achieve and maintain capital adequacy. Even if an insured
depository institution is adequately capitalized, the banking regulators are
authorized to

<PAGE> 14
apply corrective measures if the insured depository institution is determined to
be in an unsafe or unsound condition or engaging in an unsafe or unsound
activity. FDICIA grants the banking regulators broad powers to require
undercapitalized institutions to adopt and implement a capital restoration plan.
In addition, under FDICIA the bank regulators may restrict or prohibit a number
of activities of undercapitalized institutions, including the payment of cash
dividends, which may impair or threaten the capital adequacy of the insured
depository institution. FDICIA also expanded the grounds upon which a receiver
or conservator may be appointed for an insured depository institution.

Safety and Soundness Standards

Pursuant to FDICIA, the OTS has prescribed minimum acceptable
operational and managerial standards, and standards for asset quality, earnings
and valuation of publicly traded shares, for savings institutions and their
holding companies. The operational standards cover internal controls, internal
audit systems, loan documentation, credit underwriting, interest rate exposure,
asset growth, asset quality, earnings and employee compensation. The asset
quality and earnings standards specify a maximum ratio of classified assets to
capital, minimum earnings sufficient to absorb losses and minimum ratio of
market value to book value for publicly traded shares.

Qualified Thrift Lender Test

Savings associations must meet a QTL test, which test may be met either
by maintaining a specified level of "portfolio assets" in qualified thrift
investments as specified in HOLA or by meeting the definition of a "domestic
building and loan association" in section 7701 of the Internal Revenue Code of
1986, as amended (the "Code"). If the Bank maintains an appropriate level of
certain specified investments (primarily residential mortgages and related
investments, including certain mortgage-related securities) and otherwise
qualifies as a QTL or a domestic building and loan association, it will continue
to enjoy full borrowing privileges from the FHLB. The required percentage of
investments under HOLA is 65% of assets while the Code requires investments of
60% of assets. An association must be in compliance with the QTL test or the
definition of domestic building and loan association on a monthly basis in nine
out of every 12 months. If the Bank fails to satisfy the QTL test and does not
requalify as a QTL within one year, any entity in control of the Bank must
register and be regulated as a bank holding company, and the Bank must either
convert to a commercial bank charter or become subject to restrictions on
branching, business activities and dividends as if it were a national bank.
Portfolio assets consist of total assets minus (a) assets used to satisfy
liquidity requirements, (b) property used by the institution to conduct its
business and goodwill and other intangible assets. In 1996, the Economic Growth
and Regulatory Paperwork Reduction Act ("EGRPRA") was adopted, amending the QTL
requirements to allow educational loans, small business loans and credit card
loans to count as qualified thrift assets without limit and to allow loans for
personal, family or household purposes to count as qualified thrift assets in
the category limited to 20% of portfolio assets. Prior to EGRPRA, small business
loans were included in qualified thrift assets only if made in a credit-needy
area and educational and credit card loans were included subject to a 10% of
portfolio assets limit. The previous limit for loans for personal, family or
household purposes was also 10% of portfolio assets. We believe that withdrawals
our customers make through the Efectiva Card will qualify as credit card loans.

Investments and Loans

In general, federal savings institutions such as the Bank may not invest
directly in equity securities, noninvestment grade debt securities or real
estate, other than real estate used for the institution's offices and related
facilities. Indirect equity investment in real estate through a subsidiary is
permissible, but subject to certain limitations and deductions from regulatory
capital. Loans by a savings institution to a single borrower are generally
limited to 15% of an institution's "unimpaired capital and unimpaired surplus,"
which is similar

<PAGE> 15
but not identical to total capital plus an additional 10% of unimpaired capital
and surplus for loans fully secured by readily marketable collateral.

Aggregate loans secured by nonresidential real property are generally
limited to 400% of an institution's total capital. Commercial loans generally
may not exceed 20% of an institution's total assets, provided that commercial
lending in excess of 10% of total assets represents only small business loans.
Consumer loans may not exceed 35% of an institution's total assets.

Payment of Dividends and Other Capital Distributions

OTS regulations impose limitations upon all capital distributions by
savings associations, such as cash dividends, payments to repurchase or
otherwise acquire its shares, payments to shareholders of another institution in
a cash-out merger and other distributions charged against capital. Accordingly,
any such payment or distribution by the Bank to Central will be subject to
regulation and certain limitations on amount. In general, the Bank may not
declare or pay a cash dividend on its capital stock if the effect thereof would
cause the Bank to fail to meet one of its regulatory capital requirements. The
OTS may prohibit a proposed capital distribution that would otherwise be
permitted if the OTS determines that the distribution would constitute an unsafe
or unsound practice.

The OTS has proposed to amend its capital distribution regulation to
conform its requirements to the OTS prompt corrective action regulation. Under
the proposed regulation, an institution that would remain at least adequately
capitalized after making a capital distribution, and that was owned by a holding
company, would be required to provide notice to the OTS prior to making a
capital distribution. "Troubled" associations and undercapitalized associations
would be allowed to make capital distributions only by filing an application and
receiving OTS approval, and such applications would be approved under certain
limited circumstances.

Affiliate and Insider Transactions

The ability of Central and its non-depository subsidiaries to deal with
the Bank is limited by the affiliate transaction rules, including Sections 23A
and 23B of the Federal Reserve Act, which also govern commercial banks. With
limited exceptions, these rules require that all transactions between the Bank
and an affiliate must be on arms' length terms. The term "affiliate" covers
Central and any company that controls or is under common control with the Bank,
but does not include individuals and generally does not include the Bank's
subsidiaries, except to the extent that the OTS or the Federal Reserve Board
decides to treat such subsidiaries as affiliates.

Under Section 23A and Section 11 of HOLA, specific restrictions apply to
transactions in which the Bank provides funding to its affiliates. The Bank may
not (i) purchase or invest in the securities of an affiliate other than the
shares of a subsidiary, (ii) make a loan to any affiliate that is engaged in
activities not permissible for a bank holding company or (iii) acquire from an
affiliate any asset that has been classified, a nonaccrual loan, a restructured
loan or a loan that is more than 30 days past due. As to affiliates engaged in
bank holding company-permissible activities, the aggregate of (a) loans,
guarantees and letters of credit provided by the Bank for the benefit of any one
affiliate and (b) purchases of assets or investment securities by the Bank from
the affiliate, may not exceed 10% of the Bank's capital stock and surplus (20%
for the aggregate of permissible transactions with all affiliates). With certain
exceptions, all loans to affiliates must be secured by collateral with a market
value ranging from 100% to 130% of the amount of the loan, depending on the type
of collateral.

<PAGE> 16
In addition, OTS regulations on affiliate transactions require, among
other things, that savings institutions retain records of their affiliate
transactions that reflect such transactions in reasonable detail. If a savings
institution (i) has been the subject of a change of control application or
notice within the preceding two-year period, (ii) does not meet its minimum
capital requirements, (iii) has entered into a supervisory agreement, (iv) is
subject to a formal enforcement proceeding, or (v) is determined by the OTS to
be the subject of supervisory concern, the OTS may require the institution to
provide the OTS with 30 days' prior notice of any affiliate transaction.

Under these regulatory limitations, loans by the Bank to directors and
executive officers, Central and Central's non- depository subsidiaries
(collectively, "insiders"), or to a corporation or partnership that is at least
10% owned by an insider (a "related interest"), are subject to limits separate
from the affiliate transaction rules. However, a company that controls a savings
institution is excluded from the coverage of the insider lending rules even if
it owns 10% or more of the stock of the institution, and is subject only to the
affiliate transaction rules. All loans to insiders and their related interests
must be underwritten and made on non-preferential terms; loans in excess of
$500,000 must be approved in advance by the Bank's Board of Directors; and the
Bank's total of such loans may not exceed 100% of the Bank's capital. Loans by
the Bank to its executive officers are subject to additional limits.

Enforcement

Whenever the OTS has reasonable cause to believe that a savings and loan
holding company's continuation of any activity or ownership or control of any
non FDIC-insured subsidiary constitutes a serious risk to the financial safety,
soundness or stability of a savings and loan holding company's subsidiary
savings institution and is inconsistent with the sound operation of the savings
institution, the OTS may order the holding company, after notice and opportunity
for a hearing, to terminate such activities or to divest such noninsured
subsidiary. The OTS, in such a situation, also may issue a directive without any
notice or opportunity for a hearing, which may (i) limit the payment of
dividends by the savings institution, (ii) limit transactions between the
savings institution and its holding company or its affiliates and (iii) limit
any activity of the association that creates a serious risk that the liabilities
of the holding company and its affiliates may be imposed on the savings
institution.

In addition, savings and loan holding companies are included within the
category of persons designated as "institution-affiliated parties" for
regulatory purposes. An institution-affiliated party may be subject to
significant penalties and/or loss of voting rights in the event such party takes
any action for or toward causing, bringing about, participating in, counseling
or aiding and abetting a violation of law or unsafe or unsound practice by a
savings institution.

Community Reinvestment Act and the Fair Lending Laws

Savings associations have a responsibility under the Community
Reinvestment Act ("CRA") and related OTS regulations to help meet the credit
needs of their communities, including low- and moderate-income neighborhoods. In
addition, the Equal Credit Opportunity Act and the Fair Housing Act (together,
the "Fair Lending Laws") prohibit lenders from discriminating in their lending
practices on the basis of characteristics specified in those statutes. An
institution's failure to comply with the provisions of CRA could, at a minimum,
result in regulatory restrictions on its activities and the denial of certain
applications, and failure to comply with the Fair Lending Laws could result in
enforcement actions by the OTS, as well as other federal regulatory agencies and
the Department of Justice.

<PAGE> 17
Federal Home Loan Bank System

The FHLBs provide a credit facility for member institutions. Each FHLB
is financed primarily from the sale of consolidated obligations of the FHLB
System. Each FHLB makes available to members loans (i.e., advances) in
accordance with the policies and procedures established by the Board of
Directors of the individual FHLB.

As a member of the FHLB of San Francisco, the Bank is required to own
capital stock in the FHLB of San Francisco in an amount at least equal to the
greater of (i) 1% of the aggregate principal amount of its unpaid home loans,
home purchase contracts and similar obligations at the end of each calendar
year, assuming for such purposes that at least 30% of its assets were home
mortgage loans, (ii) 0.3% of total assets, or (iii) 5% of its advances from the
FHLB of San Francisco. Long-term FHLB advances may be obtained only for the
purpose of providing funds for residential housing finance and all FHLB advances
must be secured by specific types of collateral.

Federal Reserve System

As a creditor and a financial institution, the Bank is subject to
certain regulations promulgated by the Federal Reserve Board. These regulations
include, without limitation, Regulation B (Equal Credit Opportunity Act),
Regulation D (Reserves), Regulation E (Electronic Funds Transfers Act),
Regulation F (limits on exposure to any one correspondent depository
institution), Regulation Z (Truth in Lending Act), Regulation CC (Expedited
Funds Availability Act), and Regulation DD (Truth in Savings Act). As creditors
of loans secured by real property and as owners of real property, financial
institutions, including the Bank, may be subject to potential liability under
various statutes and regulations applicable to property owners, generally
including statutes and regulations relating to the environmental condition of
the property.

Rechartering Legislation

Legislation enacted in 1996 provides that the Bank Insurance Fund and
SAIF will merge on January 1, 1999 into a single Deposit Insurance Fund, if
there are no savings associations, as defined, in existence on that date.
Pursuant to that legislation, the Department of Treasury in May 1997 recommended
in a report to Congress that the separate charters for thrifts and banks be
abolished. Various proposals to (i) eliminate the federal thrift charter, (ii)
create a uniform financial institutions charter, (iii) conform the regulation of
holding companies of thrifts and commercial banks and (iv) abolish the OTS have
been introduced in Congress. In the absence of appropriate "grandfather"
provisions, legislation eliminating the thrift charter could have a material
adverse effect on the Bank and Central because, among other things, the
regulatory, capital and accounting treatment for national and state banks and
savings associations differs in certain significant respects. To date, Congress
has enacted no such legislation. We are unable to predict whether Congress will
enact any such legislation, what the provisions of any such final legislation
may be, or the extent to which the legislation would restrict, disrupt or
otherwise have a material effect on our operations.

ADVERTISING

We actively advertise primarily on Hispanic television and through
direct mail, targeting both our present and former customers and potential
customers who have used other sources of consumer credit. We believe that our
advertising contributes significantly to our ability to compete effectively with
other providers of consumer credit.

<PAGE> 18
EMPLOYEES

At December 31, 1997, we had 475 hourly employees, 152 salaried
employees and 13 commissioned employees. None of our employees are covered by a
collective bargaining agreement. We believe our relations with our employees are
good.

BUSINESS CONSIDERATIONS AND CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS OF
OPERATIONS AND STOCK PRICE

Discussions of certain matters contained in this Annual Report may
constitute forward-looking statements under Section 27A of the Securities Act
and Section 21E of the Exchange Act. These statements may involve risks and
uncertainties. These forward-looking statements relate to, among other things,
expectations of the business environment in which we operate in, projections of
future performance, perceived opportunities in the market and statements
regarding our mission and vision. Our actual results, performance and
achievements may differ significantly from the results, performance or
achievements expressed or implied in such forward-looking statements. The
following is a summary of some of the important factors that could affect our
future results of operations and/or our stock price, and should be considered
carefully.

Credit Risk Associated With Customers; Lack of Collateral

Because we rely on the creditworthiness of our customers for repayment
and do not rely on collateral securing the debt, we experience actual rates of
losses higher than lenders who have collateral which they can repossess in the
event of a borrower's default. At December 31, 1997, we had net finance
receivables (comprised of all receivables except those in the Automobile Finance
and Premium Finance Portfolios) of $102.6 million, or 91.0% of our total net
receivables. At December 31, 1997, the finance receivables had accounts with
payments 31 days or more past due as a percentage of end of period gross
receivables of 7.4%, as compared to 6.4% and 5.2%, at year-end 1996 and 1995,
respectively. In 1997, the portfolios comprising the finance receivables had net
write-offs of $10.9 million, as compared to $7.3 million in 1996 and $4.2
million in 1995. The provision for credit losses for such portfolios as a
percentage of average net finance receivables was 10.8% in 1997, as compared to
9.1% and 7.0% during 1996 and 1995, respectively. We cannot assure that we will
not continue to experience increases in delinquencies and net write-offs which
would require additional increases in the provisions for credit losses. Such
increases would adversely affect results of operations if we were not able to
increase the rate charged on receivables to reflect the additional risks in its
portfolios. Since we presently charge the maximum allowable interest rates on
our various loan products, further increases in delinquencies and write-offs
will adversely affect results of operations. For information concerning our
credit quality experience, see "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operation -- Financial Trends," "-- Credit
Quality" and "-- Delinquency Experience and Allowance for Credit Losses."

<PAGE> 19
General Economic Risk

The risks associated with our business become more significant in an
economic slowdown or recession. During periods of economic slowdown or
recession, we have experienced and may again experience a decreased demand for
our financial products and services and an increase in rates of delinquencies
and the frequency and severity of losses. Our actual rates of delinquencies and
frequency and severity of losses have been in the past and may be in the future
higher under adverse economic conditions than those generally experienced in the
consumer finance industry. Any sustained period of economic slowdown or
recession could materially adversely affect our financial condition and results
of operations. See "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Financial Trends -- Portfolios," "--
Credit Quality" and "-- Delinquency Experience and Allowances for Credit
Losses."

Dependence on California Market

Substantially all of our facilities are located, and substantially all
of our revenues are generated in California. To date, substantially all of our
operations have been in Southern California. Therefore, our performance depends
upon economic conditions in California, and in Southern California in
particular, and may be adversely affected by social factors or natural disasters
in California. During the early 1990's, California experienced adverse economic
conditions. A decline in the California economy could have a material adverse
effect on our results of operations and financial condition.

Dependence of Consumer Product Portfolio on Banner

The Consumer Product Portfolio consists of consumer finance receivables
generated from products Banner sells. The performance of the Consumer Product
Portfolio therefore depends substantially upon the success of Banner's stores.
The Consumer Product Portfolio accounted for 32.3% of our gross receivables
portfolio as of December 31, 1997.

Seasonal Fluctuations in Quarterly Operating Results

We experience the highest demand for our financial products and services
between October and December, and experience the lowest demand for our financial
products and services between January and March. These significant seasonal
fluctuations in our business directly impact our operating results and cash
needs.

Interest Rate Risk

The net interest spread, which is the difference between the average
interest rate on average net receivables and the average interest rate on
average interest bearing liabilities (the "Net Interest Spread"), partially
determines our profitability. Because we pay a floating interest rate on
borrowings under our Line of Credit (as defined below), increases in such rate
have at times decreased, and in the future may decrease, our Net Interest
Spread. This may have a material adverse effect on our results of operations and
financial condition. The interest rate we are allowed to charge our customers on
our small loans is limited under California law. We presently charge the maximum
interest rate permitted in California. There is no corresponding interest rate
limitation on installment credit sales. Increases in the interest rate we charge
our customers could reduce demand for our financial products and services which,
in turn, could decrease our net income. See "Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operation" and "Business --
Regulation of the Company."

<PAGE> 20
Need for Senior Credit Facility

Currently, we fund our business activities under a revolving loan
agreement with several banks and Wells Fargo Bank, N.A., as agent (the "Line of
Credit") which expires June 12, 2000. Although the Line of Credit permits us to
borrow up to $100.0 million, the amount of credit available at any one time is
limited to 75% of eligible contracts. At December 31, 1997, the total amount
available to us under the Line of Credit was $76.0 million. Credit facilities
are typically limited to a certain percentage of such eligible contracts or
receivables.

In addition, our inability at any time to renew or replace our Line of
Credit or other senior credit facilities on acceptable terms could have a
material adverse effect on our results of operations and financial condition.
See "Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources."

Restrictions Imposed by the Line of Credit

We have pledged substantially all of our assets, including our
receivables, and the stock of all of our significant domestic subsidiaries as
collateral for the amounts we borrow under the Line of Credit. In addition, our
significant subsidiaries have guaranteed our borrowings under the Line of
Credit. As of December 31, 1997, we had approximately $64.1 million aggregate
principal amount outstanding under the Line of Credit, including letters of
credit.

The Line of Credit requires, among other things, us to maintain specific
financial ratios and to satisfy certain financial tests. Our ability to meet
these financial ratios and financial tests can be affected by events beyond our
control, and we cannot assure that we will meet these tests. The Line of Credit
also restricts, among other things, our ability to (i) incur additional
indebtedness, (ii) pay indebtedness prior to the date when due, (iii) pay
dividends, make certain other restricted payments or consummate certain asset
sales, (iv) merge or consolidate with any other person, (v) enter into certain
transactions with affiliates, (vi) incur indebtedness that is subordinate in
priority and right of payment to amounts outstanding under the Line of Credit,
and (vii) make future acquisitions in excess of an aggregate amount. At December
31, 1997, we did not comply with certain of the financial ratios and tests.
These defaults were waived by the lending group. However, the breach of any of
these covenants could result in a default under the Line of Credit. In the event
of a default under the Line of Credit, the lenders could seek to declare all
amounts outstanding under the Line of Credit, together with accrued and unpaid
interest, to be immediately due and payable. If we were unable to repay the
amounts, the lenders under the Line of Credit could proceed against the
collateral that we granted to them to secure our indebtedness, which is
substantially all of our and our subsidiaries' assets. See "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources."

Ability of the Company to Execute its Business Strategy

Our financial performance will depend, in part, on our ability (i) to
integrate new locations into our operations, (ii) to generate satisfactory
performance or enhance performance at these locations, (iii) to integrate new
financial products and services into our operations; and (iv) to enter into
arrangements with additional major retailers. As a result of acquisitions during
1996, we acquired 84 new locations, several of which have been closed, from
which to distribute both new and established products and services, including

<PAGE> 21
33 locations in new geographic regions. Since October 1997, we have installed
our cash dispensing machines at 10 K-Mart locations and are scheduled to install
cash dispensing machines in 9 additional locations by March 31, 1998. We cannot
assure that any of these new locations and operations will be effectively and
profitably integrated into our existing operations. This expansion may
negatively impact our operating results, particularly during the periods
immediately following the expansions. In addition, we cannot assure that we will
be able to profitably implement our business strategy in new geographic areas.
Furthermore, we may compete for expansion and acquisition opportunities with
companies that have significantly greater financial and other resources than us.
We cannot assure that we will be able to locate suitable new locations or
acquisition candidates, or that any operations that we open or acquire will be
effectively and profitably integrated into our existing operations.

Our financial performance also depends, in part, on our ability to
manage our various portfolios and our ability to successfully introduce
additional financial products and services. We cannot assure that we will
introduce additional financial products and services or, if introduced, that
these financial products and services will be successful. See "Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operation -- Liquidity and Capital Resources."

Competition

Each of our businesses operate in highly competitive industries. We
compete against a large number of national and regional firms engaged in such
businesses, many of which have substantially greater resources than us. We
cannot assure that our present or future competitors will not exert significant
competitive pressures on us which could have a material adverse effect on our
results of operations and financial condition. See "Business -- Competition."

Impact of Government Regulation

Our operations are regulated by federal, state and local government
authorities and are subject to various laws and judicial and administrative
decisions imposing various requirements and restrictions. These requirements and
restrictions include, among other things, (i) regulating credit granting
activities, (ii) establishing maximum interest rates and charges, (iii)
requiring disclosures to customers, (iv) governing secured transactions, (v)
setting collection, repossession and claims handling procedures, (vi) regulating
insurance claims practices and procedures, and other trade practices. Although
we believe that we are in compliance in all material respects with applicable
local, state and federal laws, rules and regulations, we cannot assure that more
restrictive laws, rules and regulations will not be adopted in the future which
may make compliance more difficult or expensive, restrict our ability to
purchase or finance installment sales or small loans, further limit or restrict
the amount of interest and other charges imposed in installment sales or small
loans originated by retailers or the Company, or otherwise materially adversely
affect our business or prospects. See "Business -- Regulation of the Company."

Dependence Upon Key Personnel

Our success depends substantially on certain members of our senior
management, in particular Mr. Cypres, our Chairman of the Board, Chief Executive
Officer, President and Chief Financial Officer. The loss of the services of Mr.
Cypres could materially adversely affect our business and financial condition.
We do not maintain key man life insurance.

<PAGE> 22
Risks Relating to Acquisition of the Bank

If the acquisition of the Bank is consummated, Central will become a
unitary savings and loan holding company. As such, Central will become subject
to a complex body of laws and regulations which could impose substantial
compliance burdens on the Company and expose it to material risks. Among others,
these regulations would restrict the extent of transactions that could be
entered into between the Bank and its subsidiaries, on the one hand, and Central
and its nonbank subsidiaries, on the other hand. In addition, the Company and
its other operating subsidiaries would be subject to the possibility of
examination and supervision by the OTS as an "affiliate" of the Bank. If the
Bank fails to satisfy certain requirements of applicable law and regulation
relating to the amount of its assets dedicated to residential mortgage finance
and credit card activities, the Bank could be converted to a commercial bank.
Central would then become a bank holding company subject to a more restrictive
body of law and regulation imposing even greater compliance burdens on the
Company and exposing it to greater risks than those applicable to the Company as
a unitary savings and loan holding company. See "Business -- Regulation and
Supervision of the Bank and Central."

Other Risks

From time to time, we detail other risks with respect to our business
and/or financial results in our filings with the Securities and Exchange
Commission (the "SEC").

ITEM 2. PROPERTIES

Our executive and administrative offices occupy approximately 17,000
square feet of a building which Holdings, the sole shareholder of Banner, owns
that is located at 5480 East Ferguson Drive, Commerce, California 90022. We
believe that our executive and administrative offices are adequate for current
needs and that additional space in our headquarters is available for future
expansion. Our payment centers located in Banner's stores are adequate for our
present and anticipated needs. We own an 86,000 square foot property in Los
Angeles on which we built a 10,000 square foot loan center. All of our other
finance centers are leased pursuant to short-term leases.

ITEM 3. LEGAL PROCEEDINGS

We are involved in certain legal proceedings arising in the normal
course of our business. We do not believe the outcome of these matters will have
a material adverse effect on us.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of our stockholders during the
fourth quarter of 1997.

<PAGE> 23
PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

NASDAQ NATIONAL MARKET LISTING

Our common stock is listed on the Nasdaq National Market and traded
under the symbol "CFAC." The following table sets forth, in the periods
indicated, the high and low sales prices per share of our common stock, as
reported by the Nasdaq National Market for the periods presented. As of March 4,
1998, there were approximately four holders of record of our common stock.

<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
Quarter ended June 30, 1996(1)................. $15.00 $12.25

Quarter ended September 30, 1996............... $20.25 $11.25

Quarter ended December 31, 1996................ $21.50 $16.75

Quarter ended March 31, 1997................... $20.00 $16.00

Quarter ended June 30, 1997.................... $16.00 $9.00

Quarter ended September 30, 1997............... $11.50 $10.00

Quarter ended December 31, 1997................ $11.375 $9.25
</TABLE>

(1) CFAC first began trading on the Nasdaq National Market on June 26, 1996,
the date of its initial public offering

DIVIDENDS

We have never paid and have no present intention of paying cash
dividends on our common stock. We anticipate that we will retain all earnings
for use in our business, and we do not anticipate paying cash dividends for the
foreseeable future. The Delaware General Corporation Law also restricts our
ability to pay dividends. The Delaware General Corporation Law provides that a
Delaware Corporation may pay dividends either (i) out of the corporation's
surplus (as defined by Delaware law), or (ii) if there is no surplus, out of the
corporation's net profit for the fiscal year in which the dividend is declared
or the preceding fiscal year. Any determination in the future to pay dividends
will depend on our financial condition, capital requirements, results of
operations, contractual limitations, legal restrictions and any other factors
our Board of Directors deems relevant.

ITEM 6. SELECTED FINANCIAL DATA

The following selected consolidated financial data with respect to our
consolidated financial position as of December 31, 1996 and 1997 and our results
of operations for the years ended December 31, 1995, 1996, and 1997 has been
derived from our audited consolidated financial statements appearing elsewhere
in this Annual Report. This information should be read in conjunction with such
consolidated financial statements and the notes thereto. The selected financial
data with respect to our consolidated financial position as of October 31, 1993
and 1994 and December 31, 1994 and 1995 and our results of operations for the
year ended December 31, 1994 has been derived from our audited consolidated
financial statements,

<PAGE> 24

which are not presented in this Annual Report. The selected financial data with
respect to our consolidated results of operations for the year ended December
31, 1993 has been derived from unaudited financial statements, which in our
management's opinion reflect all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation of the results of
operations for the unaudited periods.

SELECTED FINANCIAL AND OPERATING DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
--------------------------------------------------------------------------------
1993 1994 1995 1996 1997
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
STATEMENTS OF INCOME DATA:

Revenues:
Interest Income
Consumer Product Portfolio ................ $ 9,420 $ 11,787 $ 12,508 $ 12,850 $ 10,822

Small Loan Portfolio ...................... 188 1,057 5,095 9,686 13,056
Automobile Finance Portfolio .............. -- -- 240 1,548 1,434
Other(1) .................................. -- -- 176 1,691 5,001
Total Interest Income .................. 9,608 12,844 18,019 25,775 30,313
Travel services ........................... -- -- 371 2,449 8,716
Transaction fees on contracts purchased
from related party ....................... 829 857 916 965 1,127
Other income(2) ............................ 1,445 1,868 2,857 7,238 11,884
----------- ----------- ----------- ----------- -----------
Total Revenues ......................... 11,882 15,569 22,163 36,427 52,040
----------- ----------- ----------- ----------- -----------
Costs and Expenses:
Operating expenses ..................... 4,461 5,170 7,288 12,676 27,217
Provision for credit losses ............ 3,447 3,923 5,449 9,105 12,296
Interest expense ....................... 2,235 2,801 4,278 4,697 5,314
----------- ----------- ----------- ----------- -----------
Income before taxes ......................... 1,739 3,675 5,148 9,949 7,213
Income tax expense .......................... 727 1,493 2,079 3,979 2,823
----------- ----------- ----------- ----------- -----------
Net income before discontinued operations ... 1,012 2,182 3,069 5,970 4,390
----------- ----------- ----------- ----------- -----------
Discontinued operations net income (loss) ... -- -- 50 (91) --
----------- ----------- ----------- ----------- -----------
Net income .................................. $ 1,012 $ 2,182 $ 3,119 $ 5,879 $ 4,390
=========== =========== =========== =========== ===========
PER SHARE DATA:
Basic earnings per share before discontinued
operations .................................. $ 0.20 $ 0.42 $ 0.60 $ 0.96 $ 0.60
Basic earnings (loss) per share discontinued
operations ............................... 0.00 0.00 0.01 (0.01) 0.00
----------- ----------- ----------- ----------- -----------
Basic earnings per share .................... $ 0.20 $ 0.42 $ 0.61 $ 0.95 $ 0.60
=========== =========== =========== =========== ===========
Diluted earnings per share before discontinued
operations ............................. $ 0.20 $ 0.42 $ 0.60 $ 0.96 $ 0.60
Diluted earnings (loss) per share from
discontinued operations ................ 0.00 0.00 0.01 (0.01) 0.00
----------- ----------- ----------- ----------- -----------
Diluted earnings per share .................. $ 0.20 $ 0.42 $ 0.61 $ 0.95 $ 0.60
=========== =========== =========== =========== ===========
Weighted average number of shares outstanding 5,150,000 5,150,000 5,150,000 6,213,500 7,277,000
</TABLE>

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

(1) Other interest income includes interest earned on the Travel Finance
Portfolio and the Independent Retail Finance Portfolio and through our
insurance premium finance business.

(2) Other income includes administrative fees charged on certain small loan
contracts, late charges and revenue from the sale of insurance products.

<PAGE> 25

<TABLE>
<CAPTION>
AS OF OCTOBER 31, AS OF DECEMBER 31,
---------------------- --------------------------------------------------
1993 1994 1994 1995 1996 1997
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash ............... $ 931 $ 1,886 $ 215 $ 57 $ 5,848 $ 4,794
Net receivable ..... 47,026 50,626 56,337 94,674 119,074 102,498
Total assets ....... 51,567 61,597 73,942 101,730 145,357 135,149
Notes payable ...... 33,700 42,287 48,845 63,967 74,024 62,000
Stockholders' equity 17,146 18,560 23,951 33,632 61,353 65,743
</TABLE>

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

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The following discussion should be read in conjunction with the
information under "Item 6. Selected Financial Data" and our Consolidated
Financial Statements and Notes thereto and other financial data, included
elsewhere in this Annual Report. Certain statements under this caption
constitute "forward-looking statements" under Section 27A of the Securities Act
and Section 21E of the Exchange Act which involve risks and uncertainties. Our
actual results may differ significantly from the results discussed in these
forward-looking statements. Factors that might cause such a difference, include
but are not limited to, credit quality, economic conditions, competition in the
geographic and business areas in which we conduct our operations, fluctuations
in interest rates and government regulation. For additional information
concerning these factors, see "Item 1. Business -- Business Considerations and
Certain Factors that May Affect Future Results of Operations and Stock Price."

OVERVIEW

In pursuit of our business strategy, since 1992 we have expanded our
financing business by (i) offering consumer financing through additional
installment credit stores opened by Banner, (ii) increasing the number and type
of products and services financed, and (iii) offering new financial products and
services. In 1992, we began offering (i) small unsecured loans generally ranging
from $300 to $1,500 with average loan terms of 12 months, and (ii) installment
credit finance to Banner's customers at three additional installment credit
stores in the greater Los Angeles area and one additional installment credit
store in San Francisco that Banner opened or acquired in 1994. In 1995, we
opened two finance centers offering small loans and travel finance and one
automobile sales location in the greater Los Angeles area, and began offering
consumer product finance to Banner's customers at one additional installment
credit store in the greater Los Angeles area that Banner opened in 1995. In
1995, we also began offering financing for the sale of used automobiles, which
was discontinued in May 1997. Beginning in late 1995, we expanded our indirect
consumer financing business by offering financing to consumers for the purchase
of products and services sold by independent retailers. At present, we have
retail installment financing arrangements with approximately 100 independent
retailers in the greater Los Angeles area. In 1996, we expanded our travel
business by acquiring 25 travel locations in June and 55 locations in December.
We presently have 75 travel locations, of which 69 are located in California. In
addition, we began our automobile insurance business in 1996 through 12
locations in the greater Los Angeles area and also began offering insurance
premium financing to our customers.

In May 1997, we introduced the Efectiva Card. The Efectiva Card provides
our customers with the ability to access their established lines of credit with
us by withdrawing cash from our cash dispensing

<PAGE> 26
machines. Initially we installed our cash dispensing machines in 15 locations
owned or leased by the Company or Banner and two locations owned or leased by
unaffiliated parties.

In October 1997, we installed our cash dispensing machines at 10 K-Mart
locations in Southern California. In addition, in January 1998, we and K-Mart
agreed to expand the relationship and install cash dispensing machines in an
additional 9 K-Mart stores. We expect these additional cash dispensing machines
to be installed by March 31, 1998. Further, we are talking to K-Mart about
expanding to additional stores after March 31, 1998 and expanding the services
we offer at these locations to include travel services.

As a result of the changes in products and services offered and changes in
distribution channels, results of operations are not readily comparable from
year to year or from period to period, and are not necessarily indicative of
future operating results.

<PAGE> 27
FINANCIAL TRENDS

Portfolios

The following sets forth certain information relating to our portfolios
for the periods indicated.

CONSUMER PRODUCT PORTFOLIO
(DOLLARS IN THOUSANDS, EXCEPT AVERAGE CONTRACT BALANCE)

<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
---------------------------------------------------------------
1993 1994 1995 1996 1997
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Gross receivable (at end of period) ........... $60,590 $67,514 $67,811 $61,848 $38,814
Deferred interest (at end of period) .......... 7,657 7,603 7,796 7,132 3,706
------- ------- ------- ------- -------
Net receivable (at end of period) ............ 52,933 59,911 60,015 54,716 35,108
Deferred insurance revenues (at end of period) 529 405 401 270 111
------- ------- ------- ------- -------
Net carrying value ............................ $52,404 $59,506 $59,614 $54,446 $34,997
======= ======= ======= ======= =======
Average net receivable ........................ $52,456 $53,656 $57,276 $55,742 $43,717
Number of contracts (at end of period) ........ 66,353 76,984 84,555 81,361 61,868
Average net contract balance .................. $ 798 $ 778 $ 710 $ 673 $ 567
Average interest bearing liabilities(1) ...... 36,163 37,549 39,284 33,489 N/A
Total interest income(2) ...................... 9,420 11,787 12,508 12,850 10,822
Total interest expense(1) ..................... 2,231 2,579 3,242 2,688 2,101
Net interest income before provision for
credit losses ............................... 7,189 9,208 9,266 10,162 8,721
Net provision for credit losses ............... 3,340 3,332 3,852 4,955 3,129
Provision for credit loss as a percentage
of average net receivable .................. 6.4% 6.2% 6.7% 8.9% 7.2%
Net write-offs ................................ 2,897 2,949 3,310 4,257 3,128
Net write-off's as a percentage of average
net receivable ................................ 5.5% 5.5% 5.8% 7.6% 7.2%
Average interest rate on average net receivable 18.0% 22.0% 21.8% 23.1% 24.8%
Average interest rate on interest bearing
liabilities(3) .............................. 6.2% 6.9% 8.3% 8.0% 8.3%
Net Interest Spread ........................... 11.8% 15.1% 13.5% 15.1% 16.5%
</TABLE>

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

(1) Amounts represent borrowings and related interest expense on our lines
of credit for the Consumer Product Portfolio, excluding amounts related
to our other borrowings. During 1997, the Company renegotiated and
consolidated its lines of credit under the single Line of Credit which
is used by Central and all our subsidiaries with Central as the
borrower. Therefore, the interest bearing liability is no longer
specific to one portfolio. The interest expense was allocated to each
portfolio based on their respective weighted average percent of the
total finance portfolios.

(2) Amounts represent interest income on installment contracts, excluding
administrative fees, late charges and other charges, which are included
in other income in the Consolidated Statements of Income appearing
elsewhere herein.

(3) Amount is determined in aggregate based on total average borrowings and
total interest paid by CFAC.

<PAGE> 28

SMALL LOAN PORTFOLIO
(DOLLARS IN THOUSANDS, EXCEPT AVERAGE CONTRACT BALANCE)

<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
--------------------------------------------------------------------
1993 1994 1995 1996 1997
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Gross Receivable (at end of period) ................ $ 4,314 $ 16,735 $ 37,868 $ 57,671 $ 58,659
Deferred interest (at end of period) ............... 241 1,809 4,187 6,041 1,414
-------- -------- -------- -------- --------
Net receivable (end of period) ..................... 4,073 14,926 33,681 51,630 57,245
Deferred administrative fees, ATM fees
and insurance
revenues (at end of period) ..................... 166 392 576 978 1,668
-------- -------- -------- -------- --------
Net carrying value ................................. $ 3,907 $ 14,534 $ 33,105 $ 50,652 $ 55,577
======== ======== ======== ======== ========
Average net receivable ............................. $ 1,131 $ 5,662 $ 20,219 $ 38,847 $ 51,496
Number of contracts (at end of period) ............. 10,616 26,166 55,241 79,819 112,901
Average net contract balance ....................... $ 384 $ 570 $ 610 $ 647 $ 507
Average interest bearing liabilities(1) ............ 67 3,165 12,902 25,204 N/A
Total administrative fee and ATM fee income ........ 65 458 1,133 1,897 2,341
Total interest income(2) ........................... 188 1,057 5,095 9,686 13,056
Total interest expense(1) .......................... 4 222 1,036 2,009 3,073
Net interest income before provision
for credit losses ............................... 184 835 4,059 7,677 9,983
Net provision for credit losses .................... 107 591 1,547 3,349 5,000
Provision for credit losses as a percentage of
average net receivable .......................... 9.5% 10.4% 7.7% 8.6% 9.7%
Net write-offs ..................................... -- 155 896 2,606 5,000
Net write-offs as a percentage of average
net receivable .................................. 0.0% 2.7% 4.4% 6.7% 9.7%
Average interest rate on average
net receivable .................................. 16.6% 18.7% 25.2% 24.9% 25.4%
Average interest rate on interest
bearing liabilities(3) .......................... 6.0% 7.0% 8.0% 8.0% 8.3%
Net Interest Spread ................................ 10.6% 11.7% 17.2% 17.0% 17.1%
</TABLE>

(1) Amounts represent borrowings and related interest expense on our lines
of credit for the Small Loan Portfolio, excluding amounts related to our
other borrowings. During 1997, the Company renegotiated and consolidated
its lines of credit under the single Line of Credit which is used by
Central and all our subsidiaries with Central as the borrower.
Therefore, the interest bearing liability is no longer specific to one
portfolio. The interest expense was allocated to each portfolio based on
their respective weighted average percent of the total finance
portfolios.

(3) Amount is determined in aggregate based on total average borrowings and
total interest paid by CFAC.

<PAGE> 29
Travel Finance Portfolio

We began offering Company-financed sales of airline tickets in mid-1995.
At December 31, 1995, 1996 and 1997, the gross receivables of the Travel Finance
Portfolio was $3.0 million, $5.6 million and $6.2 million, respectively, and the
net receivables before allowance for credit losses was $2.7 million, $5.2
million and $5.7 million, respectively. In addition, the number of contracts
outstanding at December 31, 1995, 1996 and 1997 was 5,811, 11,772 and 14,435,
respectively, with an average net contract balance of approximately $466, $438
and $395, respectively. At December 31, 1995, 1996 and 1997, the average
interest rate on the average portfolio was approximately 23.7%, 25.0% and 25.6%,
respectively.

Independent Retail Finance Portfolio

We began purchasing and servicing consumer finance receivables generated
by independent retailers in 1996. At December 31, 1996 and 1997, the gross
receivables of the Independent Retail Finance Portfolio was $7.2 million, and
$5.2 million, respectively, and the net receivables before allowance for credit
losses was $6.2 million and $4.6 million, respectively. In addition, the number
of contracts outstanding at December 31, 1996 and 1997, was 12,053 and 14,518,
respectively, with an average net contract balance of approximately $518 and
$314, respectively. At December 31, 1996 and 1997, the average interest rate on
the average portfolio was approximately 31.5% and 34.7%, respectively.

Premium Finance Portfolio

We began offering insurance premium financing in late 1996. At December
31, 1996 and 1997, the gross receivables of the Premium Finance Portfolio was
$2.1 million and $5.0 million, respectively, and the net receivables, before
allowance for credit losses was $2.0 million and $4.7 million, respectively. In
addition, the number of contracts outstanding at December 31, 1996 and 1997 was
2,615 and 14,533, respectively, with an average net contract balance of
approximately $751 and $325, respectively. This portfolio earns interest at a
statutory rate of 24.0%.

Automobile Finance Portfolio

We began offering Company-financed sales of used automobiles in
mid-1995. In August 1996, we sold the used car sales business to Banner pursuant
to an Agreement to Transfer Business Operations among Banner, Central Consumer
Finance Company, Central Auto Sales, Inc. and Central (the "Automobile Financing
Agreement") which granted us the exclusive right to finance Banner's sales of
automobiles or purchase automobile finance contracts Banner generates. Our
decision to sell the used car sales business was due to capital considerations
and our determination that such business did not presently fit well into our
overall business strategy. At December 31, 1995, 1996 and 1997, the gross
receivables of the Automobile Finance Portfolio was approximately $5.5 million,
$11.0 million and $6.4 million, respectively, and the net receivables of the
portfolio was $4.2 million, $8.7 million and $5.5 million, respectively. In
addition, the number of contracts outstanding at December 31, 1995, 1996 and
1997 was 624, 1,376 and 1,185, respectively, with an average net contract
balance of approximately $6,700, $8,000 and $4,600, respectively. This portfolio
earns interest at a statutory rate of 21%. Under the Automobile Financing
Agreement, all purchases of automobile finance receivables were made with full
recourse to Banner in the event the customer defaults. Accordingly, we maintain
no allowance for credit losses with respect to the Automobile Finance Portfolio.
Banner ceased selling used automobiles in May 1997 and, therefore, we are not
currently engaged in financing sales of used automobiles.

<PAGE> 30
ANALYSIS OF CHANGES IN NET INTEREST INCOME

The following table separates the changes in net interest income between
changes in average balances ("Volume") and average rates ("Rate") for both
average net receivables and average interest bearing liabilities of the Consumer
Product Portfolio and the Small Loan Portfolio (dollars in thousands) for the
periods presented.

<TABLE>
<CAPTION>
YEARS ENDED YEARS ENDED
DECEMBER 31, 1995 DECEMBER 31, 1996
VERSUS VERSUS
DECEMBER 31, 1994 DECEMBER 31, 1995
---------------------------------- -----------------------------------
VOLUME RATE TOTAL VOLUME RATE TOTAL
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in interest income:
Consumer Product Portfolio ............... $ 795 $ (74) $ 721 $ (354) $ 696 $ 342
Small Loan Portfolio ..................... 2,718 1,320 4,038 4,645 (54) 4,591
------- ------- ------- ------- ------- -------
3,513 1,246 4,759 4,291 642 4,933
------- ------- ------- ------- ------- -------
Increase (decrease) in interest expense:
Bank of America Line of Credit ...... 119 544 663 (465) (87) (552)
Wells Fargo Line of Credit .......... 683 131 814 980 (7) 973
------- ------- ------- ------- ------- -------
802 675 1,477 515 (94) 421
------- ------- ------- ------- ------- -------
Increase (decrease) in net interest income $ 2,711 $ 571 $ 3,282 $ 3,776 $ 736 $ 4,512
======= ======= ======= ======= ======= =======
</TABLE>

<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31, 1997
VERSUS
DECEMBER 31, 1996
----------------------------------
VOLUME RATE TOTAL
------- ------- -------
<S> <C> <C> <C>
Increase (decrease) in interest income:
Consumer Product Portfolio ............... $(2,978) $ 950 $(2,028)
Small Loan Portfolio ..................... 3,207 163 3,370
------- ------- -------
229 1,113 1,342
------- ------- -------
Increase (decrease) in interest expense:
Bank of America Line of Credit ...... N/A N/A N/A
Wells Fargo Line of Credit .......... 440 177 617
------- ------- -------
440 177 617
------- ------- -------
Increase (decrease) in net interest income $ (211) $ 936 $ 725
======= ======= =======
</TABLE>

CREDIT QUALITY

We make provision for credit losses in the Consumer Product and Travel
Finance Portfolios at the time that the contract is purchased or the retail sale
is made. The provision for credit losses in the Small Loan and Independent
Retail Finance Portfolios is made following the origination of the loans over
the period that the events giving rise to the credit losses are estimated to
occur. Our portfolios comprise smaller-balance, homogeneous loans that are
evaluated collectively to determine an appropriate allowance for credit losses.
The allowance for credit losses is maintained at a level considered adequate to
cover losses in the existing portfolios. We pursue collection of past due
accounts, and when the characteristics of an individual account indicates that
collection is unlikely, the account is charged off and turned over to a
collection agency. Accounts are generally charged off when they are between 91
and 150 days past due.

The allowance for loan losses is increased by charges to income and
decreased by charge-offs, net of recoveries. Our management's periodic
evaluation of the adequacy of the allowance is based on our past loan loss
experience, known and inherent risks in the portfolios, adverse situations that
may affect the borrower's ability to repay and current economic conditions.

For information concerning our provisions for credit losses and
chargeoff experience in the Consumer Product and Small Loan Portfolios, our two
largest portfolios, see "--Financial Trends-- Portfolios" above.

<PAGE> 31
DELINQUENCY EXPERIENCE AND ALLOWANCE FOR CREDIT LOSSES

Borrowers under our contracts are required to make monthly payments. The
following sets forth our delinquency experience for accounts with payments 31
days or more past due and allowance for credit losses for our finance
receivables.

<TABLE>
<CAPTION>
FINANCE RECEIVABLES(1)
(DOLLARS IN THOUSANDS)
DECEMBER 31,
----------------------------------------------------------
1993 1994 1995 1996 1997
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Past due accounts (gross receivable):
31-60 days ............................................ $1,325 $2,340 $2,482 $4,115 $3,204
61 days or more ....................................... 1,612 2,715 3,162 4,332 4,795
Accounts with payments 31 days or more past due
as a percentage of end of period gross receivable ............ 4.5% 6.0% 5.2% 6.4% 7.4%
Allowance for credit losses ................................... $2,893 $3,712 $4,955 $6,786 $7,471
Allowance for credit losses as a percentage of net receivables 5.1% 5.0% 5.1% 5.8% 7.3%
</TABLE>

(1) Includes receivables in our Consumer Product, Small Loan, Travel Finance
and Independent Retailer Portfolios.

In 1996, delinquencies and net write-offs in the Consumer Product
Portfolio increased to levels which were substantially higher than those we have
historically experienced in such portfolio. These trends have continued during
1997. The increases occurred primarily with respect to our existing customers,
rather than new credit customers. We believe these increases were a result of
excessive credit burdens for some customers, due to an aggregate overextension
of credit in the marketplace, coupled with uncertainty over proposed legislative
reforms potentially impacting our customers and their extended families.

In late 1996 we took a number of steps to improve collections and credit
quality. We hired two senior executives in the credit and collections fields. In
December 1996, we installed an autodialer to assist our collections personnel in
successfully contacting past due borrowers. Finally, we have hired CCN, Inc. to
develop a proprietary credit scoring system for us, which we expect to implement
during 1998. Notwithstanding these measures, we cannot assure that the trend in
increased delinquencies and net write-offs will not continue.

The Financing Agreement among us, Banner and Holdings permits us to
return to Banner during each of 1996 and 1997 up to $1.5 million of contracts
purchased from or contributed by Banner. As a result of increasing delinquencies
in the Consumer Product Portfolio, the Company and Banner amended the Financing
Agreement, to permit us for the year ended December 31, 1997 to return more than
$1.5 million of contracts purchased or contributed by Banner and for Banner to
have up to 18 months to reimburse the Company for amounts transferred to Banner.
All amounts unpaid at year end will bear interest at Central's borrowing rate.
Banner repurchased $1.5 million of delinquent receivables during the second half
of 1996 and repurchased $5.8 million of delinquent receivables during 1997.

<PAGE> 32
RESULTS OF OPERATIONS

Year Ended December 31, 1997 Compared to the Year Ended December 31, 1996

Total revenues in the year ended December 31, 1997 increased to $52.0
million from $36.4 million in the year ended December 31, 1996, an increase of
$15.6 million or 42.9%.

Consumer Product Portfolio interest income in the year ended December
31, 1997 decreased to $10.8 million from $12.9 million in the year ended
December 31, 1996. This decrease was primarily attributable to a decrease in the
portfolio which averaged $43.7 million in the year ended December 31, 1997,
compared to $55.7 million in the year ended December 31, 1996. The average
interest rate we charged on this portfolio increased to 24.8% for the year ended
December 31, 1997, compared to 23.1% for the year ended December 31, 1996.

Small Loan Portfolio interest income in the year ended December 31, 1997
increased to $13.1 million from $9.7 million in the year ended December 31,
1996. The increase was primarily attributable to an increase in the portfolio
which averaged $51.5 million in the year ended December 31, 1997, compared to
$38.8 million in the year ended December 31, 1996. A portion of the increase in
the portfolio also related to the introduction of the Efectiva Card in May 1997.
The average interest rate we charged on this portfolio was 25.4% for the year
ended December 31, 1997, compared to 24.9% for the year ended December 31, 1996.

Interest income on the Automobile Finance Portfolio in the year ended
December 31, 1997 decreased to $1.4 million from $1.5 million in the year ended
December 31, 1996. This decrease was due to a decrease in interest recognized on
this portfolio as a result of utilizing the rule of 78's method. On May 30,
1997, Banner ceased the sale of used automobiles and, therefore, we are not
financing used automobile sales.

Other interest income in the year ended December 31, 1997 increased to
$5.0 million from $1.7 million in the year ended December 31, 1996, an increase
of $3.3 million. Of this increase, $1.6 million was attributed to an increase in
interest income earned on our Independent Retail Finance Portfolio, $0.4 million
was attributed to an increase in interest income earned on our Travel Finance
Portfolio, and $1.3 million was attributed to an increase in interest income
earned on the Premium Finance Portfolio.

Revenues earned on the sales of travel services increased to $8.7
million for the year ended December 31, 1997 compared to $2.4 million for the
year ended December 31, 1996, an increase of $6.3 million. This increase was
primarily attributable to the 80 travel locations we acquired during the period
from May 1996 through December 1996.

Other income for the year ended December 31, 1997 increased to $11.9
million from $7.2 million in the year ended December 31, 1996, an increase of
$4.7 million. Other income primarily includes administrative fees earned on our
Small Loan Portfolio, ATM membership fees earned on our Efectiva Card, late and
extension charge income, transaction fees charged on consumer product
installment contracts and income earned on the sale of insurance products. Other
income in the year ended December 31, 1997 includes a decrease of $0.3 million
in administrative fee income earned on small loans, an increase of $0.7 million
in ATM membership fees, a $0.4 million increase in late and extension charges,
and an increase of $3.5 million in insurance product revenues and $0.4 million
increase in miscellaneous income.

Operating expenses in the year ended December 31, 1997 increased to
$27.2 million from $12.7 million in the year ended December 31, 1996, an
increase of $14.5 million. Of this increase, $6.1 million is attributable to
operating costs and expenses incurred in connection with the sale of airline
tickets and $2.3 million incurred in connection with the sale of auto insurance,
which business commenced in July 1996. This increase also includes $0.8 million
in expenses incurred in the introduction of the Efectiva

<PAGE> 33
Card, $0.4 million in costs associated with our proposed offering of trust
preferred securities (which has been withdrawn), $0.3 million of expenses to
modify computer software for compliance with the year 2000 and $0.2 million in
start up costs for the income tax service company. The remaining increase of
$4.4 million was primarily due to the expansion of the small loan business and
unaffiliated retailer business, including an increase in the number of employees
and related payroll expenses.

The provision for credit losses in the year ended December 31, 1997
increased to $12.3 million from $9.1 million in the year ended December 31,
1996, an increase of $3.2 million or 35.0%. This increase was primarily due to a
$1.8 million provision which we provided in connection with our decision to
phase out of our relationship with approximately 100 small retailers, a $1.6
million increase in the provision for the Small Loan Portfolio as a result of
increased receivables in the portfolio and increased delinquencies and a $0.7
million provision for the Premium Finance Portfolio which business commenced in
late 1996. The above increases were offset by a decrease in the provision for
the Consumer Product Portfolio as a result of a decline in this portfolio and
repurchase of $5.8 million of delinquent receivables by Banner in 1997.

Interest expense in the year ended December 31, 1997 increased to $5.3
million from $4.7 million in the year ended December 31, 1996. This increase was
due to an increase in the amounts borrowed under the lines of credit which
averaged $64.1 million in the year ended December 31, 1997, compared to $58.7
million in the year ended December 31, 1996.

As a result of the foregoing factors, net income in the year ended
December 31, 1997 decreased to $4.4 million from $5.9 million in the year ended
December 31, 1996, a decrease of $1.5 million or 25.3%.

Year Ended December 31, 1996 Compared to Year Ended December 31, 1995

Total revenues in the year ended December 31, 1996 increased to $36.4
million from $22.2 million in the year ended December 31, 1995, an increase of
$14.2 million or 64.4%.

Consumer Product Portfolio interest income in the year ended December
31, 1996 increased to $12.9 million from $12.5 million in the year ended
December 31, 1995, an increase of $0.4 million. Of this increase, $0.7 million
was attributable to a 1.3% increase in the average interest rate earned on this
portfolio in the year ended December 31, 1996 compared to the year ended
December 31, 1995, offset by a $0.3 million decrease in interest income as a
result of a decrease of $1.5 million in the size of the average Consumer Product
Portfolio for the year ended December 31, 1996 compared to the year ended
December 31, 1995.

Small Loan Portfolio interest income in the year ended December 31, 1996
increased to $9.7 million from $5.1 million in the year ended December 31, 1995,
an increase of $4.6 million or 90.1%. Substantially all of this increase was
attributable to an increase in the size of the Small Loan Portfolio, which
averaged $38.8 million in the year ended December 31, 1996 compared to $20.2
million in the year ended December 31, 1995. For the year ended December 31,
1996, we earned an average interest rate of 24.9% compared to 25.2% in the year
ended December 31, 1995. We currently charge the maximum interest rate permitted
under California law on our small loans.

Automobile Finance Portfolio interest income in the year ended December
31, 1996 increased to $1.5 million from $0.2 million in the year ended December
31, 1995, an increase of $1.3 million. Substantially all of this increase was
attributable to an increase in the size of the Automobile Finance Portfolio,
which averaged $7.2 million in the year ended December 31, 1996 compared to $1.1
million in the year ended December 31, 1995. We began our business of financing
automobiles in July 1995.

<PAGE> 34
Other interest income in the year ended December 31, 1996 increased to
$1.7 million from $0.2 million in the year ended December 31, 1995, an increase
of $1.5 million. Of this increase, $0.8 million was attributed to an increase in
interest income earned on our Travel Finance Portfolio, and $0.6 million was
attributable to interest income earned on our financing of installment
receivables generated from the sale of consumer products sold to customers of
independent retailers. We began this business in early 1996.

For the year ended December 31, 1996, our Travel Finance Portfolio
averaged $4.9 million compared to $2.7 million in the year ended December 31,
1995. The average interest rate earned on this portfolio was 25.0% in the year
ended December 31, 1996 compared to 23.7% in the year ended December 31, 1995.

Revenues earned on the sales of travel services increased to $2.4
million in the year ended December 31, 1996 compared to $0.4 million in the year
ended December 31, 1995, an increase of $2.0 million. We began our travel
business in June 1995, and substantially expanded our operation through the
acquisition of 25 travel locations in May and June of 1996. In December 1996, we
acquired an additional 55 travel locations. However, such acquisition did not
materially contribute to 1996 revenues.

Other income for the year ended December 31, 1996 increased to $7.2
million from $2.9 million in the year ended December 31, 1995, an increase of
$4.3 million or 153.3%. Other income primarily includes administrative fees
earned on our Small Loan Portfolio, late and extension charge income and income
earned on the sale of insurance products. For the year ended December 31, 1996,
administrative fee income increased to $1.9 million compared to $1.1 million in
the year ended December 31, 1995, an increase of $0.8 million. For the year
ended December 31, 1996, late and extension charge income increased to $2.6
million from $1.0 million in the year ended December 31, 1995, an increase of
$1.6 million. This increase was primarily attributable to the State of
California increasing the late charges we may charge coupled with an increase in
the size of our combined receivable portfolios. For the year ended December 31,
1996, income from the sale of credit life insurance, credit accident and health
insurance, and credit property insurance increased to $2.8 million from $0.8
million in the year ended December 31, 1995, an increase of $2.0 million. This
increase was primarily attributable to our beginning the sale of our insurance
products on our small loan portfolio in November 1995.

Operating expenses in the year ended December 31, 1996 increased to
$12.7 million from $7.3 million in the year ended December 31, 1995, an increase
of $5.4 million or 74.0%. Of this increase, $1.7 million and $0.9 million are
attributable to operating costs and expenses incurred in connection with the
sale of travel services, which business began in June 1995, and was expanded
through acquisitions in 1996, and the beginning of our automobile insurance
business. Of the remaining increase of $2.8 million, approximately $0.6 million
was attributable to increased costs of selling our insurance products with
substantially all of the remaining increase attributable to increased costs,
including the number of employees and related payroll to accommodate the
increased number of outstanding contracts associated with the expansion of our
businesses.

The provision for credit losses in the year ended December 31, 1996
increased to $9.1 million from $5.5 million in the year ended December 31, 1995,
an increase of $3.6 million or 67.1%. This increase was primarily due to the
growth experienced by our Small Loan Portfolio, which generated a provision of
$3.3 million in the year ended December 31, 1996 compared to $1.5 million in the
comparable period of 1995. The remaining increase of $1.8 million was primarily
attributable to an increase of $1.1 million in the provision for credit losses
on our Consumer Product Portfolio, as a result of increased write-offs and
delinquencies in such portfolio, and a $0.4 million provision for credit losses
provided on our Independent Retail Finance Portfolio. See "-- Financial Trends
- - -- Credit Quality" above and "-- Delinquency Experience and Allowance for Credit
Losses" above.

<PAGE> 35
Interest expense in the year ended December 31, 1996 increased to $4.7
million from $4.3 million, an increase of $0.4 million or 9.8%. This increase
was primarily due to a higher level of borrowings under our prior lines of
credit used to support the growth in our Small Loan Portfolio and Travel Finance
Portfolio.

As a result of the foregoing factors, net income in the year ended
December 31, 1996 increased to $5.9 million from $3.1 million in the year ended
December 31, 1995, an increase of $2.8 million or 88.5%.

Year Ended December 31, 1995 Compared to Year Ended December 31, 1994

Total revenues in the year ended December 31, 1995 increased to $22.2
million from $15.6 million in the year ended December 31, 1994, an increase of
$6.6 million or 42.4%.

Consumer Product Portfolio interest income in the year ended December
31, 1995 increased to $12.5 million from $11.8 million in the year ended
December 31, 1994, an increase of $0.7 million or 6.1%. Of this increase, $0.8
million was attributable to an increase in the size of the Consumer Product
Portfolio, which averaged $57.3 million in the year ended December 31, 1995
compared to $53.7 million in the year ended December 31, 1994. For the year
ended December 31, 1995, the number of active contracts outstanding in the
Consumer Product Portfolio increased to 84,600, an increase of 9.8% over the
comparable period in 1994. For the year ended December 31, 1995, the average
balance in such portfolio decreased to $710 from $778 in the year ended December
31, 1994, a decrease of 8.7%. The average interest rate we earned on our
Consumer Product Portfolio in the year ended December 31, 1995 decreased to
21.8% from 22.0% in the year ended December 31, 1994.

Small Loan Portfolio interest income in the year ended December 31, 1995
increased to $5.1 million from $1.1 million in the year ended December 31, 1994,
an increase of $4.0 million or 382.0%. Of this increase, $2.7 million was
attributable to an increase in loan demand and $1.3 million was attributable to
an increase in the average interest rate we earned on the average Small Loan
Portfolio. The average interest rate increased to 25.2% for the year ended
December 31, 1995 from 18.7% for the year ended December 31, 1994. We currently
charge the maximum interest rate permitted under California law on our small
loans. The average size of the Small Loan Portfolio increased to $20.2 million
in the year ended December 31, 1995 from $5.7 million in the year ended December
31, 1994, an increase of $14.6 million.

In the year ended December 31, 1995, revenues include $0.4 million
generated from the sale of travel services, which business began in June 1995,
and $0.4 million of interest income earned on the Travel Finance and Automobile
Finance Portfolios.

Other income in the year ended December 31, 1995 increased to $2.9
million from $1.9 million in the year ended December 31, 1994, an increase of
$1.0 million or 52.9%. The remaining increase in other income was primarily due
to an increase of $0.7 million in administrative fee income earned on the Small
Loan Portfolio and $0.3 million from increases in late charges and sales of
insurance products.

Operating expenses in the year ended December 31, 1995 increased to $7.3
million from $5.2 million in the year ended December 31, 1994, an increase of
$2.1 million or 40.9%. Of this increase, $0.3 million is attributable to
operating expenses and costs incurred in connection with the sale of airline
tickets, which began in the year ended December 31, 1995. The remaining increase
of $1.8 million was primarily due to the expansion of the small loan business,
including an increase in the number of employees and related payroll expenses of
$0.9 million, and to an increase in advertising expenses of $0.3 million.

The provision for credit losses in the year ended December 31, 1995
increased to $5.5 million from $3.9 million in the year ended December 31, 1994,
an increase of $1.6 million or 38.9%. This increase was primarily due to the
growth we experienced in our Small Loan Portfolio, which generated a provision
of $1.5

<PAGE> 36
million for the year ended December 31, 1995 compared to $0.6 million in the
comparable period of 1994. The Travel Finance Portfolio accounted for $0.1
million of the provision for credit losses during 1995. The remaining increase
was attributable to growth in our Consumer Product Portfolio and a higher
provision level on this portfolio in 1995 as compared to 1994.

Interest expense in the year ended December 31, 1995 increased to $4.3
million from $2.8 million in the year ended December 31, 1994, an increase of
$1.5 million or 52.7%. This increase was primarily due to a higher level of
borrowings under our prior lines of credit used to support the growth in our
Consumer Product Portfolio and Small Loan Portfolio, and to a higher level of
interest charged by the lenders under our respective prior lines of credit, as a
result of increases in their borrowing rates.

As a result of the foregoing factors, net income in the year ended
December 31, 1995 increased to $3.1 million from $2.2 million for the year ended
December 31, 1994, an increase of $0.9 million or 42.9%.

LIQUIDITY AND CAPITAL RESOURCES

We primarily finance our operations through the cash flow generated from
operations and borrowings under our lines of credit. In June 1996, we completed
an initial public offering and prior to that we received periodic contributions
to capital by Holdings and related entities.

Net cash provided from operations totaled $9.6 million, $16.3 million
and $9.2 million for the years ended December 31, 1997, 1996 and 1995,
respectively. During these periods, the primary source of net cash provided from
operations was net income before non-cash charges, principally the provision for
credit losses.

During the year ended December 31, 1997, net cash provided by investing
activities was $1.4 million as we experienced a decline in our receivables. In
addition, we paid down $12.0 million of bank borrowings during the year ended
December 31, 1997.

Net cash flow generated from operations was insufficient to fund our
outlays for capital expenditures and the significant growth we experienced in
our receivables in each of 1996 and 1995 and the acquisitions completed in 1996.
Net cash used in such investing activities was $42.4 million and $31.9 million
in the years ended December 31, 1996 and 1995, respectively. To fund our
expenditures and support the growth in our combined receivables portfolio, we
relied on capital contributions from Holdings, the proceeds from the initial
public offering and bank borrowings made under our credit facilities. Prior to
the initial public offering, we made a return of capital of $615,000 to Banner.
Net proceeds from the initial public offering were $22.5 million during 1996.
Bank borrowings provided cash of $10.1 million and $15.1 million in the years
ended December 31, 1996 and 1995, respectively. Capital contributions amounted
to $6.6 million in the year ended December 31, 1995.

We require substantial capital to finance our business. Consequently,
our ability to maintain our current level of operations and to expand our
operations will be affected by the availability of financing and the terms
thereof. Currently, we fund financing activities and operations with borrowings
under the Line of Credit which expires June 12, 2000. Holdings and all of our
significant domestic subsidiaries are guarantors under the Line of Credit. In
addition, we have pledged substantially all of our assets, including our
receivables, and the stock of all of our significant subsidiaries as collateral
for the amounts we borrow under the Line of Credit. The maximum amount available
under the Line of Credit is $100.0 million. However, the amount of credit
available at any one time under the Line of Credit is limited to 75% of eligible
contracts. Credit facilities are typically limited to a certain percentage of
such eligible contracts or receivables. As of December 31, 1997, the total
amount available to us under the Line of Credit was $76.0 million, of which
approximately $64.1 million was outstanding, including letters of credit. We pay
commitment fees to the lenders for the unused portion of the Line of Credit.
These commitment fees are equal to 37.5 basis points

<PAGE> 37
per year times the average daily amount by which the maximum amount available
under the Line of Credit exceeds the amount we have borrowed under the line.

Interest on amounts outstanding under the Line of Credit is, at the
option of Central, equal to either (a) 87.5 basis points above the higher of the
prime rate Wells Fargo Bank announces or the federal funds rate plus 50 basis
points or (b) 225 basis points above the interest rate per annum at which Wells
Fargo Bank offers deposits in dollars to prime banks in the London Eurodollar
market. The aggregate amount of indebtedness outstanding under the Line of
Credit at December 31, 1997 bore interest at the rate of 8.3%. We are required
to maintain interest rate hedging arrangements for at least 50% of our Senior
Funded Debt (as defined in the Line of Credit). However, this percentage may be
reduced by the amount (expressed as a percentage) of the ratio of any permitted
fixed rate indebtedness issued by Central to the total Senior Funded Debt (as
defined in the Line of Credit). We have a hedge on $40 million as of December
31, 1997. This hedging agreement is for the period July 21, 1997 through July
21, 2000 at a cost of $136,000.

The Line of Credit restricts, among other things, our ability to (i)
incur additional indebtedness, (ii) pay indebtedness prior to the date when due,
(iii) pay dividends, make certain other restricted payments or consummate
certain asset sales, (iv) merge or consolidate with any other person, (v) enter
into certain transactions with affiliates, (vi) incur indebtedness that is
subordinate in priority and right of payment to amounts outstanding under the
Line of Credit, and (vii) make future acquisitions in excess of an aggregate
amount.

The Line of Credit also contains certain restrictive covenants that
require, among other things, us to maintain specific financial ratios and to
satisfy certain financial tests. These include: (a) Past Due Receivables Ratio
(as defined in the Line of Credit) as of the end of each month of no more than
0.08 to 1.00, (b) Credit Loss Allowance Ratio (as defined in the Line of Credit)
as of the end of each month of not less than 0.05 to 1.00, (c) Interest Coverage
Ratio (as defined in the Line of Credit) as of the end of each quarter of not
less than 1.85 to 1.00, (d) Credit Loss/Net Chargeoff Percentage (as defined in
the Line of credit) as of the end of each month of not less than the Minimum
Credit Loss/Chargeoff Percentage (as defined in the Line of Credit) as of such
date, (e) Leverage Ratio (as defined in the Line of Credit) as of the end of
each quarter of no more than 2.00 to 1.00. We are also required to maintain a
Tangible Net Worth (as defined in the Line of Credit) as of the end of each
quarter of not less than $50 million, plus an amount equal to 75% of Net Income
(as defined in the Line of Credit) earned in each quarter (with no deduction for
a net loss in a quarter), plus an amount equal to 75% of the aggregate increases
in stockholders' equity as a result of the sale of our capital stock. The breach
of any of these covenants or other terms of the Line of Credit could result in a
default under the Line of Credit, in which event the lenders could seek to
declare all amounts outstanding under the Line of Credit, together with accrued
and unpaid interest, to be immediately due and payable. At December 31, 1997, we
did not comply with certain of the financial ratios and tests. These defaults
were waived by the lending group.

In addition, our inability at any time to renew or replace our Line of
Credit or other senior credit facilities on acceptable terms could have a
material adverse effect on our results of operations and financial condition.
See "Item 1. -- Business Considerations and Certain Factors that May Affect
Future Results of Operations and Stock Price -- Restrictions Imposed by the Line
of Credit," and "-- Need for Senior Credit Facility."

In February 1998, we entered into a definitive agreement to acquire
Mission Savings and Loan Association, a federally chartered savings association
based in Riverside, California (the "Bank"). The cost of the acquisition will
equal 1.47 times the Bank's adjusted stockholders' equity at the end of the
month immediately prior to the date of acquisition. This amount is currently
estimated to be approximately $4.7 million. The acquisition is subject to, among
other things, the approval of the OTS and the approval of

<PAGE> 38
the shareholders of the Bank. At December 31, 1997, the Bank had approximately
$49.2 million in total assets and $3.3 million in total stockholders' equity.
The Bank had net income of $0.3 million during 1997. We expect to have
sufficient cash on hand or available under our Line of Credit to consummate the
acquisition.

RECENT ACCOUNTING PRONOUNCEMENTS

The Financial Accounting Standards Board has issued Statement of
Financial Accounting Standards Number 128 (Earnings per Share) ("SFAS 128"),
Statement of Financial Accounting Standards Number 130 (Reporting Comprehensive
Income) ("SFAS 130") and Statement of Financial Accounting Standards Number 131
(Disclosures About Segments of an Enterprise and Related Information) ("SFAS
131"). We have adopted SFAS 128, for the year ended December 31, 1997. The
adoption of SFAS 128, did not have a material effect on our financial position
or our results of operations in 1997. We will adopt SFAS 130 and SFAS 131 in
1998 and believe the adoption of those statements will not have a material
effect on our financial position or our results of operations.

IMPACT OF THE YEAR 2000 ISSUE

The year 2000 issue is the result of computer programs being written
using two digits rather than four to define the applicable year. Our computer
programs that have date-sensitive software may recognize a date using "00" as
the year 1900 rather than the year 2000. This could result in a system failure
or miscalculations causing disruptions of operations, including among other
things, a temporary inability to process transactions or engage in similar
normal business activities.

We have engaged an outside consulting firm to convert our computer
systems to be year 2000 compliant so that they will recognize the difference
between dates using "99" and "00" as one year instead of negative 99 years.
Testing and conversion of system applications is expected to cost $300,000 and
is expected to be completed by December 31, 1998.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See "Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K" for our financial statements, and the notes thereto, and the financial
statement schedules filed as part of this report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

Previously reported in our Report on Form 8-K, including all amendments
thereto, filed with the SEC on October 17, 1996.

<PAGE> 39
PART III

The Securities and Exchange Commission (the "SEC") allows us to "incorporate
by reference" the information we file with them, which means that we can
disclose important information to you by referring you to those documents. The
information incorporated by reference is considered to be part of this Annual
Report. We incorporate by reference in Items 10 to 13 below certain sections of
our definitive proxy statement, to be filed pursuant to Regulation 14A with the
SEC within 120 days after December 31, 1997.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT

We incorporate by reference in this Annual Report the information required by
this Item 10 contained in the sections entitled "Discussion of Proposals
Recommended by the Board -- Proposal 1: Elect Four Directors -- Nominees,"
"Information About Directors and Executive Officers," and "Information About
CFAC Common Stock Ownership -- Did Directors, Executive Officers and
Greater-Than-10% Stockholders Comply With Section 16(a) Beneficial Ownership
Reporting in 1997?" of our definitive proxy statement, to be filed pursuant to
Regulation 14A with the SEC within 120 days after December 31, 1997.

ITEM 11. EXECUTIVE COMPENSATION

We incorporate by reference in this Annual Report the information required by
this Item 11 contained in the sections entitled "Information About Directors and
Executive Officers" and "Information About CFAC Common Stock Ownership --
Compensation Committee Interlocks and Insider Participation" of our definitive
proxy statement, to be filed pursuant to Regulation 14A with the SEC within 120
days after December 31, 1997.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

We incorporate by reference in this Annual Report the information required by
this Item 12 contained in the section entitled "Information About CFAC Common
Stock Ownership" of our definitive proxy statement, to be filed pursuant to
Regulation 14A with the SEC within 120 days after December 31, 1997.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

We incorporate herein by reference in this Annual Report the information
required by this Item 13 contained in the section entitled "Information About
Directors and Executive Officers -- Certain Relationships and Related
Transactions" of our definitive proxy statement, to be filed pursuant to
Regulation 14A with the SEC within 120 days after December 31, 1997.

<PAGE> 40
PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K

(a) (1) FINANCIAL STATEMENTS. Reference is made to the Index to Consolidated
Financial Statements on page F-1 for a list of financial statements filed as
part of this report.

(2) FINANCIAL STATEMENT SCHEDULES. All financial statement schedules are
omitted because of the absence of the conditions under which they are required
to be provided or because the required information is included in the financial
statements listed above and/or related notes.

(3) LIST OF EXHIBITS. The following is a list of exhibits filed as a
part of this report, including any management contracts or compensatory plans or
arrangements required to be filed as an exhibit to this report. Such management
contracts or compensatory plans or arrangements are identified in the list
below.

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<S> <C>
2.1* Reorganization Agreement between Central Financial
Acceptance Corporation, Banner's Central Electric, Inc.
and Banner Holdings, Inc. dated as of June 24, 1996.

2.2**** Agreement and Plan of Reorganization by and between
Central Financial Acceptance Corporation and Mission
Savings and Loan Association, a Federal Association, dated
as of February 11, 1998.

3.1* Certificate of Incorporation of Central Financial
Acceptance Corporation.

3.2* By-laws of Central Financial Acceptance Corporation.

10.1+ 1996 Stock Option Plan, as amended.

10.2*+ Indemnification Agreement between Central Financial
Acceptance Corporation and certain directors and officers
of the Company.

10.3*+ Employment Agreement between Central Financial Acceptance
Corporation and Gary M. Cypres dated as of June 24, 1996.

10.4* Financing Agreement between Central Installment Credit
Corporation, Banner's Central Electric, Inc., Central Ram,
Inc. and Banner Holdings, Inc. dated as of June 24, 1996.

10.5 Option Agreement between Central Financial Acceptance
Corporation, Banner's Central Electric, Inc. and Banner
Holdings, Inc. dated as of June 24, 1996.

10.6 Operating Agreement between Central Financial Acceptance
Corporation, Banner's Central Electric, Inc. and Banner
Holdings, Inc. dated as of June 24, 1996.
</TABLE>

<PAGE> 41
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<S> <C>
10.7 Tax Sharing Agreement between Central Financial Acceptance
Corporation, Banner's Central Electric, Inc. and Banner
Holdings, Inc. dated as of June 24, 1996.

10.8 Indemnification Agreement between Central Financial
Acceptance Corporation, Banner's Central Electric, Inc.
and Banner Holdings, Inc. dated as of June 24, 1996.

10.9 Indemnification Agreement dated June 24, 1996 between
Central Financial Acceptance Corporation and Banner
Holdings, Inc.

10.10 Reserved.

10.11 Reserved.

10.12+ Central Financial Acceptance Corporation Supplemental
Executive Retirement Plan dated as of June 24, 1996.

10.13+ Central Financial Acceptance Corporation Executive
Deferred Salary and Bonus Plan dated as of June 24 , 1996.

10.14 Reserved.

10.15 Reserved.

10.16 Reserved.

10.17 Reserved.

10.18 Reserved.

10.19 Reserved.

10.20 Reserved.

10.21 Reserved.

10.22*+ Adoption Agreement for the Qualified Benefits, Inc.
Regional Prototype Non-Standardized Profit Sharing Plan
and Trust effective as of November 1, 1989.

10.23 Reserved.

10.24 Reserved.

10.25 Reserved.

10.26**+ Employment Agreement between Central Financial Acceptance
Corporation and Anthony Fortunato dated October 25, 1996.

10.27**+ Employment Agreement between Central Financial Acceptance
Corporation and Gerard T. McMahon dated August 30, 1996.
</TABLE>

<PAGE> 42
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<S> <C>
10.28 Reserved.

10.29** Agreement to Transfer Business Operations among Banner's
Central Electric, Inc., Central Consumer Finance Company,
Central Financial Acceptance Corporation and Central Auto
Sales, Inc. dated as of July 31, 1996.

10.30 Reserved.

10.31** Amendment One to Financing Agreement between Central
Installment Credit Corporation, Banner's Central Electric,
Inc., Central Ram, Inc. and Banner Holdings, Inc., dated
as of July 1, 1996.

10.32 Reserved.

10.33 Reserved.

10.34*** Revolving Loan Agreement, dated as of June 13, 1997, by
and among the Company, each Lender who is named therein or
who may thereafter become a party to the Revolving Loan
Agreement and Wells Fargo Bank, National Association, as
Agent and Arranger and Notes executed by the Company with
each of the Lenders.

10.35*** Security Agreement, dated as of June 13, 1997, by and
among the Company and each of the Persons listed on the
signature pages thereto, together with other Persons who
may become a party thereto, jointly and severally in favor
of Wells Fargo Bank, National Association, as Agent.

10.36*** Pledge Agreement, dated as of June 13, 1997, by and among
Banner Holdings, Inc., Banner's Central Electric, Inc. the
Company and each of the Persons listed on the signature
pages thereto, together with other Persons who may become
a party thereto, jointly and severally in favor of Wells
Fargo Bank, National Association as Agent under the
Revolving Loan Agreement, and in favor of each of the
Lenders named therein.

10.37*** Trademark Collateral Assignment, dated as of June 13,
1997, by Banner Holdings, Inc. each of the Persons listed
on the signature pages thereto, together with other
Persons who may become a party thereto, jointly and
severally in favor of Wells Fargo Bank, National
Association, as Agent for the benefit of the Lenders that
are or become a party to the Revolving Loan Agreement.

10.38*** Subsidiary Guaranty, dated as of June 13, 1997, by each of
the Persons listed on the signature pages thereto,
together with each other Person who may become a party
thereto, jointly and severally in favor of Wells Fargo
Bank, National Association, as Agent for the benefit of
the Lenders that are a party to the Revolving Loan
Agreement.

10.39 Amendment No. 1 to Revolving Loan Agreement, dated as of
November 17, 1997, by and among the Company, the Lenders
party thereto and Wells Fargo Bank, National Association,
as Agent.

10.40 Amendment No. 2 to Revolving Loan Agreement, dated as of
March 26, 1998, by and among the Company, the Lenders
party thereto and Wells Fargo Bank, National Association
as Agent.
</TABLE>

<PAGE> 43
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<S> <C>
21 Subsidiaries of the Registrant.

27 Financial Data Schedule.
</TABLE>

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

* Incorporated by reference to exhibits filed with the SEC
in the Company's Registration Statement on Form S-1
(Registration No. 333-3790).

** Incorporated by reference to exhibits filed with the SEC
in the Company's Annual Report on Form 10-K for the year
ended December 31, 1996.

*** Incorporated by reference to exhibits filed with the SEC
in the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997.

**** Incorporated by reference to the exhibit filed with the
SEC on February 24, 1998 in the Company's Report on form
8-K.

+ Management contract or compensatory plan or arrangement
required to be filed as an exhibit.

(B) REPORTS ON FORM 8-K. No reports on Form 8-K were filed
during the fourth quarter of 1997.

(D) ADDITIONAL FINANCIAL STATEMENTS. Not applicable.

<PAGE> 44
GLOSSARY

Set forth below are definitions of some of the terms used in this Annual
Report on Form 10-K.

"ARC" Airline Reporting Corporation.

"Automobile Finance Portfolio" The Company's portfolio of automobile
finance contracts.

"Bank" Mission Savings and Loan Association, a
Federal Association.

"Banner" Banner's Central Electric, Inc., an
affiliate of the Company.

"Code" Internal Revenue Code of 1986, as
amended.

"Company" Central Financial Acceptance Corporation
and its subsidiaries.

"Consumer Product Portfolio" The Company's
portfolio of consumer product contracts
from sales by Banner.

"CRA" Community Reinvestment Act.

"EGRPRA" Economic Growth and Paperwork Reduction
Act of 1996.

"Exchange Act" Securities Exchange Act of 1934, as
amended.

"FDIC" Federal Deposit Insurance Corporation.

"FDICIA" Federal Deposit Insurance Corporation
Improvement Act of 1991.

"FHLB" Federal Home Loan Bank.

"HOLA" Home Owners' Loan Act, as amended.

"Holdings" Banner Holdings, Inc., the sole
shareholder of Banner.

"IndependentRetail Finance Portfolio" The Company's portfolio of consumer
finance contracts from sales by
independent retailers.

"Line of Credit" Revolving loan agreement by and among the
Company and Wells Fargo Bank, N.A., as
agent, and several banks.

"OTS" Office of Thrift Supervision.

"Premium Finance Portfolio" The Company's portfolio of insurance
premium finance contracts.

"QTL" Qualified thrift lender.

<PAGE> 45
"SAIF" Savings Association Insurance Fund.

"SEC" The Securities and Exchange Commission.

"Securities Act" Securities Act of 1933, as amended.

"Small Loan Portfolio" The Company's portfolio of loan
contracts.

"Travel Finance Portfolio" The Company's portfolio of travel finance
contracts.

"Unruh Act" California Retail Installment Sales Act.

"West Coast" West Coast Private Equity Partners, L.P.

<PAGE> 46
SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized this 31st day of March
1998.

CENTRAL FINANCIAL ACCEPTANCE CORPORATION

By: /s/ Gary M. Cypres
Gary M. Cypres
Chairman of the Board of Directors, Chief
Executive Officer, President and Chief
Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Gary M. Cypres Chairman of the Board of Directors, March 31, 1998
- - ---------------------------- Chief Executive Officer, President
Gary M. Cypres and Chief Financial Officer
(Principal Executive Officer
and Principal Financial Officer)

/s/ Salvatore J. Caltagirone Director March 31, 1998
- - ----------------------------
Salvatore J. Caltagirone

/s/ Jose de Jesus Legaspi Director March 31, 1998
- - ----------------------------
Jose de Jesus Legaspi

/s/ Wlliam Sweet Director March 31, 1998
- - ----------------------------
William Sweet

/s/ Neal E. Gower Principal Accounting Officer March 31, 1998
- - ----------------------------
Neal E. Gower
</TABLE>

<PAGE> 47
CENTRAL FINANCIAL ACCEPTANCE CORPORATION AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
Report of Independent Public Accountants ..................................... F-2
Report of Independent Public Accountants ..................................... F-3
CONSOLIDATED FINANCIAL STATEMENTS:
Consolidated Balance Sheets at December 31, 1997 and 1996 .................. F-4
Consolidated Statements of Income for the Years Ended December 31, 1997,
1996 and 1995 ........................................................... F-5
Consolidated Statements of Stockholders' Equity for the Years Ended
December 31, 1997, 1996 and 1995 ........................................ F-6
Consolidated Statements of Cash Flows for the Years Ended December 31, 1997,
1996 and 1995 ........................................................... F-7
Notes to Consolidated Financial Statements ................................. F-8
</TABLE>

F-1

<PAGE> 48
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders of Central Financial Acceptance
Corporation:

We have audited the accompanying consolidated balance sheets of Central
Financial Acceptance Corporation, a Delaware corporation, and subsidiaries, (the
"Company") as of December 31, 1997 and 1996, and the related consolidated
statements of income, stockholders' equity and cash flows for the years then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these 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 Company as of
December 31, 1997 and 1996, and the results of their operations and their cash
flows for the years then ended in conformity with generally accepted accounting
principles.

/s/ Arthur Andersen LLP

Los Angeles
March 20, 1998

F-2

<PAGE> 49

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors of
Central Financial Acceptance Corporation
Los Angeles, California:

We have audited the accompanying consolidated statements of income,
stockholders' equity, and cash flows of Central Financial Acceptance
Corporation and subsidiaries (the "Company," see Note 1, Basis of Presentation)
for the year ended December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

We conducted our audit 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 statements presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion such consolidated financial statements present fairly, in all
material respects, the results of operations and cash flows of Central
Financial Acceptance Corporation and subsidiaries for the year ended December
31, 1995 in conformity with generally accepted accounting principles.

/s/ DELOITTE & TOUCHE LLP
Deloitte & Touche LLP

Los Angeles, California
April 12, 1996 (June 12, 1996 as to the effects
of the reorganization described in Note 1)

F-3

<PAGE> 50
CENTRAL FINANCIAL ACCEPTANCE CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
1997 1996
------------ ------------
<S> <C> <C>
A S S E T S
Cash .................................................... $ 4,794,000 $ 5,848,000
Restricted cash ......................................... 930,000 0
Finance receivables, net ................................ 102,498,000 119,074,000
Prepaid expenses and other current assets ............... 2,865,000 3,962,000
Note receivable from affiliate .......................... 4,992,000 787,000
Deferred income taxes ................................... 3,845,000 3,536,000
Income taxes receivable ................................. 786,000 0
Property and equipment, net ............................. 5,880,000 3,425,000
Intangible assets, net .................................. 8,559,000 8,725,000
------------ ------------
TOTAL ............................................. $135,149,000 $145,357,000
============ ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Notes payable ........................................... $ 62,000,000 $ 74,024,000
Accrued expenses and other current liabilities .......... 6,556,000 8,178,000
Income taxes payable .................................... 0 952,000
Long-term debt .......................................... 850,000 850,000
------------ ------------
Total liabilities ............................. 69,406,000 84,004,000
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value, 5,000,000
shares authorized; no shares outstanding ........... 0 0
Common stock, $.01 par value, 20,000,000 shares
authorized; 7,277,000 shares issued and outstanding 73,000 73,000
Paid-in capital ....................................... 47,903,000 47,903,000
Retained earnings ..................................... 17,767,000 13,377,000
------------ ------------
Total stockholders' equity ........................ 65,743,000 61,353,000
------------ ------------
TOTAL ............................................. $135,149,000 $145,357,000
============ ============
</TABLE>

The accompanying notes to the consolidated financial statements are
an integral part of these consolidated financial statements.

F-4

<PAGE> 51
CENTRAL FINANCIAL ACCEPTANCE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
REVENUES:
Interest income
Consumer product portfolio ....................... $ 10,822,000 $ 12,850,000 $ 12,508,000
Small loan portfolio ............................. 13,056,000 9,686,000 5,095,000
Automobile finance portfolio ..................... 1,434,000 1,548,000 240,000
Other ............................................ 5,001,000 1,691,000 176,000
------------ ------------ ------------
Total interest income .......................... 30,313,000 25,775,000 18,019,000

Travel services, net ............................. 8,716,000 2,449,000 371,000
Transaction fees from affiliate .................. 1,127,000 965,000 916,000
Other income .................................... 11,884,000 7,238,000 2,857,000
------------ ------------ ------------

Total revenues ................................. 52,040,000 36,427,000 22,163,000
------------ ------------ ------------
COSTS AND EXPENSES:
Operating expenses ............................... 27,217,000 12,676,000 7,288,000
Provision for credit losses ...................... 12,296,000 9,105,000 5,449,000
Interest expense ................................. 5,314,000 4,697,000 4,278,000
------------ ------------ ------------
Total costs and expenses ...................... 44,827,000 26,478,000 17,015,000
------------ ------------ ------------
Income before taxes and discontinued operations ...... 7,213,000 9,949,000 5,148,000
Income tax expense ................................... 2,823,000 3,979,000 2,079,000
------------ ------------ ------------
Income from continuing operations .................... 4,390,000 5,970,000 3,069,000
Discontinued operations net income (loss) ............ 0 (91,000) 50,000
------------ ------------ ------------
Net income ........................................... $ 4,390,000 $ 5,879,000 $ 3,119,000
============ ============ ============

PER SHARE DATA: (NOTE 3)

Basic earnings per share from continuing operations .. $ 0.60 $ 0.96 $ 0.60
Basic earnings (loss) per share
from discontinued operations........................ 0 (0.01) 0.01
------------ ------------ ------------

Basic earnings per share ............................. $ 0.60 $ 0.95 $ 0.61
Diluted earnings per share continuing
operations ......................................... $ 0.60 $ 0.96 $ 0.60
Diluted earnings (loss) per share discontinued
operations ......................................... 0 (0.01) 0.01
------------ ------------ ------------
Diluted earnings per share ........................... $ 0.60 $ 0.95 $ 0.61
Weighted average common shares outstanding ........... 7,277,000 6,213,500 5,150,000
Supplementary basic earnings per share (unaudited) ... -- $ 0.88 $ 0.58
Supplementary weighted average number of common
shares outstanding (unaudited) ..................... -- 7,277,000 7,277,000
</TABLE>

The accompanying notes to the consolidated financial statements are
an integral part of these consolidated financial statements.

F-5

<PAGE> 52
CENTRAL FINANCIAL ACCEPTANCE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON PAID-IN RETAINED
STOCK CAPITAL EARNINGS TOTAL
--------------------------- ----------- ----------- -----------
SHARES AMOUNT
--------- -----------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1995 ........ 5,150,000 $ 52,000 $19,520,000 $ 4,379,000 $23,951,000
Net income ...................... 3,119,000 3,119,000
Capital contribution ............ 6,562,000 6,562,000
--------- ----------- ----------- ----------- -----------
Balance, December 31, 1995 ...... 5,150,000 52,000 26,082,000 7,498,000 33,632,000
Net income ...................... 5,879,000 5,879,000
Capital withdrawal .............. (615,000) (615,000)
Net proceeds from public offering 2,127,000 21,000 22,436,000 22,457,000
--------- ----------- ----------- ----------- -----------
Balance, December 31, 1996 ...... 7,277,000 73,000 47,903,000 13,377,000 61,353,000
Net income ...................... 4,390,000 4,390,000
--------- ----------- ----------- ----------- -----------
Balance, December 31, 1997 ...... 7,277,000 $ 73,000 $47,903,000 $17,767,000 $65,743,000
========= =========== =========== =========== ===========
</TABLE>

The accompanying notes to the consolidated financial statements
are an integral part of these consolidated financial statements.

F-6

<PAGE> 53
CENTRAL FINANCIAL ACCEPTANCE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net income ............................................... $ 4,390,000 $ 5,879,000 $ 3,119,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization ......................... 631,000 224,000 386,000
Provision for credit losses ........................... 12,296,000 9,105,000 5,449,000
Deferred income taxes ................................. (309,000) (1,229,000) (663,000)
Note receivable from affiliate ........................ (4,205,000) (787,000) 0
Changes in assets and liabilities:
Prepaid expenses and other current assets ............. 311,000 (3,762,000) (166,000)
Restricted cash ....................................... (930,000) 0 0
Net assets of discontinued operations ............... 0 1,033,000 (1,033,000)
Accrued expenses and other current liabilities ........ (2,574,000) 5,849,000 2,135,000
------------ ----------- ------------
Net cash provided by operating activities ............ 9,610,000 16,312,000 9,227,000
------------ ----------- ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Installment contracts (originated and acquired)
collected, net ...................................... 4,280,000 (33,505,000) (29,795,000)
Capital expenditures .................................. (2,770,000) (1,492,000) (2,124,000)
Acquisitions .......................................... (150,000) (7,423,000) 0
------------ ------------ ------------
Net cash provided by (used in) investing activities 1,360,000 (42,420,000) (31,919,000)
------------ ------------ ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contribution (withdrawal) ..................... 0 (615,000) 6,562,000
Net proceeds from public offering ..................... 0 22,457,000 0
Proceeds from long-term debt .......................... 0 0 850,000
Net proceeds from (repayment) of notes payable ........ (12,024,000) 10,057,000 15,122,000
------------ ------------ ------------
Net cash provided by (used in) financing activities . (12,024,000) 31,899,000 22,534,000
------------ ------------ ------------

NET (DECREASE) INCREASE IN CASH ............................. (1,054,000) 5,791,000 (158,000)
CASH, BEGINNING OF YEAR ..................................... 5,848,000 57,000 215,000
------------ ------------ ------------
CASH, END OF YEAR ........................................... $ 4,794,000 $ 5,848,000 $ 57,000
============ ============ ============

CASH PAID DURING THE YEAR FOR:
INTEREST ............................................. $ 5,375,000 $ 4,531,000 $ 4,250,000

INCOME TAXES ......................................... $ 4,870,000 $ 5,909,000 $ 1,675,000
</TABLE>

The accompanying notes to the consolidated financial statements
are an integral part of these consolidated financial statements.

F-7

<PAGE> 54
CENTRAL FINANCIAL ACCEPTANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION AND NATURE OF OPERATIONS

Basis of Presentation - Central Financial Acceptance Corporation
("CFAC") was formed in April 1996 and was a wholly owned subsidiary of Banner's
Central Electric, Inc ("Banner"). Banner's Central Electric, Inc. is wholly
owned by Banner Holdings, Inc. ("Holdings") and is a consumer products retailer
that provides its customers with financing for the merchandise it sells. On June
24, 1996, CFAC, Banner and Holdings entered into an agreement (the
"Reorganization Agreement") whereby Holdings contributed to Banner its
investments in certain wholly owned subsidiaries, along with the subsidiaries'
operations, (the "Holding Subsidiaries") and Banner contributed to CFAC its
investments in the Holdings Subsidiaries and the finance portion of its consumer
products business, and cash in such amount so as to leave CFAC with $500,000 of
cash on hand. Pursuant to the Reorganization Agreement, the intercompany
accounts between CFAC, Banner and Holdings that arose as a result of the
Reorganization Agreement and from other transactions, except with respect to
income taxes, were forgiven and reclassified as stockholder's equity.

In addition to the Reorganization Agreement, CFAC, Banner and Holdings
entered into certain agreements for the purpose of defining the ongoing
relationships among them (see Note 11). The transactions and agreements entered
into pursuant to the Reorganization Agreement are referred to herein as the
"Reorganization." Management of CFAC believes that such agreements provide for
reasonable allocations of costs between the parties.

The reorganization was accounted for at historical cost in a manner
similar to a pooling of interests. The accompanying consolidated financial
statements reflect the combined historical operations of CFAC and its
subsidiaries as if the Reorganization had taken place at the beginning of the
periods presented, except for the contribution of cash in such amount so as to
leave CFAC with $500,000 upon the Reorganization.

On July 2, 1996, CFAC consummated its initial public offering when it
sold 2.127 million shares of common stock, which resulted in net proceeds to the
Company of $22.5 million.

On August 1, 1996, Central Auto Sales, Inc. was sold to CFAC's parent
company for net book value. The consolidated financial statements have been
restated to reflect this business as a discontinued operation.

Nature of Operations --The Company (i) purchases and services consumer
finance receivables generated by the Company's customers for purchases of high
quality brand name consumer products, appliances and furniture sold by Banner,
and by independent retailers; (ii) provides small loans to its customers; (iii)
originates and services consumer finance receivables generated by the Company's
customers for purchases of airline tickets sold by the Company; (iv) provides
insurance products and insurance premium financing to its customers; and (v)
provides financing for purchases of used automobiles sold by Banner through May
30, 1997. The majority of the Company's business is focused in Southern
California, and the Company experiences the highest demand for its financial
products and services between October and December.

2. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES

Principles of Consolidation -- The accompanying consolidated financial
statements include the accounts of Central Financial Acceptance Corporation and
its wholly owned subsidiaries, Central Installment Credit Corporation, Central
Consumer Finance Company, Inc., Centravel, Inc., CFAC Accident and Health
Reinsurance Ltd., Central Check Cashing, Inc., Central Income Tax Services,
Inc., Central Financial Acceptance/Insurance Agency ,Central Premium Finance
Company and BCE Properties I, Inc. All significant intercompany balances and
transactions have been eliminated in consolidation.

Finance Receivables -- CFAC's finance receivables include installment
contracts that are purchased from Banner (referred to herein as the "Consumer
Product Portfolio"), receivables that arise from unsecured, small loans
(referred to herein as the "Small Loan Portfolio"), installment contracts that
are originated when customers buy used cars and travel tickets (referred to
herein as the "Automobile Finance Portfolio" and the "Travel Finance Portfolio,"
respectively), and installment contracts purchased from unaffiliated third party
retailers that sell products or services and receivables that arise from
automobile insurance premium contracts (referred to herein as the "Other
Portfolio.") Add-on interest of 11% to 13% per annum is included in the face
amount of the finance receivables (except for a portion of the small loan
portfolio of $34,279,000) together with administrative fees that are charged on
certain small loan contracts. The annual percentage rate varies depending on the
length of the contract and the amount of administrative fees. The contracts
provide for scheduled monthly payments and mature

F-8

<PAGE> 55
CENTRAL FINANCIAL ACCEPTANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

generally from 1 to 24 months in the Consumer Product Finance Portfolio and
Other Portfolio, from 1 to 12 months in the Small Loan and Travel Finance
Portfolios, and from 36 to 42 months in the Automobile Finance Portfolio.
A portion of the Small Loan Portfolio has an open ended maturity date.

Certain direct loan origination costs are capitalized and recognized
into expense over the life of the related loan using a method that approximates
the interest method.

The Company provides an allowance for credit losses in the Consumer
Product and Travel Finance Portfolios at the time that the contract is purchased
or the retail sale is made. The allowance for credit losses in the Small Loan
Portfolio and independent retailers is provided for following the origination of
the loans over the period that the events giving rise to the credit losses are
estimated to occur. The Company's portfolios comprise smaller-balance,
homogeneous loans that are evaluated collectively to determine an appropriate
allowance for credit losses. The allowance for credit losses is maintained at a
level considered adequate by management to cover losses in the existing
portfolios. Collection of past due accounts is pursued by the Company, and when
the characteristics of an individual account indicates that collection is
unlikely, the account is charged off and turned over to a collection agency.
Accounts are generally charged off when they are between 91 and 150 days past
due.

Allowance for credit losses is increased by charges to income and
decreased by chargeoffs, net of recoveries. Management's periodic evaluation of
the adequacy of the allowance is based on the Company's past loan loss
experience, known and inherent risks in the portfolio, adverse situations that
may affect the borrower's ability to repay and current economic conditions. The
Company's customers are typically between the ages of 21 and 45 and earn less
than $25,000 per year, have little or no savings and limited short-term
employment histories. In addition, the Company's customers typically have no
prior credit histories and are unable to secure credit from traditional lending
sources. The Company makes its credit decisions primarily on its assessment of a
customer's ability to repay the obligation. In making a credit decision, in
addition to the size of the obligation, the Company generally considers a
customer's income level, type and length of employment, stability of residence,
personal references and prior credit history with the Company. As a result, the
Company is more susceptible to the risk that its customers will not satisfy
their repayment obligations than are less specialized consumer companies or
consumer finance companies that have more stringent underwriting criteria.
Because the Company relies on the creditworthiness of its customers for
repayment and does not rely on collateral securing the debt, the Company
experiences actual rates of losses higher than lenders who have collateral which
they can repossess in the event of a borrower's default.

The Company calculates its provision for credit losses based on changes
in the present value of expected future cash flows of its loans discounted at
the loan's effective interest rate in accordance with Financial Accounting
Standards Board (FASB) Statement of Financial Accounting Standards No. 114
"Accounting by Creditors for Impairment of a Loan" as amended by FASB Statement
No. 118 "Accounting by Creditors for Impairment of a Loan - Income Recognition
and Disclosures."

The Company did not record any investment in impaired loans in 1997 and
1996. The amount of recoveries on impaired loans are recognized as a reduction
of provision for credit losses on the cash basis of accounting at the time the
payment is received. Recoveries for the years ended December 31, 1997 and
December 31, 1996, amounted to $896,000 and $903,000, respectively.

Deferred insurance revenue arises from the deferral of the recognition
of revenue from certain credit insurance contracts. Insurance premium revenue is
recognized over the life of the related contract using a method that
approximates the interest method.

Property and Equipment -- Property and equipment are carried at cost.
Long-lived property is reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of such an asset may not be
recoverable in accordance with Statement of Financial Accounting Standards No.
121 "Accounting for the Impairment of Long Lived Assets." If the carrying amount
of the asset exceeds the estimated undiscounted future cash flows to be
generated by the asset, an impairment loss would be recorded to reduce the
asset's carrying value to its estimated fair value. Depreciation and
amortization are computed primarily using the straight-line method over the
estimated lives of the assets, as follows:

Furniture, equipment and software .... 5 to 10 years
Leasehold improvements ............... Life of lease
Building improvements ................ 7 to 39 years

F-9

<PAGE> 56
CENTRAL FINANCIAL ACCEPTANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Intangible Assets-- Intangible assets primarily arose in connection with
the Company's acquisition of the net assets of certain travel and automobile
insurance businesses during 1996. The excess of the purchase price over the fair
value of net assets acquired is being amortized using the straight-line method
over 30 years. The recoverability of the intangible asset is analyzed annually
based on undiscounted future cash flows. If the carrying value of the intangible
asset exceeds the estimated undiscounted future cash flows, an impairment loss
would be recorded to reduce the asset's carrying value to its estimated fair
value.

Income Recognition -- Interest income on the Consumer Product,
Automobile Finance and Travel Finance Portfolios is deferred and recognized over
the lives of the contracts using a method that approximates the interest method.
Interest income on the Small Loan Portfolio and Independent Retailers is
deferred and recognized using the interest method. Transaction fees on contracts
purchased from a related party are deferred and recognized using the interest
method. ATM membership fees are deferred and recognized using the straight line
method. Commissions income and broker fee income is recognized as it is charged
to the customer. Administrative fees are deferred and recognized over the
estimated life of the Small Loan Portfolio using a method that approximates the
interest method. Administrative fees are included in other income in the
consolidated statements of income. Premiums and commissions for credit life
insurance are deferred and recognized as revenue using the interest method.
Premiums and commissions for credit accident and health insurance are recognized
over the terms of the contracts based on the means of the straight line and
interest method and are included in other income in the consolidated statements
of income.

Travel Services -- Revenues from the sale of travel tickets represent
airline commissions paid to the Company.

Insurance Liabilities -- The liability for losses and loss-adjustment
expenses includes an amount determined from loss reports and individual cases
and an amount, based on past experience, for losses incurred but not reported.
Such liabilities are necessarily based on estimates and, while management
believes that the amount is adequate, the ultimate liability may be in excess of
or less than the amounts provided. The methods for making such estimates and for
establishing the resulting liability are continually reviewed, and any
adjustments are reflected in earnings in the current period.

Income Taxes -- The Company follows Statement of Financial Accounting
Standards ("SFAS") No. 109. Under SFAS No. 109, income tax expense includes
income taxes payable for the current year and the change in deferred income tax
assets and liabilities for the future tax consequences of events that have been
recognized in the Company's financial statements or income tax returns. A
valuation allowance is recognized to reduce the carrying value of the deferred
tax assets if it is more likely than not that some portion or all of the
deferred tax assets will not be realized.

Concentration of Credit Risk -- The Company places its temporary cash
and cash investments with high quality financial institutions. Management
monitors the financial creditworthiness of these financial institutions. At
times, such investments may be in excess of insured limits.

Fair Value of Financial Instruments -- The carrying value of the
Company's finance receivables approximates their fair value due to their short
term nature and generally stable rates of interest currently being charged in
comparison to the rates reflected in the existing portfolios. The carrying value
of the Company's notes payable approximates their fair value, as these notes
represent a series of short-term notes at floating interest rates not to exceed
interest of 8.75% (LIBOR) for amounts outstanding of $40 million or less. The
carrying value of the Company's long-term debt approximates its fair value, as
the promissory note bears interest at a floating rate. Management believes that
the fair value of the Company's financial instruments approximates their
carrying values as of December 31, 1997 and 1996.

Use of Estimates -- The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions. Such estimates and assumptions affect the
reported amounts of assets and liabilities and the disclosure of contingent
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 from those estimates.

F-10

<PAGE> 57
CENTRAL FINANCIAL ACCEPTANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Restricted Cash -- At December 31, 1997 cash of $930,000 was held in a
trust account, in accordance with statutory regulations for insurance companies.
This cash balance was classified as restricted cash on the balance sheet.

New Accounting Pronouncements -- The Company will adopt Statements of
Financial Accounting Standards No. 130 "Reporting Comprehensive Income" and No.
131 "Disclosures about Segments of an Enterprise and Related Information" in its
fiscal year ended December 31, 1998. The Company does not expect implementation
of these statements to have a material affect on its financial condition or
results of operations, since these pronouncements require additional disclosures
only.

Accounting for Stock Based Compensation -- The Company has elected to
continue to utilize the accounting method prescribed by Accounting Principles
Board Opinion No. 25 "Accounting for Stock Issued to Employees" ("APB 25"),
under which no compensation cost has been recognized, and adopt the disclosure
requirements of Statement of Financial Accounting Standards No. 123, "Accounting
for Stock-Based Compensation" ("SFAS 123"). As a result, SFAS 123 has no effect
on the financial condition or results of operations of the Company at December
31, 1997 and 1996.

Reclassifications -- Certain reclassifications have been made to
previously reported amounts to conform to the current year presentation.

3. EARNINGS PER SHARE

The Company reports earnings per share according to the provisions of
Statements of Financial Account Standards No 128, "Earnings per Share." The
following table presents a reconciliation of basic earnings per share and
diluted earnings per share. Options to purchase 425,000 shares of common stock
at $12.00-$18.25, were outstanding during the second half of 1996 and during
1997, but were not included in the computation of diluted EPS because the
options' exercise price was greater than the average market price of the common
shares. The options, which expire on December 31, 2006, were still outstanding
at the end of 1997.

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------------------------------------
1997 1996
---------------------------- -----------------------------
Basic Diluted Basic Diluted
Earnings Earnings Earnings Earnings
Per Share Per Share Per Share Per Share
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Numerator- income from continuing operations ...... $ 4,390,000 $ 4,390,000 $ 5,970,000 $ 5,790,000
Numerator-discontinued operations net (loss) income 0 0 (91,000) (91,000)
----------- ----------- ----------- -----------
Numerator-net income .............................. $ 4,390,000 $ 4,390,000 $ 5,879,000 $ 5,879,000
Denominator-weighted average share outstanding .... 7,277,000 7,277,000 6,213,500 6,213,500

Earnings per share from continuing operations ..... $ 0.60 $ 0.60 $ 0.96 $ 0.96
Earnings (loss) per share from discontinued
operations ...................................... 0.00 0.00 (0.01) (0.01)
----------- ----------- ----------- -----------
Earnings per share ................................ $ 0.60 $ 0.60 $ 0.95 $ 0.95
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1995
----------------------------
Basic Diluted
Earnings Earnings
Per Share Per Share
----------- -----------
<S> <C> <C>
Numerator- income from continuing operations ...... $ 3,069,000 $ 3,069,000
Numerator-discontinued operations net (loss) income 50,000 50,000
----------- -----------
Numerator-net income .............................. $ 3,119,000 $ 3,119,000
Denominator-weighted average share outstanding .... 5,150,000 5,150,000

Earnings per share from continuing operations ..... $ 0.60 $ 0.60
Earnings per share from discontinued operations ... 0.01 0.01
----------- -----------
Earnings per share ................................ $ 0.61 $ 0.61
</TABLE>

F-11

<PAGE> 58
CENTRAL FINANCIAL ACCEPTANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Supplementary net income per share is based upon 5,150,000 shares of
Common Stock issued by the Company pursuant to the Reorganization and 2,127,000
shares of Common Stock sold by the Company in its initial public offering as if
all such shares were outstanding as of January 1, 1995, and also gives effect to
a reduction in interest expenses resulting from the reduction of indebtedness
upon application of the net proceeds of the initial public offering as if it has
occurred on January 1, 1995.

4. ACQUISITIONS

During 1996, the Company acquired the business of, and assumed the
leasehold interest to 80 travel locations, and 10 automobile insurance agencies
for an aggregate purchase price of approximately $7.5 million.

These acquisitions were accounted for as purchases and the results of
their operations, which are not significant, have been included since the
applicable acquisition dates.

5. FINANCE RECEIVABLES

Finance receivables consist of:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------
1997 1996
------------ ------------
<S> <C> <C>
Consumer Product Portfolio ................................. $ 38,814,000 $ 61,848,000
Small Loan Portfolio ........................................ 58,659,000 57,671,000
Automobile Finance Portfolio ................................ 6,382,000 11,002,000
Travel Finance Portfolio .................................... 6,165,000 5,609,000
Other ....................................................... 10,194,000 9,349,000
------------ ------------
120,214,000 145,479,000

Less deferred interest ...................................... 7,402,000 17,049,000
Less allowance for credit losses ............................ 7,835,000 6,786,000

Less deferred administrative fees, ATM membership fees
and insurance revenues ..................................... 1,780,000 1,253,000
Less credit insurance and reserves for policyholders' benefits 699,000 1,317,000
------------ ------------
$102,498,000 $119,074,000
============ ============
</TABLE>

F-12

<PAGE> 59
CENTRAL FINANCIAL ACCEPTANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Customers are required to make monthly payments on installment
contracts. The aggregate gross balance of accounts with payments 31 days or more
past due are:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1997 1996
---------- ----------
<S> <C> <C>
CONSUMER PRODUCT PORTFOLIO:
Past due 31- 60 days ... $1,511,000 $2,393,000
Past due 61 days or more 960,000 2,277,000
---------- ----------
$2,471,000 $4,670,000
========== ==========
SMALL LOAN PORTFOLIO:
Past due 31 - 60 days .. $1,252,000 $1,239,000
Past due 61 days or more 3,352,000 1,615,000
---------- ----------
$4,604,000 $2,854,000
========== ==========
TRAVEL FINANCE PORTFOLIO:
Past due 31 - 60 days .. $ 134,000 $ 129,000
Past due 61 days or more 483,000 213,000
---------- ----------
$ 617,000 $ 342,000
========== ==========
OTHER:
Past due 31-60 day ..... $ 574,000 $ 437,000
Past due 61 days or more 633,000 252,000
---------- ----------
$1,207,000 $ 689,000
========== ==========
</TABLE>

Note: Included in the other category is delinquencies on canceled automobile
insurance premium contracts. Since we seek recovery of unearned premiums from
the insurance companies, which can take up to 90 days, loans are not considered
delinquent until more than 90 days past due. The amount greater than 90 days was
$545,000 and $25,000 at December 31, 1997 and 1996, respectively.

The allowance for credit losses includes the following:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Allowance for credit losses,
Beginning of year ....... $ 6,786,000 $ 4,955,000 $ 3,712,000
Provision for credit losses . 12,296,000 9,105,000 5,449,000
Write-offs, net of recoveries (11,247,000) (7,274,000) (4,206,000)
------------ ------------ ------------
Allowance for credit losses,
End of year .............. $ 7,835,000 $ 6,786,000 $ 4,955,000
============ ============ ============
</TABLE>

F-13

<PAGE> 60
CENTRAL FINANCIAL ACCEPTANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6. PROPERTY AND EQUIPMENT

Property and equipment, net consist of:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1997 1996
---------- ----------
<S> <C> <C>
Land $1,568,000 $1,568,000
Improvements 103,000 507,000
Furniture, equipment and software 4,722,000 1,548,000
---------- ----------
6,393,000 3,623,000
Less accumulated depreciation and amortization 513,000 198,000
---------- ----------
$5,880,000 $3,425,000
========== ==========
</TABLE>

7. INTANGIBLE ASSETS

Intangible assets, net consist of:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1997 1996
---------- ----------
<S> <C> <C>
Excess of purchase price over the fair value of net
assets acquired $9,235,000 $9,085,000
Less accumulated amortization 676,000 360,000
---------- ----------
$8,559,000 $8,725,000
========== ==========
</TABLE>

8. NOTES PAYABLE

Notes payable consist of:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------
1997 1996
----------- -----------
<S> <C> <C>
Bank of America line of credit $ 0 $35,208,000
Wells Fargo line of credit 62,000,000 38,816,000
----------- -----------
$62,000,000 $74,024,000
=========== ===========
</TABLE>

F-14
<PAGE> 61
CENTRAL FINANCIAL ACCEPTANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company had a line of credit agreement with Bank of America National
Trust and Savings Association (the "Bank of America Line of Credit") that, as
amended, provided for the issuance of notes up to $60,000,000, subject to an
allowable borrowing base. The amounts outstanding under these notes bear
interest at rates that are determined by the type of borrowing. Borrowings under
the notes were collateralized by the Consumer Product Portfolio and Banner was a
guarantor. The Bank of America Line of Credit was repaid on June 13, 1997.
Borrowings under the facility bore interest at a weighted average rate of 9.13%
per annum as of December 31, 1996.

The Company had a line of credit agreement with Wells Fargo Bank
National Association (the "Wells Fargo Line of Credit") that, as amended,
provided for the issuance of notes up to $50,000,000, subject to an allowable
borrowing base. The amounts outstanding under these notes bear interest at rates
that are determined by the type of borrowing. Borrowings under the notes were
collateralized by the Small Loan, Automobile Finance and Travel Finance
Portfolios. The Wells Fargo Line of Credit was repaid on June 13, 1997.
Borrowings under the facility bore interest at a weighted average rate of 7.89%
per annum as of December 31, 1996.

The Company entered into a credit agreement with several banks and Wells
Fargo Bank National Association, as Agent, (the "Wells Fargo Line of Credit") on
June 13, 1997 that provides for the issuance of notes up to $100,000,000 subject
to an allowable borrowing base. The amounts outstanding under these notes bear
interest at rates that are determined by the type of borrowing. Borrowings under
the notes are collateralized by all receivables of the Company. The Wells Fargo
Line of Credit expires on June 12, 2000. The credit facility contains certain
restrictive covenants that require, among other things, the maintenance of
certain financial ratios and amounts. The Company is required to maintain
specific levels of tangible net worth, cash flow to interest coverage ratio and
cannot exceed a specified ratio of debt to tangible net worth. Other ratios
related to the performance of the Company's receivables portfolios must be
maintained within limits, including maximum ratios of past due accounts to
eligible contracts, net write-offs to provision and receivable growth and a
minimum ratio of the allowance for credit losses to net receivables, in all
cases as such terms are defined in the line of credit agreement. Borrowings
under the facility bore interest at a weighted average rate of 8.3% at December
31, 1997. The Company has $2,070,000 in Letters of Credit outstanding for
various purposes at December 31, 1997. The amount of unused credit under the
facility was limited by the allowable borrowing base and was approximately
$11,930,000 at December 31, 1997.

The Company is required to pay a commitment fee of 0.375% per annum for
unused portions of its lines of credit. These fees totaled $150,000 for the year
ended December 31, 1997 and $179,000 for the year ended December 31, 1996, and
are included with operating expenses in the consolidated statements of income.

The Company was not in compliance with certain financial covenants as of
December 31, 1997; however, a waiver has been received from each of the lenders
in the Wells Fargo Line of Credit.

The Company entered into a hedge agreement on $40 million to protect it
from large interest rate swings. The agreement period is from July 21, 1997
through July 31, 2000, at a cost of $136,000.

9. LONG-TERM DEBT

Long-term debt consists of a promissory note payable to a bank that
bears interest at a floating variable rate which was 8.50% at December 31, 1997.
Interest is payable monthly and the principal is due July 1998. The note is
secured by a deed of trust.

F-15

<PAGE> 62
CENTRAL FINANCIAL ACCEPTANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

10. INCOME TAXES

The Company has agreed to indemnify Holdings for all federal, state, and
other income taxes for periods prior to July 2, 1996, when it was included as
part of Holdings consolidated tax group.

Beginning July 2, 1996, the Company and its subsidiaries have filed a
consolidated federal income tax return separate from Holdings. For California
and certain other states, the Company will continue to file on a combined tax
basis with Holdings or on a separate company tax basis, as appropriate. The
income tax provisions as presented in the accompanying consolidated financial
statements are based upon the amount the Company would have paid as if it filed
separate income tax returns for the entire periods presented.

The provision for income taxes from continuing operations consists of
the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
CURRENT:

Federal $ 2,531,000 $ 4,127,000 $ 2,121,000
State 601,000 1,081,000 621,000
----------- ----------- -----------
3,132,000 5,208,000 2,742,000
----------- ----------- -----------
DEFERRED:

Federal (186,000) (1,041,000) (521,000)
State (123,000) (188,000) (142,000)
----------- ----------- -----------
(309,000) (1,229,000) (663,000)
----------- ----------- -----------
Provision for income taxes $ 2,823,000 $ 3,979,000 $ 2,079,000
=========== =========== ===========

</TABLE>

A reconciliation of the provision for income taxes from continuing operations to
the statutory rates is as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Federal income taxes at statutory rates 35.0% 35.0% 35.0%
State franchise taxes, net of federal benefit 4.3 5.8 6.0
Amortization of the excess purchase price over the fair
value of assets required 0.3 0.2 0.4
Other (0.5) (1.0) (1.0)
----- ----- -----
39.1% 40.0% 40.4%
===== ===== =====
</TABLE>

The tax effects of temporary differences giving rise to the deferred income tax
assets and liabilities are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------
1997 1996
---------- ----------
<S> <C> <C>
DEFERRED INCOME TAX ASSETS

Allowance for credit losses $3,243,300 $2,908,000
Deferred revenue 529,000 466,000
Other 73,000 162,000
-------- ----------
$3,845,000 $3,536,000
========== ==========
</TABLE>

F-16

<PAGE> 63
CENTRAL FINANCIAL ACCEPTANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

11. RELATED PARTY TRANSACTIONS

In connection with its formation, the Company, Banner and Holdings,
entered into the Reorganization Agreement and certain other agreements (the
"Financing Agreement", the "Option Agreement", and the "Operating Agreement").

The Financing Agreement, as amended, grants the Company exclusive right
to provide financing to Banner customers for a term of fifteen years from the
date of the Reorganization and provides that any contracts purchased pursuant to
this Agreement will be at face value less a transaction fee, which is subject to
renegotiation at six month intervals. The Agreement also provides that for the
years ended December 31, 1996 and 1997, up to $1.5 million of contracts
purchased can be returned to Banner at amortized principal balance. The Company
can terminate the Financing Agreement at any time upon one year's prior written
notice to Banner. As a result of increasing delinquencies in the Consumer
Products Portfolio, the Company and Banner amended the Financing Agreement,
effective July 1, 1997 to permit the Company for the year ended December 31,
1997 to return to Banner an amount greater than $1.5 million . Banner
repurchased $1.5 million in the year ended December 31, 1996 and $5.8 million in
the year ended December 31, 1997.

In the accompanying consolidated financial statements the transaction
fee was computed based upon 1.6% of average net receivables in the Consumer
Products Portfolio prior to July 2, 1996 and 2.5% thereafter. During 1997,
Banner sold approximately $32 million of Consumer Products Receivables, net of
$5.8 million which the Company returned pursuant to the Financing Agreement. All
unpaid amounts ($4,992,000 at December 31, 1997) are due within 18 months and
bear interest at the Company's borrowing rate. Interest expense charged on the
amount due to Banner was $98,000 for the year ended December 31, 1997.

Pursuant to the Option Agreement, Holdings granted the Company an
option, exercisable for a two-year period commencing one year from the date of
the Reorganization, to acquire all of the outstanding capital stock of Banner
(the "Option") at an exercise price equal to the book value of Banner for the
month ended immediately preceding the exercise. If the Company exercises the
Option, the exercise price is payable in cash or in shares of the Company's
common stock.

The Operating Agreement provides, among other things, that Banner,
Holdings or their affiliates are obligated to provide to the Company, and the
Company is obligated to utilize, certain services, including accounting,
management information systems and employee benefits. If such services involve
an allocation of expenses, such allocation shall be made on a reasonable basis.
To the extent that such services directly relate to the finance portion of the
consumer products business contributed by Banner to the Company, or to the
extent that other costs are incurred by Banner, Holdings or their affiliates
that directly relate to the Company, the Company is obligated to pay Banner,
Holdings or their affiliates; actual cost of providing such services or
incurring such costs. Employee benefit expenses are allocated to the Company
based on the ratio of actual payroll expenses of employees in the consumer
products business contributed by Banner to the Company compared to total actual
payroll expenses of Banner before such allocation. Accounting expenses are
allocated 50% to the Company. The operating costs of Banner's management
information systems function are allocated initially 50% to the Company for a
period of five years, subject to adjustment from time to time to reflect
changing costs and usage. Except for management information systems services,
the Operating Agreement continues until terminated by either the Company,
Holdings or Banner upon one year's prior written notice. Termination may be made
on a service-by-service basis or in total. Such allocated expenses totaled
$1,618,000, $1,338,000, and $1,000,000 for the years ended December 31, 1997,
1996 and 1995, respectively.

In August 1996, following CFAC's initial public offering, CFAC, Central
Auto Sales, Inc., Central Consumer Finance Company and Banner entered into an
Agreement to Transfer Business Operations (the"Automobile Financing Agreement"),
under which CFAC sold its used car sales business to Banner for approximately
its net book value, or $865,000. Under the provisions of the Automobile
Financing Agreement, Banner will operate the used car sales business while the
Company will have the exclusive right for a fifteen year period to provide
financing for all cars that Banner sells or to purchase automobile finance
contracts generated by Banner. In addition, all financing extended by the
Company on automobiles sold by Banner will be with full recourse back to Banner
in the event of default by the customer. Accordingly, Banner will not provide
any dealers discount for cars sold pursuant to the Automobile Financing
Agreement. On May 30, 1997, Central Auto Sales Inc. discontinued its business.

F-17

<PAGE> 64
CENTRAL FINANCIAL ACCEPTANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

12. PROFIT-SHARING PLAN

The Company participates along with other affiliated companies, in a
profit-sharing plan that covers substantially all employees who meet certain age
and length-of-service requirements. Annual contributions are contingent upon
current and accumulated profits and are at the sole discretion of the Board of
Directors. Profit-sharing expense allocated to the Company for the years ended
December 31, 1997, 1996 and 1995 was $0, $27,000, and $55,000, respectively.

13. STOCK OPTION PLAN

In connection with its initial public offering the Company adopted the
1996 Stock Option Plan, under which 700,000 shares of authorized common stock
have been reserved for issuance pursuant to terms and conditions as determined
by the Board of Directors. The options have a maximum duration of ten years and
are subject to certain vesting and cancellation provisions, and may not be
granted at less than the market value of the Company's Common Stock on the date
of grant of the option. During 1996, the Company granted options to acquire an
aggregate of 425,000 shares of common stock with exercise prices ranging from
$12.00 to $18.25 per share. As of December 31, 1996 no options were exercisable.
As of December 31, 1997, 85,000 shares were exercisable and had a weighted
average exercise price of $14.40. In 1997, no options were granted, exercised or
forfeited.

In October 1995, the Financial Accounting Standard Board issued
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123"). SFAS 123 defines a fair value based method of
accounting for employee stock compensation plans, but allows for the
continuation of the intrinsic value based method of accounting to measure
compensation cost prescribed by Accounting Principles Board Opinion No. 25
"Accounting for Stock Issued to Employees" ("APB 25"). For companies electing
not to change their accounting, SFAS 123 requires pro-forma disclosures of
earnings and earnings per share as if the change in accounting provision of SFAS
123 has been adopted.

Had compensation cost for this plan been determined consistent with SFAS
123, the Company's net income and earnings per share would have been reduced to
the following pro forma amounts.

<TABLE>
<CAPTION>
1997 1996
------------- -------------
<S> <C> <C>
Net Income........ As Reported $ 4,390,000 $ 5,879,000
Pro Forma $ 4,007,000 $ 5,496,000

Basic EPS......... As Reported $ 0.60 $ 0.95
Pro Forma $ 0.55 $ 0.88
</TABLE>

The fair value of each option grant is estimated on the date of grant
using an option pricing model with the following weighted average assumptions
used for grants: dividend yield of 0.0%, expected volatility of 51.0%, risk free
interest rate of 6.5% and lives of five years. The weighted average remaining
contractual life is 8.5 years. The weighted average exercise price of the
options was $14.40 at December 31, 1997 and 1996.

F-18

<PAGE> 65
CENTRAL FINANCIAL ACCEPTANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

14. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

During 1996, the Company adopted a Supplemental Executive Retirement
Plan (the "SERP Plan") which will provide supplemental retirement benefits to
certain key management employees. To vest in the SERP Plan, an employee must
have at least ten years of service with the Company, including five years
subsequent to the adoption of the plan.

The Supplemental Executive Retirement Plan, which is unfunded, expense
for the years ended December 31, 1997 and 1996, amounted to approximately
$80,000 each year.

15. COMMITMENTS AND CONTINGENCIES

The Company is allocated 50% of the cost of various computer equipment
operating leases from Banner. These leases expire at various times from 1998
through 2002. The Company's stand-alone loan and travel centers are leased under
noncancelable operating leases that generally have two to five-year terms with
options to renew.

Aggregate minimum lease commitments under the location leases and
one-half of the computer equipment minimum lease commitments of Banner are as
follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, BANNER OTHERS
----------------------- ---------- ----------
<S> <C> <C>
1998 .................................................. $ 641,000 $1,243,000
1999 .................................................. 481,000 892,000
2000 .................................................. 413,000 475,000
2001 .................................................. 286,000 214,000
2002 .................................................. 4,000 149,000
Thereafter ............................................ 0 25,000
---------- ---------
$1,825,000 $2,998,000
========== ==========
</TABLE>

Aggregate rental expense for the years ended December 31, 1997, 1996 and
1995 were $2,519,000, $1,039,000, and $458,000, respectively.

The Company has an employment agreement with the Chairman of the Board
of Directors for a period of five years at a base salary of $175,000 per year
with eligibility to participate in the Company's executive compensation plans.
Any changes to the agreement require approval of the Board of Directors.

The Company has an agreement with the Company's Executive Vice President
of Operations for a period of three years at a base salary of $225,000, $250,000
and $275,000 per year, respectively, with eligibility to participate in the
Company's executive compensation plans.

The Company is from time to time involved in routine litigation
incidental to the conduct of its business. Management of the Company believes
that litigation currently pending will not have a material adverse effect on the
Company's financial position or results of operations.

F-19

<PAGE> 66
CENTRAL FINANCIAL ACCEPTANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

16. SUBSEQUENT EVENT

In February 1998, CFAC entered into a definitive agreement to acquire
Mission Savings and Loan Association, a federally chartered savings association
based in Riverside, California (the "Bank") with deposits insured by the Federal
Deposit Insurance Corporation (the "FDIC"). The cost of the acquisition will
equal 1.47 times the Bank's adjusted stockholders' equity at the end of the
month immediately prior to the date of acquisition. This amount is currently
estimated to be approximately $4.7 million. The acquisition is subject to, among
other things, the approval of the Office of Thrift Supervision (the "OTS") and
the approval of the shareholders of the Bank. At December 31, 1997, the Bank had
approximately $49.2 million in total assets and $3.3 million in total
stockholders' equity. The Bank had net income of $0.3 million during 1997.

Although the Company expects the Bank to continue to accept deposits and
provide other financial services, the primary purpose of the acquisition is to
expand our consumer lending business through the issuance of a credit card
substantially similar to our Efectiva Card.

F-20

<PAGE> 67
EXHIBIT INDEX

EXHIBIT
NO. DESCRIPTION
- - ------- -----------
2.1* Reorganization Agreement between Central Financial Acceptance
Corporation, Banner's Central Electric, Inc. and Banner Holdings, Inc.
dated as of June 24, 1996.

2.2**** Agreement and Plan of Reorganization by and between Central Financial
Acceptance Corporation and Mission Savings and Loan Association, a
Federal Association, dated as of February 11, 1998.

3.1* Certificate of Incorporation of Central Financial Acceptance
Corporation.

3.2* By-laws of Central Financial Acceptance Corporation.

10.1+ 1996 Stock Option Plan, as amended.

10.2*+ Indemnification Agreement between Central Financial Acceptance
Corporation and certain directors and officers of the Company.

10.3*+ Employment Agreement between Central Financial Acceptance Corporation
and Gary M. Cypres dated as of June 24, 1996.

10.4* Financing Agreement between Central Installment Credit Corporation,
Banner's Central Electric, Inc., Central Ram, Inc. and Banner Holdings,
Inc. dated as of June 24, 1996.

10.5 Option Agreement between Central Financial Acceptance Corporation,
Banner's Central Electric, Inc. and Banner Holdings, Inc. dated as of
June 24, 1996.

10.6 Operating Agreement between Central Financial Acceptance Corporation,
Banner's Central Electric, Inc. and Banner Holdings, Inc. dated as of
June 24, 1996.

10.7 Tax Sharing Agreement between Central Financial Acceptance Corporation,
Banner's Central Electric, Inc. and Banner Holdings, Inc. dated as of
June 24, 1996.

10.8 Indemnification Agreement between Central Financial Acceptance
Corporation, Banner's Central Electric, Inc. and Banner Holdings, Inc.
dated as of June 24, 1996.

10.9 Indemnification Agreement dated June 24, 1996 between Central Financial
Acceptance Corporation and Banner Holdings, Inc.

10.10 Reserved.

10.11 Reserved.

10.12+ Central Financial Acceptance Corporation Supplemental Executive
Retirement Plan dated as of June 24, 1996.

<PAGE> 68
10.13+ Central Financial Acceptance Corporation Executive Deferred Salary and
Bonus Plan dated as of June 24 , 1996.

10.14 Reserved.

10.15 Reserved.

10.16 Reserved.

10.17 Reserved.

10.18 Reserved.

10.19 Reserved.

10.20 Reserved.

10.21 Reserved.

10.22*+ Adoption Agreement for the Qualified Benefits, Inc. Regional Prototype
Non-Standardized Profit Sharing Plan and Trust effective as of November
1, 1989.

10.23 Reserved.

10.24 Reserved.

10.25 Reserved.

10.26**+Employment Agreement between Central Financial Acceptance Corporation
and Anthony Fortunato dated October 25, 1996.

10.27**+Employment Agreement between Central Financial Acceptance Corporation
and Gerard T. McMahon dated August 30, 1996.

10.28 Reserved.

10.29** Agreement to Transfer Business Operations among Banner's Central
Electric, Inc., Central Consumer Finance Company, Central Financial
Acceptance Corporation and Central Auto Sales, Inc. dated as of July 31,
1996.

10.30 Reserved.

10.31** Amendment One to Financing Agreement between Central Installment Credit
Corporation, Banner's Central Electric, Inc., Central Ram, Inc. and
Banner Holdings, Inc., dated as of July 1, 1996.

10.32 Reserved.

10.33 Reserved.

10.34***Revolving Loan Agreement, dated as of June 13, 1997, by and among the
Company, each Lender who is named therein or who may thereafter become a
party to the Revolving Loan Agreement and Wells Fargo Bank, National
Association, as Agent and Arranger and Notes executed by the Company
with each of the Lenders.

<PAGE> 69
10.35***Security Agreement, dated as of June 13, 1997, by and among the Company
and each of the Persons listed on the signature pages thereto, together
with other Persons who may become a party thereto, jointly and severally
in favor of Wells Fargo Bank, National Association, as Agent.

10.36***Pledge Agreement, dated as of June 13, 1997, by and among Banner
Holdings, Inc., Banner's Central Electric, Inc. the Company and each of
the Persons listed on the signature pages thereto, together with other
Persons who may become a party thereto, jointly and severally in favor
of Wells Fargo Bank, National Association as Agent under the Revolving
Loan Agreement, and in favor of each of the Lenders named therein.

10.37***Trademark Collateral Assignment, dated as of June 13, 1997, by Banner
Holdings, Inc. each of the Persons listed on the signature pages
thereto, together with other Persons who may become a party thereto,
jointly and severally in favor of Wells Fargo Bank, National
Association, as Agent for the benefit of the Lenders that are or become
a party to the Revolving Loan Agreement.

10.38***Subsidiary Guaranty, dated as of June 13, 1997, by each of the Persons
listed on the signature pages thereto, together with each other Person
who may become a party thereto, jointly and severally in favor of Wells
Fargo Bank, National Association, as Agent for the benefit of the
Lenders that are a party to the Revolving Loan Agreement.

10.39 Amendment No. 1 to Revolving Loan Agreement, dated as of November 17,
1997, by and among the Company, the Lenders party thereto and Wells
Fargo Bank, National Association, as Agent.

10.40 Amendment No. 2 to Revolving Loan Agreement, dated as of March 26,
1998, by and among the Company, the Lenders party thereto and Wells
Fargo Bank, National Association as Agent.

21 Subsidiaries of the Registrant.

27 Financial Data Schedule.

- - --------------
* Incorporated by reference to exhibits filed with the SEC in the
Company's Registration Statement on Form S-1 (Registration No.
333-3790).

** Incorporated by reference to exhibits filed with the SEC in the
Company's Annual Report on Form 10-K for the year ended December 31,
1996.

*** Incorporated by reference to exhibits filed with the SEC in the
Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
1997.

**** Incorporated by reference to the exhibit filed with the SEC on February
24, 1998 in the Company's Report on Form 8-K.

+ Management contract or compensatory plan or arrangement required to be
filed as an exhibit.

<PAGE> 1

EXHIBIT 10.1

As Amended March 4, 1998

1996 STOCK OPTION PLAN
OF
CENTRAL FINANCIAL ACCEPTANCE CORPORATION

1. Purpose. The purpose of this Stock Option Plan is to advance the
interests of the Corporation by encouraging and enabling the acquisition of a
larger personal proprietary interest in the Corporation by key employees and
directors of, and consultants to, the Corporation, its Parent and its
Subsidiaries upon whose judgment and keen interest the Corporation is largely
dependent for the successful conduct of its operations and by providing such key
employees, directors and consultants with incentives to put forth maximum
efforts for the success of the Corporation's business. It is anticipated that
the acquisition of such proprietary interest in the Corporation and such
incentives will stimulate the efforts of such key employees, directors and
consultants on behalf of the Corporation, its Parent and Subsidiaries of the
Corporation and strengthen their desire to remain with the Corporation, its
Parent and Subsidiaries of the Corporation. It is also expected that such
incentives and the opportunity to acquire such a proprietary interest will
enable the Corporation, its Parent and its Subsidiaries to attract desirable
personnel.

2. Definitions. When used in this Plan, unless the context otherwise
requires:

(a) "Board of Directors" or "Board" shall mean the Board of
Directors of the Corporation, as constituted at any time.

(b) "Chairman of the Board" shall mean the person who at the
time shall be Chairman of the Board of Directors.

(d) "Committee" shall mean the committee or committees
hereinafter described in Section 3, or if no committee exists, the Board
of Directors.

(e) "Consummation Date" shall mean the date of the
consummation of the Corporation's initial public offering.

(f) "Corporation" shall mean Central Financial Acceptance
Corporation, a Delaware corporation.

(g) "Eligible Persons" shall mean those persons described in
Section 4 who are potential recipients of Options.

(h) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.

(i) "Fair Market Value" on a specified date shall mean the
average of the high and low sales prices at which a Share is traded on the
stock exchange, if any, on which Shares are primarily traded or, if the
Shares are not then traded on a stock exchange, the

<PAGE> 2

average of the high and low sales prices of a Share as reported on the
Nasdaq Stock Market's National Market or, if the Shares are not then
traded on the Nasdaq Stock Market's National Market, the average of the
high and low sales prices at which a Share is traded on the
over-the-counter market, but if no Shares were traded on such date, then
on the last previous date on which a Share was so traded, or, if none of
the above are applicable, the value of a Share as established by the
Committee for such date using any reasonable method of valuation.

(j) "Initial Public Offering Price" shall mean the price per
Share at which Shares are offered to the public in the Corporation's
initial public offering as set forth on the cover page of the prospectus
relating thereto.

(k) "Options" shall mean the stock options granted pursuant to
this Plan.

(l) "Parent" shall mean a corporation (other than the
Corporation) owning 50% or more of stock having general voting power of
the Corporation.

(m) "Plan" shall mean this 1996 Stock Option Plan of Central
Financial Acceptance Corporation, as adopted by the Board of Directors on
June 24, 1996, and approved by the sole stockholder on June 24, 1996, as
such Plan from time to time may be amended.

(n) "President" shall mean the person who at the time shall be
the President of the Corporation.

(o) "Share" shall mean a share of common stock, $.01 par value
per share of the Corporation.

(p) "Subsidiary" shall mean (A)(i) any corporation, 50% or
more of whose stock having general voting power is owned by the
Corporation, or by another Subsidiary, as herein defined, of the
Corporation, or (ii) any other person (other than a corporation) in which
the Corporation, one or more Subsidiaries or the Corporation and one or
more Subsidiaries, directly or indirectly has at least majority ownership
interest and either directly or indirectly has the power to direct the
policies, management and affairs thereof, and (B) that, in accordance with
generally accepted accounting principles, the accounts of which would be
included on a consolidated basis in the Corporation's financial
statements.

3. Administration. The Plan shall be administered by the Board of
Directors or one or more Committee(s) appointed by the Board of Directors. If no
persons are designated by the Board of Directors to serve on the Committee, the
Plan shall be administered by the Board and all references herein to the
Committee (other than in this Section 3) shall refer to the Board of Directors.
The Board of Directors shall have the discretion to appoint, add, remove or
replace members of the Committee, and shall have the sole authority to fill
vacancies on the Committee. Unless otherwise provided by the Board of Directors:
(i) with respect to any grant of Options for which it is necessary and desired
for such grant of Options to be exempted by Rule 16b-3 of the Exchange Act, the

2
<PAGE> 3

Committee shall consist of two or more directors, each of whom is a
"non-employee director" (as such term is defined in Rule 16b-3 promulgated under
the Exchange Act, as such Rule may be amended from time to time), (ii) with
respect to any grant of Options that is intended to qualify as "performance
based compensation" under Section 162(m) of the Code, the Committee shall
consist of two or more directors, each of whom is an "outside director" (as such
term is defined under Section 162(m) of the Code), and (iii) with respect to any
other grant of Options, the Committee shall consist of one or more directors
(any of whom also may be an Eligible Person who has been granted or is eligible
to be granted Options under the Plan).

4. Participants. All key employees of, and consultants to, the
Corporation, the Parent or a Subsidiary of the Corporation, as determined by the
Committee, shall be eligible to receive Options under the Plan. The parties to
whom Options are granted under this Plan, and the number of Shares subject to
each such Option, shall be determined by the Committee in its sole discretion,
subject, however, to the terms and conditions of this Plan. Employees to whom
Options may be granted include key employees who are also directors of the
Corporation, the Parent or a Subsidiary. Each director of the Corporation who is
not also an employee of the Corporation, and/or its Parent and/or Subsidiaries
of the Corporation (hereinafter referred to as a "Non-Employee Director") shall
be eligible to receive Options in accordance with the provisions of Section 14
hereof.

5. Shares. Subject to the provisions of Section 15 hereof, the Committee
may grant Options with respect to an aggregate of up to 700,000 Shares, all of
which Shares may be either Shares held in treasury or authorized but unissued
Shares. The maximum number of Shares which may be the subject of Options granted
to any individual during the duration of the Plan shall not exceed 350,000
Shares. If the Shares that would be issued or transferred pursuant to any Option
are not issued or transferred and cease to be issuable or transferable for any
reason, the number of Shares subject to such Option will no longer be charged
against the limitation provided for herein and may again be made subject to
Options; provided, that the counting of Shares subject to Options granted under
the Plan against the number of Shares available for further Options shall in all
cases conform to the requirements of Rule 16b-3 under the Exchange Act; and
provided, further, that with respect to any Option granted to any Eligible
Person who is a "covered employee" as defined in Section 162(m) of the Code and
the regulations promulgated thereunder that is canceled or repriced, the number
of Shares subject to such Option shall continue to count against the maximum
number of Shares which may be the subject of Options granted to such Eligible
Person and such maximum number of Shares shall be determined in accordance with
Section 162(m) of the Code and the regulations promulgated.

6. Grant of Options. The number of any Options to be granted to any
Eligible Person shall be determined by the Committee in its sole discretion. At
the time an Option is granted, the Committee may, in its sole discretion,
designate whether such Option (a) is to be considered as an incentive stock
option within the meaning of Section 422 of the Code, or (b) is not to be
treated as an incentive stock option for purposes of this Plan and the Code. No
Option which is intended to qualify as an incentive stock option shall be
granted under this Plan to any individual who, at the time of such grant, is not
an employee of the Corporation, the Parent, or a Subsidiary of the Corporation.

3
<PAGE> 4

Notwithstanding any other provision of this Plan to the contrary, to the
extent that the aggregate Fair Market Value (determined as of the date an Option
is granted) of the Shares with respect to which Options which are designated as
(or deemed to be) incentive stock options granted to an employee (and any
incentive stock options granted to such employee under any other incentive stock
option plan maintained by the Corporation, the Parent or any Subsidiary of the
Corporation that meets the requirements of Section 422 of the Code) first become
exercisable in any calendar year exceeds $100,000, such Options shall be treated
as Options which are not incentive stock options. Options with respect to which
no designation is made by the Committee shall be deemed to be incentive stock
options to the extent that the $100,000 limitation described in the preceding
sentence is met. This paragraph shall be applied by taking Options into account
in the order in which they are granted.

Nothing herein contained shall be construed to prohibit the issuance of
Options at different times to the same person.

The form of an Option shall be determined from time to time by the
Committee in its sole discretion. A certificate of Option signed by the Chairman
of the Board or the President or a Vice President of the Corporation, attested
by the Treasurer or an Assistant Treasurer, or Secretary or an Assistant
Secretary of the Corporation, shall be issued to each person to whom an Option
is granted. The certificate of Option for an Option shall be legended to
indicate whether or not the Option is an incentive stock option.

7. Purchase Price. The purchase price per Share for the Shares purchased
pursuant to the exercise of an Option shall be fixed by the Committee at the
time of grant of the Option; provided, however, that the purchase price per
Share for the Shares to be purchased pursuant to the exercise of an incentive
stock option shall not in any event be less than 100% of the Fair Market Value
of a Share on the date of grant of the Option.

8. Duration of Options. The duration of each Option shall be determined by
the Committee in its sole discretion at the time of grant; provided, however,
that the duration of any Option shall not be more than ten years from the date
upon which the Option is granted.

9. Ten Percent Stockholders. Notwithstanding any other provision of this
Plan to the contrary, no Option which is intended to qualify as an incentive
stock option may be granted under this Plan to any employee who, at the time the
Option is granted, owns Shares possessing more than 10 percent of the total
combined voting power or value of all classes of stock of the Corporation,
unless the exercise price under such Option is at least 110% of the Fair Market
Value of a Share on the date such Option is granted and the duration of such
Option is no more than five years.

10. Exercise of Options. Except as otherwise provided herein, Options,
after the grant thereof, shall be exercisable by the holder at such rate, times
and subject to such conditions as may be fixed by the Committee, in it sole
discretion, at the time of grant. Notwithstanding the foregoing, all or any part
of any remaining unexercised Options granted to any person may be exercised upon
the occurrence of such special circumstance or event as in the opinion of the
Committee merits special consideration.

<PAGE> 5

An Option shall be exercised by the delivery of a written notice duly
signed by the holder thereof to such effect ("Exercise Notice"), together with
the Option certificate and the full purchase price of the Shares purchased
pursuant to the exercise of the Option, to the Chairman of the Board or an
officer of the Corporation appointed by the Chairman of the Board for the
purpose of receiving the same. Payment of the full purchase price shall be made
as follows: in cash or by check payable to the order of the Corporation; by
delivery to the Corporation of Shares which shall be valued at their Fair Market
Value on the date of exercise of the Option; by delivery, concurrently with such
exercise and in accordance with applicable law and regulations, of irrevocable
instructions to a broker promptly to deliver to the Corporation a specified
dollar amount of the proceeds of a sale of or a loan secured by purchased Shares
issuable on exercise of the Option; by a combination of the methods of payment
previously described; or by such other method of payment as the Committee in its
sole discretion may permit.

Within a reasonable time after the exercise of an Option, the Corporation
shall cause to be delivered to the person entitled thereto, a certificate for
the Shares purchased pursuant to the exercise of the Option. If the Option shall
have been exercised with respect to less than all of the Shares subject to the
Option, the Corporation shall also cause to be delivered to the person entitled
thereto a new Option certificate in replacement of the certificate surrendered
at the time of the exercise of the Option, indicating the number of Shares with
respect to which the Option remains available for exercise, or the original
Option certificate shall be endorsed to give effect to the partial exercise
thereof.

Notwithstanding any other provision of the Plan or of any Option, no
Option granted pursuant to the Plan may be exercised at any time when the Option
or the granting or exercise thereof violates any law or governmental order or
regulation.

11. Consideration for Options. The Corporation shall obtain such
consideration for the grant of an Option as the Committee in its sole discretion
may determine.

12. Nontransferability of Options. Options and all other rights thereunder
shall be nontransferable or non-assignable by the holder thereof except to the
extent that the estate of a deceased holder of an Option may be permitted to
exercise them. Options may be exercised or surrendered during the holder's
lifetime only by the holder thereof.

13. Termination of Employment or Service. All or any part of any Option,
to the extent unexercised, shall terminate immediately, upon the cessation or
termination for any reason of the holder's employment by, or service with, the
Corporation, the Parent or any Subsidiary of the Corporation, except that the
holder shall have until the end of the thirtieth day following the cessation of
his employment or service with the Corporation, the Parent or Subsidiaries of
the Corporation, and no longer, to exercise any unexercised Option to the extent
he could have exercised such Option on the day on which such employment or
service terminated; provided, that such exercise must be accomplished prior to
the expiration of the term of such Option. Notwithstanding the foregoing, except
as otherwise determined by the Committee in its sole discretion, if the
cessation of employment or service is due to retirement on or after attaining
the age of sixty-five (65) years, or to disability (to an extent and in a manner
as shall be determined in each case by the Committee in its

5
<PAGE> 6

sole discretion) or to death, the holder or the representative of the estate of
a deceased holder shall have the privilege of exercising any unexercised Option
to the extent he could have exercised such Option on the day of such retirement,
or of such disability or death; provided, however, that such exercise must be
accomplished prior to the expiration of the term of such Option and (a) within
three months of the holder's retirement or (b) within one year of the holder's
disability or death, as the case may be. If the employment or service of any
holder of an Option with the Corporation, the Parent or Subsidiary of the
Corporation shall be terminated for cause, the existence of which shall be
determined by the Committee in its sole discretion (which determination by the
Committee shall be conclusive) all unexercised Options of such holder shall
terminate immediately upon such termination of the holder's employment or
service with the Corporation, the Parent and all Subsidiaries of the
Corporation, and a holder of Options whose employment or service with the
Corporation, the Parent and any Subsidiaries of the Corporation is so
terminated, shall have no right after such termination to exercise any
unexercised Option he might have exercised prior to the termination of his
employment or service with the Corporation, the Parent and Subsidiaries of the
Corporation.

14. Grants of Options to Non-Employee Directors. Each Non-Employee
Director who is serving on the Board of Directors as of the Consummation Date
shall be granted an Option to purchase 7,000 Shares on the Consummation Date at
the Initial Public Offering Price. Thereafter, commencing on January 1, 1997,
each Non-Employee Director shall be eligible to be granted Options to purchase
no more than 7,000 Shares in any calendar year at a purchase price per share
equal to the Fair Market Value of a Share on the date of grant. The Non-Employee
Directors to whom Options are granted under this Plan, and the number of Shares
subject to each such Option (up to a maximum of 7,000 Shares in any calendar
year) shall be determined by the Committee in its sole discretion. Each Option
granted pursuant to this Section 14 shall have a duration of ten years from the
date of grant and shall become exercisable cumulatively as to 20% of the Shares
on the date of grant and on each of the first, second, third and fourth
anniversaries of the date of grant. Notwithstanding the foregoing, all or any
part of any remaining unexercised Options granted pursuant to this Section 14
also may be exercised upon the occurrence of such special circumstance or event
as in the opinion of the Committee merits special consideration. Any Option
granted pursuant to this Section 14, to the extent unexercised, shall terminate
immediately upon the holder's ceasing to serve as a member of the Board, except
that the holder shall have until the end of the thirtieth day following the
cessation of such service to exercise any unexercised Option to the extent he
could have exercised such Option on the day on which such service terminated;
provided that such exercise must be accomplished prior to the expiration of the
term of such Option. Notwithstanding the foregoing, except as otherwise
determined by the Committee in its sole discretion, if the cessation of service
as a director is due to retirement on or after attaining the age of 65 years, or
to disability (to the extent and in a manner as shall be determined in each case
by the Committee in its sole discretion) or to death, the holder or the
representative of the estate of a deceased shareholder shall have the privilege
of exercising any unexercised Option to the extent he could have exercised such
Option on the day of such retirement, or of such disability or death; provided,
however, that such exercise must be accomplished prior to the expiration of the
term of the Option and (a) within three months of the holder's retirement or (b)
within one year of the holder's disability or death, as the case may be.
Notwithstanding the preceding, if the service of any holder of an Option granted
pursuant to this Section 14 shall be terminated for cause, the existence of
which shall be determined by the Committee in its sole

6
<PAGE> 7

discretion (which determination by the Committee shall be conclusive), then all
such unexercised Options of the holder shall terminate immediately upon such
termination of the holder's service.

Upon the exercise of any Option granted pursuant to this Section 14,
payment of the full purchase price shall be made in cash or by check payable to
the order of the Corporation, by delivery to the Corporation of Shares which
shall be valued at their Fair Market Value on the date of exercise of the
Option; by delivery, concurrently with such exercise and in accordance with
applicable law and regulations, of irrevocable instructions to a broker promptly
to deliver to the Corporation a specified dollar amount of the proceeds or a
sale of a loan secured by Purchaser Shares issuable on exercise of an option; or
by a combination of the methods of payment previously described, or by such
other method of payment as the Committee in its sole discretion may permit.

15. Adjustment Provision. If prior to the complete exercise of any Option
there shall be declared and paid a stock dividend upon the Shares or if the
Shares shall be split up, converted, exchanged, reclassified, or in any way
substituted for, then the Option, to the extent that it has not been exercised,
shall entitle the holder thereof upon the future exercise of the Option to such
number and kind of securities or cash or other property subject to the terms of
the Option to which he would have been entitled had he actually owned the Shares
subject to the unexercised portion of the Option at the time of the occurrence
of such stock dividend, split-up, conversion, exchange, reclassification or
substitution, and the aggregate purchase price upon the future exercise of the
Option shall be the same as if the originally optioned Shares were being
purchased thereunder.

Any fractional shares or securities issuable upon the exercise of the
Option as a result of such adjustment shall be payable in cash based upon the
Fair Market Value of such shares or securities at the time of such exercise. If
any such event should occur, the number of Shares with respect to which Options
remain to be issued, or with respect to which Options may be reissued, shall be
adjusted in a similar manner.

Notwithstanding any other provision of the Plan, in the event of a
recapitalization, merger, consolidation, rights offering, separation,
reorganization or liquidation, or any other change in the corporate structure or
outstanding shares, the Committee may make such equitable adjustments to the
number of Shares and the class of shares available hereunder or to any
outstanding Options as it shall deem appropriate to prevent dilution or
enlargement of rights.

16. Issuance of Shares and Compliance with Securities Act. The Corporation
may postpone the issuance and delivery of Shares pursuant to the grant or
exercise of any Option until (a) the admission of such Shares to listing on any
stock exchange on which Shares of the Corporation of the same class are then
listed, and (b) the completion of such registration or other qualification of
such Shares under any State or Federal law, rule or regulation as the
Corporation shall determine to be necessary or advisable. Any holder of an
Option shall make such representations and furnish such information as may, in
the opinion of counsel for the Corporation, be appropriate to permit the
Corporation, in the light of the then existence or non-existence with respect to
such Shares of an effective Registration Statement under the Securities Act of
1933, as from time to time amended (the "Securities Act"), to issue the Shares
in compliance with the provisions of the Securities Act or any comparable act.
The Corporation shall have the right, in its sole discretion, to legend any
Shares

<PAGE> 8

which may be issued pursuant to the grant or exercise of any Option, or may
issue stop transfer orders in respect thereof.

17. Income Tax Withholding. If the Corporation, the Parent or a Subsidiary
of the Corporation shall be required to withhold any amounts by reason of any
Federal, State or local tax rules or regulations in respect of the issuance of
Shares pursuant to the exercise of any Option, the Corporation, the Parent or
such Subsidiary shall be entitled to deduct and withhold such amounts from any
cash payments to be made to the holder of such Option or permit the holders of
such Option to pay such holders' tax withholding obligation by delivery of other
property deemed acceptable by the Committee, including but not limited to
delivery of previously owned Shares or a reduction in the amount of Shares
otherwise issuable pursuant to the Option. In any event, the holder shall make
available to the Corporation, the Parent or such Subsidiary, promptly when
requested by the Corporation, the Parent or such Subsidiary, sufficient funds or
other property to meet the requirements of such withholding; and the
Corporation, the Parent or such Subsidiary shall be entitled to take and
authorize such steps as it may deem advisable in order to have such funds or
other property made available to the Corporation, the Parent or Subsidiary out
of any funds or property due or to become due to the holder of such Option.

18. Administration and Amendment of the Plan. Except as hereinafter
provided, the Board of Directors or the Committee may at any time withdraw or
from time to time amend the Plan as it relates to, and the terms and conditions
of, any Option not theretofore granted, and the Board of Directors or the
Committee, with the consent of the affected holder of an Option, may at any time
withdraw or from time to time amend the Plan as it relates to, and the terms and
conditions of, any outstanding Option. Notwithstanding the foregoing, any
amendment by the Board of Directors or the Committee which would increase the
number of Shares issuable under the Plan or to any individual or change the
class of Eligible Persons shall be subject to the approval of the stockholders
of the Corporation within one year of such amendment.

Determinations of the Committee as to any question which may arise with
respect to the interpretation of the provisions of the Plan and Options shall be
final. The Committee may authorize and establish such rules, regulations and
revisions thereof not inconsistent with the provisions of the Plan, as it may
deem advisable to make the Plan and Options effective or provide for their
administration, and may take such other action with regard to the Plan and
Options as it shall deem desirable to effectuate their purpose.

The Plan is intended to comply with Rule l6b-3 under the Exchange Act. Any
provision inconsistent with such Rule shall be inoperative and shall not affect
the validity of the Plan.

19. No Right of Employment or Service. Nothing contained herein or in an
Option shall be construed to confer on any employee, consultant or director any
right to be continued in the employ or service of the Corporation, the Parent or
any Subsidiary of the Corporation or derogate from any right of the Corporation,
the Parent and any Subsidiary to retire, request the resignation of or discharge
or otherwise cease its service arrangement with any employee, consultant or
director (without or with pay), at any time, with or without cause.

<PAGE> 9

20. Final Issuance Date. No Option shall be granted under the Plan after
June 24, 2006.

<PAGE> 10

FORM NO. 1
(RE-GRANT TO EMPLOYEE)

CENTRAL FINANCIAL ACCEPTANCE CORPORATION

1996 STOCK OPTION PLAN

NONQUALIFIED STOCK OPTION AGREEMENT

This Stock Option Agreement ("Agreement") is made and entered into
as of the Date of Grant indicated below by and between Central Financial
Acceptance Corporation, a Delaware corporation (the "Company"), and the person
named below ("Participant").

WHEREAS, Participant is an employee or independent contractor of the
Company or one or more of its Subsidiaries;

WHEREAS, pursuant to the Company's 1996 Stock Option Plan (the
"Plan") the Company granted to the Participant options to purchase shares of
common stock, $.01 par value of the Company (the "Common Stock") in an amount
and at an exercise price per share as set forth on Exhibit "A" hereto (the "Old
Option");

WHEREAS, pursuant to the Plan, the committee of the Board of
Directors of the Company administering the Plan (the "Committee") has approved
the grant to Participant of an option to purchase shares of the Common Stock in
substitution for the Old Option on the terms and conditions set forth herein;
and

WHEREAS, all capitalized terms not otherwise defined herein shall
have the meaning assigned to such term in the Plan.

NOW, THEREFORE, in consideration of the foregoing recitals and the
covenants set forth herein, the parties hereto hereby agree as follows:

1. Cancellation of Old Option. Effective as of the Date of Grant
indicated below, the Old Option shall be terminated and all rights and
obligations of the Participant and Company under the Old Option shall be
extinguished.

2. Grant Of Option; Certain Terms and Conditions. The Company hereby
grants to Participant, and Participant hereby accepts, as of the Date of Grant,
an option to purchase the number of shares of Common Stock indicated below (the
"Option Shares") at the Exercise Price per share indicated below, which option
shall expire at 5:00 p.m., Los Angeles time, on the Expiration Date indicated
below and shall be subject to all of the terms and conditions set forth in this
Agreement (the "Option"). On each anniversary of the Date of Grant, the option
shall become exercisable to purchase, and shall vest with respect to, the number
of Option Shares (rounded to the nearest whole

<PAGE> 11

FORM NO. 1
(RE-GRANT TO EMPLOYEE)

share) equal to the total number of Option Shares multiplied by the Annual
Vesting Rate indicated below.

Participant: ______________________

Date of Grant: __________

Number of shares purchasable: __________

Exercise Price per share: __________

Expiration Date: __________

Annual Vesting Rate: __________

The Option is not intended to qualify as an incentive stock option under Section
422 of the Internal Revenue Code of 1986, as amended.

3. Acceleration and Termination of Option.

(a) Termination of Employment.

(i) Retirement. If Participant's employment is terminated by
reason of Participant's retirement on or after attaining the age of 65 years
("Retirement"), then (A) the portion of the Option that has not vested on or
prior to the date of such termination of employment shall terminate on such date
and (B) the remaining vested portion of the Option shall terminated upon the
earlier of the Expiration Date or 90 days after the date of such termination of
employment (the "Termination Date of the Option").

(ii) Death or Permanent Disability. If Participant's
employment is terminated by reason of the death or Disability (as hereinafter
defined) of Participant, then (A) the portion of the Option that has not vested
on or prior to the date of such termination of employment shall terminate on
such date and (B) the remaining vested portion of the Option shall terminate
upon the earlier of the Expiration Date or the first anniversary of the date of
such termination of employment (the "Termination Date of the Option").
"Disability," shall mean the inability due to illness, accident, injury,
physical or mental incapacity or other disability, of Participant to carry out
effectively his or her duties and obligations to the Company or a Subsidiary and
to participate effectively and actively in the management of the Company or a
Subsidiary for a period of at least 90 consecutive days or for shorter periods
aggregating at least 120 days (whether or not consecutive) during any
twelve-month period, as determined in the reasonable judgment of the Committee.
Any determination by the Board or Committee that Participant does or does not
have a Disability shall be final and binding upon the Company and Participant.

<PAGE> 12

FORM NO. 1
(RE-GRANT TO EMPLOYEE)

(iii) Termination for Cause. If Participant's employment is
terminated for Cause (as hereinafter defined) then the Option shall terminate
immediately on the date of such termination of employment (the "Termination Date
of the Option"). "Cause" shall mean (i) your theft or embezzlement, or attempted
theft or embezzlement, or money or property of the Company or a Subsidiary, your
perpetration or attempted perpetration of fraud, or your participation in a
fraud or attempted fraud, on the Company or a Subsidiary or your unauthorized
appropriation of, or your attempt to misappropriate, any tangible or intangible
assets or property of the Company or a Subsidiary, (ii) any act or acts of
disloyalty, dishonesty, misconduct, moral turpitude, or any other act or acts by
you injurious to the interest, property, operations, business or reputation of
the Company or a Subsidiary, (iii) your conviction of a crime the commission of
which results in injury to the Company or a Subsidiary, or (iv) any material
violation of any restriction on the disclosure or use of confidential
information of the Company or a Subsidiary, or in competition with the Company
or a Subsidiary, or any of their businesses then conducted or planned to be
conducted, in each case as determined in the sole judgment of the Board or
Committee.

(iv) Other Termination. If Participant's employment is
terminated for any reason other than Retirement, death or Disability, or Cause,
then (A) the portion of the Option that has not vested on or prior to the date
of such termination of employment shall terminate on such date and (B) the
remaining vested portion of the Option shall terminate upon the earlier of the
Expiration Date or 30 days after the date of such termination of employment (the
"Termination Date of the Option").

(b) Death Following Termination of Employment. Notwithstanding
anything to the contrary contained in this Agreement, if Participant shall die
at any time after the termination of his or her employment and prior to the
Termination Date of the Option, then the vested portion, if any, of the Option
shall terminate on the earlier of the Expiration Date or the first anniversary
of the date of such death.

(c) Change in Responsibilities. If Participant's duties,
responsibilities or authorities as an employee or officer of the Company or a
Subsidiary are materially reduced compared to the duties, responsibilities and
authorities of the Participant at the Date of Grant, as a result of a change in
position within the Company or a Subsidiary or otherwise, then, unless the
Committee, in its sole discretion, shall otherwise determine, and provided that
the Participant continues to be an employee of the Company or a Subsidiary after
such reduction in duties, responsibilities or authorities, (A) the portion of
the Option that has not vested on or prior to the date of such reduction in
duties, responsibilities or authorities shall terminate on the date of such
reduction and (B) the remaining vested portion of the Option shall be unaffected
by such reduction and continue in effect, subject to this Agreement and the
Plan.

(d) Events Causing Acceleration of Option. Notwithstanding the
foregoing, the Committee, in its sole discretion, may accelerate the
exercisability of the Option at any time, upon the occurrence of such special
circumstances or events that the Committee finds merits special consideration.

<PAGE> 13

FORM NO. 1
(RE-GRANT TO EMPLOYEE)

(e) Other Events Causing Termination of Option. Notwithstanding
anything to the contrary contained in this Agreement, the Option shall terminate
upon the consummation of any of the following events, or, if later, the
thirtieth day following the first date upon which such event shall have been
approved by both the Board and the stockholders of the Company:

(i) the dissolution or liquidation of the Company; or

(ii) a sale of substantially all of the property and assets of
the Company, unless the terms of such sale shall provide otherwise.

4. Adjustments. In the event that the outstanding securities of the
class then subject to the Option are increased, decreased or exchanged for or
converted into cash, property or a different number or kind of securities, or
cash, property or securities are distributed in respect of such outstanding
securities, in either case as a result of a reorganization, merger,
consolidation, recapitalization, reclassification, dividend (other than a
regular cash dividend) or other distribution, stock split, reverse stock split
or the like, or in the event that substantially all of the property and assets
of the Company are sold, then, unless the terms of such transactions shall
provide otherwise or such event shall cause the Option to terminate pursuant to
Section 3(e) hereof, the Committee shall make appropriate and proportionate
adjustments in the number and type of shares or other securities or cash or
other property that may thereafter be acquired upon the exercise of the Option
and the Exercise Price per share specified herein; provided, however, that any
such adjustments in the Option shall be made without changing the aggregate
Exercise Price of the then unexercised portion of the Option.

5. Exercise. The Option shall be exercisable during Participant's
lifetime only by Participant or by his or her guardian or legal representative,
and after Participant's death only by the person or entity entitled to do so
under Participant's last will and testament or applicable intestate law. The
Option may only be exercised by the delivery to the Company of a written notice
of such exercise, which notice shall specify the number of Option Shares to be
purchased (the "Purchased Shares") and the aggregate Exercise Price for such
shares (the "Exercise Notice"), together with payment in full of such aggregate
Exercise Price, in whole or in part,

(a) by cash or by check payable to the order of the Company;

(b) by the delivery to the Company of a certificate or
certificates representing shares of Common Stock, duly endorsed or accompanied
by a duly executed stock powers, which delivery effectively transfers to the
Company good and valid title to such shares, free and clear of any pledge,
commitment, lien, claim or other encumbrance (such shares to be valued on the
basis of the aggregate Fair Market Value thereof on the date of such exercise),
provided that the Company is not then prohibited from purchasing or acquiring
such shares of Common Stock; or

<PAGE> 14

FORM NO. 1
(RE-GRANT TO EMPLOYEE)

(c) by the delivery, concurrently with such exercise and in
accordance with applicable law and regulations, of irrevocable instructions to a
broker promptly to deliver to the Company a specified dollar amount of the
proceeds of a sale of or a loan secured by the Purchased Shares issuable upon
exercise of such option.

6. Payment of Withholding Taxes. As a condition to the exercise of
an Option, Participant shall make such arrangements as the Committee may require
for the satisfaction of any federal, state, local or foreign withholding tax
obligations that arise in connection with such exercise. The Participant shall
also make such arrangements as the Committee may require for the satisfaction of
any federal, state, local or foreign withholding tax obligations that may arise
in connection with the disposition of Option Shares acquired by exercising an
Option. The Committee may permit the Participant to satisfy all or part of his
or her tax obligations related to the Option or Option Shares by having the
Company withhold a portion of any Option Shares that otherwise would be issued
to him or her or by surrendering any shares of Common Stock that previously were
acquired by him or her. Such shares of Common Stock or Option Shares shall be
valued at their Fair Market Value on the date when taxes otherwise would be
withheld in cash. The payment of taxes by assigning shares of Common Stock to
the Company, if permitted by the Committee, shall be subject to such
restrictions as the Committee may impose.

7. Notices. All notices and other communications required or
permitted to be given pursuant to this Agreement shall be in writing and shall
be deemed given if delivered personally or five days after mailing by certified
or registered mail, postage prepaid, return receipt requested, to the Company at
5480 East Ferguson Drive, Commerce, California 90022, Attention: Chief Financial
Officer, or to Participant at the address set forth beneath his or her signature
on the signature page hereto, or at such other addresses as they may designate
by written notice in the manner aforesaid.

8. Stock Exchange Requirements; Applicable Laws. Notwithstanding
anything to the contrary in this Agreement, no shares of stock purchased upon
exercise of the Option, and no certificate representing all or any part of such
shares, shall be issued or delivered if (a) such shares have not been admitted
to listing upon official notice of issuance on each stock exchange upon which
shares of that class are then listed or (b) in the opinion of counsel to the
Company, such issuance or delivery would cause the Company to be in violation of
or to incur liability under any federal, state or other securities law, or any
requirement of any stock exchange listing agreement to which the Company is a
party, or any other requirement of law or of any administrative or regulatory
body having jurisdiction over the Company. Notwithstanding any other provision
of this Agreement to the contrary, Participant will not offer, sell or otherwise
dispose of any Option Shares in any manner which would: (i) require the Company
to file any registration statement with the Securities and Exchange Commission
(or any similar filing under state law) or to amend or supplement any such
filing or (ii) violate or cause the Company to violate the Securities Act, the
rules and regulation promulgated thereunder or any other state of federal law.
You further understand that the certificates

<PAGE> 15

FORM NO. 1
(RE-GRANT TO EMPLOYEE)

for any Option Shares you purchase will bear such legends as the Company deems
necessary or desirable in connection with the Securities Act or other rules,
regulations or laws.

9. Nontransferability. Neither the Option nor any interest therein
may be sold, assigned, conveyed, gifted, pledged, hypothecated or otherwise
transferred in any manner other than by will or the laws of descent and
distribution.

10. Plan. The Option is granted pursuant to the Plan, as in effect
on the Date of Grant, and is subject to all the terms and conditions of the
Plan, as the same may be amended from time to time; provided, however, that no
such amendment shall deprive Participant, without his or her consent, of the
Option or of any of Participant's rights under this Agreement. The
interpretation and construction by the Committee of the Plan, this Agreement,
the Option and such rules and regulations as may be adopted by the Committee for
the purpose of administering the Plan shall be final and binding upon
Participant. Until the Option shall expire, terminate or be exercised in full,
the Company shall, upon written request therefor, send a copy of the Plan, in
its then-current form, to Participant or any other person or entity then
entitled to exercise the Option.

11. Stockholder Rights. No person or entity shall be entitled to
vote, receive dividends or be deemed for any purpose the holder of any Option
Shares until the Option shall have been duly exercised to purchase such Option
Shares in accordance with the provisions of this Agreement.

12. Employment or Contract Rights. No provision of this Agreement or
of the Option granted hereunder shall (i) confer upon Participant any right to
continue in the employ of or contract with the Company or any of its
subsidiaries, (ii) affect the right of the Company and each of its Subsidiaries
to terminate the employment or contract of Participant, with or without cause,
or (iii) confer upon Participant any right to participate in any employee
welfare or benefit plan or other program of the Company or any of its
Subsidiaries other than the Plan. PARTICIPANT HEREBY ACKNOWLEDGES AND AGREES
THAT THE COMPANY AND EACH OF ITS SUBSIDIARIES MAY TERMINATE THE EMPLOYMENT OR
CONTRACT OF PARTICIPANT AT ANY TIME AND FOR ANY REASON, OR FOR NO REASON, UNLESS
PARTICIPANT AND THE COMPANY OR SUCH SUBSIDIARY ARE PARTIES TO A WRITTEN
EMPLOYMENT OR INDEPENDENT CONTRACTOR AGREEMENT THAT EXPRESSLY PROVIDES
OTHERWISE.

<PAGE> 16

FORM NO. 1
(RE-GRANT TO EMPLOYEE)

13. Governing Law. This Agreement and the Option granted hereunder
shall be governed by and construed and enforced in accordance with the laws of
the State of California without reference to choice or conflict of law
principles.

IN WITNESS WHEREOF, the Company and Participant have duly executed
this Agreement as of the Date of Grant.

CENTRAL FINANCIAL ACCEPTANCE
CORPORATION

By
------------------------------------------
Authorized Representative

PARTICIPANT

------------------------------------------
Signature

------------------------------------------
Printed Name

------------------------------------------
Street Address

------------------------------------------
City, State and Zip Code

------------------------------------------
Social Security Number

<PAGE> 17

FORM NO. 2
(NON-EMPLOYEE DIRECTOR)

CENTRAL FINANCIAL ACCEPTANCE CORPORATION

1996 STOCK OPTION PLAN

NONQUALIFIED STOCK OPTION AGREEMENT

WHEREAS, Participant is a non-employee director of the Company or
one or more of its Subsidiaries;

WHEREAS, pursuant to Section 14 of the Company's 1996 Stock Option
Plan (the "Plan"), the committee of the Board of Directors of the Company
administering the Plan (the "Committee") has approved the grant to Participant
of an option to purchase shares of the common stock, $.01 par value of the
Company (the "Common Stock"), on the terms and conditions set forth herein; and

WHEREAS, all capitalized terms not otherwise defined herein shall
have the meaning assigned to such term in the Plan.

NOW, THEREFORE, in consideration of the foregoing recitals and the
covenants set forth herein, the parties hereto hereby agree as follows:

1. Grant Of Option; Certain Terms and Conditions. The Company hereby
grants to Participant, and Participant hereby accepts, as of the Date of Grant,
an option to purchase the number of shares of Common Stock indicated below (the
"Option Shares") at the Exercise Price per share indicated below, which option
shall expire at 5:00 p.m., Los Angeles time, on the Expiration Date indicated
below and shall be subject to all of the terms and conditions set forth in this
Agreement (the "Option"). On the Date of Grant and on each anniversary of the
Date of Grant, the option shall become exercisable to purchase, and shall vest
with respect to, the number of the Option Shares (rounded to the nearest whole
share) equal to the total number of Option Shares multiplied by the Annual
Vesting Rate indicated below, until fully vested.

Participant: ______________________

Date of Grant: __________

Number of shares purchasable: __________

<PAGE> 18

FORM NO. 2
(NON-EMPLOYEE DIRECTOR)

Exercise Price per share: __________

Expiration Date: __________

Annual Vesting Rate: 20%

The Option is not intended to qualify as an incentive stock option under Section
422 of the Internal Revenue Code of 1986, as amended.

2. Acceleration and Termination of Option.

(a) Termination of Service.

(i) Retirement. If Participant's service as a director of the
Company ("Service") is terminated by reason of Participant's retirement from the
Board of Directors on or after attaining the age of 65 years ("Retirement"),
then (A) the portion of the Option that has not vested on or prior to the date
of such termination of Service shall terminate on such date and (B) the
remaining vested portion of the Option shall terminate upon the earlier of the
Expiration Date or 90 days after the date of such termination of Service (the
"Termination Date of the Option").

(ii) Death or Permanent Disability. If Participant's Service
is terminated by reason of the death or Disability (as hereinafter defined) of
Participant, then (A) the portion of the Option that has not vested on or prior
to the date of such termination of Service shall terminate on such date and (B)
the remaining vested portion of the Option shall terminate upon the earlier of
the Expiration Date or the first anniversary of the date of such termination of
Service (the "Termination Date of the Option"). "Disability" shall mean the
inability, due to illness, accident, injury, physical or mental incapacity or
other disability, of Participant to carry out effectively his or her duties and
obligations to the Company or a Subsidiary and to participate effectively and
actively as a director of the Company or a Subsidiary for a period of at least
90 consecutive days or for shorter periods aggregating at least 120 days
(whether or not consecutive) during any twelve month period, as determined in
the reasonable judgment of the Committee. Any determination by the Board of
Directors (the "Board") or, Committee that Participant does or does not have a
Disability shall be final and binding upon the Company and Participant.

(iii) Termination for Cause. If Participant's Service is
terminated for Cause (as hereinafter defined), then (A) the portion of the
Option that has not vested on or prior to the date of such termination of
Service and (B) the remaining vested portion of the Option shall terminate
immediately on the date of such termination of Service (the "Termination Date of
the Option"). "Cause" shall mean (i) your theft or embezzlement, or attempted
theft or embezzlement, or money or property of the Company or a subsidiary, your
perpetration or attempted perpetration of fraud, or your participation in a
fraud or attempted fraud, on the Company or a subsidiary or your unauthorized
appropriation of, or your attempt to misappropriate, any tangible or intangible
assets or property of

<PAGE> 19

FORM NO. 2
(NON-EMPLOYEE DIRECTOR)

the Company, the Parent or a Subsidiary, (ii) any act or acts of disloyalty,
dishonesty, misconduct, moral turpitude, or any other act or acts by you
injurious to the interest, property, operations, business or reputation of the
Company or a Subsidiary, (iii) your conviction of a crime the commission of
which results in injury to the Company or a Subsidiary, or (iv) any material
violation of any restriction on the disclosure or use of confidential
information of the Company or a Subsidiary, or in competition with the Company
or a Subsidiary, or any of their businesses then conducted or planned to be
conducted, in each case as determined in the sole judgment of the Board or
Committee.

(iv) Other Termination. If Participant's Service is terminated
for any reason other than Retirement, death or Disability, or Cause, then (A)
the portion of the Option that has not vested on or prior to the date of such
termination of Service shall terminate on such date and (B) the remaining vested
portion of the Option shall terminate upon the earlier of the Expiration Date or
30 days after the date of such termination of Service (the "Termination Date of
the Option").

(b) Death Following Termination of Service. Notwithstanding anything
to the contrary contained in this Agreement, if Participant shall die at any
time after the termination of his or her Service and prior to the Termination
Date of the Option, then the vested portion, if any, of the Option shall
terminate on the earlier of the Expiration Date or the first anniversary of the
date of such death.

(c) Events Causing Acceleration of Option. Notwithstanding the
foregoing, the Committee, in its sole discretion, may accelerate the
exercisability of the Option at any time upon the occurrence of such special
circumstances or events that the Committee find merits special consideration.

(d) Other Events Causing Termination of Option. Notwithstanding
anything to the contrary contained in this Agreement, the Option shall terminate
upon the consummation of any of the following events, or, if later, the
thirtieth day following the first date upon which such event shall have been
approved by both the Board and the stockholders of the Company:

(i) the dissolution or liquidation of the Company; or

(ii) a sale of substantially all of the property and assets of
the Company, unless the terms of such sale shall provide otherwise.

<PAGE> 20

FORM NO. 2
(NON-EMPLOYEE DIRECTOR)

or such event shall cause the Option to terminate pursuant to Section 2(d)
hereof, the Committee shall make appropriate and proportionate adjustments in
the number and type of shares or other securities or cash or other property that
may thereafter be acquired upon the exercise of the Option and the Exercise
Price per share specified herein; provided, however, that any such adjustments
in the Option shall be made without changing the aggregate Exercise Price of the
then unexercised portion of the Option.

4. Exercise. The Option shall be exercisable during Participant's
lifetime only by Participant or by his or her guardian or legal representative,
and after Participant's death only by the person or entity entitled to do so
under Participant's last will and testament or applicable intestate law. The
Option may only be exercised by the delivery to the Company of a written notice
of such exercise, which notice shall specify the number of Option Shares to be
purchased (the "Purchased Shares") and the aggregate Exercise Price for such
shares (the "Exercise Notice"), together with payment in full of such aggregate
Exercise Price, in whole or in part,

(a) by cash or by check payable to the order of the Company;

5. Payment of Withholding Taxes. As a condition to the exercise of
an Option, Participant shall make such arrangements as the Committee may require
for the satisfaction of any federal, state, local or foreign withholding tax
obligations that arise in connection with such exercise. The Participant shall
also make such arrangements as the Committee may require for the satisfaction of
any federal, state, local or foreign withholding tax obligations that may arise
in connection with the disposition of Option Shares acquired by exercising an
Option. The Committee may permit the Participant to satisfy all or part of his
or her tax obligations related to the Option or Option Shares by having the
Company withhold a portion of any Option Shares that otherwise would be issued
to him or her or by surrendering any shares of Common Stock that previously were
acquired by him or her. Such shares of Common Stock or Option Shares shall be
valued at their Fair Market Value on the date when taxes otherwise would be
withheld in cash. The payment of taxes by assigning shares of Common Stock to
the Company, if permitted by the Committee, shall be subject to such
restrictions as the Committee may impose.

<PAGE> 21

FORM NO. 2
(NON-EMPLOYEE DIRECTOR)

6. Notices. All notices and other communications required or
permitted to be given pursuant to this Agreement shall be in writing and shall
be deemed given if delivered personally or five days after mailing by certified
or registered mail, postage prepaid, return receipt requested, to the Company at
5480 East Ferguson Drive, Commerce, California 90022, Attention: Chief Financial
Officer, or to Participant at the address set forth beneath his or her signature
on the signature page hereto, or at such other addresses as they may designate
by written notice in the manner aforesaid.

7. Stock Exchange Requirements; Applicable Laws. Notwithstanding
anything to the contrary in this Agreement, no shares of stock purchased upon
exercise of the Option, and no certificate representing all or any part of such
shares, shall be issued or delivered if (a) such shares have not been admitted
to listing upon official notice of issuance on each stock exchange upon which
shares of that class are then listed or (b) in the opinion of counsel to the
Company, such issuance or delivery would cause the Company to be in violation of
or to incur liability under any federal, state or other securities law, or any
requirement of any stock exchange listing agreement to which the Company is a
party, or any other requirement of law or of any administrative or regulatory
body having jurisdiction over the Company. Notwithstanding any other provision
of this Agreement to the contrary, Participant will not offer, sell or otherwise
dispose of any Option Shares in any manner which would: (i) require the Company
to file any registration statement with the Securities and Exchange Commission
(or any similar filing under state law) or to amend or supplement any such
filing or (ii) violate or cause the Company to violate the Securities Act of
1933, as amended (the "Securities Act"), the rules and regulation promulgated
thereunder or any other state of federal law. You further understand that the
certificates for any Option Shares you purchase will bear such legends as the
Company deems necessary or desirable in connection with the Securities Act or
other rules, regulations or laws.

8. Nontransferability. Neither the Option nor any interest therein
may be sold, assigned, conveyed, gifted, pledged, hypothecated or otherwise
transferred in any manner other than by will or the laws of descent and
distribution.

9. Plan. The Option is granted pursuant to the Plan, as in effect on
the Date of Grant, and is subject to all the terms and conditions of the Plan,
as the same may be amended from time to time; provided, however, that no such
amendment shall deprive Participant, without his or her consent, of the Option
or of any of Participant's rights under this Agreement. The interpretation and
construction by the Committee of the Plan, this Agreement, the Option and such
rules and regulations as may be adopted by the Committee for the purpose of
administering the Plan shall be final and binding upon Participant. Until the
Option shall expire, terminate or be exercised in full, the Company shall, upon
written request therefor, send a copy of the Plan, in its then-current form, to
Participant or any other person or entity then entitled to exercise the Option.

10. Stockholder Rights. No person or entity shall be entitled to
vote, receive dividends or be deemed for any purpose the holder of any Option
Shares until the Option shall have

<PAGE> 22

FORM NO. 2
(NON-EMPLOYEE DIRECTOR)

been duly exercised to purchase such Option Shares in accordance with the
provisions of this Agreement.

11. Directorship, Employment or Contract Rights. No provision of
this Agreement or of the Option granted hereunder shall (i) confer upon
Participant any right to continue as a director of the Company or a Subsidiary
or in the employ of, or contract with, the Company or any of its subsidiaries,
(ii) affect the right of the Company and each of its Subsidiaries to terminate
the directorship, employment or contract of the Participant, or (iii) confer
upon Participant any right to participate in any welfare or benefit plan or
other program of the Company or any of its Subsidiaries, other than the Plan.

12. Governing Law. This Agreement and the Option granted hereunder
shall be governed by and construed and enforced in accordance with the laws of
the State of California without reference to choice or conflict of law
principles.

IN WITNESS WHEREOF, the Company and Participant have duly executed
this Agreement as of the Date of Grant.

CENTRAL FINANCIAL ACCEPTANCE
CORPORATION

By
----------------------------------------
Authorized Representative

<PAGE> 23

FORM NO. 2
(NON-EMPLOYEE DIRECTOR)

PARTICIPANT

------------------------------
Signature

------------------------------
Printed Name

------------------------------
Street Address

------------------------------
City, State and Zip Code

------------------------------
Social Security Number

<PAGE> 24

FORM NO. 2
(EMPLOYEE / INDEPENDENT CONTRACTOR)

CENTRAL FINANCIAL ACCEPTANCE CORPORATION

1996 STOCK OPTION PLAN

NONQUALIFIED STOCK OPTION AGREEMENT

WHEREAS, Participant is an employee or independent contractor of the
Company or one or more of its Subsidiaries;

WHEREAS, pursuant to the Company's 1996 Stock Option Plan (the
"Plan"), the committee of the Board of Directors of the Company administering
the Plan (the "Committee") has approved the grant to Participant of an option to
purchase shares of the common stock, $.01 par value of the Company (the "Common
Stock"), on the terms and conditions set forth herein; and

WHEREAS, all capitalized terms not otherwise defined herein shall
have the meaning assigned such term in the Plan.

NOW, THEREFORE, in consideration of the foregoing recitals and the
covenants set forth herein, the parties hereto hereby agree as follows:

1. Grant Of Option; Certain Terms and Conditions. The Company hereby
grants to Participant, and Participant hereby accepts, as of the Date of Grant,
an option to purchase the number of shares of Common Stock indicated below (the
"Option Shares") at the Exercise Price per share indicated below, which option
shall expire at 5:00 p.m., Los Angeles time, on the Expiration Date indicated
below and shall be subject to all of the terms and conditions set forth in this
Agreement (the "Option"). On each anniversary of the Date of Grant, the option
shall become exercisable to purchase, and shall vest with respect to, the number
of the Option Shares (rounded to the nearest whole share) equal to the total
number of Option Shares multiplied by the Annual Vesting Rate indicated below.

Participant: ______________________

Date of Grant: __________

Number of shares purchasable: __________

Exercise Price per share: __________

<PAGE> 25

FORM NO. 2
(EMPLOYEE / INDEPENDENT CONTRACTOR)

Expiration Date: __________

Annual Vesting Rate: __________

The Option is not intended to qualify as an incentive stock option under Section
422 of the Internal Revenue Code of 1986, as amended.

2. Acceleration and Termination of Option.

(a) Termination of Employment.

(i) Retirement. If Participant's employment is terminated by
reason of Participant's retirement on or after attaining the age of 65 years
("Retirement"), then (A) the portion of the Option that has not vested on or
prior to the date of such termination of employment shall terminate on such date
and (B) the remaining vested portion of the Option shall terminate upon the
earlier of the Expiration Date or 90 days after the date of such termination of
employment (the "Termination Date of the Option").

(ii) Death or Permanent Disability. If Participant's
employment is terminated by reason of the death or Disability (as hereinafter
defined) of Participant, then (A) the portion of the Option that has not vested
on or prior to the date of such termination of employment shall terminate on
such date and (B) the remaining vested portion of the Option shall terminate
upon the earlier of the Expiration Date or the first anniversary of the date of
such termination of employment (the "Termination Date of the Option").
"Disability" shall mean the inability, due to illness, accident, injury,
physical or mental incapacity or other disability, of Participant to carry out
effectively his or her duties and obligations to the Company or a Subsidiary and
to participate effectively and actively in the management of the Company or a
Subsidiary for a period of at least 90 consecutive days or for shorter periods
aggregating at least 120 days (whether or not consecutive) during any twelve
month period, as determined in the reasonable judgment of the Committee. Any
determination by the Board or Committee that Participant does or does not have a
Disability shall be final and binding upon the Company and Participant.

(iii) Termination for Cause. If Participant's employment is
terminated for Cause (as hereinafter defined) then (A) the portion of the Option
that has not vested on or prior to the date of such termination of employment
and (B) the remaining vested portion of the Option shall terminate immediately
on the date of such termination of employment (the "Termination Date of the
Option"). "Cause" shall mean (i) your theft or embezzlement, or attempted theft
or embezzlement, or money or property of the Company or a subsidiary, your
perpetration or attempted perpetration of fraud, or your participation in a
fraud or attempted fraud, on the Company or a subsidiary or your unauthorized
appropriation of, or your attempt to misappropriate, any tangible or intangible
assets or property of the Company or a subsidiary, (ii) any act or acts of
disloyalty, dishonesty, misconduct, moral turpitude, or any other act or acts by
you injurious to the interest, property, operations,

<PAGE> 26

FORM NO. 2
(EMPLOYEE / INDEPENDENT CONTRACTOR)

business or reputation of the Company or a Subsidiary, (iii) your conviction of
a crime the commission of which results in injury to the Company or a
Subsidiary, or (iv) any material violation of any restriction on the disclosure
or use of confidential information of the Company or a Subsidiary, or in
competition with the Company or a Subsidiary, or any of their businesses then
conducted or planned to be conducted, in each case as determined in the sole
judgment of the Board or Committee.

(i) the dissolution or liquidation of the Company; or

<PAGE> 27

FORM NO. 2
(EMPLOYEE / INDEPENDENT CONTRACTOR)

(ii) a sale of substantially all of the property and assets
of the Company, unless the terms of such sale shall provide otherwise.

3. Adjustments. In the event that the outstanding securities of the
class then subject to the Option are increased, decreased or exchanged for or
converted into cash, property or a different number or kind of securities, or
cash, property or securities are distributed in respect of such outstanding
securities, in either case as a result of a reorganization, merger,
consolidation, recapitalization, reclassification, dividend (other than a
regular cash dividend) or other distribution, stock split, reverse stock split
or the like, or in the event that substantially all of the property and assets
of the Company are sold, then, unless the terms of such transactions shall
provide otherwise or such event shall cause the Option to terminate pursuant to
Section 2(e) hereof, the Committee shall make appropriate and proportionate
adjustments in the number and type of shares or other securities or cash or
other property that may thereafter be acquired upon the exercise of the Option
and the Exercise Price per share specified herein; provided, however, that any
such adjustments in the Option shall be made without changing the aggregate
Exercise Price of the then unexercised portion of the Option.

(a) by cash or by check payable to the order of the Company;

<PAGE> 28

FORM NO. 2
(EMPLOYEE / INDEPENDENT CONTRACTOR)

The Participant shall also make such arrangements as the Committee may require
for the satisfaction of any federal, state, local or foreign withholding tax
obligations that may arise in connection with the disposition of Option Shares
acquired by exercising an Option. The Committee may permit the Participant to
satisfy all or part of his or her tax obligations related to the Option or
Option Shares by having the Company withhold a portion of any Option Shares that
otherwise would be issued to him or her or by surrendering any shares of Common
Stock that previously were acquired by him or her. Such shares of Common Stock
or Option Shares shall be valued at their Fair Market Value on the date when
taxes otherwise would be withheld in cash. The payment of taxes by assigning
shares of Common Stock to the Company, if permitted by the Committee, shall be
subject to such restrictions as the Committee may impose.

<PAGE> 29

FORM NO. 2
(EMPLOYEE / INDEPENDENT CONTRACTOR)

10. Stockholder Rights. No person or entity shall be entitled to
vote, receive dividends or be deemed for any purpose the holder of any Option
Shares until the Option shall have been duly exercised to purchase such Option
Shares in accordance with the provisions of this Agreement.

11. Employment or Contract Rights. No provision of this Agreement or
of the Option granted hereunder shall (i) confer upon Participant any right to
continue in the employ of or contract with the Company or any of its
Subsidiaries, (ii) affect the right of the Company and each of its Subsidiaries
to terminate the employment or contract of Participant, with or without cause,
or (iii) confer upon Participant any right to participate in any employee
welfare or benefit plan or other program of the Company or any of its
Subsidiaries other than the Plan. PARTICIPANT HEREBY ACKNOWLEDGES AND AGREES
THAT THE COMPANY AND EACH OF ITS SUBSIDIARIES MAY TERMINATE THE EMPLOYMENT OR
CONTRACT OF PARTICIPANT AT ANY TIME AND FOR ANY REASON, OR FOR NO REASON, UNLESS
PARTICIPANT AND THE COMPANY OR SUCH SUBSIDIARY ARE PARTIES TO A WRITTEN
EMPLOYMENT OR INDEPENDENT CONTRACTOR AGREEMENT THAT EXPRESSLY PROVIDES
OTHERWISE.

IN WITNESS WHEREOF, the Company and Participant have duly executed
this Agreement as of the Date of Grant.

CENTRAL FINANCIAL ACCEPTANCE
CORPORATION

By
-----------------------------------------
Authorized Representative

<PAGE> 30

FORM NO. 2
(EMPLOYEE / INDEPENDENT CONTRACTOR)

PARTICIPANT

------------------------------
Signature

------------------------------
Printed Name

------------------------------
Street Address

------------------------------
City, State and Zip Code

------------------------------
Social Security Number

<PAGE> 31

FORM NO. 3
(EMPLOYEE / INDEPENDENT CONTRACTOR)

CENTRAL FINANCIAL ACCEPTANCE CORPORATION

1996 STOCK OPTION PLAN

INCENTIVE STOCK OPTION AGREEMENT

WHEREAS, Participant is an employee or independent contractor of the
Company or one or more of its Subsidiaries;

WHEREAS, all capitalized terms not otherwise defined herein shall
have the meaning assigned such term in the Plan.

NOW, THEREFORE, in consideration of the foregoing recitals and the
covenants set forth herein, the parties hereto hereby agree as follows:

1. Grant Of Option; Certain Terms and Conditions. The Company hereby
grants to Participant, and Participant hereby accepts, as of the Date of Grant,
an option to purchase the number of shares of Common Stock indicated below (the
"Option Shares") at the Exercise Price per share indicated below, which option
shall expire at 5:00 p.m., Los Angeles time, on the Expiration Date indicated
below and shall be subject to all of the terms and conditions set forth in this
Agreement (the "Option"). On each anniversary of the Date of Grant, the option
shall become exercisable to purchase, and shall vest with respect to, the number
of the Option Shares (rounded to the nearest whole share) equal to the total
number of Option Shares multiplied by the Annual Vesting Rate indicated below.

Participant: ______________________

Date of Grant: __________

Number of shares purchasable: __________

Exercise Price per share: __________

<PAGE> 32

FORM NO. 3
(EMPLOYEE / INDEPENDENT CONTRACTOR)

Expiration Date: __________

Annual Vesting Rate: __________

The Option is not intended to qualify as an incentive stock option under Section
422 of the Internal Revenue Code of 1986, as amended.

2. Acceleration and Termination of Option.

(a) Termination of Employment.

(i) Retirement. If Participant's employment is terminated by
reason of Participant's retirement on or after attaining the age of 65 years
("Retirement"), then (A) the portion of the Option that has not vested on or
prior to the date of such termination of employment shall terminate on such date
and (B) the remaining vested portion of the Option shall terminate upon the
earlier of the Expiration Date or 90 days after the date of such termination of
employment (the "Termination Date of the Option").

(ii) Death or Permanent Disability. If Participant's
employment is terminated by reason of the death or Disability (as hereinafter
defined) of Participant, then (A) the portion of the Option that has not vested
on or prior to the date of such termination of employment shall terminate on
such date and (B) the remaining vested portion of the Option shall terminate
upon the earlier of the Expiration Date or the first anniversary of the date of
such termination of employment (the "Termination Date of the Option").
"Disability" shall mean the inability, due to illness, accident, injury,
physical or mental incapacity or other disability, of Participant to carry out
effectively his or her duties and obligations to the Company or a Subsidiary and
to participate effectively and actively in the management of the Company or a
Subsidiary for a period of at least 90 consecutive days or for shorter periods
aggregating at least 120 days (whether or not consecutive) during any twelve
month period, as determined in the reasonable judgment of the Committee. Any
determination by the Board or Committee that Participant does or does not have a
Disability shall be final and binding upon the Company and Participant.

<PAGE> 33

FORM NO. 3
(EMPLOYEE / INDEPENDENT CONTRACTOR)

(i) the dissolution or liquidation of the Company; or

<PAGE> 34

FORM NO. 3
(EMPLOYEE / INDEPENDENT CONTRACTOR)

(ii) a sale of substantially all of the property and assets
of the Company, unless the terms of such sale shall provide otherwise.

(a) by cash or by check payable to the order of the Company;

<PAGE> 35

FORM NO. 3
(EMPLOYEE / INDEPENDENT CONTRACTOR)

<PAGE> 36

FORM NO. 3
(EMPLOYEE / INDEPENDENT CONTRACTOR)

IN WITNESS WHEREOF, the Company and Participant have duly executed
this Agreement as of the Date of Grant.

CENTRAL FINANCIAL ACCEPTANCE
CORPORATION

By
----------------------------------------
Authorized Representative

<PAGE> 37

FORM NO. 3
(EMPLOYEE / INDEPENDENT CONTRACTOR)

PARTICIPANT

------------------------------
Signature

------------------------------
Printed Name

------------------------------
Street Address

------------------------------
City, State and Zip Code

------------------------------
Social Security Number

<PAGE> 1
EXHIBIT 10.5

OPTION AGREEMENT

This OPTION AGREEMENT (the "Agreement") is dated as of June 24, 1996
among CENTRAL FINANCIAL ACCEPTANCE CORPORATION, a Delaware corporation
("Central"), BANNER'S CENTRAL ELECTRIC, INC., a California corporation
("Banner"), and BANNER HOLDINGS, INC., a Delaware corporation ("Holdings").

WHEREAS, concurrently herewith, Central, Banner and Holdings
have entered into a Reorganization Agreement dated as of the date hereof
pursuant to which Central will acquire the consumer finance business of Holdings
and Banner (the "Reorganization");

WHEREAS, Central has filed a registration statement with the Securities
and Exchange Commission under the Securities Act of 1933, as amended, covering
the issuance and sale by Central of up to 2,127,000 shares of its common stock,
par value of $.01 per share;

WHEREAS, concurrently herewith, Central, Banner and Holdings have
entered into various additional agreements for the purpose of defining the
ongoing relationship among the parties following the Reorganization;

WHEREAS, Holdings desires to grant to Central an option (the "Option")
to purchase all of the outstanding capital stock of Banner (the "Shares"), which
Shares are owned beneficially and of record by Holdings.

NOW, THEREFORE, in consideration of the premises and the mutual
covenants and conditions herein contained, the parties agree as follows:

1. Option. Holdings hereby grants to Central the Option to purchase
the Shares at any time commencing with the first anniversary of the
Reorganization and terminating on the third anniversary of the Reorganization
(the "Option Termination Date"). Central may exercise the option by delivering
to Holdings a written notice of exercise.

2. Exercise Price. The exercise price for the Shares shall be equal to
the book value of Banner as reflected on Banner's balance sheet for the month
ended immediately preceding the exercise of the Option (the "Exercise Price").
The balance sheet shall be prepared in accordance with generally accepted
accounting principles on a basis consistent with prior periods.

3. Payment of Exercise Price. The Exercise Price is payable, at
Central's option, in cash or in shares of common stock, par value $0.01 per
share, of Central (the "Common Stock"). If Central chooses to pay the Exercise
Price in shares of Common Stock, the number of shares of Common Stock that
Central shall deliver shall be equal to the quotient of the Exercise Price
divided by the average last sales, close, or bid and asked price of the
Common Stock as reported
<PAGE> 2
by the Nasdaq National Market or such other market on which the Common Stock is
traded, listed or quoted during the ten trading days preceding the date on which
Central delivers its notice of exercise or, if the Common Stock is not so
traded, listed or quoted, as reasonably determined by the Board of Directors of
Central.

4. Representations and Warranties of Banner and Holdings. All of the
Shares have been duly and validly authorized and issued and are fully paid and
nonassessable and were not issued and are not now in violation of or subject to
any preemptive rights. The Shares are owned of record and beneficially by
Holdings free and clear of any security interests, liens, encumbrances, equities
or claims.

5. Covenants of Banner and Holdings.

(a) From the date hereof up to and including the Option Termination
Date, Banner will not, without Central's prior written consent, (i) issue, sell,
offer or agree to sell, grant any option for the sale of or otherwise dispose of
any capital stock of Banner (or any securities convertible into, exercisable for
or exchangeable for capital stock of Banner), or (ii) sell all or substantially
all of its assets.

(b) From the date hereof up to and including the Option Termination
Date, Holdings will not, without Central's prior written consent, sell, offer or
agree to sell, grant any option for the sale of or otherwise dispose of any of
the Shares.

6. Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties and their respective successors and
permitted assigns. This Agreement may not be assigned or delegated by any party
without the consent of the other parties.

7. Notices. All notices, requests, demands and other communications
provided for by this Agreement shall be in writing (including telecopier or
similar writing) and shall be deemed to have been given at the time when mailed
in any general or branch office of the United States Postal Service, enclosed in
a registered or certified postpaid envelope, or sent by Federal Express or other
similar overnight courier service, addressed to the appropriate party at 5480
East Ferguson Drive, Commerce, California 90022, Attention: Secretary, or to
such changed address as such party may have fixed by notice or, if given by
telecopier, when such telecopy is transmitted and the appropriate answerback is
received.

8. Governing Law. This Agreement shall be governed by the laws of the
State of California without giving effect to the principles of conflicts of law.

9. Entire Agreement. This Agreement sets forth the entire agreement
among the parties with respect to its subject matter. This Agreement may not be
amended or otherwise modified except in writing duly executed by all of the
parties. No waiver of any provision or breach of this Agreement shall be
effective unless such waiver is in writing and signed by the party against which
enforcement of such waiver is sought. A waiver by any party of any

-2-
<PAGE> 3
breach or violation of this Agreement shall not be deemed or construed as a
waiver of any subsequent breach or violation thereof.

10. Severability. Should any part, term or condition hereof be
declared illegal or unenforceable or in conflict with any other law, the
validity of the remaining portions or provisions of this Agreement shall not be
affected thereby, and the illegal or unenforceable portions of the Agreement
shall be and hereby are redrafted to conform with applicable law, while leaving
the remaining portions of this Agreement intact.

11. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same document.

12. Headings. Section headings are for convenience only and do not
control or affect the meaning or interpretation of any terms or provisions of
this Agreement.

IN WITNESS WHEREOF the parties have executed this Agreement as of the
date first above written.

CENTRAL FINANCIAL ACCEPTANCE CORPORATION

By /s/ GARY M. CYPRES
----------------------------------------
Gary M. Cypres
Chief Executive Officer and President

BANNER'S CENTRAL ELECTRIC, INC.

By /s/ GARY M. CYPRES
----------------------------------------
Gary M. Cypres
Chief Executive Officer and President

BANNER HOLDINGS, INC.

By /s/ GARY M. CYPRES
----------------------------------------
Gary M. Cypres
Chief Executive Officer and President

-3-

<PAGE> 1
EXHIBIT 10.6

OPERATING AGREEMENT

This OPERATING AGREEMENT (the "Agreement") is dated as of June 24, 1996
among CENTRAL FINANCIAL ACCEPTANCE CORPORATION, a Delaware corporation
("Central"), BANNER'S CENTRAL ELECTRIC, INC., a California corporation
("Banner"), and BANNER HOLDINGS, INC., a Delaware corporation ("Holdings").

WHEREAS, concurrently herewith, Central, Banner and Holdings have
entered into a Reorganization Agreement dated as of the date hereof pursuant to
which Central will acquire the consumer finance business of Holdings and Banner
(the "Reorganization");

WHEREAS, in order to avoid a possible conflict of interest in the
operation of the businesses of Central and its subsidiaries (individually and
collectively, the "Central Group") and Holdings and its subsidiaries
(individually and collectively, the "Holdings Group") following the
Reorganization, the parties desire that Holdings follow certain procedures
as set forth herein; and

WHEREAS, in order to provide cost savings and operating efficiencies
following the Reorganization, the parties desire that the Holdings Group perform
various administrative functions for the Central Group upon the terms and
conditions set forth herein following the Reorganization.

NOW, THEREFORE, in consideration of the premises and the mutual
covenants and conditions herein contained, the parties agree as follows:

1. Allocation of Business Opportunities.

(a) Restricted Businesses. The Holdings Group will not, without the
prior written consent of Central, directly or indirectly engage in or enter into
any business competing with the Central Group that involves consumer finance
lending, including, but not limited to, the financing of consumer products,
travel products, small loans, automobiles or insurance (the "Restricted
Businesses"). If, notwithstanding the foregoing, any member of the Holdings
Group shall acquire a company engaged in a Restricted Business or shall
otherwise directly or indirectly engage in a Restricted Business, Holdings shall
be obligated to sell to Central, at Central's election, such Restricted Business
at a purchase price equal to the fair market value of such Restricted Business
as determined in accordance with Section 1(b). The foregoing restriction shall
terminate on the earlier of December 31, 2002 or
<PAGE> 2
the date on which Holdings ceases to own, directly or indirectly, at least 25%
of the outstanding voting stock of Central.

(b) Valuation. The fair market value of a Restricted Business shall
be determined by an independent qualified and recognized investment banking firm
agreed to by Central, on the one hand, and Banner and Holdings, on the other
hand. If the parties are unable to mutually agree on a single appraiser within a
seven day period, then Central, on the one hand, and Banner and Holdings, on the
other hand, shall each immediately appoint an independent qualified appraiser of
the type set forth above. Within seven days of such appointment, the two
appointed appraisers shall appoint a third independent qualified appraiser of
the type set forth above who shall determine the current value of the Restricted
Business within 30 days of appointment. The cost of this appointment process and
the appraisal fees shall be divided equally between Central, on the one hand,
and Banner and Holdings, on the other hand.

2. Services to be Performed by the Holdings Group and Allocation of
Costs and Benefits.

(a) Services. Each of the following services shall be performed by,
and the Central Group agrees to utilize the following services of, the Holdings
Group:

(1) Accounting. To the extent requested by the Central Group,
the Holdings Group shall provide accounting services to the Central
Group in connection with the preparation of quarterly, annual and other
financial statements.

(2) Management Information Systems. The Holdings Group shall
provide the Central Group with information processing, data retrieval
and other management information systems services. If the Central Group
elects to discontinue receiving such services from the Holdings Group,
the Holdings Group shall return all information pertaining to the
business and operations of the Central Group and shall use its best
efforts in the transition of all data processing functions in a manner
that does not unduly disrupt the business or operation of the Central
Group.

(3) Employee Benefit Plans. The Holdings Group shall
administer all health plans and any other benefits offered
for the benefit of the employees of the Central Group.

(4) Legal. The Holdings Group shall provide to the Central
Group all legal assistance provided in the ordinary course of business
to the Holdings Group.

(5) Insurance. The Holdings Group shall include every member
of the Central Group under any insurance policy maintained by the
Holdings Group. The Holdings Group shall cause each member of the
Central Group to be named as an additional insured under any such
policies. The Holdings Group shall agree to deliver to Central any
insurance proceeds received by it or one of the other members of the
Holdings Group if such

-2-
<PAGE> 3
proceeds relate to any claim relating to the business of the Central
Group. The Holdings Group shall make appropriate cost allocations to
the Central Group for any policy which provides joint coverage to the
Holdings Group, or any other member of the Holdings Group, and to the
Central Group.

(6) Purchasing. The Holdings Group shall provide purchasing
services, including warehousing, to the Central Group for all products
Central may request. Central shall either reimburse the Holdings Group
for, or pay directly, the actual cost of all products acquired for its
account (after giving effect to its ratable share of any discounts,
allowances, rebates or other similar benefits realized by the Holdings
Group).

(7) Advertising. The Holdings Group shall provide advertising
services to the Central Group. Such services shall include the
purchasing of broadcast, newspaper or other advertising in accordance
with the specifications and requirements provided by the Central Group.
Each party to this Agreement agrees not to utilize any form of
advertising that would be reasonably likely to be detrimental to the
business or prospects of the other party.

(8) Other Services. To the extent requested by Central and
approved by the members of its board of directors, the Holdings Group
may provide the Central Group with such other administrative services
as may be deemed necessary or appropriate.

(b) Payment of Costs. The Central Group shall be responsible for the
actual cost of any goods or services provided for their account by the Holdings
Group. Except as provided herein with respect to management information systems,
the allocable share of such costs for each member of the Central Group shall be
determined on the basis of its percentage utilization of the applicable service
or management's best estimate thereof. Fifty percent of the expenses of the
costs and expenses of operating the Holdings Group's management information
systems shall be allocated to each of Banner and Central for a period of five
years, subject to adjustment from time to time to reflect changing costs and
usage and prior termination pursuant to Section 4 below. The Central Group
shall either pay such costs directly or reimburse the Holdings Group for its
prior payment (after giving effect to its ratable share of any discounts,
allowances, rebates or other similar benefits realized by such member of the
Holdings Group). The Holdings Group shall maintain appropriate records to
substantiate the costs associated with the services provided to the Central
Group.

3. Employee Benefits. Central hereby agrees to assume all
liabilities of Banner, Holdings and the subsidiaries thereof that become
subsidiaries of Central pursuant to the Reorganization under existing employee
welfare benefit and profit sharing plans with respect to the employees of Banner
and Holdings who have become employees of the Central Group pursuant to the
Reorganization. The employment by the Central Group of individuals who were
employees of Banner, Holdings or the subsidiaries thereof that become
subsidiaries of Central pursuant to the Reorganization prior to the
Reorganization will not be deemed a severance of employment from Banner or
Holdings for purposes of any policy, plan, program or agreement of Banner or
Holdings that provides for the payment of severance, salary continuation or
similar benefits.

-3-
<PAGE> 4
4. Term. Except as provided in Section 1, this Agreement or any
service provided herein may be terminated by any party hereto upon one year's
prior written notice.

5. Independent Parties. The parties are independent parties engaged
in the operation of their respective businesses. No party has the authority to
enter into contracts or assume any obligations for any other party or is to be
considered as the agent or employee of any other party for any purpose
whatsoever. Nothing in this Agreement shall be construed to establish a
relationship of partners or joint venturers among the parties.

8. Governing Law. This Agreement shall be governed by the laws of
the State of California without giving effect to the principles of conflicts of
law.

11. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same document.

-4-
<PAGE> 5
12. Headings. Section headings are for convenience only and do not
control or affect the meaning or interpretation of any terms or provisions of
this Agreement.

[Remainder of Page Intentionally Left Blank]

-5-
<PAGE> 6
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.

CENTRAL FINANCIAL ACCEPTANCE CORPORATION

By /s/ GARY M. CYPRES
---------------------------------------
Gary M. Cypres
Chief Executive Officer and President

BANNER'S CENTRAL ELECTRIC, INC.

By /s/ GARY M. CYPRES
----------------------------------------
Gary M. Cypres
Chief Executive Officer and President

BANNER HOLDINGS, INC.

By /s/ GARY M. CYPRES
----------------------------------------
Gary M. Cypres
Chief Executive Officer and President

-6-

<PAGE> 1
EXHIBIT 10.7

TAX SHARING AGREEMENT

This TAX SHARING AGREEMENT (the "Agreement") is dated as of June 24,
1996 among CENTRAL FINANCIAL ACCEPTANCE CORPORATION, a Delaware corporation
("Central"), BANNER'S CENTRAL ELECTRIC, INC., a California corporation
("Banner"), and BANNER HOLDINGS, INC., a Delaware corporation ("Holdings").

WHEREAS, concurrently herewith, Central, Banner and Holdings have
entered into a Reorganization Agreement dated as of the date hereof pursuant to
which Central will acquire the consumer finance businesses of Holdings and
Banner (the "Reorganization");

WHEREAS, Central has filed a registration statement with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, covering the issuance and sale by Central of up to 2,127,000 shares of
its common stock, par value of $.01 per share (the "Offering");

WHEREAS, the consumer finance businesses of Central will be included
in the consolidated federal, state and other income tax returns of Holdings
until the consummation of the Offering;

WHEREAS, effective upon the consummation of the Offering, Central and
its subsidiaries (collectively with Central and any predecessor of any
subsidiary, the "Subsidiaries," and individually, a "Subsidiary") will not be
included in Holdings' consolidated federal, state and other income tax returns.

NOW, THEREFORE, in consideration of the premises and the mutual
covenants and conditions herein contained, the parties agree as follows:

1. Remittance to Holdings. For all periods during which the
Subsidiaries were included in the consolidated federal, state and other income
tax returns of Holdings, Central shall remit to

<PAGE> 2

Holdings in a timely manner all taxes that would have been due the respective
governmental entities from each of the Subsidiaries if such Subsidiary had
filed separate income tax returns for the applicable period. For purposes of
this Agreement, the tax which would have been payable by a Subsidiary if it had
filed separate returns shall be computed as if such Subsidiary had filed
separate returns for all years during which such Subsidiary is includible in
the consolidated income tax returns of Holdings.

2. Refunds. Holdings shall remit to each Subsidiary in a timely
manner all refunds, together with interest thereon, that would be due the
Subsidiary if the Subsidiary had filed separate income tax returns.

3. Indemnification; Audits. The Subsidiaries shall indemnify
Holdings for all income tax liabilities for periods during which the
Subsidiaries were included in Holdings' consolidated income tax returns. In
the event of any changes to such consolidated income tax returns upon audit by
the Internal Revenue Service, a recalculation of the tax liability of each
Subsidiary shall be made and appropriate payments (including any interest and
penalties) shall be made by the Subsidiary based on the result of such audit.

4. Filing of Consolidated Returns; Taxes Due. Holdings shall be
responsible for filing the consolidated federal, state and other income tax
returns, for making all elections with respect thereto and for the payment of
all taxes due in respect thereof for all periods during which the Subsidiaries
were members of the affiliated group of which Holdings is the common parent.
The parties agree to cooperate with each other in the preparation of all
required tax returns and in connection with the audit of such tax returns
including making available to each other all applicable records and other
documents pertinent thereto. Holdings shall not consent to any adjustments
which would increase the tax liability of a Subsidiary without the consent of
such Subsidiary, provided that Holdings may consent to such adjustments if it
has the right to and does file a refund claim which preserves the right of such
Subsidiary to contest the adjustment.

5. Use of Accountants. For the purposes of this Agreement, all
computations or recomputations of income tax

- 2 -
<PAGE> 3
liability, and all determinations of payments or repayments, or determinations
of any other nature required to be made by this Agreement, shall be based on
the conclusions of the independent public accountants for Holdings and Central.

6. Dispute Resolution. In an effort to resolve informally and
amicably any claim or controversy arising out of or related to the
interpretation or performance of this Agreement without resorting to
litigation, the parties shall first notify the other parties of any difference
or dispute hereunder that requires resolution. The disputing parties shall
each designate an employee to investigate, discuss and seek to settle the
matter between them. If such parties are unable to settle the matter within 30
days after such notification, the matter shall be submitted to an independent
director of each for consideration. If settlement cannot be reached through
their efforts within an additional 30 days, or such longer time period as they
shall agree upon, the parties shall consider arbitration or other alternative
means to resolve the dispute. If they are unable to agree on an alternative
dispute resolution mechanism, any party may initiate legal proceedings to
resolve such matter.

7. Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties and their respective successors and
permitted assigns. This Agreement may not be assigned or delegated by any
party without the consent of the other parties.

8. Notices. All notices, requests, demands and other
communications provided for by this Agreement shall be in writing (including
telecopier or similar writing) and shall be deemed to have been given at the
time when mailed in any general or branch office of the United States Postal
Service, enclosed in a registered or certified postpaid envelope, or sent by
Federal Express or other similar overnight courier service, addressed to the
appropriate party at 5480 East Ferguson Drive, Commerce, California, 90022,
attention: Secretary, or to such changed address as such party may have fixed
by notice or, if given by telecopier, when such telecopy is transmitted and the
appropriate answerback is received.

9. Governing Law. This Agreement shall be governed by the laws
of the State of California without giving effect to the principles of conflicts
of law.

- 3 -
<PAGE> 4
10. Entire Agreement. This Agreement sets forth the entire
agreement among the parties with respect to its subject matter. This Agreement
may not be amended or otherwise modified except in writing duly executed by all
of the parties. No waiver of any provision or breach of this Agreement shall
be effective unless such waiver is in writing and signed by the party against
which enforcement of such waiver is sought. A waiver by any party of any
breach or violation of this Agreement shall not be deemed or construed as a
waiver of any subsequent breach or violation thereof.

11. Severability. Should any part, term or condition hereof be
declared illegal or unenforceable or in conflict with any other law, the
validity of the remaining portions or provisions of this Agreement shall not be
affected thereby, and the illegal or unenforceable portions of the Agreement
shall be and hereby are redrafted to conform with applicable law, while leaving
the remaining portions of this Agreement intact.

12. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same document.

13. Headings. Section headings are for convenience only and do
not control or affect the meaning or interpretation of any terms or provisions
of this Agreement.

IN WITNESS WHEREOF, the parties hereto have executed this agreement as
of the date first above written.

CENTRAL FINANCIAL ACCEPTANCE CORPORATION

By /s/ GARY M. CYPRES
--------------------------------
Gary M. Cypres
Chief Executive Officer and President

BANNER'S CENTRAL ELECTRIC, INC.

By /s/ GARY M. CYPRES
---------------------------------

- 4 -

<PAGE> 5
Gary M. Cypres
Chief Executive Officer and President

BANNER HOLDINGS, INC.

By /s/ GARY M. CYPRES
--------------------------------------
Gary M. Cypres
Chief Executive Officer and President

- 5 -

<PAGE> 1
EXHIBIT 10.8

INDEMNIFICATION AGREEMENT

This INDEMNIFICATION AGREEMENT (this "Agreement") is dated as of June
24, 1996 among CENTRAL FINANCIAL ACCEPTANCE CORPORATION, a Delaware corporation
("CFAC"), BANNER'S CENTRAL ELECTRIC, INC., a California corporation ("BCE"),
and BANNER HOLDINGS, INC., a Delaware corporation ("BHI").

WHEREAS, concurrently herewith, CFAC, BCE and BHI have entered into
a Reorganization Agreement dated as of the date hereof pursuant to which CFAC
will acquire the consumer finance business of BHI and BCE (the
"Reorganization");

WHEREAS, CFAC has filed a registration statement with the Securities
and Exchange Commission under the Securities Act of 1933, as amended, covering
the issuance and sale by CFAC of up to 2,127,000 shares of its common stock,
par value of $.01 per share;

WHEREAS, concurrently herewith, CFAC, BCE and BHI have entered into
various additional agreements for the purpose of defining the ongoing
relationship among the parties following the Reorganization;

WHEREAS, CFAC, BCE and BHI desire to enter into this Agreement to
indemnify one another (and provide for contribution to one another)
against liabilities arising from the operation of the parties' respective
businesses after the Reorganization.

NOW, THEREFORE, in consideration of the premises and the mutual
covenants and conditions herein contained, the parties agree as follows:

1. Indemnification.

(a) CFAC agrees to indemnify and hold harmless BCE and its subsidiaries
following the Reorganization (collectively and individually, "Banner") and BHI
and its subsidiaries following the Reorganization (collectively and
individually, "Holdings") against any and all claims, losses, damages,
liabilities, costs and expenses, joint or several (including reasonable
attorneys' fees and costs of investigation), to which Banner or Holdings may
become subject insofar as such claims, losses, damages, liabilities, costs and
expenses (or actions in respect thereof) arise from or are based on the
operations of the business of CFAC and its subsidiaries following the
Reorganization (collectively and individually, "Central"); provided, however,
that neither Banner nor Holdings shall be indemnified hereunder for liabilities
arising from either party's intentional misconduct or gross negligence or to the
extent any liability arises from a breach by Banner or Holdings of a fiduciary
duty owed by Banner or Holdings to other stockholders of CFAC.

(b) BCE and BHI, jointly and severally, agree to indemnify and hold
harmless Central against any and all claims, losses, damages, liabilities, costs
and expenses, joint or several (including reasonable attorneys' fees and costs
of investigation), to which Central may become
<PAGE> 2
subject insofar as such claims, losses, damages, liabilities, costs or expenses
(or actions in respect thereof) arise from or are based on the operations of the
businesses of Banner or Holdings, other than the business of Central before or
after the Reorganization.

(c) CFAC agrees to indemnify and hold harmless each of Banner and
Holdings against any all claims, losses, damages, liabilities, costs and
expenses, joint or several (including reasonable attorneys' fees and costs of
investigation) to which Banner or Holdings may become subject insofar as such
claims, losses, damages, liabilities, costs or expenses (or actions in respect
thereof) arise from or are based on guarantees or undertakings made by Banner or
Holdings to third parties in respect of liabilities or obligations of Central,
whether such guarantees or undertakings are made by Banner or Holdings before or
after the Reorganization; provided, however, that neither Banner nor Holdings
shall be indemnified hereunder for liabilities arising from either party's
intentional misconduct or gross negligence or to the extent any liability arises
from a breach by Banner or Holdings of a fiduciary duty owed by Banner or
Holdings to other stockholders of Central; provided, further, however, that if
the events giving rise to a particular claim, loss, damage, liability, cost or
expense occurred prior to the Reorganization, neither Banner nor Holdings shall
be indemnified pursuant to this Section.

2. Substitution.

(a) With respect to any litigation, proceeding or investigation by or
before any court or governmental agency or body which may be commenced or
threatened against Banner or Holdings after the date hereof which arises out of
or is based upon the business or operations of Central following the
Reorganization, at the option of Banner or Holdings, as the case may be, Central
and Banner or Holdings shall use their best efforts to have Central substituted
in the place of and for Banner or Holdings and to have Banner or Holdings
removed as a party as promptly as is reasonably practicable. Pending such
substitution, and in cases where such substitution cannot be effected, Central
shall promptly assume and direct the defense, prosecution and/or settlement of
the claims involved, employing for this purpose counsel satisfactory to each of
Banner and Holdings, and shall pay all expenses related thereto. To the extent
that any such expenses are paid by Banner or Holdings, Central shall promptly
reimburse such party therefor.

(b) With respect to any litigation, proceeding or investigation by or
before any court or governmental agency or body which may be commenced or
threatened against Central after the date hereof which arises out of or is based
upon the past, present or future business or operations of Banner or Holdings,
at Central's option, Central and Banner and Holdings shall use their best
efforts to have Banner or Holdings or both substituted in the place of and for
Central and to have Central removed as a party as promptly as is reasonably
practicable. Pending such substitution, and in cases where such substitution
cannot be effected, Banner or Holdings shall promptly assume and direct the
defense, prosecution and/or settlement of the claims involved, employing for
this purpose counsel satisfactory to Central, and shall pay all

-2-
<PAGE> 3
expenses related thereto. To the extent that any such expenses are paid by
Central, Banner or Holdings shall promptly reimburse Central therefor.

3. Notice and Payment of Claims. If any party entitled to
indemnification hereunder (an "Indemnified Party") is threatened in writing with
any claim, or any claim is presented in writing to, or any action or proceeding
formally commenced against, an Indemnified Party which may give rise to the
right of indemnification hereunder, the Indemnified Party will promptly give
written notice thereof to the other party (the "Indemnifying Party"), provided
that any delay by the Indemnified Party in so notifying the Indemnifying Party
shall not relieve the Indemnifying Party of any liability to the Indemnified
Party hereunder except to the extent the Indemnifying Party is materially and
adversely prejudiced by such delay. The Indemnifying Party, by delivery of
written notice to the Indemnified Party within 30 days of receipt of notice of
claim to indemnity from the Indemnified Party, may elect to contest such claim,
action or proceeding at the Indemnifying Party's expense and by counsel of its
own choosing. If the Indemnified Party requests in writing that such claim,
action or proceeding not be contested, then it shall not be contested but shall
not be covered by the indemnities provided herein. The Indemnifying Party may
settle an indemnifiable matter which it has duly elected to contest with the
consent of the Indemnified Party after delivering a written description of the
proposed settlement to, and receiving consent from, the Indemnified Party. In
the event that the Indemnified Party declines to consent to a bona fide
settlement acceptable to the claimant, then the Indemnified Party shall have no
right to indemnification beyond the amount of the proposed settlement.

4. Dispute Resolution. In an effort to resolve informally and
amicably any claim or controversy arising out of or related to the
interpretation or performance of this Agreement without resorting to litigation,
each party shall first notify the others of any difference or dispute hereunder
that requires resolution. BCE, BHI and CFAC shall each designate an employee to
investigate, discuss and seek to settle the matter among them. If they are
unable to settle the matter within 30 days after such notification, the matter
shall be submitted to a director of each of BCE, BHI and CFAC for consideration.
If settlement cannot be reached through their efforts within an additional 30
days, or such longer time period as they shall agree upon, CFAC, on the one
hand, or BCE and BHI, on the other hand, may initiate legal proceedings to
resolve such matter.

5. Cooperation. So long as any books, records and files retained by
either Banner or Holdings relating to the business operations or assets of
Central remain in existence and available, Central shall have the right upon
prior notice to inspect and copy the same at any time during business hours for
any proper purpose. Neither Banner nor Holdings shall destroy or permit the
destruction of (without first having offered to deliver to the other) any such
books, records and files for the time period during which they would be required
to retain such books, records or files by applicable law. Banner, Holdings and
Central shall cooperate with one another in a timely manner in any
administrative or judicial proceeding involving any matter affecting the
potential liability of any such party or with respect to any governmental
authority. Such

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<PAGE> 4
cooperation shall include, without limitation, making available to each of the
other parties, during normal business hours, all books, records and information,
officers and employees (without substantial interruption of employment)
necessary or useful in connection with any inquiry, audit, investigation or
dispute, any litigation or any other matter requiring any such books, records,
information, officers or employees for any reasonable business purpose. The
party requesting or otherwise entitled to any books, records, information,
officers or employees pursuant to this Section shall bear all reasonable
out-of-pocket costs and expenses (except reimbursement of salaries, employee
benefits and general overhead) incurred in connection with providing such books,
records, information, officers or employees.

8. Governing Law. This Agreement shall be governed by the laws of
the State of California without giving effect to the principles of conflicts of
law.

11. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same document.

-4-
<PAGE> 5
12. Headings. Section headings are for convenience only and do not
control or affect the meaning or interpretation of any terms or provisions of
this Agreement.

IN WITNESS WHEREOF the parties have executed this Agreement as of the
date first above written.

CENTRAL FINANCIAL ACCEPTANCE CORPORATION

By /s/ GARY M. CYPRES
----------------------------------------
Gary M. Cypres
Chief Executive Officer and President

BANNER'S CENTRAL ELECTRIC, INC.

By /s/ GARY M. CYPRES
----------------------------------------
Gary M. Cypres
Chief Executive Officer and President

BANNER HOLDINGS, INC.

By /s/ GARY M. CYPRES
----------------------------------------
Gary M. Cypres
Chief Executive Officer and President

-5-

<PAGE> 1
EXHIBIT 10.9

CENTRAL FINANCIAL ACCEPTANCE CORPORATION
5480 East Ferguson Drive
Commerce, California 90022
(213) 720-8600

June 24, 1996

Banner Holdings, Inc.
5480 East Ferguson Drive
Commerce, California 90022

Dear Sirs:

Central Financial Acceptance Corporation ("Central") has filed
a registration statement on Form S-1 (the "Registration Statement") with the
Securities and Exchange Commission under the Securities Act of 1933, as amended
(the "Act"), covering the sale by Central of shares of its common stock, par
value of $.01 per share, pursuant to the Registration Statement (the
"Offering"). In connection with the Offering, Central desires to enter into an
underwriting agreement substantially in the form of Exhibit A attached hereto
(the "Underwriting Agreement"). At the request of the underwriters named in the
Underwriting Agreement (the "Underwriters"), you have agreed to become a party
to the Underwriting Agreement and, as such, to jointly and severally with
Central indemnify the Underwriters as provided in Section 10 of the Underwriting
Agreement. In addition, by becoming a party to the Underwriting Agreement at the
request of the Underwriters, you also will agree to the contribution provisions
set forth in Section 10 of the Underwriting Agreement. Notwithstanding that the
indemnification and contribution provisions set forth in Section 10 of the
Underwriting Agreement provide for the joint and several liability of you and
Central, Central hereby agrees that between you and Central it is intended that
Central will be the primary obligor under the Underwriting Agreement and that
your liability thereunder is intended to be that of a guarantor.

In consideration of your execution and delivery of the
Underwriting Agreement and other good and valuable consideration, Central hereby
agrees with you as follows:

1. Indemnification. Central agrees to indemnify and hold harmless you
and each person, if any, who controls you (a "Control Person") within the
meaning of Section 15 of the Act or Section 20(a) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), against any and all losses, claims,
damages, liabilities and expenses (including but limited to reasonable
attorneys' fees and all costs whatsoever incurred in investigating, preparing or
defending against any litigation, commenced or threatened, or any claim
whatsoever, and any and all amounts paid in settlement of any claim or
litigation), to which you or any such Control Person may become subject insofar
as such losses, claims, damages, liabilities and expenses (or actions in respect
thereof) arise from or are based on the indemnification and contribution
provisions set forth in Section 10 in the Underwriting Agreement.
<PAGE> 2
This indemnity agreement will be in addition to any liability which Central may
otherwise have, including under the Underwriting Agreement.

2. Contribution. In order to provide for just and equitable
contribution in circumstances under which the indemnity provided for in Section
1 hereof is for any reason held to be unenforceable by you although applicable
in accordance with its terms, you and Central shall contribute to the aggregate
claims, losses, damages, liabilities, costs and expenses of the nature
contemplated by such indemnity incurred by you and Central in such proportion
that is appropriate to reflect the relative fault of Central and you in
connection with the matters which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
For purposes of this Section 2, each Control Person, if any, shall have the same
rights to contribution as you.

3. Notice and Payment of Claims. Central agrees that you shall not be
required to give Central any notice with respect to an event which may give rise
to the right of indemnification or contribution hereunder. Central agrees that
you shall have the right to settle any indemnifiable matter without Central's
prior consent.

4. Dispute Resolution. In order to resolve informally and amicably any
claim or controversy arising out of or related to the interpretation or
performance of this Agreement without resorting to litigation, each party shall
first notify the other of any difference or dispute hereunder that requires
resolution. You and Central shall each designate an employee to investigate,
discuss and seek to settle the matter between them. If the two are unable to
settle the matter within 30 days after such notification, the matter shall be
submitted to an independent director of each of you and Central for
consideration. If settlement cannot be reached through their efforts within an
additional 30 days, or such longer time period as they shall agree upon, either
party may initiate legal proceedings to resolve such matter.

5. Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties and their respective successors and
permitted assigns. This Agreement may not be assigned or delegated by any party
without the consent of the other party.

6. Notices. All notices, requests, demands and other communications
provided for by this Agreement shall be in writing (including telecopier or
similar writing) and shall be deemed to have been given at the time when mailed
in any general or branch office of the United States Postal Service, enclosed in
a registered or certified postpaid envelope, or sent by Federal Express or other
similar overnight courier service, addressed to the address of the parties set
forth above or to such changed address as such party may have fixed by notice
or, if given by telecopier, when such telecopy is transmitted and the
appropriate answerback is received.

7. Governing Law. This agreement shall be governed by the laws of the
State of California without giving effect to principles of conflicts of laws.

-2-
<PAGE> 3
8. Entire Agreement. This Agreement sets forth the entire agreement
among the parties with respect to its subject matter. This Agreement may not be
amended or otherwise modified except in writing duly executed by all of the
parties. No waiver of any provision or breach of this Agreement shall be
effective unless such waiver is in writing and signed by the party against which
enforcement of such waiver is sought. A waiver by any party of any breach or
violation of this Agreement shall not be deemed or construed as a waiver of any
subsequent breach or violation thereof.

9. Severability. Should any part, term or condition hereof be
declared illegal or unenforceable or in conflict with any other law, the
validity of the remaining portions or provisions of this Agreement shall not be
affected thereby, and the illegal or unenforceable portions of the Agreement
shall be and hereby are redrafted to conform with applicable law, while leaving
the remaining portions of this Agreement intact.

10. Effectiveness. This Agreement shall become effective upon the
execution by you and Central of the Underwriting Agreement.

11. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same document.

12. Headings. Section headings are for convenience only and do not
control or affect the meaning or interpretation of any terms or provisions of
this Agreement.

[Remainder of Page Intentionally Left Blank]

-3-
<PAGE> 4
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to Central a counterpart hereof, whereupon
this instrument will become a binding agreement between you and Central in
accordance with its terms.

Very truly yours,

CENTRAL FINANCIAL ACCEPTANCE CORPORATION

By /s/ GARY M. CYPRES
--------------------------------------
Gary M. Cypres
Chief Executive Officer and President

Confirmed and accepted as of
the date first above written:

BANNER HOLDINGS, INC.

By /s/ GARY M. CYPRES
-----------------------------------
Gary M. Cypres
Chief Executive Officer and President

-4-

<PAGE> 1

EXHIBIT 10.12

CENTRAL FINANCIAL ACCEPTANCE CORPORATION

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

<PAGE> 2

CENTRAL FINANCIAL ACCEPTANCE CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

1. Purpose - The purpose of this Plan is to provide key executives with
an incentive to become or remain long-term employees of the Company. This Plan
is intended to be a "tophat" plan within the meaning of Sections 201(2),
301(a)(3), 401(a)(1) and 4021(b)(6) of the Employee Retirement Income Security
Act of 1974, as amended.

2. Definitions - As used in this Plan, the following terms shall have
the meanings set forth below, unless the context requires otherwise:

(a) "Accrued Benefit" shall mean a Participant's Target
Benefit Level adjusted by: (i) multiplying it by a fraction not to exceed one,
the numerator of which is the Participant's active Years of Service and the
denominator of which is the Years of Service the Participant would have had at
his Normal Retirement Date if he continued in employment with the Company until
such date, and (ii) reducing it by the annuity value (as determined by an
actuary who is selected by the Board of Directors) of the Participant's Profit
Sharing Plan Account.

(b) "Actuarial Equivalent" shall mean equality in
<PAGE> 3

value of the aggregate sums expected to be received under the form of payment
under the Plan, or equality in value of the same form of payment under the Plan
if payments begin as of a different date, or both, determined in each case by
actuarial assumptions determined by an actuary who is selected by the Board of
Directors.

(c) "Affiliate" shall mean (i) the Company, (ii) any
corporation of which the Company or any other Affiliate owns more than 50% of
the outstanding shares or (iii) any corporation which owns more than 50% of the
outstanding shares of the Company or any other Affiliate.

(d) "Surviving Spouse" shall mean the person determined in
accordance with Section 8.

(e) "Board of Directors" shall mean the Board of Directors of
the Company.

(f) "Company" shall mean Central Financial Acceptance
Corporation, a Delaware corporation, and any successor thereto.

(g) "Compensation" shall mean the Participant's fixed salary
or base pay which is paid to the Participant in consideration for his personal
services actually rendered to the Company, including any amount contributed by
the Company pursuant to a salary reduction agreement which is not includible
<PAGE> 4

in the gross income of the Participant under Section 125 or 402(e)(3) of the
Internal Revenue Code of 1986, as amended, and any bonuses accrued by the
Company with respect to such Participant.

(h) "Effective Date" shall mean June __, 1996.

(i) "Employee" shall mean any key employee on the payroll of
the Company whose wages are subject to withholding for Federal income tax
purposes.

(j) "Final Average Compensation" shall mean the average
monthly Compensation earned by a Participant during those 36 consecutive
calendar months out of the last 60 calendar months preceding the Participant's
termination of employment with the Company which produces the highest monthly
average.

(k) "Normal Retirement Date" shall mean the first day of the
month following the date the Participant attains his 60th birthday.

(l) "Participant" shall mean each Employee who is eligible to
participate in the Plan in accordance with the provisions of Section 3.

(m) "Plan" shall mean the Central Financial Acceptance
Corporation Supplemental Executive Retirement Plan, as embodied herein and as
amended from time to time.
<PAGE> 5

(n) "Post-Effective Date Year of Service" shall mean each Year
of Service completed after the Effective Date.

(o) "Profit Sharing Plan Account" shall mean a Participant's
Company contribution account, including earnings thereon, under the Banner's, a
California corporation, dba Central Electric Profit Sharing Plan and any
successor plan thereto.

(p) "Surviving Spouse" shall mean the person determined in
accordance with Section 8.

(q) "Target Benefit Level" shall mean a monthly benefit
beginning at the Participant's Normal Retirement Date, equal to a percentage
designated by the Board of Directors of a Participant's Final Average
Compensation, but in no event more than 50% of the Participant's Final Average
Compensation.

(q) "Year of Service" shall mean each twelve consecutive month
period or fraction thereof (to the nearest whole month) beginning with the date
the Participant is hired by the Company or its Affiliates (whether completed
before or after the Effective Date and before or after the Employee becomes a
Participant in this Plan).

3. Eligibility. The Board of Directors shall designate, from time to
time, the Employees who are eligible to participate
<PAGE> 6

in the Plan. An Employee shall cease to be a Participant in the Plan upon his
termination of employment.

4. Benefit Agreement. Upon his designation, each Participant shall
enter into a written agreement (the "Agreement") with the Company, which shall
be executed for the Company by the Chairman of the Board of Directors or the
President, and which shall include the Target Benefit Level and such other terms
as the Board of Directors shall deem appropriate. The Board of Directors may
amend the Agreement to provide for an increase or decrease of the Target Benefit
Level for an eligible Employee; provided that any decrease shall apply only to
Years of Service after the date of such decrease.

5. Normal Retirement Benefit. If a Participant terminates his
employment with the Company on or after his Normal Retirement Date and after
having completed at least ten Years of Service (at least five of which are
Post-Effective Date Years of Service), he shall be entitled to receive a benefit
in a monthly amount equal to his Accrued Benefit , or the Actuarial Equivalent
of such Accrued Benefit if the Participant's termination of employment occurs
after his Normal Retirement Date. Such Benefit shall be paid monthly in the form
of a straight life annuity for the Participant's life, commencing on
<PAGE> 7

the later of the Participant's Normal Retirement Date or the first day of the
month following the Participant's termination of employment.

6. Death Benefits. In the event a Participant dies after completing at
least ten Years of Service (at least five of which are Post-Effective Date Years
of Service), while either an Employee or after having retired under Section 5 or
having terminated employment under Section 7 but before having received any
payment of his Accrued Benefit and he is survived by a Surviving Spouse, the
Company shall pay a death benefit to his Surviving Spouse, in an amount equal to
the Actuarial Equivalent of the Participant's Accrued Benefit as of the date of
his death determined on the basis of his Final Average Compensation and Years of
Service as of such date. Such amount shall be paid monthly for the life of the
Participant's Surviving Spouse, commencing as of the first day of the month
following the Participant's death.

7. Termination of Employment. If a Participant's employment with the
Company and its Affiliates is involuntarily terminated (other than by reason of
death) prior to his Normal Retirement Date, he will receive a benefit under the
Plan, provided he completed at least ten Years of Service (at least
<PAGE> 8

five of which are Post-Effective Date Years of Service). The benefit payable
pursuant to this Section 7 shall be a monthly amount equal to the Participant's
Accrued Benefit determined on the basis of his Final Average Compensation and
Years of Service as of the date of his termination of employment and shall be
paid monthly in the form of a straight life annuity for the Participant's life,
commencing on the Participant's Normal Retirement Date. Notwithstanding the
preceding, a Participant shall not be entitled to any benefits under the Plan if
his employment with the Company and its Affiliates is terminated for "cause".
For purposes of this Plan, a Participant shall be terminated for "cause" if his
employment is terminated because of the Participant's fraud, misappropriation of
funds or property of the Company or its Affiliates for his own use, embezzlement
of the property of the Company or its Affiliates or a material and intentional
breach by the Participant of the provisions of his employment.

8. Surviving Spouse. Any amount payable pursuant to this Plan upon the
death of a Participant shall be payable to the spouse, if any, to whom the
Participant was married at the time of his death.
<PAGE> 9

9. Funding. Benefits under this Plan shall be unfunded, shall be
payable out of the general assets of the Company, and no special or separate
fund shall be established to assure payment of such amounts. No Participant or
Surviving Spouse shall have any rights under the terms of the Plan or a Benefit
Agreement greater than the rights of an unsecured general creditor of the
Company.

10. Other Retirement Benefits. The benefits and payments provided under
this Plan are independent of any and all retirement benefits provided to the
Participant from any other source, except that in determining the amount of the
Participant's Accrued Benefit pursuant to Section 2(a), the value of the
Participant's Profit Sharing Plan Account shall be taken into account as
provided in Section 2(a).

11. Incapacity. In the event that the Board of Directors determines
that the Participant or his Surviving Spouse is unable to care for his affairs
due to any physical or mental condition, any payment due the Participant or
Surviving Spouse under this Plan may be made to his duly appointed legal
representative. The Board of Directors may, in its discretion, make such payment
to a child, parent or spouse of such Participant or Surviving Spouse or to any
other person with whom
<PAGE> 10

he resides or who is charged with his care. Any such payment so made shall be in
complete discharge of the liability of the Company under this Plan to each and
every person with respect to the amount so paid.

12. Assignment. The interest in this Plan of a Participant or Surviving
Spouse shall not be subject to assignment or transfer or otherwise be alienable
either by voluntary or involuntary acts of such person, or by operation of law,
nor shall it be subject to attachment, execution, garnishment, sequestration or
other seizure under any legal, equitable or other process. If any Participant or
Surviving Spouse shall attempt to or shall alienate, sell, transfer, pledge or
otherwise encumber any amount to which he is or might become entitled, or if by
reason of the bankruptcy or insolvency of any such person or the issuance of any
garnishment, writ of execution or other court process, or other event happening
at any time, any amount otherwise payable hereunder to such person should
devolve upon anyone other than him or would not be enjoyed by him, the Board of
Directors, in its absolute discretion, may terminate such interest and may hold
or apply it to or for the benefit of such Participant, or Surviving Spouse, as
the case may be, or the spouse, children or other dependents
<PAGE> 11

of such person, in such manner as the Board of Directors may deem proper.

13. No Employment Contract. This Plan shall not be construed as
creating any contract of employment between the Company and the Participant nor
shall it change any rights or obligations under any existing employment contract
between the Company and the Participant. The Company shall have the same right
with respect to, and control over, its Employees as though this Plan had never
been executed.

14. Covenant Not to Compete.

(a) If a Participant shall, during the 24-month period
immediately following his termination of employment with the Company, engage in
"Competition" with the Company (as hereinafter defined), within the territories
in which the Company is actively engaged in the conduct of business during the
term of employment hereunder including, without limitation, the territories in
which customers are then being solicited, his benefit payments shall be
suspended, and he shall be required to return the amount of any previous
benefits paid to him under this Plan plus any interest thereon, as liquidated
damages, or if no such payments have been made, his benefit under the Plan shall
be forfeited.
<PAGE> 12

(b) The word "Competition" for purposes of this Section 14 or
any other provision of this Plan shall mean:

(i) Engaging in or carrying on, directly or
indirectly, either for himself or as a member of a partnership or as a
stockholder, investor, lender, officer or director of a corporation
(other than the Company), or as an employee or agent of, or consultant
or advisor to, any person, partnership, corporation, joint venture or
enterprise (other than the Company), or in any capacity on behalf of
any trust or other organization or entity, any business in competition
with (as defined below) any business then carried on by the Company as
long as any like business is carried on by the Company or by any
person, corporation, partnership, trust or other organization or entity
deriving title to the good will of such business, directly or
indirectly, from the Company; provided, however, that nothing herein
contained shall prevent the Participant from purchasing securities of
any publicly owned company, the securities of which are listed on a
national securities exchange or registered pursuant to Section 12(g) of
the Securities Exchange Act of 1934, (the "1934 Act") but the total
holding of such security so
<PAGE> 13

listed or registered shall be limited to 1% of the amount of any such
security outstanding. The Participant may make investments, without
restriction on amount, in noncompetitive private businesses. For the
purposes of this Section 14(b)(i) the term "any business in competition
with" shall mean any business engaged principally or in part in the
business of the Company as described in its Registration Statement on
Form S-1 (Registration No. 333- 3790) relating to the registration of
shares of the common stock of the Company (the "Registration
Statement") and in any other filing made after the Effective Date by
the Company with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended, or the 1934 Act ("Subsequent
Filings"); or

(ii) soliciting, raiding, enticing, inducing or
attempting to persuade any person that presently is or is at any time
during the term of the Participant's employment as an Employee (or, in
the case of termination, is at the time of termination or within the
24-month period thereafter) an employee of the Company to become
employed by any person, firm, partnership, corporation or other
enterprise or entity, and the Participant shall not
<PAGE> 14

approach any such employee for such purpose or authorize the taking of
such actions by any other person, firm, partnership, corporation or
other enterprise or entity in taking such action; or

(iii) divulging, furnishing or making accessible
to any person, corporation, partnership, trust or other organization or
entity, any information, trade secrets, technical data or know-how
relating to the business, business practices, methods, attorney-client
communications, pending or contemplated acquisitions or other
transactions, products, processes, equipment or any confidential or
secret aspect of the business of the Company without the prior written
consent of the Company, unless such information shall have become
public knowledge or shall have become known generally to competitors of
the Company through sources other than the Participant.

15. Amendment and Termination. The Company may amend, terminate or
suspend this Plan at any time or from time to time by a resolution by the Board
of Directors; provided, however, that no amendment or termination of the Plan
shall reduce the Accrued Benefit to which any Participant or Surviving Spouse is
entitled under this Plan by reason of the Participant's prior
<PAGE> 15

Years of Service or the Participant's death, or other termination of employment.

16. Administration. This Plan shall be administered by the Board of
Directors. The Board of Directors shall be charged with the operation and
administration of the Plan. The Board of Directors shall have discretionary
authority to interpret and construe this Plan and to determine all questions
arising under this Plan, and to adopt and amend from time to time such by-laws
and rules and regulations necessary for the administration of this Plan which
are not inconsistent with the terms and provisions of this Plan.

17. Binding Effect. This Plan shall inure to the benefit of and be
binding upon the Company, its successors and assigns, including without
limitation any corporation which may acquire all its assets or into which the
Company may be consolidated or merged, and any Participant, his heirs,
executors, administrators and legal representatives, provided that the
obligations of the Participant hereunder may not be delegated.

18. Governing Law. This Plan shall be governed by and construed in
accordance with the laws of the State of California governing contracts to be
made and performed therein without giving effect to principles of conflicts of
law, except to the

<PAGE> 16

extent such laws have been superseded by Federal law.

19. Gender and Number. The masculine pronoun whenever used
herein shall include the feminine pronoun and the singular number shall include
the plural number and vice versa unless the context of the Plan requires
otherwise.

<PAGE> 17

IN WITNESS WHEREOF, Central Financial Acceptance Corporation
has executed this Plan on this 24th of June 1996.

CENTRAL FINANCIAL ACCEPTANCE CORPORATION

By /s/ GARY M. CYPRES
-----------------------------------
Gary M. Cypres
President and Chief Executive Officer

ATTEST:

________________________________
Secretary

<PAGE> 1
EXHIBIT 10.13

CENTRAL FINANCIAL ACCEPTANCE CORPORATION

EXECUTIVE DEFERRED SALARY AND BONUS PLAN

Effective June 24, 1996
<PAGE> 2
CENTRAL FINANCIAL ACCEPTANCE CORPORATION
EXECUTIVE DEFERRED SALARY AND BONUS PLAN

1. PURPOSE

The purpose of the Plan is to attract competent officers and key
executives by offering flexible compensation opportunities; to
motivate these executives to promote the growth and profitability of
the Company; and to associate the interests of these executives with
those of the Company.

2. DEFINITIONS

"Account" shall mean the record maintained by the Company reflecting
Executive's Deferred Amounts and the interest credited thereon as
provided for in this Plan.

"Account Balance" shall mean at any time the total of the amounts
credited to the Executive's Account and any accrued but not credited
interest in accordance with the provisions of the Plan.

"Board of Directors" shall mean the Board of Directors of Central
Finance Acceptance Corporation.

"Bonus" shall mean, at any time, the gross amount of the bonus payable
to the Executive under the Company's Executive Incentive Bonus Program
(or any other similar bonus program hereafter established by the
Company), before giving effect to any deferral agreement hereunder.

"Committee" shall mean the Committee appointed by the Board of
Directors.

"Company" shall mean Central Financial Acceptance Corporation.

"Deferred Amount" shall mean the amount by which the Salary and/or
Bonus is reduced from time to time as agreed upon by the Executive and
the Company and deferred in accordance with the terms of the Plan.
The Deferred Amount may be a dollar amount or a percentage of Salary
and/or Bonus.

-2-

<PAGE> 3
"Employee" shall mean any person (including an officer) actively
employed by the Company on a full-time, salaried basis.

"Employed" or "Employment" shall mean performing services as an
employee on a full time basis for the Company.

"Executive" shall mean an Employee who is an officer or key executive
of the Company Employed in a high-ranking executive or managerial
capacity.

"Participant" shall mean an Executive selected by the Committee and
whose participation in the Plan for a calendar year has been approved.

"Plan" shall mean this Executive Deferred Salary and Bonus Plan, as
from time to time amended and in effect.

"Salary" shall mean, at any time, the gross amount of base
compensation being paid to the Executive for Employment, before giving
effect to any deferral agreement hereunder.

3. ADMINISTRATION

The Plan shall be administered by the Committee, which shall have full
and discretionary authority to interpret the Plan, to establish rules
and regulations relating to the Plan, to determine the criteria for
eligibility to participate in the Plan, to select Participants in the
Plan, and to make all other determinations and take all other actions
necessary or appropriate for the proper administration of the Plan.
The Committee's interpretation of the Plan, and all actions taken
within the scope of its authority, shall be final and binding on the
Company, its stockholders, Participants, Employees, former Employees
and beneficiaries.

4. ELIGIBILITY AND PARTICIPATION

Participation in the Plan for a calendar year (and for the period
beginning on the effective date of the Plan and ending December 31,
1996) shall be limited to those key Executives whom the Committee
shall select, on the basis of

-3-
<PAGE> 4
such Executives' impact on the long-term success of the Company, and
who might benefit from the deferral of amounts otherwise constituting
current compensation.

5. DEFERRAL OF SALARY AND/OR BONUS

A Participant may, subject to the terms and conditions of this Plan,
elect to defer payment of a maximum of 35% of Salary, and/or a maximum
of 100% of Bonus, annually under this Plan by completing the form
prescribed by the Committee. The form shall constitute an agreement
between the Company and the Employee as to the amount of Salary and/or
Bonus to be deferred pursuant to the Plan. The Committee may further
limit deferral by individual Participants, for any reason it deems
advisable.

(a) Election.

An election to defer Salary shall be made on or before the
last regular working day of the Company of the calendar year
preceding the calendar year for which the Salary and/or Bonus
agreement is to be made and shall be effective upon delivery
(or in the event the form is mailed by certified mail, return
receipt requested, on the date of mailing) of the deferral
form to the Company. Notwithstanding the preceding sentence,
in the calendar year in which this Plan is initially adopted
and in the case of an individual who becomes an Executive
during a calendar year, a Participant's election to defer
Salary that would otherwise be payable after the date of the
election, and/or all or a portion of the Bonus payable with
respect to the period after the date of the election, may be
made up to 30 days after the effective date of the Plan or the
individual becomes an Executive and eligible to participate
herein, whichever is applicable. The election made to reduce
Salary and/or Bonus by a Participant must remain in effect for
an entire calendar year (or, in the case of the calendar year
in which this Plan is adopted or the calendar year in which an
individual becomes an Executive, the remaining portion of such
calendar year to which the

-4-
<PAGE> 5
deferral election relates) and may not be changed by any
action taken by the Participant thereafter.

(b) Payment of Deferred Amount.

The Deferred Amount, plus interest credited thereon pursuant
to Subsection (c) hereof, upon the Participant's termination
of Employment for any reason will be paid to the Participant
(or, in the event of the Participant's death, the person or
estate determined under Section 6 hereof) in a lump sum within
30 days after such termination.

A separate Account shall be established and maintained for
each Participant, which Account shall reflect the Deferred
Amount and all interest credited thereon from time to time.
Each Participant's Account Balance shall be credited quarterly
with interest as of the end of each calendar quarter, with the
first such credit being made as of September 30, 1996. In the
event a Participant's Account Balance is paid other than at
the end of any calendar quarter, he shall be credited with
interest thereon from the end of the immediately preceding
calendar quarter to the date of payment. No interest shall be
credited to a Participant's Account after the payment of such
Participant's Account Balance. Interest to be credited for
any period shall be at a rate equal to the average prime rate
which Wells Fargo Bank N.A. charged from time to time during
such period at its principal office on 90-day unsecured
commercial loans to its most credit worthy commercial
borrowers. Interest credits shall be computed on the basis of
a 360-day year of twelve 30-day months.

(d) Acceleration of Payment of Deferred Amount.

Payment of the Deferred Amount plus interest may occur prior
to the Participant's termination of Employment under the
following circumstances:

-5-
<PAGE> 6
(1) At any time prior to complete payment of the
Participant's Account Balance, the Company may pay to
the Participant an amount not greater than that
portion of the Deferred Amount that the Committee
determines, in its sole discretion, is necessary to
meet an Unforeseeable Emergency. For purposes of
this paragraph, an Unforeseeable Emergency shall mean
an unanticipated emergency that is caused by an event
beyond the control of the Participant and that would
result in severe financial hardship to the
Participant if early withdrawal of the Participant's
Account Balance were not permitted. The Participant
shall apply in writing to the Committee for any
payment under this paragraph and shall furnish to the
Committee such information as the Committee deems
necessary and appropriate to make its determination.

(2) In no event may payment of the Deferred Amount, and
interest thereon, or any portion thereof, be
accelerated in any manner other than as provided
above.

6. DESIGNATION OF BENEFICIARY

A Participant may designate a beneficiary or beneficiaries who, in the
event of the Participant's death prior to full payment of his Account
Balance hereunder, shall receive payment of the Account Balance due
under the Plan. Such designation shall be made by the Participant on
a form prescribed by the Committee. The Participant may, at any time,
change or revoke such designation. A beneficiary designation, or
revocation of a prior beneficiary designation, will be effective only
if it is made in writing on a form provided by the Company, signed by
the Participant and received by the Company. If the Participant does
not designate a beneficiary or the beneficiary dies prior to receiving
any payment of the Account Balance, the Account Balance payable under
the Plan shall be paid to the Participant's estate.

7. AMENDMENT AND TERMINATION

-6-
<PAGE> 7
The Board of Directors may at any time amend or terminate this Plan.
No amendment or termination shall adversely affect a Participant's
rights to or interest in the Account Balance credited prior thereto
without the Participant's consent.

8. MISCELLANEOUS PROVISIONS

(a) This Plan is not a contract for employment of the Employee for
a certain period of time. Neither the establishment of this
Plan, nor any action taken hereunder, shall be construed as
giving any Employee any right to be retained in the Employ of
the Company.

(b) A Participant's rights and interest under the Plan are not
subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, attachment, or
garnishment by creditors of the Participant or the
Participant's beneficiary.

(c) It is the intention of the parties that the Plan be unfunded
for tax purposes and for purposes of Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").
The Company shall not be required to establish any special or
separate fund, or to make any other segregation of assets, to
assure payment of the Account Balance. Participants have the
status of general unsecured creditors of the Company and the
Plan constitutes a mere promise by the Company to make benefit
payments in the future.

(d) To the extent that the Plan is considered to be a plan for
purposes of ERISA, it shall be considered an unfunded plan
maintained primarily for the purpose of providing deferred
compensation for a select group of management or highly
compensated employees, within the meaning of Sections 201(2),
301(a)(3) and 401(a)(1) of ERISA.

-7-
<PAGE> 8
9. WITHHOLDING AND PAYMENTS

The Company shall have the right to deduct from any amount to be paid
to any Participant or beneficiary any taxes or other amounts required
by law to be withheld.

10. EFFECTIVE DATE

The Plan shall be effective on and after June 24, 1996.

-8-

<PAGE> 1

EXHIBIT 10.39

AMENDMENT NO. 1 TO
REVOLVING LOAN AGREEMENT

This Amendment No. 1 to Revolving Loan Agreement (this "Amendment"),
dated as of November 17, 1997, is entered into with reference to the Revolving
Loan Agreement dated as of June 13, 1997 among Central Financial Acceptance
Corporation, a Delaware corporation ("Borrower"), the Lenders party thereto, and
Wells Fargo Bank, National Association, as Agent (the "Loan Agreement").
Capitalized terms used but not defined herein are used with the meanings
specified for such terms in the Loan Agreement. Section references herein relate
to the Loan Agreement unless stated otherwise.

Borrower, the Agent and each of the Lenders agree as follows:

1. Section 6.13 - Past Due Receivables Ratio. Section 6.13 is
amended and restated in its entirety to read as follows:

6.13. Past Due Receivables Ratio. Permit the Past Due
Receivables Ratio, as of the last day of any Fiscal Month (commencing with
the Fiscal Month ending September 30, 1997), to exceed 0.08 to 1.00.

2. Conditions Precedent. The effectiveness of this Amendment shall
be conditioned upon the receipt by the Agent of the following documents, each
properly executed by a Responsible Official of each party thereto and dated as
of the date hereof:

(a) counterparts of this Amendment executed by all parties
hereto; and

(b) a consent and reaffirmation executed by all of the
Guarantors in the form of Exhibit A to this Amendment.

3. Amendment Fee. In addition to the conditions precedent specified
above, the effectiveness of this Amendment shall be further conditioned upon the
receipt by the Agent, for the ratable accounts of the Lenders pro rata according
to their Pro Rata Share of the Commitment, an amendment fee equal to $25,000.00.

4. Representations and Warranties. Borrower represents and warrants
to the Agent and the Lenders that, after giving effect to this Amendment, no
Default or Event of Default has occurred and remains continuing.

5. Confirmation. In all respects, the terms of the Loan Agreement
and the other Loan Documents, in each case as amended hereby, are hereby
confirmed.

-1-

<PAGE> 2

IN WITNESS WHEREOF, Borrower, the Agent and each of the Lenders have
executed this Amendment as of the date first set forth above by their duly
authorized representatives.

CENTRAL FINANCIAL ACCEPTANCE
CORPORATION, a Delaware corporation

By: /s/ GARY M. CYPRES
-----------------------------------------------
Gary M. Cypres
Chief Executive Officer

WELLS FARGO BANK, NATIONAL
ASSOCIATION, as the Agent and as a Lender

By: /s/ PERRY MORETH
-----------------------------------------------
Perry Moreth
Vice President

SUMITOMO BANK OF CALIFORNIA,
as a Lender

By: /s/ STEVEN K. SLOAN
-----------------------------------------------
Steven K. Sloan, Vice President
-----------------------------------------------
[Printed Name and Title]

SANWA BANK CALIFORNIA,
as a Lender

By: /s/ ROBERT G. MORRE
-----------------------------------------------
Robert G. Morre, Vice President
-----------------------------------------------
[Printed Name and Title]

UNION BANK OF CALIFORNIA, N.A.,
as a Lender

By: /s/ ROBERT C. NAGEL
-----------------------------------------------
Robert C. Nagel, Vice President
-----------------------------------------------
[Printed Name and Title]

-2-

<PAGE> 3

Exhibit A to Amendment No. 1

CONSENT AND REAFFIRMATION OF GUARANTORS

Each of the undersigned Guarantors hereby consents to the execution,
delivery and performance by Borrower, the Agent and the Lenders of the foregoing
Amendment No. 1 ("Amendment"). In connection therewith, each of the undersigned
expressly and knowingly reaffirms its liability under the Guaranty to which it
is a party executed and delivered by such Guarantor in favor of the Agent (on
behalf of the Lenders), and expressly agrees to be and remain liable under the
terms of such Guaranty for the Guarantied Obligations described therein and
acknowledges that it has no defense, offset or counterclaim whatsoever against
the Agent or the Lenders with respect to such Guaranty.

Each of the undersigned further agrees that such Guaranty shall
remain in full force and effect and is hereby ratified and confirmed.

Each of the undersigned further agrees that the execution of this
Consent and Reaffirmation of Guarantors is not necessary for the continued
validity and enforceability of such Guaranty, but is executed to induce the
Agent and the Lenders to approve of and otherwise enter into the Amendment.

IN WITNESS WHEREOF, each of the undersigned, intending to be legally
bound hereby, has caused this Consent and Reaffirmation of Guarantors to be
executed as of November 17, 1997.

BANNER HOLDINGS, INC.,
a Delaware corporation

By: /s/ GARY M. CYPRES
-----------------------------------------------
Gary M. Cypres
Chief Executive Officer

CENTRAL FINANCIAL ACCEPTANCE
CORPORATION, a Delaware corporation

By: /s/ GARY M. CYPRES
-----------------------------------------------
Gary M. Cypres
Chief Executive Officer

-3-

<PAGE> 1
EXHIBIT 10.40

AMENDMENT NO. 2 TO
REVOLVING LOAN AGREEMENT

This Amendment No. 2 to Revolving Loan Agreement (this "Amendment No. 2"),
dated as of March 26, 1998, is entered into with reference to the Revolving Loan
Agreement dated as of June 13, 1997 among Central Financial Acceptance
Corporation, a Delaware corporation ("Borrower"), the Lenders party thereto, and
Wells Fargo Bank, National Association, as Agent (as amended from time to time,
the "Loan Agreement"). Capitalized terms used but not defined herein are used
with the meanings specified for such terms in the Loan Agreement. Section
references herein relate to the Loan Agreement unless stated otherwise.

R E C I T A L S

A. Pursuant to a letter dated February 13, 1998 delivered by Borrower to
the Agent, on behalf of the Lenders, Borrower has advised the Lenders that
Borrower has violated the Tangible Net Worth and Interest Coverage Ratio
financial covenants set forth in Sections 6.12 and 6.15 of the Loan Agreement,
respectively, for the Fiscal Quarter ended December 31, 1997. According to such
letter, and based on Borrower's unaudited "draft" financial statements, Tangible
Net Worth of Borrower and its Subsidiaries was $52,233,991 as of December 31,
1997 and Borrower's Interest Coverage Ratio was 1.43 to 1.00. Pursuant to the
terms of the Loan Agreement, Borrower was required to have Tangible Net Worth of
$52,580,000 as of December 31, 1997 and an Interest Coverage Ratio of not less
than 1.85 to 1.00 as of such date.

B. Borrower has requested that the Lenders waive the Events of Default that
would otherwise occur as a result of the foregoing covenant violations.

A G R E E M E N T

Borrower and the Agent, acting with the consent of the Requisite Lenders
pursuant to Section 11.2 of the Loan Agreement, agree as follows:

1. Waiver. In reliance upon the foregoing recitals and the representations
and warranties contained in Section 5 below, the Lenders hereby waive Borrower's
compliance with the Tangible Net Worth covenant and the Interest Coverage Ratio
covenant for the Fiscal Quarter ended December 31, 1997, provided, however, that
Tangible Net Worth, as reflected in the "final" consolidated financial
statements of Borrower and its Subsidiaries to be delivered to the Lenders
pursuant to Section 7.1(b) of the Loan Agreement for the Fiscal Quarter ended
December 31, 1997, is not less than $52,000,000 and, provided further, that such
financial statements reflect an Interest Coverage Ratio of not less than 1.35 to
1.00 as of such date. Notwithstanding the foregoing, the Lender shall be
entitled to require full compliance with Sections 6.12 and 6.15 of the Loan
Agreement with respect to each other fiscal period.

1
<PAGE> 2

2. Amendment to Section 1.1. The definition of "Interest Coverage Ratio"
in Section 1.1 of the Loan Agreement is amended and restated in its entirety to
read as follows:

"Interest Coverage Ratio" means, as of the last day of any Fiscal
Quarter commencing the Fiscal Quarter ending March 31, 1998, the ratio
of (a) Available Cash Flow for the fiscal period consisting of (i) in
the case of the Fiscal Quarter ending March 31, 1998, such Fiscal
Quarter, (ii) in the case of the Fiscal Quarter ending June 30, 1999,
such Fiscal Quarter and the immediately preceding Fiscal Quarter,
(iii) in the case of the Fiscal Quarter ending September 30, 1998,
such Fiscal Quarter and the two immediately preceding Fiscal Quarters
and (iv) in the case of the Fiscal Quarter ending December 31, 1998
and each subsequent Fiscal Quarter, such Fiscal Quarter and the three
immediately preceding Fiscal Quarters to (b) Interest Charges of
Borrower and its Subsidiaries for the corresponding fiscal period.

3. Conditions Precedent. The effectiveness of this Amendment No. 2 shall
be conditioned upon the receipt by the Agent of the following documents, each
properly executed by a Responsible Official of each party thereto and dated as
of the date hereof:

(a) counterparts of this Amendment No. 2 executed by all parties
hereto;

(b) a consent and reaffirmation executed by all of the Guarantors in
the form of Exhibit A to this Amendment No. 2; and

(c) written consent of the Requisite Lenders as required under Section
11.2 of the Loan Agreement in the form of Exhibit B to this Amendment No.
2.

4. Amendment Fee. In addition to the conditions precedent specified
above, the effectiveness of this Amendment No. 2 shall be further conditioned
upon the receipt by the Agent, for the ratable accounts of the Lenders pro rata
according to their Pro Rata Share of the Commitment, an amendment fee equal to
$25,000.00.

5. Representations and Warranties. Borrower represents and warrants to
the Agent and the Lenders that, after giving effect to this Amendment No. 2, no
Default or Event of Default remains in effect.

6. Confirmation. In all respects, the terms of the Loan Agreement and the
other Loan Documents, in each case as amended hereby, are hereby confirmed.

2
<PAGE> 3

IN WITNESS WHEREOF, Borrower and the Agent have executed this Amendment No.
2 as of the date first set forth above by their duly authorized representatives.

CENTRAL FINANCIAL ACCEPTANCE
CORPORATION, a Delaware corporation

By: /s/ GARY M. CYPRES
------------------------------------
Gary M. Cypres
Chief Executive Officer

WELLS FARGO BANK, NATIONAL ASSOCIATION,
as the Agent

By: /s/ PERRY MORETH
------------------------------------
Perry Moreth
Vice President

3
<PAGE> 4

Exhibit A to Amendment No. 2

CONSENT AND REAFFIRMATION OF GUARANTORS

Each of the undersigned Guarantors hereby consents to the execution,
delivery and performance by Borrower and the Agent of the foregoing Amendment
No. 2 ("Amendment No. 2"). In connection therewith, each of the undersigned
expressly and knowingly reaffirms its liability under the Guaranty to which it
is a party executed and delivered by such Guarantor in favor of the Agent (on
behalf of the Lenders), and expressly agrees to be and remain liable under the
terms of such Guaranty for the Guarantied Obligations described therein and
acknowledges that it has no defense, offset or counterclaim whatsoever against
the Agent or the Lenders with respect to such Guaranty.

Each of the undersigned further agrees that such Guaranty shall remain in
full force and effect and is hereby ratified and confirmed.

Each of the undersigned further agrees that the execution of this Consent
and Reaffirmation of Guarantors is not necessary for the continued validity and
enforceability of such Guaranty, but is executed to induce the Agent and the
Lenders to approve of and otherwise enter into the Amendment No. 2.

IN WITNESS WHEREOF, each of the undersigned, intending to be legally bound
hereby, has caused this Consent and Reaffirmation of Guarantors to be executed
as of March 26, 1998.

BANNER HOLDINGS, INC.,
a Delaware corporation

By: /s/ GARY M. CYPRES
------------------------------------
Gary M. Cypres
Chief Executive Officer

CENTRAL FINANCIAL ACCEPTANCE
CORPORATION, a Delaware corporation

By: /s/ GARY M. CYPRES
------------------------------------
Gary M. Cypres
Chief Executive Officer

4
<PAGE> 5

CENTRAL CONSUMER FINANCE
COMPANY, a Delaware corporation

By: /s/ GARY M. CYPRES
------------------------------------
Gary M. Cypres
Chief Executive Officer

CENTRAVEL, INC., a California
corporation

By: /s/ GARY M. CYPRES
------------------------------------
Gary M. Cypres
Chief Executive Officer

CENTRAL PREMIUM FINANCE COMPANY,
a California corporation

By: /s/ GARY M. CYPRES
------------------------------------
Gary M. Cypres
Chief Executive Officer

BCE PROPERTIES, INC.,
a California corporation

By: /s/ GARY M. CYPRES
------------------------------------
Gary M. Cypres
Chief Executive Officer

C.E.A. ACQUISITION CORPORATION,
a California corporation

By: /s/ GARY M. CYPRES
------------------------------------
Gary M. Cypres
Chief Executive Officer

5
<PAGE> 6

C.E.A. TRAVEL CORPORATION,
a California corporation

By: /s/ GARY M. CYPRES
------------------------------------
Gary M. Cypres
Chief Executive Officer

6
<PAGE> 7

Exhibit B to Amendment No. 2

CONSENT OF LENDER

Reference is hereby made to that certain Revolving Loan Agreement dated as
of June 13, 1997 among Central Financial Acceptance Corporation, a Delaware
corporation, as Borrower, the Lenders party thereto, and Wells Fargo Bank,
National Association, as Agent (as amended from time to time, the "Loan
Agreement").

The undersigned Lender hereby consents to the execution and delivery of
Amendment No. 2 to Revolving Loan Agreement by Wells Fargo Bank, National
Association, as Agent, on its behalf, substantially in the form of a draft dated
on or about March 18, 1998 presented to the undersigned Lender.

Dated: March 26, 1998

----------------------------------------
[Name of Institution]

By:
------------------------------------

------------------------------------
[Printed Name and Title]

By:
------------------------------------

------------------------------------
[Printed Name and Title]

<PAGE> 1

EXHIBIT 21

SUBSIDIARIES OF CENTRAL FINANCIAL ACCEPTANCE CORPORATION

Central Check Cashing, Inc., a California corporation

Central Installment Credit
Corporation, a California corporation

Central Consumer Finance
Company, a Delaware corporation

Centravel, Inc., a California corporation

Central Financial
Acceptance/Insurance Agency, a California corporation

Central Premium Finance
Company, a California corporation

BCE Properties, Inc., a California corporation

Central Consumer Company of
Nevada, a Nevada corporation

CALPLAN Travel Corporation, a California corporation

C.E.A. Acquisition Corporation, a California corporation

BTT Corporation, a California corporation

C.E.A. Travel Corporation, a California corporation

Central Finance Reinsurance, Ltd., a Turks & Caicos, British
West Indies entity

Central Financial Acceptance
Corporation Accident & Health
Reinsurance Limited, a Turks & Caicos, British
West Indies entity

Central Income Tax Services, Inc., a California corporation

<ARTICLE> 5

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 4,794,000
<SECURITIES> 0
<RECEIVABLES> 110,333,000
<ALLOWANCES> 7,835,000
<INVENTORY> 0
<CURRENT-ASSETS> 120,710,000
<PP&E> 6,393,000
<DEPRECIATION> 513,000
<TOTAL-ASSETS> 135,149,000
<CURRENT-LIABILITIES> 68,556,000
<BONDS> 850,000
0
0
<COMMON> 73,000
<OTHER-SE> 65,670,000
<TOTAL-LIABILITY-AND-EQUITY> 135,149,000
<SALES> 0
<TOTAL-REVENUES> 52,040,000
<CGS> 0
<TOTAL-COSTS> 27,217,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 12,296,000
<INTEREST-EXPENSE> 5,314,000
<INCOME-PRETAX> 7,213,000
<INCOME-TAX> 2,823,000
<INCOME-CONTINUING> 4,390,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,390,000
<EPS-PRIMARY> 0.60
<EPS-DILUTED> 0.60

</TABLE>