UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

x Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2007

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

Commission file number: 001-33257

White River Capital, Inc.

(Exact name of registrant as specified in its charter)

Indiana	35-1908796
(State or other jurisdiction of  incorporation or organization)	(I.R.S. Employer Identification No.)

1445 Brookville Way, Suite I

Indianapolis, Indiana 46239

 (Address of principal executive offices/zip code)

Registrant’s telephone number, including area code:   (317) 806-2166

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.    x Yes          o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated filer o          Accelerated filer o          Non-accelerated filer x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    o Yes          x No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of August 8, 2007, there were 3,842,287 shares outstanding of the issuer’s Common Stock, without par value.

White River Capital, Inc.

Form 10-Q for the Quarter Ended June 30, 2007

- INDEX -

		PAGE
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Unaudited Condensed Consolidated Balance Sheets as of June 30, 2007 and December 31, 2006	1
	Unaudited Condensed Consolidated Statements of Operations for the quarters and six months ended June 30, 2007 and 2006	2
	Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2007 and 2006	3
	Unaudited Condensed Consolidated Statements of Comprehensive Income for the quarters and six months ended June 30, 2007 and 2006	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 4.	Controls and Procedures	35
PART II.	OTHER INFORMATION
Item 4.	Submission of Matters to a Vote of Security Holders	36
Item 6.	Exhibits	36
SIGNATURES		37

ii

PART I   FINANCIAL INFORMATION

PART I

ITEM 1. FINANCIAL STATEMENTS.

(Dollars in thousands)

ASSETS	June 30, 2007			December 31, 2006
Cash and cash equivalents	$	5,882		$	6,958
Restricted cash		6,737			13,618
Securitized finance receivables—net		10,530			27,447
Finance receivables—net		81,460			78,693
Beneficial interest in Master Trust		10,339			23,601
Goodwill		34,698			34,698
Deferred tax assets—net		36,540			38,189
Other assets		2,244			2,220
TOTAL	$	188,430		$	225,424
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES:
Collateralized financings	$	12,543		$	32,368
Line of credit		44,500			49,500
Secured note payable		11,250			13,125
Subordinated debentures		-			7,700
Accrued interest		653			1,169
Amounts due to Master Trust		4,792			8,400
Creditor notes payable		1,053			1,392
Other payables and accrued expenses		2,359			3,852
Total liabilities		77,150			117,506
SHAREHOLDERS’ EQUITY:
Preferred Stock, without par value, authorized 3,000,000 shares; none issued and outstanding		-			-
Common Stock, without par value, authorized 20,000,000 shares; 3,842,287 and 3,813,155 issued and outstanding at June 30, 2007 and December 31, 2006, respectively		179,796			179,594
Warrants, 150,000 outstanding at June 30, 2007 and December 31, 2006		534			534
Accumulated other comprehensive income, net of taxes		6,228			11,107
Accumulated deficit		(75,278	)		(83,317	)
Total shareholders’ equity		111,280			107,918
TOTAL	$	188,430		$	225,424

See notes to condensed consolidated financial statements.

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PART I   FINANCIAL INFORMATION

WHITE RIVER CAPITAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Dollars in thousands, except per share amounts)

	Quarters Ended June 30,						Six Months Ended June 30,
	2007			2006			2007			2006
INTEREST:
Interest on receivables	$	8,138		$	9,577		$	16,286		$	19,609
Accretion and other interest		966			2,697			11,283			3,407
Total interest income		9,104			12,274			27,569			23,016
Interest expense		(1,548	)		(3,082	)		(3,539	)		(6,423	)
Net interest margin		7,556			9,192			24,030			16,593
Recovery (provision) for estimated credit losses		(862	)		523			(1,500	)		385
Net interest margin after recovery (provision) for estimated credit losses		6,694			9,715			22,530			16,978
OTHER REVENUES (EXPENSES):
Salaries and benefits		(2,010	)		(2,127	)		(4,152	)		(4,123	)
Third party servicing expense		(136	)		(477	)		(354	)		(1,180	)
Other operating expenses		(1,499	)		(1,611	)		(2,818	)		(3,217	)
Bankruptcy costs		-			(57	)		(6	)		(131	)
Charge to Master Trust—net		(429	)		(5,614	)		(1,490	)		(8,001	)
Change in fair market valuation of creditor liabilities		50			-			(187	)		-
Gain (loss) from extinguishment of debt		-			(202	)		-			(202	)
Gain (loss) from deficiency sale		(19	)		3,663			22			3,709
Other income (expense)		(66	)		(100	)		75			(39	)
Total other revenues (expenses)		(4,109	)		(6,525	)		(8,910	)		(13,184	)
INCOME BEFORE INCOME TAXES		2,585			3,190			13,620			3,794
INCOME TAX BENEFIT (EXPENSE)		(925	)		439			(4,949	)		971
NET INCOME	$	1,660		$	3,629		$	8,671		$	4,765
NET INCOME PER COMMON SHARE (BASIC)	$	0.43		$	0.95		$	2.26		$	1.25
NET INCOME PER COMMON SHARE (DILUTED)	$	0.42		$	0.94		$	2.20		$	1.23
BASIC WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING		3,842,287			3,813,155			3,839,080			3,812,989
DILUTED WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING		3,949,069			3,868,828			3,940,983			3,866,358

See notes to condensed consolidated financial statements.

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PART I   FINANCIAL INFORMATION

WHITE RIVER CAPITAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in thousands)

	Six Months Ended June 30,
	2007			2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	8,671		$	4,765
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Accretion of beneficial interest in Master Trust		(10,961	)		(2,942	)
Provision (recovery) for estimated credit losses		1,500			(385	)
Amortization and depreciation		214			249
Amortization of discount and interest accrued on creditor notes payable		186			630
Gain from disposition of equipment		(14	)		-
Loss (gain) from extinguishment of debt		-			202
Deferred income taxes		4,816			(1,049	)
Change in fair value of creditor notes payable		187			-
Stock based compensation expense		202			102
Changes in assets and liabilities:
Accrued interest receivable and other assets		390			(1,231	)
Amounts due to Master Trust		(3,609	)		(103	)
Payment of creditor notes payable accrued interest		(137	)		(251	)
Other payables and accrued expenses		(1,915	)		791
Net cash provided by (used in) operating activities		(470	)		778
CASH FLOWS FROM INVESTING ACTIVITIES:
Payment of Coastal Credit purchase holdback		-			(3,840	)
Principal collections and recoveries on securitized finance receivables		17,477			53,466
Purchase of finance receivables		(31,862	)		(34,288	)
Collections on finance receivables		25,961			25,210
Principal collections and recoveries on receivables held for investment		654			1,967
Collections on beneficial interest in Master Trust		16,481			2,953
Change in restricted cash		6,881			4,657
Proceeds from sale of equipment		14			-
Capital expenditures		(151	)		(31	)
Net cash provided by (used in) investing activities		35,455			50,094
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on collateralized financings		(19,825	)		(56,952	)
Principal payments on secured note payable		(1,875	)		-
Principal payments on creditor notes payable		(1,661	)		(389	)
Net borrowing (repayment) in line of credit		(5,000	)		6,000
Principal payments of subordinated debentures		(7,700	)		-
Net cash provided by (used in) financing activities		(36,061	)		(51,341	)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(1,076	)		(469	)
CASH AND CASH EQUIVALENTS—Beginning of year		6,958			6,878
CASH AND CASH EQUIVALENTS—End of period	$	5,882		$	6,409
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Income tax refunds	$	1		$	2
Interest paid	$	3,705		$	5,899
Non cash items:
Initial fair value adjustment for creditor notes payable	$	994		$	-
Transfer of securitized finance receivables—net to other assets after the collateralized financing for securitization 2003-A was paid in full	$	-		$	2,771

See notes to condensed consolidated financial statements.

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PART I   FINANCIAL INFORMATION

WHITE RIVER CAPITAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(Dollars in thousands)

	Quarters Ended June 30,						Six Months Ended June 30,
	2007			2006			2007			2006
NET INCOME	$	1,660		$	3,629		$	8,671		$	4,765
OTHER COMPREHENSIVE INCOME:
Unrealized gain on beneficial interest in Master Trust, net of tax		534			5,787			2,147			9,662
Reclassification adjustment for gain included in net income, net of tax		(595	)		(2,462	)		(7,026	)		(2,942	)
Net other comprehensive income		(61	)		3,325			(4,879	)		6,720
COMPREHENSIVE INCOME	$	1,599		$	6,954		$	3,792		$	11,485

See notes to condensed consolidated financial statements.

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PART I   FINANCIAL INFORMATION

WHITE RIVER CAPITAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) QUARTERS AND SIX MONTHS ENDED JUNE 30, 2007 AND 2006

1. BASIS OF PRESENTATION

The foregoing condensed consolidated financial statements are unaudited. However, in the opinion of management, all adjustments necessary for a fair presentation of the results of the interim periods presented have been included. Results for any interim period are not necessarily indicative of results to be expected for the year ending December 31, 2007.

The condensed consolidated unaudited interim financial statements have been prepared in accordance with Form 10-Q specifications and therefore do not include all information and footnotes normally shown in annual financial statements. These interim period financial statements should be read in conjunction with the consolidated financial statements that are included in the Annual Report on Form 10-K for the year ended December 31, 2006 of White River Capital, Inc., which is available online at www.WhiteRiverCap.com or www.sec.gov.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates.

New Accounting Pronouncements

In September 2006, the FASB issued Statement of Financial Accounting Standards ("SFAS") No. 157, Fair Value Measurements (“SFAS No. 157”), which provides guidance on how to measure assets and liabilities using fair value methods. SFAS No. 157 will apply whenever another United States Generally Accepted Accounting Principle standard requires (or permits) assets or liabilities to be measured at fair value but does not expand the use of fair value to any new circumstances. This standard also will require additional disclosures in both annual and quarterly reports. SFAS No. 157 will be effective for financial statements issued for fiscal years beginning after November 15, 2007. We have elected an early adoption of SFAS No. 157 beginning January 1, 2007. There was no effect on the consolidated financial statements for the adoption of SFAS No. 157 (See Note 6 and Note 9).

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (“SFAS No. 159”). SFAS No. 159 permits all entities to choose, at specified election dates, to measure eligible assets and liabilities at fair value. SFAS No. 159 will be effective for financial statements issued for fiscal years beginning after November 15, 2007. We have elected an early adoption of SFAS No. 159 beginning January 1, 2007. We will apply SFAS No. 159 solely to creditor notes payable. See Note 9 for further details.

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PART I   FINANCIAL INFORMATION

2. GENERAL DISCUSSION

White River Capital, Inc. (“White River”) is a holding company for specialized indirect auto finance businesses, with two principal operating subsidiaries, Coastal Credit LLC (“Coastal Credit”) and Union Acceptance Company LLC (“UAC”). Coastal Credit, based in Virginia Beach, Virginia, is a specialized subprime auto finance company engaged in acquiring subprime auto receivables from both franchised and independent automobile dealers which have entered into contracts with purchasers of typically used, but some new, cars and light trucks. Coastal Credit then services the receivables it acquires. Coastal Credit operates in 22 states through 16 offices. UAC, based in Indianapolis, Indiana, holds and oversees its portfolio of approximately $29.7 million in non-prime auto receivables, as of June 30, 2007. Its portfolio is held approximately 61.6% in off-balance sheet securitizations, 36.2% through subsidiary non-recourse financings and 2.2% directly or by subsidiaries not subject to financing. On January 5, 2007, the U.S. Bankruptcy Court for the Southern District of Indiana issued a final decree and closed UAC’s Chapter 11 bankruptcy case. UAC remains contractually obligated to distribute its remaining assets in compliance with its Second Amended and Restated Plan of Reorganization (the “Plan” or the “Plan of Reorganization”) approved in connection with the bankruptcy case. Under the Plan, UAC must pay net proceeds from its residual interest in its receivables portfolios and other estate assets to creditors holding notes and claims under the Plan. White River owns all of UAC’s general unsecured claims, 89.1% of UAC’s restructured subordinated notes (“Subordinated Notes”) and 94.7% of UAC's accrual notes (“Accrual Notes”) issued under the Plan.  Upon closing of the bankruptcy case, UAC was designated the Creditor Representative in connection with the distribution of its remaining assets as contractually required under the Plan.

3. NET ASSETS OF COLLATERALIZED FINANCINGS

UAC Securitization Corporation (“UACSC”), a wholly owned special purpose subsidiary of UAC, in conjunction with a conduit provider and its surety provider, purchased receivables from outstanding securitizations that were eligible for clean-up calls during 2005, 2004 and 2003. These receivables were re-securitized through non-recourse asset backed note issuances. The associated future cash flows from these receivables are subject to the same Master Trust account provisions as the securitizations called.

To finance the receivable acquisitions, UAC used collateralized financings, secured by the respective portfolio of the acquired receivables and related restricted cash accounts. Timely payments of principal and interest on the non-recourse collateralized financings are insured by surety policies. Such obligations are also cross-collateralized through the Master Trust Agreement. Net interest cash flows in excess of expenses are payable to the Master Trust account and expensed as a charge to Master Trust, net.

The following table represents the restricted net assets and liabilities related to non-recourse collateralized financings (in millions) as of:

	June 30,			December 31,
	2007			2006
Securitized finance receivables—net	$	10.5		$	27.4
Restricted cash		6.7			13.3
Receivable from servicer included in other assets		0.2			0.3
Collateralized financings		(12.5	)		(32.4	)
Accrued interest payable		0.0			(0.1	)
Other payables and accrued expenses		(0.1	)		(0.1	)
Amounts due to Master Trust	$	4.8		$	8.4

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PART I   FINANCIAL INFORMATION

4. SECURITIZED FINANCE RECEIVABLES—NET

Securitized finance receivables-net are recorded at the outstanding principal balance of the receivables plus accrued interest receivable, net of an allowance for credit losses. The following table represents components of securitized finance receivables—net (in thousands) as of:

	June 30,			December 31,
	2007			2006
Principal balance of securitized finance receivables	$	10,755		$	28,800
Accrued interest receivable		97			264
Allowance for credit losses		(322	)		(1,617	)
Securitized finance receivables—net	$	10,530		$	27,447

Activity in the allowance for credit losses on securitized finance receivables is as follows (in thousands):

	Quarters Ended June 30,						Six Months Ended June 30,
	2007			2006			2007			2006
Balance at the beginning of period	$	881		$	4,867		$	1,617		$	6,503
Charge-offs		(627	)		(2,064	)		(1,714	)		(6,316	)
Recoveries		900			2,842			2,054			6,391
Provision (recovery) for estimated credit losses		(832	)		(1,556	)		(1,635	)		(2,489	)
Balance at the end of the period	$	322		$	4,089		$	322		$	4,089

5. COLLATERALIZED FINANCINGS

Principal and interest on the collateralized financings are paid monthly with total cash received from the corresponding securitized finance receivables collateralizing the notes. If the cash received within the month is insufficient to pay the note principal and interest, funds are drawn from restricted cash accounts or the Master Trust account in accordance with the Master Trust Agreement. Interest expense related to these collateralized financings, including the amortization of debt issuance costs, was $0.2 million and $1.0 million for the quarters ended June 30, 2007 and 2006, respectively, and $0.5 million and $2.3 million for the six months ended June 30, 2007 and 2006, respectively. On June 8, 2007 the collateralized financings for notes series 2004-A1, 2004-A2 and 2004-B were paid in full.

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PART I   FINANCIAL INFORMATION

The following table summarizes the outstanding principal balance of the collateralized financings (in thousands) at:

	Note			Initial Note		June 30,		December 31,
Notes Series	Rate			Amount		2007		2006
Series 2004-A1		4.15	%	$	29,485	$	-	$	425
Series 2004-A2		4.55			29,298		-		764
Series 2004-B		5.02			25,896		-		1,009
Series 2004-C		4.89			51,992		1,233		3,946
Series 2005-A		4.49			47,742		2,113		5,564
Series 2005-B		4.69			50,684		3,439		8,087
Series 2005-C		5.40			54,933		5,758		12,573
				$	290,030	$	12,543	$	32,368

6. BENEFICIAL INTEREST IN MASTER TRUST

With the establishment of the Master Trust Agreement in 2003, all excess cash flows, as defined, from retained interest in securitized assets, securitized finance receivables, and restricted cash accounts are to be deposited in the Master Trust account. Once prescribed cash reserve levels are met, cash will be released from the Master Trust account to UACSC. This estimated future discounted cash flow is reported as beneficial interest in Master Trust. In determining the fair value of the beneficial interest in Master Trust, estimates must be made for the future prepayments, rates of gross credit losses and credit loss severity, and delinquencies as they impact the amount and timing of the estimated cash flows from the Master Trust. The average of the interest rates on the receivables exceeds the interest rates on the securities issued in the securitizations and the servicing and surety fees. This excess cash is held by the Master Trust account and released based on reserve requirements of the Master Trust. These estimated cash flows from the Master Trust are then discounted to reflect the present value. The fair value of this asset is not impacted by the credit quality of White River. White River’s credit quality was not considered when calculating the fair value of the beneficial interest in Master Trust.

The assumptions used to calculate the beneficial interest in Master Trust are as follows:

§ Credit Loss Assumptions—Gross credit losses are calculated using the loss to liquidation factor methodology. The loss to liquidation methodology takes into account the current loss level of each securitized pool and its “pool factor,” which is the percentage remaining of the original pool balance. Dividing the current cumulative net loss for each pool by its corresponding pool factor, future projected cumulative net losses were calculated. However, recovery cash flows from gross credit losses are estimated independently as two different cash flow streams. These two recovery cash flow streams are:

o Liquidation recovery– consists of net auction proceeds, deficiency recoveries by the servicer, and scheduled payments from defaulted accounts. On a monthly basis for each pool, liquidation recovery cash dollars as a percentage of gross default dollars has been calculated based on a rolling twelve month average. This twelve month average for each pool is used to project monthly liquidation recovery by multiplying this value by the monthly estimated gross default dollars projected.

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PART I   FINANCIAL INFORMATION

o Bankruptcy recovery– consists of cash recovered from accounts charged off and in bankruptcy status. Bankruptcy cash flows are somewhat independent of default rates due to bankruptcy court involvement and the latitude allowed debtors during the bankruptcy process. UAC has observed a reasonably predictable cash flow stream from bankruptcy payments in each securitized pool. This cash flow stream will, however, eventually expire as the bankruptcy cases are dismissed from the various courts with either a successful or non-successful outcome. A previous twelve month average of bankruptcy cash flows is calculated for each pool. This value is then reduced on a straight line basis over either a 13 or 25 month period. The bankruptcy recovery has been adjusted to reflect the percentage of accounts remaining after a significant portion of the Chapter 13 bankruptcy receivables were sold during June 2006.

Finally, gross credit losses are netted against the two recovery cash streams to estimate future net credit losses.

The weighted average net credit loss assumption as a percentage of the original principal balance over the life of the receivables to value beneficial interest in Master Trust was 8.55% and 8.61% at June 30, 2007 and December 31, 2006, respectively.

§ Prepayment Assumptions—UAC estimates prepayments by evaluating the historical prepayment performance of each pool of receivables. UAC used annual prepayment rates ranging from 30.9% to 40.2% at June 30, 2007 as compared to 30.2% to 46.0% at December 31, 2006.

§ Discount Rate Assumptions—UAC determines the estimated fair value of its beneficial interest in Master Trust by discounting the expected cash flows released from the Master Trust account (the cash out method) using a discount rate that UAC believes is commensurate with the risks involved. UAC used a discount rate of 15% to value the beneficial interest in Master Trust at June 30, 2007 and December 31, 2006 to reflect current market conditions.

The following table presents the beneficial interest in Master Trust (in thousands) on a recurring basis using significant unobservable inputs (Level 3) per SFAS No. 157 for the quarter and six months ended June 30, 2007:

	Quarter Ended June 30, 2007			Six Months Ended June 30, 2007
Beginning balance	$	10,079		$	23,601
Total unrealized gains included in other comprehensive income		842			3,381
Purchases, issuances and settlements		(582	)		(16,643	)
Transfers in and/or out of Level 3		-			-
Ending balance	$	10,339		$	10,339

Total gains realized and unrealized included in earnings reported in accretion and other interest was $0.8 million and $11.0 million for the quarter and six months ended June 30, 2007, respectively.  There was no effect recorded in beneficial interest in Master Trust for the adoption of SFAS No. 157.

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PART I   FINANCIAL INFORMATION

7. FINANCE RECEIVABLES – NET

Finance receivables – net are acquired by Coastal Credit and generally have original terms ranging from 32 to 48 months and are secured by the related vehicles.

A significant number of contracts acquired by Coastal Credit are contracts made with borrowers who are in the United States military. As of June 30, 2007 30.1% of the Coastal Credit Receivables were with borrowers who are in the United State military as compared to 32.6% as of December 31, 2006. Coastal Credit requests that all borrowers who are in the military use the military allotment system to make payments on their contracts. Under this allotment system, the borrower authorizes the military to make a payroll deduction for the amount of the borrower’s monthly contract payment and to direct this deduction payment to Coastal Credit on behalf of the borrower.

Finance receivables – net outstanding is as follows (in thousands):

	June 30,			December 31,
	2007			2006
Finance receivables, gross	$	106,027		$	104,399
Unearned interest		(6,998	)		(8,574	)
Finance receivables, net of unearned finance charge income		99,029			95,825
Accretable unearned acquisition discounts and fees		(11,785	)		(11,438	)
Finance receivables, net of unearned finance charge income and discounts and fees		87,244			84,387
Allowance for loan losses		(5,784	)		(5,694	)
Finance receivables, net	$	81,460		$	78,693

Activity in the allowance for loan losses on finance receivables is as follows (dollars in thousands):

	Quarters Ended June 30,						Six Months Ended June 30,
	2007			2006			2007			2006
Balance at beginning of period	$	5,694		$	5,916		$	5,694		$	6,031
Charge-offs, net of recoveries		(1,605	)		(1,117	)		(3,045	)		(2,303	)
Provision for estimated credit losses		1,695			1,033			3,135			2,104
Balance at the end of the period	$	5,784		$	5,832		$	5,784		$	5,832

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PART I   FINANCIAL INFORMATION

8. OTHER ASSETS

Other assets are as follows (in thousands) at:

	June 30,		December 31,
	2007		2006
Receivable from servicer	$	205	$	296
Prepaid expenses		354		408
Property, equipment and leasehold improvements, net		649		609
Receivables held for investment, net		635		454
Receivable from Master Trust account		283		268
Other		118		185
Total other assets	$	2,244	$	2,220

9. CREDITOR NOTES PAYABLE

White River’s adoption of SFAS No. 159 will apply solely to creditor notes payable. Creditor notes payable consists of debt owed to the one remaining third party creditor from the UAC bankruptcy. During September 2003, UAC recorded the bankruptcy debt at fair value in accordance with Statement of Position 90-7, Financial Reporting by Entities in Reorganization Under the Bankruptcy Code. This fair value adjustment resulted in a gain. Since that time, accretion interest expense has been recognized based on the original fair value calculation and the creditor notes payable increased based on this calculation. Since September 2003, no adjustments have been made to this accretion schedule for the increase or decrease in performance of the receivables of UAC. The only adjustments that had been made were for the creditor notes that were purchased by White River and were subsequently extinguished in accordance with SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities. Prior to the adoption of SFAS No. 159, creditor notes payable was being accreted to its full contractual value. Using this methodology, the creditor notes payable would have continued to accrete to their full contractual value. With the adoption of SFAS No. 159, creditor notes payable is recorded at fair value which represents the present value of the amount that UAC expects to pay to the creditors from the residual assets of the beneficial interest in Master Trust. The assumptions used to calculate the fair value of creditor notes payable are consistent with that of the beneficial interest in Master Trust. The beneficial interest in Master Trust is in essence the only material asset UAC has remaining to pay the creditor notes payable. Beneficial interest in Master Trust is recorded at fair value.

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PART I   FINANCIAL INFORMATION

The following table presents the creditor notes payable (in thousands) on a recurring basis using significant unobservable inputs (Level 3) per SFAS No. 157 for the quarter and six months ended June 30, 2007:

	Quarter Ended June 30, 2007			Six Months Ended June 30, 2007
Beginning balance	$	2,117		$	2,478
Total losses (gains) included in earnings (recorded as other revenues)		(50	)		188
Purchases, issuances and settlements		(1,014	)		(1,613	)
Transfers in and/or out of Level 3		-			-
Ending balance	$	1,053		$	1,053

The contractual interest related to the creditor notes payable will continue to be accrued as interest expense and the interest payable will be included in the fair value calculation along with the creditor notes payable on a quarterly basis.  The difference between the aggregate fair value and the unpaid principal balance of creditor notes payable was $1.7 million as of June 30, 2007.  The ultimate amount paid to creditor notes payable could differ depending on the actual cash flows from the beneficial interest in Master Trust.

10. INCOME TAXES

White River adopted FIN 48 on January 1, 2007. The implementation of FIN 48 did not impact White River’s financial statements. As of January 1, 2007, there were no unrecognized tax benefits.

White River recognized interest and penalties, if any, on tax assessments or tax refunds in the financial statements as a component of income tax expense.

White River and its subsidiaries are subject to U.S. federal income tax and income tax of multiple state and local jurisdictions. The 2004 - 2006 U.S. federal income tax returns remain open to examination by the Internal Revenue Service. Various state jurisdictions remain open to examination for tax years 2002 and forward.

11. BUSINESS SEGMENT INFORMATION

White River is the holding company for Coastal Credit and UAC, which are specialized auto finance companies. These subsidiaries are distinct legal entities and managed separately. Corporate and Other is the White River holding company segment and includes debt and interest expense related to the acquisition of Coastal Credit, professional fees related to holding company activities of White River and the elimination of all inter-segment amounts, which generally relate to the holding company activities of White River.

Coastal Credit is a specialized subprime auto finance company engaged primarily in (1) acquiring retail installment sales contracts from both franchised and independent automobile dealers which have entered into contracts with purchasers of used and, to a much lesser extent, new cars and light trucks, and (2) servicing the contract portfolio. Coastal Credit commenced operations in Virginia in 1987 and conducts business in 22 states through its 16 branch locations. All goodwill relates to the Coastal Credit segment.

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PART I   FINANCIAL INFORMATION

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

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PART I   FINANCIAL INFORMATION

Set forth in the table below is certain financial information with respect to White River’s segments.

For The Quarter Ended June 30, 2007	UAC			Coastal Credit			Corporate and Other			Consolidated
Total interest income	$	1,429		$	7,654		$	21		$	9,104
Interest expense		(279	)		(952	)		(317	)		(1,548	)
Net interest margin		1,150			6,702			(296	)		7,556
Recovery (provision) for estimated credit losses		833			(1,695	)		-			(862	)
Net interest margin (deficit) after recovery (provision) for estimated credit losses		1,983			5,007			(296	)		6,694
Total other revenues and (expenses)		(9,939	)		(2,833	)		8,663			(4,109	)
Income (loss) before income taxes	$	(7,956	)	$	2,174		$	8,367		$	2,585

For The Quarter Ended June 30, 2006	UAC			Coastal Credit			Corporate and Other			Consolidated
Total interest income	$	5,052		$	7,208		$	14		$	12,274
Interest expense		(1,292	)		(1,367	)		(423	)		(3,082	)
Net interest margin		3,760			5,841			(409	)		9,192
Recovery (provision) for estimated credit losses		1,556			(1,033	)		-			523
Net interest margin (deficit) after recovery (provision) for estimated credit losses		5,316			4,808			(409	)		9,715
Total other revenues and (expenses)		(4,469	)		(2,932	)		876			(6,525	)
Income before income taxes	$	847		$	1,876		$	467		$	3,190

For The Six Months Ended June 30, 2007	UAC			Coastal Credit			Corporate and Other			Consolidated
Total interest income	$	12,479		$	15,041		$	49		$	27,569
Interest expense		(726	)		(2,153	)		(660	)		(3,539	)
Net interest margin		11,753			12,888			(611	)		24,030
Recovery (provision) for estimated credit losses		1,635			(3,135	)		-			(1,500	)
Net interest margin (deficit) after recovery (provision) for estimated credit losses		13,388			9,753			(611	)		22,530
Total other revenues and (expenses)		(17,419	)		(5,630	)		14,139			(8,910	)
Income (loss) before income taxes	$	(4,031	)	$	4,123		$	13,528		$	13,620

For The Six Months Ended June 30, 2006	UAC			Coastal Credit			Corporate and Other			Consolidated
Total interest income	$	8,937		$	14,055		$	24		$	23,016
Interest expense		(2,917	)		(2,565	)		(941	)		(6,423	)
Net interest margin		6,020			11,490			(917	)		16,593
Recovery (provision) for estimated credit losses		2,489			(2,104	)		-			385
Net interest margin (deficit) after recovery (provision) for estimated credit losses		8,509			9,386			(917	)		16,978
Total other revenues and (expenses)		(7,936	)		(5,629	)		381			(13,184	)
Income (loss) before income taxes	$	573		$	3,757		$	(536	)	$	3,794

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PART I   FINANCIAL INFORMATION

The following table presents assets with respect to White River’s segments (in thousands) at:

	June 30,		December 31,
	2007		2006
Corporate and other	$	39,569	$	43,205
Coastal Credit		118,609		114,900
UAC		30,252		67,319
	$	188,430	$	225,424

12. STOCK BASED COMPENSATION

On October 26, 2005, the board of directors of White River adopted the White River Capital, Inc. Directors Stock Compensation Plan. The plan provides for the payment of a portion of regular fees to certain members of the board of directors in the form of shares of White River common stock. The terms of the plan includes the reservation of 50,000 shares of White River common stock for issuance under the plan.

Effective January 1, 2006, the restated employment agreement between Coastal Credit and William McKnight, President of Coastal Credit, includes a long-term incentive award. This award provides for the payment, in cash, of the value of 100,000 shares of White River stock, vesting in three annual increments of 33,333.33 shares on January 1, 2007, 2008 and 2009. In accordance with SFAS No. 123R, Share-Based Payment (“SFAS No. 123R”), this award is accounted for as a liability award. The value of payment is to be determined based on the mean of the trading value of White River shares for 20 trading days prior to the vesting date. Compensation expense related to this award approximated $198,000 and $128,000 for the quarters ended June 30, 2007 and 2006, respectively, and $397,000 and $256,000 for the six months ended June 30, 2007 and 2006 respectively. The compensation expense related to this award is included in salaries and benefits expense in the accompanying condensed consolidated statements of operations. Additional compensation costs will be incurred based on the changes in White River’s stock price through 2008.

On May 5, 2006, White River shareholders approved the White River Capital, Inc. 2005 Stock Incentive Plan. The purpose of this plan is to offer certain employees, non-employee directors, and consultants the opportunity to acquire a proprietary interest in White River. The plan provides for the grant of options, restricted stock awards and performance stock awards.

On June 1, 2006, White River granted restricted stock awards totaling 84,000 shares to certain employees, vesting in three equal annual increments on January 2, 2007, 2008 and 2009. In addition, White River granted restricted stock awards totaling 9,000 shares that vest in three equal annual increments on March 31, 2007, 2008 and 2009. SFAS No. 123R is used for guidance in accounting for these awards. The value of awards is determined based on the trading value of White River shares on the June 1, 2006 grant date of $14.25 per share with an estimated forfeiture rate of 3%. During the first quarter 2007, the estimated forfeiture rate was increased to 7%. Since inception, 11,800 shares with January 2 vesting dates were forfeited. Compensation expense related to the awards was approximately $89,000 and $56,000 for the quarter ended June 30, 2007 and 2006, respectively and $133,000 and $56,000 for the six months ended June 30, 2007 and 2006, respectively. This compensation expense is included in salaries and benefits expense in the accompanying condensed consolidated statements of operations. There were 21,320 and 2,800 shares vested and issued on January 2, 2007 and March 31, 2007, respectively.

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PART I   FINANCIAL INFORMATION

As of June 30, 2007, there was $1.7 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted and long-term incentive awards. That cost is expected to be recognized over a weighted-average period of 1.5 years.

13. EARNINGS PER SHARE

Basic earnings per share are calculated by dividing the reported net income for the period by the weighted average number of common shares outstanding. The weighted average number of common shares outstanding during a period is weighted for the portion of the period that the shares were outstanding. Diluted earnings per share include the dilutive effect of warrants that were granted on August 31, 2005 and stock awards that were granted on June 1, 2006. Basic and diluted earnings per share have been computed as follows (dollars in thousands except per share data):

	Quarters Ended June 30,				Six Months Ended June 30,
	2007		2006		2007		2006
Net income in thousands	$	1,660	$	3,629	$	8,671	$	4,765
Weighted average shares outstanding		3,842,287		3,813,155		3,839,080		3,812,989
Incremental shares from assumed conversions:
Warrants		87,018		51,321		85,096		51,197
Stock award plans		19,764		4,352		16,807		2,172
Weighted average shares and assumed incremental shares		3,949,069		3,868,828		3,940,983		3,866,358
Earnings per share:
Basic	$	0.43	$	0.95	$	2.26	$	1.25
Diluted	$	0.42	$	0.94	$	2.20	$	1.23

14. COMMITMENTS AND CONTINGENCIES

White River and its subsidiaries, as consumer finance companies, are subject to various consumer claims and litigation seeking damages and statutory penalties, based upon, among other things, usury, disclosure inaccuracies, wrongful repossession, violations of bankruptcy stay provisions, certificate of title disputes, fraud, breach of contract and discriminatory treatment of credit applicants. Some litigation against White River and its subsidiaries could take the form of class action complaints by consumers. As the assignee of finance contracts originated by dealers, White River and its subsidiaries may also be named as a co-defendant in lawsuits filed by consumers principally against dealers. The damages and penalties claimed by consumers in these types of matters can be substantial. The relief requested by the plaintiffs varies but can include requests for compensatory, statutory and punitive damages. White River and its subsidiaries believe that it has taken prudent steps to address and mitigate the litigation risks associated with its business activities. In the opinion of White River’s management, the aggregate effect of such proceedings, if any, would not have a material effect on White River’s consolidated financial statements.

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PART I   FINANCIAL INFORMATION

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

General

White River Capital, Inc. (“White River”) is an Indiana corporation incorporated on December 30, 2004, for the purpose of acting as a holding company and effecting a recapitalization transaction proposed by the board of directors of Union Acceptance Company LLC (“UAC”).

Coastal Credit LLC (“Coastal Credit”), based in Virginia Beach, Virginia, is a specialized subprime auto finance company engaged in acquiring subprime auto receivables from both franchised and independent automobile dealers which have entered into contracts with purchasers of typically used, but some new, cars and light trucks.  Coastal Credit then services the receivables it acquires. Coastal Credit operates in 22 states through 16 offices.

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

Critical Accounting Policies

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

Net Assets of Collateralized Financings

UAC Securitization Corporation has purchased receivables from off-balance sheet securitizations that were eligible for clean-up calls. These receivables were re-securitized through non-recourse collateralized financing issuances. The associated future cash flows from these receivables are subject to the same Master Trust Account provisions as the securitizations called.

To finance the securitized receivable acquisitions, collateralized financings were used, secured by the respective portfolios of the acquired receivables and related restricted cash accounts. Timely payments of principal and interest on the non-recourse collateralized financings are insured by surety policies. Such obligations are also cross-collateralized through the Master Trust Agreement. Net interest cash flows in excess of expense are payable to the Master Trust Account and expensed as charge to Master Trust, net.

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PART I   FINANCIAL INFORMATION

Valuation of Beneficial Interest in Master Trust

The Master Trust Agreement established that all excess cash from securitizations is to be deposited in the Master Trust Account. Once prescribed cash reserve levels are met, cash will be released to UAC from the Master Trust Account. This future cash flow is reported as beneficial interest in Master Trust. In determining the fair value of the beneficial interest in Master Trust, estimates must be made for the future prepayments, rates of gross credit losses and credit loss severity, and delinquencies as they impact the amount and timing of the estimated cash flows from the Master Trust. The average of the interest rates on the receivables exceeds the interest rates on the securities issued in the securitization. This excess cash is held by the Master Trust Account and released based on reserve requirements of the Master Trust. These estimated cash flows from the Master Trust are then discounted to reflect the present value.

Allowance for Loan Losses – Finance Receivables

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

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

Valuation of Creditor Notes Payable

The valuation of creditor notes payable is dependent on the actual cash flows from the beneficial interest in Master Trust. Once the cash flows from the Master Trust are estimated, as discussed in the Critical Accounting Policy “Valuation of Beneficial Interest in Master Trust”, the estimated distributions to creditors can be calculated using the percentage of notes owned by the third party creditor. These estimated distributions are then discounted to reflect the present value.

Income Taxes

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

The ultimate realization of the deferred tax asset depends on White River’s ability to generate sufficient taxable income in the future and its ability to prevent an ownership change from occurring for tax purposes. The valuation allowance has been derived pursuant to the provisions of Statement of Financial Accounting Standards ("SFAS") No. 109, Accounting for Income Taxes, and reduces the total deferred tax asset to an amount that will “more likely than not” be realized (see Note 10). White River adopted FIN 48 on January 1, 2007. The implementation of FIN 48 did not impact White River’s consolidated financial statements. As of January 1, 2007, there were no unrecognized tax benefits.

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PART I   FINANCIAL INFORMATION

New Accounting Pronouncements

In September 2006, the FASB issued Statement of Financial Accounting Standards ("SFAS") No. 157, Fair Value Measurements (“SFAS No. 157”), which provides guidance on how to measure assets and liabilities that use fair value. SFAS No. 157 will apply whenever another United States Generally Accepted Accounting Principle standard requires (or permits) assets or liabilities to be measured at fair value but does not expand the use of fair value to any new circumstances. This standard also will require additional disclosures in both annual and quarterly reports. SFAS No. 157 will be effective for financial statements issued for fiscal years beginning after November 15, 2007. White River has elected early adoption of SFAS No. 157 as of January 1, 2007.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (“SFAS No. 159”). SFAS No. 159 permits all entities to choose, at specified election dates, to measure eligible assets and liabilities at fair value. SFAS No. 159 will be effective for financial statements issued for fiscal years beginning after November 15, 2007. White River has elected early adoption of SFAS No. 159 as of January 1, 2007 solely for creditor notes payable.

Results of Operations

The Quarter Ended June 30, 2007 Compared to the Quarter Ended June 30, 2006 – Overview

Net income was $1.7 million, or $0.42 per diluted share, for the quarter ended June 30, 2007, compared to $3.6 million, or $0.94 per diluted share, for the quarter ended June 30, 2006. The following items contributed to the decrease to net income:

§ Interest income for the quarter ended June 30, 2007 decreased $1.5 million as a result as a result of the continued liquidation of the UAC receivable portfolio.

§ Accretion and other income decreased $1.7 million to $1.0 million for the quarter ended June 30, 2007 as compared to $2.7 million for the same period during 2006. This decline is the result of the decline of accretion income from the beneficial interest in Master Trust.

§ A provision for estimated credit losses of $(0.9) million was recognized for the quarter ended June 30, 2007 compared to a recovery of estimated credit losses of $0.5 million for the quarter ended June 30, 2006.

§ A gain from deficiency sale of $3.7 million during the quarter ended June 30, 2006, with no such gain occurring during the quarter ended June 30, 2007.

§ Income tax expense was $(0.9) million for the quarter ended June 30, 2007 compared to an income tax benefit of $0.4 million for the quarter ended June 30, 2006.

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

§ Interest expense for the quarter ended June 30, 2007 decreased $1.5 million as the result of the reductions of debt as compared to the quarter ended June 30, 2007.

§ Charge to master trust–net decreased $5.2 million during the quarter ended June 30, 2007 as compared to the quarter ended June 30, 2006 as a result of the reduction of the activity from UAC.

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PART I   FINANCIAL INFORMATION

The Six Months Ended June 30, 2007 Compared to the Six Months Ended June30, 2006 – Overview

Net income was $8.7 million, or $2.20 per diluted share, for the six months ended June 30, 2007, compared to $4.8 million, or $1.23 per diluted share, for the six months ended June 30, 2006. The following items contributed to the increase to net income:

§ Accretion and other income increased $7.9 million during the six months ended June 30, 2007 to $11.3 million as compared to $3.4 million for the same period during 2006. This increase is the result of the increase of accretion income of the beneficial interest in Master Trust.

§ Interest expense for the six months ended June 30, 2007 decreased $2.9 million as the result of the reductions of debt as compared to the six months ended June 30, 2007.

§ Charge to master trust–net decreased $6.5 million during the six months ended June 30, 2007 as compared to the same period during 2006 as a result of the reduction of the activity from UAC.

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

§ Interest income for the six months ended June 30, 2007 decreased $3.3 million as a result as a result of the continued liquidation of the UAC receivable portfolio.

§ A provision for estimated credit losses of $(1.5) million was recognized for the six months ended June 30, 2007 compared to a recovery of estimated credit losses of $0.4 million for the same period during 2006.

§ A gain from deficiency sale of $3.7 million during the six months ended June 30, 2006, with no significant gain occurring during the six months ended June 30, 2007.

§ Income tax expense was $(4.9) million for the six months ended June 30, 2007 compared to an income tax benefit of $1.0 million for the six months ended June 30, 2006.

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PART I   FINANCIAL INFORMATION

Discussion of Results

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

For The Quarter Ended June 30, 2007	UAC			Coastal Credit			Corporate and Other			Consolidated
Interest on receivables	$	484		$	7,654		$	-		$	8,138
Accretion and other interest		945			-			21			966
Total interest income		1,429			7,654			21			9,104
Interest expense		(279	)		(952	)		(317	)		(1,548	)
Net interest margin		1,150			6,702			(296	)		7,556
Recovery (provision) for estimated credit losses		833			(1,695	)		-			(862	)
Net interest margin (deficit) after recovery (provision) for estimated credit losses		1,983			5,007			(296	)		6,694
OTHER REVENUES (EXPENSES):
Salaries and benefits		(64	)		(1,797	)		(149	)		(2,010	)
Operating expenses		(113	)		(951	)		(435	)		(1,499	)
Third party servicing expense		(136	)		-			-			(136	)
Bankruptcy costs		-			-			-			-
(Charge) credit to master trust—net		(429	)		-			-			(429	)
Change in fair market valuation of creditor liabilities		50			-			-			50
Gain from extinguishment of debt		(9,247	)		-			9,247			-
Gain (loss) from deficiency sale		(19	)		-			-			(19	)
Other income (expense)		19			(85	)		-			(66	)
Total other revenues (expenses)		(9,939	)		(2,833	)		8,663			(4,109	)
Income (loss) before income taxes		(7,956	)		2,174			8,367			2,585
Income tax expense		-			-			(925	)		(925	)
Net income (loss)	$	(7,956	)	$	2,174		$	7,442		$	1,660

For The Quarter Ended June 30, 2006	UAC			Coastal Credit			Corporate and Other			Consolidated
Interest on receivables	$	2,369		$	7,208		$	-		$	9,577
Accretion and other interest		2,683			-			14			2,697
Total interest income		5,052			7,208			14			12,274
Interest expense		(1,292	)		(1,367	)		(423	)		(3,082	)
Net interest margin		3,760			5,841			(409	)		9,192
Recovery (provision) for estimated credit losses		1,556			(1,033	)		-			523
Net interest margin (deficit) after recovery (provision) for estimated credit losses		5,316			4,808			(409	)		9,715
OTHER REVENUES (EXPENSES):
Salaries and benefits		(52	)		(1,942	)		(133	)		(2,127	)
Operating expenses		(216	)		(839	)		(556	)		(1,611	)
Third party servicing expense		(477	)		-			-			(477	)
Bankruptcy costs		(57	)		-			-			(57	)
(Charge) credit to master trust—net		(5,614	)		-			-			(5,614	)
Change in fair market valuation of creditor liabilities		-			-			-			-
Gain from extinguishment of debt		(1,767	)		-			1,565			(202	)
Gain from deficiency sale		3,663			-			-			3,663
Other income (expense)		51			(151	)		-			(100	)
Total other revenues (expenses)		(4,469	)		(2,932	)		876			(6,525	)
Income before income taxes		847			1,876			467			3,190
Income tax benefit		-			-			439			439
Net income	$	847		$	1,876		$	906		$	3,629

21

PART I   FINANCIAL INFORMATION

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

For The Six Months Ended June 30, 2007	UAC			Coastal Credit			Corporate and Other			Consolidated
Interest on receivables	$	1,245		$	15,041		$	-		$	16,286
Accretion and other interest		11,234			-			49			11,283
Total interest income		12,479			15,041			49			27,569
Interest expense		(726	)		(2,153	)		(660	)		(3,539	)
Net interest margin		11,753			12,888			(611	)		24,030
Recovery (provision) for estimated credit losses		1,635			(3,135	)		-			(1,500	)
Net interest margin (deficit) after recovery (provision) for estimated credit losses		13,388			9,753			(611	)		22,530
OTHER REVENUES (EXPENSES):
Salaries and benefits		(132	)		(3,751	)		(269	)		(4,152	)
Operating expenses		(252	)		(1,712	)		(854	)		(2,818	)
Third party servicing expense		(354	)		-			-			(354	)
Bankruptcy costs		(6	)		-			-			(6	)
(Charge) credit to master trust—net		(1,490	)		-			-			(1,490	)
Change in fair market valuation of creditor liabilities		(187	)		-			-			(187	)
Gain from extinguishment of debt		(15,262	)		-			15,262			-
Gain from deficiency sale		22			-			-			22
Other income (expense)		242			(167	)		-			75
Total other revenues (expenses)		(17,419	)		(5,630	)		14,139			(8,910	)
Income (loss) before income taxes		(4,031	)		4,123			13,528			13,620
Income tax expense		-			-			(4,949	)		(4,949	)
Net income (loss)	$	(4,031	)	$	4,123		$	8,579		$	8,671

For The Six Months Ended June 30, 2006	UAC			Coastal Credit			Corporate and Other			Consolidated
Interest on receivables	$	5,554		$	14,055		$	-		$	19,609
Accretion and other interest		3,383			-			24			3,407
Total interest income		8,937			14,055			24			23,016
Interest expense		(2,917	)		(2,565	)		(941	)		(6,423	)
Net interest margin		6,020			11,490			(917	)		16,593
Recovery (provision) for estimated credit losses		2,489			(2,104	)		-			385
Net interest margin (deficit) after recovery (provision) for estimated credit losses		8,509			9,386			(917	)		16,978
OTHER REVENUES (EXPENSES):
Salaries and benefits		(171	)		(3,746	)		(206	)		(4,123	)
Operating expenses		(601	)		(1,638	)		(978	)		(3,217	)
Third party servicing expense		(1,180	)		-			-			(1,180	)
Bankruptcy costs		(131	)		-			-			(131	)
(Charge) credit to master trust—net		(8,001	)		-			-			(8,001	)
Change in fair market valuation of creditor liabilities		-			-			-			-
Gain from extinguishment of debt		(1,767	)		-			1,565			(202	)
Gain from deficiency sale		3,709			-			-			3,709
Other income (expense)		206			(245	)		-			(39	)
Total other revenues (expenses)		(7,936	)		(5,629	)		381			(13,184	)
Income (loss) before income taxes		573			3,757			(536	)		3,794
Income tax benefit		-			-			971			971
Net income	$	573		$	3,757		$	435		$	4,765

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PART I   FINANCIAL INFORMATION

The Quarter Ended June 30, 2007 Compared to the Quarter Ended June 30, 2006

Interest on receivables decreased 15.0% to $8.1 million compared to $9.6 million for the quarters ended June 30, 2007 and 2006, respectively. Interest on receivables from UAC decreased $1.9 million due to a lower average securitized finance receivable and receivables held for investment balance of $14.6 million during the quarter ended June 30, 2007 as compared to $71.5 million during the quarter ended June 30, 2006. This decrease in interest on receivables was partially offset by an increase in interest on receivables from Coastal Credit of $0.5 million. This increase is due to an increase in the average finance receivable balance of $87.0 million for the quarter ended June 30, 2007 as compared to $81.7 million during the quarter ended June 30, 2006.

Accretion and other interest decreased to $1.0 million compared to $2.7 million for the quarters ended June 30, 2007 and 2006, respectively. UAC contributed $1.7 million to this decrease from a decrease in accretion income of the beneficial interest in Master Trust. The fair value of beneficial interest in Master Trust has increased over time primarily as a result of reductions in estimated securitized finance receivable net losses. As an increase in the fair value of beneficial interest in Master Trust is recorded, an adjustment is recorded to increase accumulated other comprehensive income in the shareholders’ equity section of the consolidated balance sheet. The accumulated other comprehensive income is accreted over time as interest income based on estimated future cash flows. As the cash flows for a given period or near future periods have decreased, the accretion income has decreased as well. The individual components of accretion and other interest income are shown in the following table (in thousands):

	Quarters Ended June 30,
	2007		2006
UAC discount accretion for beneficial interest in Master Trust	$	834	$	2,462
Interest on cash balances		132		235
UAC accretion and other interest income	$	966	$	2,697

Interest expense decreased 49.8% to $1.6 million compared to $3.1 million for the quarters ended June 30, 2007 and 2006, respectively. UAC interest expense decreased by $1.0 million due to the decrease in the average collateralized financings of $16.8 million during the quarter ended June 30, 2007 compared to $77.4 million during the same period ended June 30, 2006. Coastal Credit interest expense decreased by $0.4 million to $1.0 million from $1.4 million for the quarters ended June 30, 2007 and 2006 as the result of the decrease in average line of credit and subordinated debentures of $46.4 million and $64.5 million for the quarters ended June 30, 2007 and 2006, respectively. Interest expense of Corporate and Other was $0.3 million compared to $0.4 million for the quarters ended June 30, 2007 and 2006, respectively, which is primarily related to the secured note payable.

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PART I   FINANCIAL INFORMATION

Provision for estimated credit losses was $(0.9) million compared to a recovery for estimated credit losses of $0.5 million for the quarters ended June 30, 2007 and 2006, respectively. Coastal Credit contributed a provision of $1.7 million and $1.0 million for the quarters ended June 30, 2007 and 2006, respectively. Provision for estimated credit losses is charged to income to bring Coastal Credit’s allowance for estimated credit losses to a level which management considers adequate to absorb probable credit losses inherent in the portfolio of finance receivables. This provision was partially offset by a recovery of $0.8 million and $1.5 million to the provision for estimated credit losses at UAC for the quarters ended June 30, 2007 and 2006, respectively. This change in recovery for estimated credit losses is due to stronger than projected cash flows from recoveries on defaulted receivables during the periods. In addition, as the receivable balances continue to liquidate a smaller reserve is required and thus less provision expense is recognized.

Salaries and benefits decreased to $2.0 million for the quarter ended June 30, 2007 compared to $2.1 million for the quarter ended June 30, 2006. There was no significant change in salaries and benefits during these periods.

Operating expenses decreased to $1.5 million for the quarter ended June 30, 2007 compared to $1.6 million for the quarter ended June 30, 2006. UAC operating expenses decreased $0.1 million between the periods as a result of a reduction in professional fees as UAC continued to wind down. Operating expenses for Corporate and Other decreased $0.2 million to $0.4 million for the quarter ended June 30, 2007 compared to $0.6 million for the quarter ended June 30, 2006. The Corporate and Other expenses were primarily professional fees. Coastal Credit operating expenses increased $0.2 million.

Third party servicing expenses decreased 71.5% to $0.1 million for the quarter ended June 30, 2007 compared to $0.5 million for the quarter ended June 30, 2006. UAC is the only segment that incurs this expense. This decrease is the result of the decline in the number of accounts serviced by the third party servicer during the quarter ended June 30, 2007 as compared to June 30, 2006. UAC pays a monthly servicing fee per active receivable. As the number of receivable accounts decreases, the third party servicing expense decreases.

Bankruptcy costs are professional fees and expenses associated with the bankruptcy proceedings of UAC. These costs were $57,000 for the quarter ended June 30, 2006. There were no such costs for the quarter ended June 30, 2007. Future bankruptcy costs will be eliminated with the closure of the bankruptcy case on January 5, 2007. UAC is the only segment that incurs these costs which were for the purpose of assisting the reorganized company in complying with its bankruptcy plan.

The charge to Master Trust, net was $0.4 million for the quarter ended June 30, 2007 compared to $5.6 million for the quarter ended June 30, 2006. Charge to Master Trust is expense related to future transfers of funds to the Master Trust from securitized finance receivables. UAC is the only segment that reports this activity.

Gain (loss) from deficiency sale was a loss of $(19,000) compared to a gain of $3.7 million for the quarters ended June 30, 2007 and 2006. The loss during the quarter ended June 30, 2007 was the result of final fees related to the UAC sale of Chapter 13 bankruptcy accounts. This gain is the result of the UAC sale of Chapter 13 bankruptcy accounts that occurred during the quarter ended June 30, 2006.

Income tax benefit (expense) was a $(0.9) million expense for the quarter ended June 30, 2007 compared to a $0.4 million benefit for quarter ended June 30, 2006. The expense for the quarter ended June 30, 2007 is based on the estimated effective tax rates for 2007. During 2006 White River was evaluating its future taxable income based on the successful integration of Coastal Credit and various other items that occurred during 2006. This evaluation resulted in an income tax benefit from the reversal of a portion of the deferred tax valuation allowance.

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PART I   FINANCIAL INFORMATION

The availability of these tax benefits would be jeopardized if an ownership change (as defined in IRS regulations governing NOL carryforward limitations) were to occur in the future with respect to White River. In general, an ownership change occurs when, as of any testing date, the aggregate of the increase in percentage points of the total amount of a corporation's stock owned by each 5-percent shareholder within the meaning of the NOL carryforward limitations whose percentage ownership of the stock has increased as of such date over the lowest percentage of the stock owned by each such 5-percent shareholder at any time during the three-year period preceding such date, is more than 50 percentage points. In general, persons who own 5% or more of a corporation's stock are 5-percent shareholders, and all other persons who own less than 5% of a corporation's stock are treated together, as a single, public group 5-percent shareholder, regardless of whether they own an aggregate of 5% of a corporation's stock. Calculating whether an ownership change has occurred is subject to inherent uncertainty. This uncertainty results from the complexity and ambiguity of the NOL carryforward limitations as well as the limitations on the knowledge of a publicly-traded corporation concerning the ownership of, and transactions in, its securities. White River is not aware of any facts indicating that an ownership change has occurred with respect to White River.

The Six Months Ended June 30, 2007 Compared to the Six Months Ended June 30, 2006

Interest on receivables decreased 16.9% to $16.3 million compared to $19.6 million for the six months ended June 30, 2007 and 2006, respectively. Interest on receivables from UAC decreased $4.3 million due to a lower average securitized finance receivable and receivables held for investment balance of $19.2 million during the six months ended June 30, 2007 as compared to $85.5 million during the six months ended June 30, 2006. This decrease in interest on receivables was partially offset by an increase in interest on receivables from Coastal Credit of $1.0 million. This increase is due to an increase in the average finance receivable balance of $86.1 million for the six months ended June 30, 2007 as compared to $80.0 million during the six months ended June 30, 2006.

Accretion and other interest increased to $11.3 million compared to $3.4 million for the six months ended June 30, 2007 and 2006, respectively. UAC contributed $7.9 million to this increase from an increase in accretion income of the beneficial interest in Master Trust. The fair value of beneficial interest in Master Trust has increased over time primarily as a result of reductions in estimated securitized finance receivable net losses. As an increase in the fair value of beneficial interest in Master Trust is recorded, an adjustment is recorded to increase accumulated other comprehensive income in the shareholders’ equity section of the consolidated balance sheet. The accumulated other comprehensive income is accreted over time as interest income. The individual components of accretion and other interest income are shown in the following table (in thousands):

	Six Months Ended June 30,
	2007		2006
UAC discount accretion for beneficial interest in Master Trust	$	10,961	$	2,942
Interest on cash balances		322		465
UAC accretion and other interest income	$	11,283	$	3,407

Interest expense decreased 44.9% to $3.5 million compared to $6.4 million for the six months ended June 30, 2007 and 2006, respectively. UAC interest expense decreased by $2.2 million due to the decrease in the average collateralized financings of $21.8 million during the six months ended June 30, 2007 compared to $91.9 million during the same period ended June 30, 2006. Coastal Credit interest expense decreased by $0.4 million to $2.2 million from $2.6 million for the six months ended June 30, 2007 and 2006 as the result of the

25

PART I   FINANCIAL INFORMATION

decrease in average line of credit and subordinated debentures of $51.0 million and $62.2 million for the six months ended June 30, 2007 and 2006, respectively. Interest expense of Corporate and Other was $0.7 million compared to $0.9 million for the six months ended June 30, 2007 and 2006, respectively, which is primarily related to the secured note payable.

Provision for estimated credit losses was $(1.5) million compared to a recovery for estimated credit losses of $0.4 million for the six months ended June 30, 2007 and 2006, respectively. Coastal Credit contributed a provision of $3.1 million and $2.1 million for the six months ended June 30, 2007 and 2006, respectively. Provision for estimated credit losses is charged to income to bring Coastal Credit’s allowance for estimated credit losses to a level which management considers adequate to absorb probable credit losses inherent in the portfolio of finance receivables. This provision was partially offset by a recovery of $1.6 million and $2.5 million to the provision for estimated credit losses at UAC for the six months ended June 30, 2007 and 2006, respectively. This change in recovery for estimated credit losses is due to stronger than projected cash flows from recoveries on defaulted receivables during the periods. In addition, as the receivable balances continue to liquidate a smaller reserve is required and thus less provision expense is recognized.

Salaries and benefits increased to $4.2 million for the six months ended June 30, 2007 compared to $4.1 million for the six months ended June 30, 2006. There was no significant change in salaries and benefits during these periods.

Operating expenses decreased to $2.8 million for the six months ended June 30, 2007 compared to $3.2 million for the six months ended June 30, 2006. UAC operating expenses decreased $0.3 million between the periods as a result of a reduction in professional fees as UAC continued to wind down. Operating expenses for Corporate and Other decreased $0.1 million to $0.9 million for the six months ended June 30, 2007 compared to $1.0 million for the six months ended June 30, 2006. The Corporate and Other expenses were primarily professional fees. Coastal Credit operating expenses increased $0.1 million.

Bankruptcy costs are professional fees and expenses associated with the bankruptcy proceedings of UAC. These costs were approximately $6,000 and $131,000 for the six months ended June 30, 2007 and 2006, respectively. Future bankruptcy costs will be eliminated with the closure of the bankruptcy case on January 5, 2007. UAC is the only segment that incurs these costs which were for the purpose of assisting the reorganized company in complying with its bankruptcy plan.

The charge to Master Trust, net was $1.5 million for the six months ended June 30, 2007 compared to $8.0 million for the six months ended June 30, 2006. Charge to Master Trust is expense related to future transfers of funds to the Master Trust from securitized finance receivables. UAC is the only segment that reports this activity.

Gain from deficiency sale was $22,000 compared to $3.7 million for the six months ended June 30, 2007 and 2006. The gain from deficiency sale for the six months ended June 30, 2006 is the result of the UAC sale of chapter 13 bankruptcy accounts that occurred during the quarter ended June 30, 2006. No such sale occurred during the six months ended June 30, 2007.

Income tax benefit (expense) was a $(4.9) million expense for the six months ended June 30, 2007 compared to a $1.0 million benefit for six months ended June 30, 2006. The expense for the six months ended June 30, 2007 is based on the estimated effective tax rates. During 2006 White River was evaluating its future taxable income based on the successful integration of Coastal Credit and various other items that occurred during 2006. This evaluation resulted in an income tax benefit from the reversal of a portion of the deferred tax valuation allowance.

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PART I   FINANCIAL INFORMATION

Financial Condition as of June 30, 2007 and December 31, 2006

Securitized Finance Receivables, Net

Securitized finance receivables, net balance is 39.3% lower at June 30, 2007 compared to December 31, 2006. On June 8, 2007 the collateral financings for notes series 2004-A1, 2004-A2 and 2004-B were paid in full. Subsequent to the settlement of the collateral financings, the receivables securing the collateral financings were recorded as receivables held for investment in other assets. The decrease in the remainder of the securitized receivables is attributable to the normal runoff of the portfolio. Principal balances of securitized finance receivables and the off-balance sheet securitization portfolios are summarized in the following table (in thousands):

	June 30,		December 31,
	2007		2006
UAC and Subsidiary Receivables Held for Investment
UAC Owned (1)	$	112	$	188
UACSC Owned (2)		538		298
		650		486
Securitized Finance Receivables (3)
2004-A1		-		414
2004-A2		-		637
2004-B		-		855
2004-C		1,015		3,424
2005-A		1,730		4,913
2005-B		2,974		7,227
2005-C		5,036		11,330
		10,755		28,800
Off-Balance Sheet Securitizations
2001-B (4)		2,400		4,719
2001-C		7,698		14,070
2002-A		8,208		14,530
		18,306		33,319
Total Portfolios	$	29,711	$	62,605

(1) Receivables that are owned directly by UAC and are not leveraged.

(2) On June 8, 2007 the 2004-A1, 2004-A2 and 2004-B notes were paid in full. The receivable portfolios are still owned by UACSC but are now recorded as held for investment.

(3) On-balance sheet portfolios held by UACSC as collateral for non-recourse asset-backed notes.

(4) The 2001-B transaction represents a separate issuance of notes, or a separate tranche, under the UACSC 1999 Master Owner Trust.

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PART I   FINANCIAL INFORMATION

Finance Receivables, Net

Finance receivables, net refer to the receivables of Coastal Credit and generally have original terms ranging from 32 to 48 months and are secured by the related vehicles. As of June 30, 2007, Coastal Credit’s finance receivables consisted exclusively of contracts acquired by Coastal Credit without credit recourse to the dealer. Although all the contracts in Coastal Credit’s portfolio were acquired without credit recourse, each dealer remains liable to Coastal Credit for liabilities arising from certain representations and warranties made by the dealer with respect to compliance with applicable federal and state laws and valid title to the vehicle.

Coastal Credit’s policy is to only acquire a contract after the dealer has provided Coastal Credit with the requisite proof that Coastal Credit will have a first priority lien on the financed vehicle, that the borrower has obtained the required collision insurance naming Coastal Credit as loss payee and that the contract has been fully and accurately completed and validly executed. Coastal Credit typically buys contracts on an individual basis and occasionally considers portfolio acquisitions as part of its growth strategy.

During the six months ended June 30, 2007, 25.7% of contracts acquired by Coastal Credit are contracts made with borrowers who are in the United States military as compared to 33.7% during the six months ended June 30, 2006. Coastal Credit believes that having in the portfolio a significant percentage of contracts for which the borrowers are United States military personnel contributes to lower payment delinquency and greater collection personnel efficiencies. As of June 30, 2007, 30.1% of the Coastal Credit Receivables were with borrowers who are in the United States military as compared to 32.6% as of December 31, 2006. Coastal Credit requests that all borrowers who are in the military use the military allotment system to make payments on their contracts. Under this allotment system, the borrower authorizes the military to make a payroll deduction for the amount of the borrower’s monthly contract payment and to direct this deduction payment to Coastal Credit on behalf of the borrower. Delinquency of payments on contracts paid by allotment historically has been less than delinquency of payments on contracts not paid by allotment. As a result, the collection effort associated with the military contracts requires substantially less time, allowing Coastal Credit’s collection staff to focus on an increasing number of non-military contracts.

Beneficial Interest in Master Trust

Beneficial interest in Master Trust decreased to $10.3 million at June 30, 2007 compared to $23.6 million at December 31, 2006. This decrease is primarily due to cash distributed or available for distribution from the Master Trust account. UAC used a 15% discount rate to value the beneficial interest in Master Trust as of June 30, 2007 and December 31, 2006.

UAC continually assesses the adequacy of its beneficial interest in Master Trust cash flow model and, as necessary, adjusts both its cash flow model and the balance of the beneficial interest in Master Trust accordingly. Adjustments to beneficial interest in Master Trust are recorded as accumulated other comprehensive income in the shareholders’ equity section of the consolidated balance sheet and are accreted over time as accretion and other interest. The anticipated amortization period of the accumulated other comprehensive income is based on the estimated cash flows from the Master Trust which are projected to be completed by 2010. Accumulated other comprehensive income, net of taxes was $6.2 million and $11.1 million at June 30, 2007 and December 31, 2006, respectively.

Collateralized Financings

Collateralized financings were $12.5 million at June 30, 2007, compared to $32.4 million at December 31, 2006. The decrease was the result of principal payments to note holders that correspond to the principal reduction of securitized finance receivables, net.

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PART I   FINANCIAL INFORMATION

Accrued Interest Payable

Accrued interest payable was $0.7 million at June 30, 2007, compared to $1.2 million at December 31, 2006. The change in accrued interest payable is the result of the declining collateralized financing.

Creditor Notes Payable

Creditor notes payable was $1.1 million at June 30, 2007, compared to $1.4 million at December 31, 2006. The decrease was the result of a distributions to UAC’s third party creditor during the six months ended June 30, 2007 partially offset by recording the creditor notes payable at fair value in accordance with SFAS No. 159 which was adopted on January 1, 2007. The initial fair value adjustment increased creditor notes payable by approximately $994,000 and increased accumulated deficit net of taxes.

Liquidity and Capital Resources for the Six Months Ended June 30, 2007 and 2006

Net cash used in operating activities was $(0.5) million for the six months ended June 30, 2007 compared to net cash provided by operating activities of $0.7 million for the six months ended June 30, 2006. The change in net cash flows is primarily from the reduction of interest on receivables from UAC related to the reduction in the average securitized finance receivables between the periods and to the proceeds from deficiency sale related to the UAC sale of Chapter 13 bankruptcy accounts during 2006.

Net cash provided by investing activities was $35.5 million for the six months ended June 30, 2007 compared to $50.1 million for the six months ended June 30, 2006. This change was primarily the result of a reduction in the principal collection and recoveries on securitized finance receivables. This activity was partially offset by the collection on beneficial interest in Master Trust.

Net cash used in financing activities was $36.1 million for the six months ended June 30, 2007 compared to $51.3 million for the six months ended June 30, 2006. Net cash flows used in financing activities for the six months ended June 30, 2007 primarily resulted from the $19.8 million principal payments of collateralized financing, the repayment in full of subordinated debentures principal of $7.7 million and the net decrease in the line of credit during the period of $5.0 million. Net cash used in financing activities for the six months ended June 30, 2006 primarily resulted from the $57.0 million principal payments of collateralized financing partially offset by the net borrowings on the line of credit during the period of $6.0 million.

At June 30, 2007, White River and its subsidiaries had cash and cash equivalents of $5.9 million compared to $6.4 million at June 30, 2006.

Coastal Credit has a revolving credit facility from a lending institution with a maximum borrowing limit at June 30, 2007 of $100.0 million. The maturity date is December 31, 2011. As of June 30, 2007, Coastal Credit had $44.5 million of indebtedness outstanding under this facility. Total availability under the line of credit was $72.2 million based upon the level of eligible collateral with $27.7 million available in excess of the amount utilized at June 30, 2007. The credit facility is secured by substantially all of the assets of Coastal Credit. In addition, White River has provided an unconditional corporate guaranty. Coastal Credit must maintain specified financial ratios within guidelines established by the lender and is in compliance with these ratios. Interest is paid monthly at a variable rate, based on meeting certain financial criteria. At June 30, 2007, the rate was the London Interbank Offered Rate (“LIBOR”) plus 2.60% (7.92%). There is an annual commitment fee of 1/8 of 1% on the average daily unused commitment. In the event of a significant pay down or an earlier retirement of the revolver commitment, Coastal Credit would sustain certain prepayment penalties. This facility limits distributions Coastal Credit may make to White River to 50% of Coastal Credit’s net income in addition to permitted payments on subordinated debt (including White River debt guaranteed by Coastal Credit).

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PART I   FINANCIAL INFORMATION

Coastal Credit paid in full its $7.7 million in subordinated debentures on May 1, 2007.

UAC’s sources of liquidity are limited and consist of cash on hand, escrowed cash for operations, funds from consolidated operations and distributions from the Master Trust. UAC's beneficial interest in Master Trust reflected on the balance sheet reflects the discounted value of projected cash flows that UAC expects to receive from its outstanding securitizations and non-recourse financings of its portfolios of auto finance receivables. White River, as owner of approximately 90% of UAC's notes and claims outstanding under the Plan of Reorganization, will become entitled to distribution of the substantial majority of these cash flows as they are realized by UAC. However, the realization of such projected cash flows is dependent upon the performance of the underlying auto receivable portfolios and the effective servicing of such receivables. In particular, if gross defaults, recoveries on defaulted receivables or prepayments on such receivables are less favorable than the rates projected by management, UAC's realization of such cash flows will be reduced or delayed relative to such projections. Such reduction may be material.

White River has outstanding $11.3 million in a secured note at June 30, 2007. Interest on the note is payable quarterly in arrears at a fixed rate of 10.75% per annum. The secured note payable is secured by White River’s ownership interest in Coastal Credit and is guaranteed by Coastal Credit, but subordinate to the revolving credit facility of Coastal Credit. Principal is payable in quarterly installments of $937,500 which began July 1, 2006. Prepayment of the note is allowed beginning September 1, 2007. There is a 2% prepayment penalty if prepayment occurs between September 1, 2007 and August 30, 2008. This prepayment penalty is 1% if prepayment occurs between September 1, 2008 and August 30, 2009. There is no penalty if the prepayment occurs after August 30, 2009.

White River’s sources of liquidity, as the parent company, are limited and consist of cash on hand, payments by UAC on the UAC creditor notes payable owned by White River and distributions by Coastal Credit (subject to restrictions under Coastal Credit’s credit facility).

White River currently intends to retain its earnings to finance the growth and development of its businesses and has no present intention of paying any cash dividends in the foreseeable future.

Asset Quality

Set forth below is certain information concerning the credit loss experiences on the fixed rate retail automobile receivables of White River. There can be no assurance that future net credit loss experience on the receivables will be comparable to that set forth below. See “Discussion of Forward-Looking Statements.”

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PART I   FINANCIAL INFORMATION

Securitized Finance Receivables

Selected information about active UAC securitizations (dollars in thousands):

Current Transaction	Initial Transaction	Original Amount of Initial Transaction		Remaining Balance at June 30, 2007		Remaining Balance as a Percentage of Original Amount			Net Loss Incurred to Original Amount at June 30, 2007
On Balance Sheet Securitized Finance Receivables:
2004-C	2000-B	$	534,294	$	1,015		0.19	%		11.39	%
2005-A	2000-C		499,999		1,730		0.35	%		9.44	%
2005-B	2000-D		510,000		2,974		0.58	%		10.04	%
2005-C	2001-A		573,000		5,036		0.88	%		9.20	%
			2,117,293		10,755
Off Balance Sheet Securitized Finance Receivables:
2001-B			150,002		2,400		1.60	%		7.32	%
2001-C			330,000		7,698		2.33	%		6.82	%
2002-A			300,000		8,208		2.74	%		4.97	%
			780,002		18,306
Total		$	2,897,295	$	29,061		1.00	%		8.55	%

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PART I   FINANCIAL INFORMATION

Delinquency experience of securitized finance receivables at UAC (dollars in thousands):

	June 30, 2007			December 31, 2006
Securitized finance receivables principal balance	$	10,755		$	28,800
Delinquencies:
30-59 days	$	1,021		$	2,812
60-89 days		283			748
90+ days		200			419
Total delinquencies	$	1,504		$	3,979
Delinquencies as a percentage of securitized finance receivables		14.0	%		13.8	%
Off-balance sheet finance receivables principal balance	$	18,306		$	33,319
Delinquencies:
30-59 days	$	906		$	1,929
60-89 days		223			544
90+ days		93			220
Total delinquencies	$	1,222		$	2,693
Delinquencies as a percentage of securitized finance receivables		6.7	%		8.1	%

Provisions were made for estimated net credit losses of securitized finance receivables in conjunction with each repurchased off-balance sheet securitization. The cumulative credit loss assumptions used for the pools of receivables repurchased as of June 30, 2007 ranged from 9.24% to 11.38%, compared to a range of 8.91% to 11.44% as of December 31, 2006.

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PART I   FINANCIAL INFORMATION

Allowance for loan losses of securitized finance receivables at UAC ($ in thousands):

	Quarters Ended June 30,						Six Months Ended June 30,
	2007			2006			2007			2006
Balance at the beginning of period	$	881		$	4,867		$	1,617		$	6,503
Charge-offs		(627	)		(2,064	)		(1,714	)		(6,316	)
Recoveries		900			2,842			2,054			6,391
Provision (recovery) for estimated credit losses		(832	)		(1,556	)		(1,635	)		(2,489	)
Balance at the end of the period	$	322		$	4,089		$	322		$	4,089
Net charge-offs (recoveries)	$	(273	)	$	(778	)	$	(340	)	$	(75	)
Securitized finance receivables	$	10,755		$	58,710		$	10,755		$	58,710
Allowance for loan losses as a percent of securitized finance receivables		2.99	%		6.96	%		2.99	%		6.96	%
Annualized net-charge offs (recoveries) as a percent of securitized finance receivables		(10.15	)%		(5.30	)%		(6.32	)%		(0.26	)%

Finance Receivables

Delinquency experience of finance receivables at Coastal Credit, including unearned interest ($ in thousands):

	June 30,			December 31,
	2007			2006
Finance receivables - gross balance	$	106,027		$	104,399
Delinquencies:
30-59 days	$	1,500		$	1,261
60-89 days		876			898
90+ days		1,322			1,208
Total delinquencies	$	3,698		$	3,367
Delinquencies as a percentage of finance receivables - gross balance		3.5	%		3.2	%

33

PART I   FINANCIAL INFORMATION

As a result of the nature of the customers in Coastal Credit’s portfolio, Coastal Credit considers the establishment of an adequate allowance for loan losses to be critical to its continued profitability. Coastal Credit has an allowance for loan losses that is calculated independent of the aggregate acquisition discounts and fees on finance receivables. Coastal Credit’s allowance for loan losses is based upon the historical rate at which (1) current loans, (2) contracts in a 30, 60 and 90+ day delinquency state and (3) loans ineligible for its borrowing line will default. These historical rates are evaluated and revised on a quarterly basis.

Allowance for loan losses of finance receivables ($ in thousands):

	Quarters Ended June 30,						Six Months Ended June 30,
	2007			2006			2007			2006
Balance at beginning of period	$	5,694		$	5,916		$	5,694		$	6,031
Charge-offs, net of recoveries		(1,605	)		(1,117	)		(3,045	)		(2,303	)
Provision for estimated credit losses		1,695			1,033			3,135			2,104
Balance at the end of the period	$	5,784		$	5,832		$	5,784		$	5,832
Net charge-offs	$	1,605		$	1,117		$	3,045		$	2,303
Finance receivables, net of unearned finance charges	$	99,029		$	95,598		$	99,029		$	95,598
Allowance for loan losses as a percent of finance receivables, net of unearned finance charges		5.84	%		6.10	%		5.84	%		6.10	%
Annualized net charge-offs as a percent of finance receivables, net of unearned finance charges		6.48	%		4.67	%		6.15	%		4.82	%
Allowance for loan losses as a percent of annualized net charge-offs		90.09	%		130.53	%		94.98	%		126.62	%

Discussion of Forward-Looking Statements

The preceding Management’s Discussion and Analysis contains forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. Forward-looking statements are also made elsewhere in this report. White River publishes other forward-looking statements from time to time. Statements that are not historical in nature, including the words “anticipate,” “estimate,” “should,” “expect,” “believe,” “intend,” and similar expressions, are intended to identify forward-looking statements. We caution you to be aware of the speculative nature of “forward-looking statements.” Although these statements reflect White River’s good faith belief based on current expectations, estimates and projections about (among other things) the industry and the markets in which White River operates and the performance of its subsidiaries’ receivables portfolios, they are not guarantees of future performance. Whether actual results will conform to management’s expectations and predictions is subject to a number of known and unknown risks and uncertainties, including:

§ the risks and uncertainties discussed in White River’s 2006 Annual Report on Form 10-K;

§ general economic, market, or business conditions;

34

PART I   FINANCIAL INFORMATION

§ changes in interest rates, the cost of funds, and demand for White River’s financial services;

§ changes in White River’s competitive position;

§ White River’s ability to manage growth;

§ the opportunities that may be presented to and pursued by White River;

§ competitive actions by other companies;

§ changes in laws or regulations;

§ changes in the policies of federal or state regulators and agencies; and

§ other circumstances, many of which are beyond White River’s control.

Consequently, all of White River’s forward-looking statements are qualified by these cautionary statements. White River may not realize the results anticipated by management or, even if White River substantially realizes the results management anticipates, the results may not have the consequences to, or effects on, White River or its business or operations that management expects. Such differences may be material. Except as required by applicable laws, White River does not intend to publish updates or revisions of any forward-looking statements management makes to reflect new information, future events or otherwise.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of disclosure controls and procedures

The Company's chief executive officer and chief financial officer, after evaluating the effectiveness of the Company's disclosure controls and procedures (as defined in Sections 13a-15(e) and 15d-15(e) of the regulations promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the most recent fiscal quarter covered by this quarterly report (the "Evaluation Date"), have concluded that as of the Evaluation Date, the Company's disclosure controls and procedures are effective in ensuring that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and are designed to ensure that information required to be disclosed in those reports is accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosure.

Changes in internal control over financial reporting

There were no changes in the Company's internal control over financial reporting identified in connection with the Company's evaluation of controls that occurred during the Company's last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

35

Part I I  OTHER INFORMATION       

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

The annual meeting of the shareholders of White River Capital, Inc. was held on May 17, 2007. At the meeting the seven nominees for director were elected to serve one-year terms, ending in 2008, as follows:

Nominee	Votes For		Votes Withheld
John M. Eggemeyer		3,600,781		2
Thomas C. Heagy		3,600,781		2
William E. McKnight		3,230,781		370,002
Daniel W. Porter		3,540,781		60,002
John W. Rose		3,230,781		370,002
Mark R. Ruh		3,600,781		2
Richard D. Waterfield		3,574,505		26,278

ITEM 6. EXHIBITS.

31.1 Certification by Chief Executive Officer required by Rule 13a-14(a) or 15d-14(a) of the Exchange Act

31.2 Certification by Chief Financial Officer required by Rule 13a-14(a) or 15d-14(a) of the Exchange Act

32 Section 1350 Certifications

36

SIGNATURES

Pursuant to the requirements 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.

	White River Capital, Inc.
	(Registrant)
August 8, 2007	By:	/s/ Martin J. Szumski
		Martin J. Szumski
		Chief Financial Officer
		(Signing on behalf of the registrant as Principal Financial Officer)