AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 22, 1996

REGISTRATION NO. 33-80217
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

AMENDMENT NO. 5 TO

FORM S-1

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

FIRST ENTERPRISE
FINANCIAL GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

ILLINOIS 6159 36-3688499
(State or other jurisdiction (Primary Standard Industrial (IRS Employer
of incorporation or Classification Code Number) Identification No.)
organization)

500 DAVIS STREET, SUITE 1005
EVANSTON, ILLINOIS 60201
(847) 866-8665

(Address, including ZIP Code, and telephone number,
including area code, of registrant's principal executive offices)

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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such State.

SUBJECT TO COMPLETION, DATED JULY 22, 1996

PROSPECTUS

1,886,640 SHARES

FIRST ENTERPRISE FINANCIAL GROUP, INC.

FIRST ENTERPRISE LOGO COMMON STOCK

Of the 1,886,640 shares of common stock, par value $0.01 per share (the
"Common Stock"), offered hereby (the "Offering"), 1,500,000 shares are being
sold by First Enterprise Financial Group, Inc. (the "Company") and 386,640
shares in the aggregate are being sold by Banc One Capital Partners V, Ltd. and
LaSalle National Corp. (the "Selling Stockholders"). See "Principal and Selling
Stockholders." The Company will not receive any of the proceeds from the sale of
shares of Common Stock by the Selling Stockholders; however, the Company will
receive $520,000 in connection with the exercise of warrants held by the Selling
Stockholders.

Prior to the Offering, there has been no public market for the Common
Stock. It is currently anticipated that the initial public offering price will
be between $7.00 and $8.00 per share. See "Underwriting" for information
relating to the factors considered in determining the initial public offering
price. The Common Stock has been approved, subject to official notice of
issuance, for quotation on The Nasdaq Stock Market's National Market (the
"Nasdaq National Market") under the symbol "FENT."

SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR A DISCUSSION OF CERTAIN FACTORS
WHICH SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR BY ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

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PROCEEDS TO
PRICE TO UNDERWRITING PROCEEDS TO SELLING
PUBLIC DISCOUNT(1) COMPANY(2) STOCKHOLDERS

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Per Share....................... $ $ $ $
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Total(3)........................ $ $ $ $
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(1) The Company and the Selling Stockholders have agreed to indemnify the
several Underwriters against certain liabilities, including liabilities
under the Securities Act of 1933, as amended. See "Underwriting."
(2) Before deducting expenses payable by the Company estimated at $500,000. A
portion of the proceeds will be used to make an S Corporation distribution
to existing stockholders. See "Use of Proceeds" and "S Corporation
Distributions."
(3) The Company has granted the Underwriters a 30-day over-allotment option to
purchase up to 282,996 additional shares of Common Stock on the same terms
and conditions as set forth above. If all such shares are purchased by the
Underwriters, the total Price to Public will be $ , the total
Underwriting Discount will be $ , the total Proceeds to Company will
be $ and the total Proceeds to Selling Stockholders will remain
unchanged. See "Underwriting."
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The shares of Common Stock are offered subject to receipt and acceptance by
the several Underwriters, to prior sale and to the Underwriters' right to reject
any order in whole or in part and to withdraw, cancel or modify the offer
without notice. It is expected that certificates for the shares of Common Stock
will be available for delivery on or about , 1996.
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J.C. Bradford & Co. The Chicago Corporation

, 1996
3

FIRST ENTERPRISE FINANCIAL GROUP, INC.

MARCH 31, 1996

MAP

Executive Office
Operations Headquarters
-- Branch Office

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THE COMPANY INTENDS TO FURNISH ITS STOCKHOLDERS WITH ANNUAL REPORTS
CONTAINING AUDITED FINANCIAL STATEMENTS WITH A REPORT THEREON BY INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS.
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IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.

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PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements and notes thereto appearing elsewhere in
this Prospectus. Unless otherwise indicated, all information in this Prospectus
has been adjusted to give effect to (i) the conversion of the Company's Class B
Common Stock into Common Stock on a share for share basis which will be effected
upon the consummation of the sale of shares in the Offering, (ii) the exercise
of outstanding warrants held by the Selling Stockholders which will be effected
immediately prior to the consummation of the sale of the shares in the Offering
and (iii) the change of the Company's state of incorporation from Delaware to
Illinois, the reclassification of the Company's Class A Common Stock as "Common
Stock" and a 1,288.8-for-1 stock split of the Company's capital stock, all
effected by a merger which occurred on February 1, 1996. Unless otherwise
indicated, all information in this Prospectus assumes no exercise of the
Underwriters' over-allotment option.

This Prospectus contains forward-looking statements that involve risks and
uncertainties. The Company's actual results may differ materially from the
results discussed in the forward-looking statements. Factors that might cause
such a difference include, but are not limited to, those discussed in "Risk
Factors."

THE COMPANY

The Company, which operates under the name First Enterprise Acceptance
Company, is a specialty finance company engaged primarily in purchasing and
servicing installment sales contracts ("installment contracts") originated by
automobile dealers ("dealers") for financing the sale of used automobiles, vans
and light trucks (collectively, "automobiles"). The Company purchases
installment contracts which provide financing for consumers who have limited
access to traditional sources of credit as a result of limited credit histories,
low incomes or past credit problems ("non-prime consumers"). Various insurance,
warranty and other products ("ancillary products") are also offered by the
Company, as agent, in conjunction with purchases of installment contracts. The
Company commenced operations in 1990 and began purchasing installment contracts
in May 1992 through three branch offices. As of March 31, 1996, the Company
operated 28 branch offices in eight southeastern states and currently plans to
open at least five additional branch offices by the end of 1996. The principal
amount of installment contracts owned and/or serviced by the Company (the "Total
Portfolio") increased 107.0% from $49.0 million at March 31, 1995 to $101.5
million at March 31, 1996. As of March 31, 1996, the Company owned $60.6 million
(the "Owned Portfolio") of the Total Portfolio.

Since it began purchasing installment contracts in 1992, the Company has
experienced substantial growth in the Total Portfolio. During fiscal 1992, 1993,
1994, 1995 and the three months ended March 31, 1996, the Company purchased
installment contracts with aggregate original principal balances of $7.5
million, $19.2 million, $35.1 million, $70.2 million and $32.4 million,
respectively. As of March 31, 1996, the Total Portfolio had an average original
principal balance of approximately $7,300 per installment contract, a weighted
average contract annual percentage rate ("APR") of approximately 25.4%, a
weighted average non-refundable contract acquisition discount of approximately
10.8% and a weighted average initial contract term of approximately 32 months.
At March 31, 1996, account balances which were 60 or more days past due were
0.88% of the gross amount of the Total Portfolio.

The Company's strategy is to grow the Total Portfolio by increasing its
penetration of existing markets and by expanding into new market areas. The
principal components of the Company's strategy include:

- Decentralized Structure. The Company operates with a decentralized branch
office network that provides branch managers with a significant degree of
autonomy and accountability. Within guidelines set by the Company, branch
managers are responsible for the development of dealer relationships,
underwriting of installment contract purchases, servicing and collection
of accounts and implementation of repossession procedures. Performance
goals are established for each branch office, and the branch manager's
incentive compensation is tied to the performance results of the branch
office. Management believes that its decentralized operational structure
(i) enhances dealer service by allowing branch managers and branch
personnel to provide localized service to dealers, (ii) results in better
portfolio quality through personal knowledge of local market conditions
and (iii) improves

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collection rates by requiring collection activity to be handled through direct
local contact with consumers.

- Experienced Management Personnel. The Company's growth and profitability
have been largely the result of the services of its management at the
executive, supervisory and branch levels. The executive officers of the
Company have an average of over 33 years of experience in the financial
services industry. The Company's regional supervisors and branch managers
have an average of 35 years and 24 years of experience, respectively, in
the consumer and automobile finance industries. The Company believes that
hiring and retaining experienced management personnel, particularly at
the branch and supervisory levels, is essential for the Company to
accomplish its growth objectives. The Company believes it attracts and
retains experienced management personnel by providing competitive
compensation, significant autonomy in the Company's decentralized
operational structure and equity participation.

- Management Information System. The Company utilizes an on-line, real-time
data processing system to process its installment contract transactions,
to assist in compliance with its credit policies and certain applicable
laws and regulations and to monitor its decentralized branch office
network. This system has been customized to meet the Company's
processing, compliance and reporting requirements. The executive,
operations and branch offices have immediate access to data from the
management information system.

THE OFFERING

Common Stock offered by the
Company........................ 1,500,000 shares
Common Stock offered by the
Selling Stockholders........... 386,640 shares
Common Stock to be outstanding
after the Offering............. 4,964,289 shares(1)
Use of proceeds.................. To repay subordinated indebtedness of $8.5 million and
to temporarily reduce the outstanding balance under the
Company's Credit Facility (as defined in "Use of
Proceeds") (approximately $1.4 million). See "Use of
Proceeds" and "Certain Transactions."
Nasdaq National Market symbol.... FENT

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(1) Excludes 1,232,334 shares of Common Stock which may be issued under the
Company's 1992 Employee Stock Option Plan, as Amended and Restated, 1995
Nonqualified Director Stock Option Plan and 1995 Employee Stock Purchase
Plan, of which 512,947 shares are issuable upon the exercise of stock
options granted under the employee stock option plan outstanding as of March
31, 1996. See "Management."

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SUMMARY FINANCIAL AND OPERATING DATA

THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
----------------------------- --------------------
1993 1994 1995 1995 1996
------- ------- ------- ------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

STATEMENT OF INCOME DATA:
Automobile portfolio finance charges(1).............. $ 3,002 $ 5,082 $ 9,634 $ 2,156 $ 3,256
Interest from timeshare receivables(1)............... 752 123 11 6 --
------- ------- ------- ------- ---------
Finance charges and interest......................... 3,754 5,205 9,645 2,162 3,256
Interest expense..................................... 1,201 1,576 4,039 871 1,358
------- ------- ------- ------- ---------
Net interest income.................................. 2,553 3,629 5,606 1,291 1,898
Provision for credit losses.......................... -- -- -- -- 400
Other income:
Servicing income................................... 227 1,323 3,052 478 1,126
Insurance commissions.............................. 534 550 1,342 275 651
Fees and other income.............................. 169 257 606 96 358
Gain on sale of installment contracts.............. -- -- -- -- 409
------- ------- ------- ------- ---------
Total other income............................... 930 2,130 5,000 849 2,544
Total operating expenses............................. 2,421 5,095 8,172 1,635 2,953
Income taxes(2)...................................... 30 3 60 15 427
Income tax effect of S Corporation termination(2).... -- -- -- -- (267)
------- ------- ------- ------- ---------
Net income........................................... $ 1,032 $ 661 $ 2,374 $ 490 $ 929
======= ======= ======= ======= =========
Per share data:
Pro forma net income per share(3).................. $ 0.46
Supplemental pro forma net income per share(4)..... 0.43 0.21
Weighted average shares outstanding (in thousands):
Pro forma(3)..................................... 3,245
Supplemental pro forma(4)........................ 5,131 5,397
PORTFOLIO DATA:
Total Portfolio...................................... $19,399 $39,724 $80,261 $49,035 $ 101,519
Average Total Portfolio.............................. 12,204 28,553 59,374 44,041 89,235
Average Owned Portfolio.............................. 11,560 19,997 40,153 34,700 57,323
Average indebtedness (5)............................. 18,252 18,480 34,917 30,459 49,877
Number of installment contracts purchased............ 2,685 4,935 10,021 2,152 4,390
Installment contracts purchased...................... $19,248 $35,137 $70,184 $14,341 $ 32,433
OPERATING DATA(6):
Owned Portfolio yield(7)............................. 25.97% 25.41% 23.99% 25.20% 22.85%
Cost of borrowed funds(5)............................ 6.58 8.53 11.57 11.60 10.95
Net interest spread.................................. 19.39 16.88 12.42 13.60 11.90
Net interest margin(8)............................... 19.98 18.10 13.96 15.09 13.32
Allowance for credit losses as a percentage of Owned
Portfolio.......................................... 6.86 7.59 8.42 8.20 8.98
Net charge-offs in the Owned Portfolio as a
percentage of average Owned Portfolio.............. 4.35 6.04 7.49 6.90 8.05
Net charge-offs in the Total Portfolio as a
percentage of average Total Portfolio.............. 4.12 5.94 6.46 6.12 7.16
Operating expenses as a percentage of average Total
Portfolio.......................................... 19.84 17.84 13.76 15.06 13.31
Number of branch offices............................. 8 17 25 19 28
Number of dealers.................................... 187 333 722 414 834

AT MARCH 31, 1996
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AS
ACTUAL ADJUSTED(9)
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BALANCE SHEET DATA:
Net principal balance(10)............................ $60,573 $ 60,573
Allowance for credit losses.......................... (5,439) (5,439)
Total assets......................................... 60,520 60,881
Senior debt.......................................... 43,034 41,152
Subordinated debt.................................... 8,383 --
Stockholders' equity................................. 3,047 12,852

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(1) In May 1992, the Company changed its business strategy from financing
timeshare receivables at resort properties to purchasing and servicing
installment contracts originated by automobile dealers for financing the
sale of automobiles.

(2) For all periods presented except the three month period ended March 31,
1996, the Company was an S Corporation and was not subject to income taxes.
See "S Corporation Distributions." Effective January 1, 1996, the Company
terminated its Subchapter S status and is subject to federal and state
income taxes. Upon termination, and in compliance with SFAS No. 109, the
Company recognized a deferred tax benefit of $267,000.

(3) Pro forma net income per share represents net income as adjusted for the
pro forma provision for income taxes as if the Company had been subject to
income for the year ended December 31, 1995 divided by pro forma weighted
average shares outstanding. The calculation of pro forma weighted average
shares outstanding is based upon the Company's actual weighted average
shares and common share equivalents outstanding for the year ended December
31, 1995. See Note M to the Financial Statements.

(4) Supplemental pro forma net income per share represents net income,
increased by the after-tax interest savings resulting from the repayment of
debt as described under "Use of Proceeds," divided by supplemental pro
forma weighted average shares outstanding. The calculation of supplemental
pro forma weighted average shares outstanding is based upon the number of
shares used in the calculation of pro forma earnings per share plus the
number of shares to be sold by the Company (at a public offering price of
$7.50 per share, less the underwriting discount) and the number of shares
issued upon the exercise of warrants to fund the repayment of debt as
described under "Use of Proceeds" and to pay estimated offering expenses of
$500,000. See Note M to the Financial Statements.

(5) Average indebtedness represents the average dollar balance of borrowings
outstanding under the Credit Facility and subordinated notes throughout the
periods presented. Cost of borrowed funds represents interest expense as a
percentage of average indebtedness. Averages were computed using the
beginning and ending balances for each month during the periods presented.

(6) Ratios for the three months ended March 31, 1995 and 1996 are annualized,
which may not necessarily represent comparable data for a full twelve-month
period.

(7) Represents automobile portfolio finance charges as a percentage of the
average Owned Portfolio.

(8) Represents net interest income as a percentage of the average Owned
Portfolio. Interest expense was allocated to the Owned Portfolio based on
the ratio of the average Owned Portfolio to the average total finance
receivables (consisting of both the Owned Portfolio and timeshare
receivables).

(9) Adjusted to reflect the sale by the Company of 1,500,000 shares of Common
Stock offered hereby at an assumed initial public offering price of $7.50
per share and application of the estimated net proceeds therefrom. See "Use
of Proceeds."

(10) Represents the net principal balance of finance receivables in the Owned
Portfolio.

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RISK FACTORS

In addition to the other information contained in this Prospectus, the
following risk factors should be considered carefully in evaluating an
investment in the Common Stock offered hereby.

CREDIT RISK. The Company specializes in acquiring and servicing installment
contracts for financing the purchase of automobiles by non-prime consumers.
Non-prime consumers generally have limited credit histories, low incomes or past
credit problems and, therefore, are unable to obtain credit from traditional
sources such as banks, savings and loan institutions, credit unions or captive
finance companies owned by automobile manufacturers. Although the Company's
installment contracts typically reflect a higher finance charge than contracts
with more creditworthy consumers and are purchased at a discount, they also
involve a higher degree of risk of delinquency and loss. Although, the Company
believes its reserves are adequate, there can be no assurance that the Company
has adequately provided for such credit risks. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Credit Loss
Experience." If the Company were to experience an increase in defaults or
charge-offs in its Total Portfolio, the Company, its profitability and its
financial condition could be materially adversely affected. Furthermore, the
Company has historically funded its allowance for credit losses through
non-refundable contract acquisition discounts. Accordingly, a reduction in the
availability of discounts could adversely impact the Company, its profitability
and its financial condition.

AVAILABILITY OF FUNDS. The Company's operations require substantial
external financing to fund the purchase of installment contracts. Such purchases
have been funded primarily by money borrowed from banks and other lenders and by
the sale of installment contracts on a servicing-retained basis to independent
third parties, including General Electric Capital Corporation ("GECC"). In
addition, on June 18, 1996, a wholly-owned subsidiary of the Company sold
approximately $45.1 million of 6.84% fixed rate notes ("Securitized Notes") in
an asset securitization transaction. The Securitized Notes are secured by
installment contracts and the payments under the Securitized Notes are
guaranteed pursuant to a financial guaranty insurance policy issued by Financial
Security Assurance Inc. The net proceeds of the securitization to the Company
were used primarily to reduce the outstanding balance under the Credit Facility.
The principal source of borrowings by the Company has historically been the
Credit Facility, as defined in "Use of Proceeds." The Credit Facility expires on
June 1, 1997. Although the Company believes it will be able to renew the Credit
Facility on acceptable terms, there can be no assurance that the Company will be
able to renew the Credit Facility or obtain a new credit facility, or that the
Company can effect additional sales of installment contracts at a cost or with
terms attractive to the Company, or at all. If the Credit Facility is not
renewed, the Company would be required to seek alternative financing sources to
repay the outstanding balance under the Credit Facility on its expiration. Any
failure to renew the Credit Facility, obtain any other source of funding or
effect any additional sales of installment contracts could have a material
adverse effect on the Company and its ability to continue operations.

In addition, in order for the Company to continue to fund the purchase of
installment contracts in accordance with its growth strategy for 1997, the
Company will require financing in excess of that currently provided by its cash
flow from operations, the net proceeds from the Offering and the Credit
Facility. No assurance can be given that additional financing sources, including
installment contract sales and asset securitization transactions, will be
available on terms acceptable to the Company. If the Company cannot secure
additional financing, the Company's ability to implement its growth strategy
will be materially adversely affected. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Liquidity and Capital
Resources."

INTEREST RATE RISK. The Company purchases installment contracts that have a
fixed finance charge (which, in certain jurisdictions is the maximum rate
permitted by law), and the Company generally finances its purchase of these
contracts by incurring indebtedness with floating interest rates. As a result,
the Company's interest spread could decrease during periods of rising interest
rates, which could materially adversely affect the Company, its profitability
and its financial condition. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Impact of Inflation."

COMPETITION. The automobile finance business is highly fragmented and
competitive. There are numerous competitors (some of which are larger and have
significantly greater financial resources) providing, or capable of providing,
financing through dealers to non-prime consumers and many companies have entered
the market for financing non-prime consumers during the last several years. The
Company does not believe that it

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competes, in any significant manner, with commercial banks, savings and loans,
credit unions, financing arms of automobile manufacturers or other consumer
lenders that apply more traditional lending criteria to the credit approval
process. If additional competitors were to enter the Company's market segment or
if existing competitors were to expand their operations in the Company's
markets, the Company, its profitability and its financial condition could be
materially adversely affected. Furthermore, an increase in competition may
result in a decrease in the number of installment contracts which the Company
may purchase and reductions in finance charges or reductions in or elimination
of the non-refundable contract acquisition discount. Any of these events could
materially adversely affect the Company, its profitability and its financial
condition. See "Business -- Competition."

EXPANSION RISKS. The Company's growth has been due, in part, to the opening
of new branch offices in communities not previously served by the Company. The
Company's expansion depends substantially upon (i) the number of competitors in
the Company's markets, (ii) material changes in its competitors' business
strategies, (iii) the Company's ability to attract and retain qualified and
experienced branch managers and other personnel for new branch offices and (iv)
the ability of such persons to develop relationships with automobile dealers
that serve the areas in which new branch offices are located. Although the
Company believes that it will attract and retain qualified and experienced
personnel as it proceeds with its planned expansion into new locations, there
can be no assurance that it will be successful in doing so. The success of the
Company's expansion strategy is also dependent upon the Company's ability to
maintain credit quality as its Total Portfolio grows. There can be no assurance
that the Company will be successful in doing so. The failure of the Company to
successfully expand could materially adversely affect the ability of the Company
to increase its revenues and profits.

MARKET CONDITIONS. The Company's business is affected by certain trends in
the automobile and finance industries. The Company believes that purchasers of
automobiles are increasingly considering the purchase of used automobiles rather
than new automobiles and that dealers are increasingly focusing on the sale of
used automobiles to generate additional revenue. Historically, traditional
sources of consumer credit generally have applied more restrictive lending
criteria which has made financing from such sources available to fewer persons.
A change in any of these trends, or any change in general economic conditions,
may lead to a reduction in the number of purchasers of used automobiles, less
emphasis on selling used automobiles or an increase in the number of used
automobile purchasers who qualify for traditional financing. Any of such events
could have a material adverse effect on the Company, its profitability and its
financial condition. See "Business -- The Industry."

RELATIONSHIPS WITH DEALERS. The Company's business depends in large part
upon its ability to establish and maintain active relationships with automobile
dealers who can provide a sufficient volume of installment contracts. The
Company defines an active relationship with a dealer as one in which the Company
purchases at least five contracts per calendar year from such dealer. While the
Company believes that it has been successful in developing and maintaining
relationships with dealers, there can be no assurance that the Company will be
successful in maintaining such relationships or increasing the number of dealers
with which it does business. See "Business -- Business Strategy."

LITIGATION. Due to the consumer-oriented nature of the Company's industry
and the application of certain laws and regulations, industry participants are
regularly named as defendants in litigation alleging violations of federal and
state laws and regulations and consumer law torts, including fraud. Many of
these actions involve alleged violations of consumer protection laws. A
significant judgment against the Company or others within the industry in
connection with any such litigation could have a material adverse effect on the
Company's financial condition or results of operations. See "Business --
Regulation" and "Business -- Legal Proceedings." Furthermore, a substantial
portion of the installment contracts owned or serviced by the Company are
originated in the state of Alabama (25.4% of the Total Portfolio as of March 31,
1996). In the past several years large verdicts, including substantial amounts
of punitive damages, have been returned against financial services companies and
other defendants in Alabama. The Company is involved from time to time in
ordinary routine litigation incidental to its business. The Company believes
that the ultimate outcome of such litigation will not have a material adverse
effect on the Company's financial condition or results of operations. Due to the
uncertainties inherent in litigation and the large verdicts returned against
other financial services companies in Alabama, there can be no assurance that
the outcome of such actions, either individually or in the aggregate, will not
have a material adverse effect on the Company, its profitability and its

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financial condition, and there can be no assurance other similar lawsuits will
not be filed. A recent Alabama Supreme Court decision, in a case in which the
Company was not a party, but relating to regulations which the Company follows,
found that certain regulations of the Alabama Department of Banking relating to
the amount of credit life insurance any creditor can sell in relation to the
principal balance of an installment contract were invalid. These regulations
permitted credit life insurance to be sold covering the principal and finance
charge on an installment contract. The court ruled that such regulations were in
violation of Alabama law which permits credit life to be sold covering only the
principal balance on an installment contract. The Company cannot predict the
impact of this decision on the Company, its profitability, and its financial
condition. See "Business -- Legal Proceedings."

REGULATION. The Company's business is subject to various state and federal
laws which require licensing and qualification and regulate, among other things,
the maximum finance charge that may be charged to consumers, the sale and type
of insurance products offered by the insurers for which the Company acts as
agent and the Company's rights to repossess and sell collateral. An adverse
change in these laws or their interpretation, or the adoption of additional laws
or regulations, could have a material adverse effect on the Company's business
by limiting the finance charges and fee income the Company may charge on
installment contracts, limiting the states in which the Company may operate or
restricting the Company's ability to realize the value of the collateral
securing its installment contracts. A reduction in the maximum permissible
finance charge in any market could also reduce the attractiveness of such
market, thereby limiting the expansion opportunities of the Company. See
"Business -- Regulation."

GEOGRAPHIC CONCENTRATION. As of March 31, 1996, approximately 26.1% and
25.4% of the Total Portfolio was purchased from dealers located in Florida and
Alabama, respectively. In addition, as of March 31, 1996, the Company's five
largest branch offices, located in Alabama, Florida, Mississippi and North
Carolina, accounted for approximately 32.6% of the Total Portfolio. The Company
believes, but there can be no assurance, that such geographic concentration will
decrease in the future as a result of its growth strategy. Although the Company
believes that the economies of these markets are diverse, the Company's
profitability may be disproportionately affected by adverse changes in the
general economic, regulatory and legal conditions in these markets. See
"Business -- Contract Purchase."

DEPENDENCE UPON KEY PERSONNEL. The Company's growth and success have been
largely dependent upon the services of Michael P. Harrington, Chairman,
President and Chief Executive Officer of the Company and Thomas G. Parker,
President and Chief Operating Officer of First Enterprise Acceptance Company.
The Company is dependent for its future success upon the continued services of
its senior management, including Messrs. Harrington and Parker, and other key
employees. See "Management -- Executive Officers and Directors." The Company
believes the unexpected loss of the services of a key employee, particularly a
member of senior management, could have a material adverse effect upon the
Company. The Company has entered into employment agreements (which include
noncompetition provisions) with all of its executive officers, including Messrs.
Harrington and Parker, and it maintains key person life insurance on Mr.
Harrington. See "Management -- Employment Agreements."

The Company believes that its future growth will also depend in large part
upon its continued ability to attract, retain and motivate additional branch
managers. There can be no assurance that the Company will be able to attract and
retain sufficiently qualified managers to support its growth strategy.

VOTING CONTROL BY CERTAIN STOCKHOLDERS. Upon completion of the Offering,
Michael P. Harrington, Chairman, President and Chief Executive Officer of the
Company, and the executive officers of the Company, as a group, will
beneficially own approximately 27.5% and 58.5%, respectively, of the outstanding
Common Stock (approximately 26.0% and 55.4%, respectively, if the Underwriters'
over-allotment option is exercised in full). As a result, such persons, if they
were to act in concert, would control the Company's Board of Directors, and,
therefore, the business, policies and affairs of the Company. In addition, the
Company's Bylaws provide that actions may be taken by stockholders without a
meeting by those stockholders holding a majority interest. Therefore, an action
may be taken by certain stockholders, after transmitting a written information
statement complying with Regulation 14C of the Securities and Exchange Act of
1934, as amended (the "Exchange Act") to every stockholder entitled to consent
to such action. See "Principal and Selling Stockholders," "Description of
Capital Stock" and "Underwriting."

9
11

ABSENCE OF PUBLIC MARKET AND POSSIBLE VOLATILITY OF STOCK PRICE. Prior to
the Offering, there has been no public market for the Common Stock. There can be
no assurance as to the liquidity of any markets that may develop for the Common
Stock, the ability of holders of Common Stock to sell their securities, or at
what price holders would be able to sell their securities. The initial public
offering price of the Common Stock has been determined solely by negotiations
among the Company, the Selling Stockholders, and J.C. Bradford & Co. and The
Chicago Corporation, as representatives (the "Representatives") of the several
underwriters named in this Prospectus (the "Underwriters") and may bear no
relationship to the market price of the Common Stock after the Offering. See
"Underwriting." From time to time after this Offering, there may be significant
volatility in the market price for the Common Stock. Quarterly operating results
of the Company or of other similar companies, changes in general conditions in
the economy, consumer delinquency and default rates generally, the financial
markets or the industry in which the Company operates, natural disasters,
litigation developments or other developments affecting the Company or its
competitors could cause the market price of the Common Stock to fluctuate
substantially. In addition, in recent years the stock market has experienced
extreme price and volume fluctuations. This volatility has had a significant
effect on the market prices of securities issued by many companies for reasons
unrelated to their operating performance.

DILUTION. Investors in the Offering will experience immediate and
substantial dilution of $4.91 per share in the net tangible book value of their
shares of Common Stock, and current stockholders will receive a material
increase in the book value of their shares of Common Stock. See "Dilution."

SHARES ELIGIBLE FOR FUTURE SALE. Upon consummation of the Offering, the
Company will have 4,964,289 shares of Common Stock outstanding. Of these shares,
the 1,886,640 shares offered hereby will be freely tradeable without restriction
or registration under the Securities Act of 1933, as amended ("Securities Act"),
unless owned by an affiliate of the Company. All of the remaining 3,077,653
shares of Common stock are "restricted securities" as that term is defined in
Rule 144 promulgated under the Securities Act. The Company and all of its
directors and executive officers have agreed with the Underwriters not to sell
any Common Stock for 180 days from the date of this Prospectus without the prior
written consent of the Representatives. All of the shares not subject to
"lock-up" as discussed in the preceding sentence will be eligible for sale in
the public market 90 days following the date of this Prospectus subject to
certain volume and other resale restrictions pursuant to Rule 144 and except for
shares acquired upon the exercise of employee stock options which will be
registered under the Securities Act as soon as practicable after consummation of
the Offering and may be sold without limitation after the effective date of such
registration. Although the Common Stock has been approved, subject to official
notice of issuance, for quotation on the Nasdaq National Market, there can be no
assurance that an active trading market for the Common Stock will develop or be
sustained after the Offering. Following the Offering, sales of substantial
amounts of Common Stock in the public market, pursuant to Rule 144 or otherwise,
or even the potential of such sales could adversely affect the prevailing market
price of the Common Stock or impair the Company's ability to raise additional
capital through the sale of equity securities. See "Shares Eligible for Future
Sale" and "Underwriting."

EFFECT OF CERTAIN STATUTORY PROVISIONS. The Company is subject to
provisions of the Illinois Business Corporation Act that prohibit a
publicly-held Illinois corporation from engaging in a broad range of business
combinations with a person who, together with affiliates and associates, owns
15% or more of the corporation's common stock (an "interested stockholder") for
three years after the person became an interested stockholder, unless the
business combination is approved in a prescribed manner. Those provisions could
discourage or make more difficult a merger, tender offer or similar transaction,
even if favorable to the Company's stockholders. See "Description of Capital
Stock -- Certain Provisions of the Illinois Business Corporation Act."

10
12

THE COMPANY

The Company, which operates under the name First Enterprise Acceptance
Company, is a specialty finance company engaged primarily in purchasing and
servicing installment contracts originated by dealers for financing the sale of
automobiles. The Company purchases installment contracts which provide financing
for non-prime consumers. Various ancillary products are also offered by the
Company, as agent, in conjunction with its purchases of installment contracts.
The Company commenced operations in 1990 and began purchasing installment
contracts in May 1992 through three branch offices. As of March 31, 1996, the
Company operated 28 branch offices in eight southeastern states and currently
plans to open at least five additional branch offices by the end of 1996. The
Total Portfolio increased 107.0% from $49.0 million at March 31, 1995 to $101.5
million at March 31, 1996. As of March 31, 1996, the Owned Portfolio was $60.6
million.

The Company, an Illinois corporation, commenced business in 1990 to engage
in the financing of timeshare receivables at resort properties. In May 1992, the
Company changed its operating strategy to focus on the financing of automobile
installment contracts. As of March 31, 1996, the Company had sold or collected
all remaining timeshare receivables. Since inception, the Company had elected to
be treated as an S Corporation for tax purposes, but terminated its S
Corporation status effective January 1, 1996. After the consummation of the
Offering, the Company may organize subsidiary corporations to carry out the
operations of the Company.

Executive Office. The Company's principal executive office and mailing
address is 500 Davis Street, Suite 1005, Evanston, Illinois 60201, and its
telephone number is (847) 866-8665. The executive office is responsible for the
Company's general management, capitalization, banking relationships, corporate
accounting and legal functions.

Operations Headquarters. The Company's operations are conducted through its
only operating division, First Enterprise Acceptance Company (the "FEAC
Division"), which is located in Enterprise, Alabama. From this operations
headquarters, the Company measures branch office performance against established
goals and monitors branch office adherence to Company policies. The operations
headquarters is responsible for supervision, accounting, cash management,
information management and personnel functions.

DIVIDEND POLICY

Prior to January 1, 1996, the Company's dividend policy has been based
primarily on considerations relating to its S Corporation status, including the
desirability of paying dividends to stockholders in amounts at least sufficient
to fund their individual income tax liability resulting from the taxation of
corporate income at the stockholder level. The Company paid total cash dividends
of approximately $393,000 in 1993, $474,000 in 1994 and $1.5 million in 1995.
The Company intends to pay, at such time as the Board of Directors determines
that the payment of such distribution will not have a material adverse effect on
the Company's 1997 funding needs, the S Corporation Distribution as a cash
dividend to its stockholders of record on December 29, 1995. See "S Corporation
Distributions."

On January 1, 1996, the Company terminated its status as an S Corporation
and intends to retain its earnings to support operations and finance its growth.
Consequently, after making the S Corporation Distribution, the Company does not
anticipate declaring or paying cash dividends in the foreseeable future. In
addition, following termination of the Company's status as an S Corporation, the
Credit Facility prohibits the payment of dividends. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources" and Notes to Financial Statements.

11
13

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 1,500,000 shares of
Common Stock offered by the Company are estimated to be $10.0 million (1,782,996
shares and approximately $11.9 million if the Underwriters' over-allotment
option is exercised in full), assuming an initial public offering price of $7.50
per share and after deducting the underwriting discount and estimated offering
expenses payable by the Company. The Company will also receive approximately
$520,000 of proceeds from the Selling Stockholders upon the exercise of their
warrants. The Company will not receive any proceeds from the sale of shares of
Common Stock by the Selling Stockholders.

The Company intends to use these proceeds (i) to repay a subordinated note
having a principal amount of $4.0 million, which bears interest at 13.50%, has
no prepayment penalty, and matures on September 30, 1996 (the "LaSalle Note"),
(ii) to repay a subordinated note having a principal balance of $4.5 million,
which bears interest at a rate of 13.00%, has no prepayment penalty, and matures
on August 31, 1998 (the "Banc One Note"), and (iii) initially to repay
approximately $1.9 million of outstanding indebtedness incurred under the
Company's $62.0 million revolving credit facility which bears interest at the
reference rate as defined in the agreement, which was 9.25% at March 31, 1996,
and matures on June 1, 1997 (the "Credit Facility"). The Company may reborrow
under the Credit Facility in order to meet its funding needs or to make an
approximate $2.1 million distribution ("S Corporation Distribution") to existing
stockholders of undistributed S Corporation earnings. The proceeds from the
LaSalle Note, the Banc One Note and the Credit Facility were used to fund
purchases of installment contracts and to retire prior subordinated debt. The
LaSalle Note is a loan that was made by LaSalle National Bank ("LaSalle") to
Michael P. Harrington, the Chairman, President and Chief Executive Officer of
the Company, who, in turn, loaned the proceeds to the Company on generally the
same financial terms as the loan from LaSalle to Mr. Harrington. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources," "S Corporation Distributions"
and "Certain Transactions."

S CORPORATION DISTRIBUTIONS

Since its inception, the Company has been an S Corporation under the
Internal Revenue Code of 1986, as amended. As a result, the income of the
Company has been taxed, for federal and certain state and local income tax
purposes, directly to the Company's stockholders, rather than to the Company.
The Company terminated its status as an S Corporation effective January 1, 1996
(the "Termination Date") and, as a result, the Company will be subject to
federal and state corporate income taxation for the year ended December 31,
1996. Purchasers of Common Stock in this Offering will not receive any portion
of the S Corporation Distribution.

The Company's stockholders of record as of December 29, 1995 have included
in their taxable incomes a total of approximately $4.5 million, the estimated
amount of the Company's accumulated earnings and profits since its inception
through the Termination Date (included in this amount is approximately $702,000
of estimated earnings which has not yet been recognized by the Company for
financial reporting purposes). As such, upon the Termination Date and as a
result of becoming subject to corporate income taxation, the Company recognized
a deferred tax asset of $267,000.

Of the total estimated amount on which the Company's stockholders of record
as of December 29, 1995, have been or will be taxed, the Company has distributed
an aggregate of approximately $2.4 million, including approximately $393,000 in
1993, $474,000 in 1994, and $1.5 million in 1995. The estimated balance of
approximately $2.1 million will be distributed to stockholders of record as of
December 29, 1995 at such time as the Board of Directors determines that the
payment of the S Corporation Distribution will not have a material adverse
effect on the Company's 1997 funding needs. See "Capitalization" and Notes to
Financial Statements. In the event that the S Corporation Distribution is not
paid by December 31, 1996, such distribution will not be made.

Prior to the closing of the Offering, the Company will enter into a tax
indemnification agreement with the Company's existing stockholders, pursuant to
which its stockholders of record on December 31, 1995, will agree to indemnify
the Company and the Company will agree to indemnify such stockholders against
certain possible income tax consequences. See "Certain Transactions."

12
14

DILUTION

The net tangible book value of the Company as of March 31, 1996 was
approximately $3.0 million, or $0.99 per share of Common Stock. Net tangible
book value per share represents the amount of the Company's stockholders'
equity, less intangible assets, divided by the number of shares of Common Stock
outstanding. Dilution per share to new investors represents the difference
between the amount per share paid by purchasers of shares of Common Stock in the
Offering made hereby and the pro forma net tangible book value per share of
Common Stock immediately after completion of the Offering. After (i) giving
effect to the sale by the Company of 1,500,000 shares of Common Stock offered
hereby at an assumed initial public offering price per share of $10.00, (ii)
deducting the underwriting discount and estimated offering expenses payable by
the Company, (iii) giving effect to the exercise of warrants by the Selling
Stockholders, (iv) giving effect to the S Corporation Distribution and (v)
giving effect to expenses related to the extinguishment of subordinated debt,
the pro forma net tangible book value of the Company as of March 31, 1996 would
have been approximately $12.9 million, or $2.59 per share. This represents an
immediate increase in net tangible book value to existing stockholders
attributable to new investors of $1.69 per share and an immediate dilution in
net tangible book value of $4.91 per share to new investors purchasing Common
Stock in the Offering, as illustrated in the following table:

[CAPTION]

Assumed initial public offering price per share.............................. $ 7.50
Net tangible book value per share at March 31, 1996........................ $0.99
Pro forma Adjustments:
Decrease per share attributable to S Corporation Distribution........... (0.67)
-----
Pro forma net tangible book value per share before the Offering......... 0.32
Increase per share attributable to exercise of warrants................. 0.65
Decrease per share attributable to expenses related to extinguishment of
debt................................................................... (0.07)
Increase in net tangible book value per share to existing stockholders
attributable to new investors.......................................... 1.69
-----
Pro forma net tangible book value per share after the Offering............... 2.59
------
Dilution per share to new investors.......................................... $ 4.91
======

Assuming the Underwriters' over-allotment option is exercised in full, pro
forma net tangible book value upon completion of the Offering would be $2.83 per
share, the immediate increase in pro forma net tangible book value of shares to
existing stockholders would be $1.93 per share, and the immediate dilution to
new investors would be $4.67 per share.

The following table summarizes on a pro forma basis as of March 31, 1996
the difference between the existing stockholders and the investors purchasing
shares of Common Stock in the Offering (at an assumed initial public offering
price of $7.50 per share) with respect to the number of shares purchased from
the Company, the total consideration paid and the average price paid per share:

SHARES PURCHASED TOTAL CONSIDERATION
-------------------- ---------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ----------- ------- -------------

Existing stockholders......... 3,464,289 69.8% $ 1,862,398 14.2% $ 0.54
New investors................. 1,500,000 30.2 11,250,000 85.8 7.50
---------- ------ ------------ ------
Total.................... 4,964,289 100.0% $13,112,398 100.0%
========== ====== ============ ======

The foregoing assumes no exercise of outstanding stock options. As of March
31, 1996, the Company had an aggregate of 1,232,334 additional shares available
for future issuance under the Company's 1992 Stock Option Plan, as Amended and
Restated, 1995 Nonqualified Director Stock Option Plan and 1995 Employee Stock
Purchase Plan, of which it had granted outstanding options to purchase an
aggregate of 512,947 shares of Common Stock, at exercise prices per share of
$1.13 and $1.36. Such options were granted to certain employees of the Company
pursuant to the Company's 1992 Stock Option Plan, as Amended and Restated. To
the extent outstanding options are exercised, or shares reserved for future
issuance are issued, there will be further dilution to new investors. See
"Management."

13
15

CAPITALIZATION

The following table sets forth the capitalization of the Company as of
March 31, 1996 (i) on a historical basis and (ii) on an adjusted basis to
reflect the issuance and sale by the Company of 1,500,000 shares of Common Stock
offered hereby at an assumed initial public offering price of $7.50 per share,
the exercise of warrants by the Selling Stockholders and the addition of a
deferred tax asset from termination of S Corporation status, and the application
of the estimated net proceeds of the Offering as described in "Use of Proceeds."
This table should be read in conjunction with "Management Discussion and
Analysis of Financial Condition and Results of Operations" and the Company's
Financial Statements and Notes thereto included elsewhere in this Prospectus.

MARCH 31, 1996
----------------------
PRO FORMA
ACTUAL AS ADJUSTED
------- -----------
(IN THOUSANDS)

INDEBTEDNESS:
Senior debt........................................................... $43,034 $41,152
Subordinated debt..................................................... 8,383 --
Common stock warrants................................................... 807 --
STOCKHOLDERS' EQUITY:
Common stock, $0.01 per share par value; 20,000,000 shares authorized;
3,077,649 shares issued and outstanding; 4,964,289 shares issued
and outstanding as adjusted(1)..................................... 31 50
Additional paid-in capital............................................ 1,311 13,510
Retained earnings(2).................................................. 2,100 (313)
Guaranteed loans of stockholders(3)................................... (395) (395)
------- -------
Total stockholders' equity......................................... 3,047 12,852
------- -------
Total capitalization............................................... $55,271 $54,004
======= =======

- -------------------------
(1) Does not include 1,232,334 shares of Common Stock which may be issued under
the Company's 1992 Employee Stock Option Plan, as Amended and Restated, 1995
Nonqualified Director Stock Option Plan and 1995 Employee Stock Purchase
Plan, of which 512,947 shares are issuable upon the exercise of stock
options granted under the employee stock option plan outstanding as of March
31, 1996.

(2) The pro forma adjustments include (i) the declaration of the S Corporation
Distribution of approximately $2.1 million and (ii) expenses related to the
extinguishment of subordinated debt of approximately $343,000.

(3) Represents loans by financial institutions to certain stockholders which the
Company has guaranteed. Proceeds from these loans were used to exercise
stock options. The amount of guaranteed loans at March 31, 1996, is included
in other liabilities and is treated as a reduction of stockholders' equity
on the Company's balance sheet.

14
16

SELECTED FINANCIAL AND OPERATING DATA

The selected financial data set forth below as of and for the years ended
December 31, 1991 through 1995 are derived from the audited financial statements
of the Company. The selected financial and operating data as of March 31, 1995
and 1996 and for the three months then ended, respectively, are unaudited but,
in the opinion of management reflect all normal recurring adjustments necessary
for a fair statement of the results for such periods and as of such dates. The
selected financial and operating data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Financial Statements, including the Notes thereto, and other
financial data included elsewhere herein.

THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
--------------------------------------------------- -------------------
1991 1992 1993 1994 1995 1995 1996
------- ------- ------- ------- ------- ------- --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

STATEMENT OF INCOME DATA:
Automobile portfolio finance charges(1)........ -- $ 557 $ 3,002 $ 5,082 $ 9,634 $ 2,156 $ 3,256
Interest from timeshare receivables(1)......... $ 1,671 1,458 752 123 11 6 --
------- ------- ------- ------- ------- ------- --------
Finance charges and interest................... 1,671 2,015 3,754 5,205 9,645 2,162 3,256
Interest expense............................... 1,169 1,080 1,201 1,576 4,039 871 1,358
------- ------- ------- ------- ------- ------- --------
Net interest income............................ 502 935 2,553 3,629 5,606 1,291 1,898
Provision for credit losses.................... -- -- -- -- -- -- 400
Other income:
Servicing income............................. -- -- 227 1,323 3,052 478 1,126
Insurance commissions........................ -- 93 534 550 1,342 275 651
Fees and other income........................ 99 53 169 257 606 96 358
Gain on sale of installment contracts........ -- -- -- -- -- -- 409
------- ------- ------- ------- ------- ------- --------
Total other income......................... 99 146 930 2,130 5,000 849 2,544
Total operating expenses....................... 416 1,168 2,421 5,095 8,172 1,635 2,953
Income taxes (2)............................... 3 (2) 30 3 60 15 427
Income tax effect of S Corporation
termination(2)............................... -- -- -- -- -- -- (267)
------- ------- ------- ------- ------- ------- --------
Net income (loss).............................. $ 182 $ (85) $ 1,032 $ 661 $ 2,374 $ 490 $ 929
======= ======= ======= ======= ======= ======= ========
Per share data:
Pro forma net income per share(3)............ $ 0.46
Supplemental pro forma net income per
share(4)................................... 0.41 0.21
Weighted average shares outstanding:
(in thousands)
Pro forma(3)............................... 3,245
Supplemental pro forma(4).................. 5,131 5,397
PORTFOLIO DATA:
Total Portfolio................................ $ 6,215 $19,399 $39,724 $80,261 $49,035 $101,519
Average Total Portfolio........................ 2,001 12,204 28,553 59,374 44,041 89,235
Average Owned Portfolio........................ 2,001 11,560 19,997 40,153 34,700 57,323
Average indebtedness (5)....................... 16,899 18,252 18,480 34,917 30,459 49,877
Number of installment contracts purchased...... 800 2,685 4,935 10,021 2,152 4,390
Installment contracts purchased................ $ 7,525 $19,248 $35,137 $70,184 $14,341 $ 32,433
OPERATING DATA(6):
Owned Portfolio yield(7)....................... 27.84% 25.97% 25.41% 23.99% 25.20% 22.85%
Cost of borrowed funds(5)...................... 6.39 6.58 8.53 11.57 11.60 10.95
Net interest spread............................ 21.45 19.39 16.88 12.42 13.60 11.90
Net interest margin(8)......................... 21.65 19.98 18.10 13.96 15.09 13.32
Allowance for credit losses as a percentage of
Owned Portfolio.............................. 9.59 6.86 7.59 8.42 8.20 8.98
Net charge-offs in the Owned Portfolio as a
percentage of average Owned Portfolio........ 1.00 4.35 6.04 7.49 6.90 8.05
Net charge-offs in the Total Portfolio as a
percentage of average Total Portfolio........ 1.00 4.12 5.94 6.46 6.12 7.16
Operating expenses as a percentage of average
Total Portfolio.............................. 58.37 19.84 17.84 13.76 15.06 13.31
Number of branch offices....................... 4 8 17 25 19 28
Number of dealers.............................. 69 187 333 722 414 834
BALANCE SHEET DATA:
Net principal balance (9)...................... -- $ 6,215 $ 7,612 $33,779 $59,495 $33,959 $ 60,573
Allowance for credit losses.................... -- (596) (522) (2,563) (5,011) (2,784) (5,439)
Timeshare receivables.......................... $15,490 12,955 4,326 266 -- -- --
Total assets................................... 15,976 19,077 12,272 33,101 58,411 33,925 60,520
Senior debt.................................... 4,450 7,200 5,966 25,640 43,267 25,414 43,034
Subordinated debt.............................. 10,476 10,777 4,000 3,850 8,355 3,875 8,383
Stockholders' equity........................... 970 885 1,524 1,728 2,165 1,999 3,047

15
17

- -------------------------
(1) In May 1992, the Company changed its business strategy from the financing of
timeshare receivables at resort properties to purchasing and servicing
installment contracts originated by automobile dealers for financing the
sale of automobiles.

(3) Pro forma net income per share represents net income divided by pro forma
weighted average shares outstanding, as adjusted for the pro forma provision
for income taxes as if the Company had been subject to income taxes for the
year ended December 31, 1995. The calculation of pro forma weighted average
shares outstanding is based upon the Company's actual weighted average
shares and common share equivalents outstanding for the year ended December
31, 1995. See Note M to the Financial Statements.

(4) Supplemental pro forma net income per share represents net income, increased
by the after-tax interest savings resulting from the repayment of debt as
described under "Use of Proceeds," divided by supplemental pro forma
weighted average shares outstanding. The calculation of supplemental pro
forma weighted average shares outstanding is based upon the number of shares
used in the calculation of pro forma earnings per share plus the number of
shares to be sold by the Company (at a public offering price of $7.50 per
share, less the underwriting discount) and the number of shares issued upon
the exercise of warrants to fund the repayment of debt as described under
"Use of Proceeds" and to pay estimated offering expenses of $500,000. See
Note M to the Financial Statements.

(5) Average indebtedness represents the average dollar balance of borrowings
outstanding under the Credit Facility and subordinated notes throughout the
year. Cost of borrowed funds represents interest expense as a percentage of
average indebtedness. Averages were computed using the beginning and ending
balances for each month during the year.

(6) Ratios for the three months ended March 31, 1995 and 1996 are annualized,
which may not necessarily represent comparable data for a full twelve-month
period.

(7) Represents automobile portfolio finance charges as a percentage of the
average Owned Portfolio.

(9) Represents the net principal balance of finance receivables in the Owned
Portfolio.

16
18

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the preceding
"Selected Financial and Operating Data" and the Company's Financial Statements
and the Notes thereto and the other financial data included elsewhere in this
Prospectus. The financial information provided below has been rounded in order
to simplify its presentation. However, the ratios and percentages provided below
are calculated using the detailed financial information contained in the
Financial Statements, the Notes thereto and the other financial data included
elsewhere in this Prospectus.

GENERAL

The Company is a specialty finance company engaged primarily in purchasing
and servicing installment contracts originated by dealers in the sale of
automobiles. The Company derives most of its revenue from (i) finance charges
earned on the installment contracts, (ii) contractual servicing fees and bonus
servicing fees resulting from the sales of certain receivables and (iii) fees
and commissions derived from the sale of ancillary products. The following table
summarizes the Company's sources of revenues.

THREE MONTHS
YEARS ENDED DECEMBER 31, ENDED MARCH 31,
--------------------------- ----------------
1993 1994 1995 1995 1996
----- ----- ----- ----- -----

Finance charges from installment contracts....... 64.1% 69.3% 65.8% 71.6% 56.1%
Interest income from timeshare receivables....... 16.1 1.7 0.1 0.2 --
Servicing income................................. 4.8 18.0 20.8 15.9 19.4
Other fees and commissions....................... 15.0 11.0 13.3 12.3 17.4
Gain on sale of installment contracts............ -- -- -- -- 7.1
----- ----- ----- ----- -----
Total............................................ 100.0% 100.0% 100.0% 100.0% 100.0%
===== ===== ===== ===== =====

From its inception in 1990 through May 1992, the Company engaged in the
financing of timeshare receivables at resort properties. In May 1992 the Company
changed its operating strategy to focus on the financing of automobile
installment contracts. As of March 31, 1996, the Company had sold or collected
all remaining timeshare receivables. The Company's automobile installment
contract portfolio has grown significantly since 1992. The Total Portfolio
increased from $6.2 million at December 31, 1992 to $101.5 million at March 31,
1996.

Installment contracts are generally purchased from dealers at a discount
from the principal amount financed by consumers which is non-refundable to
dealers ("non-refundable contract acquisition discount"). The amount of
non-refundable contract acquisition discount is negotiated between the dealers
and the branch managers based on several factors, including the creditworthiness
of the consumers, the value and condition of the automobiles and the
relationship between the amount to be financed and the automobile's value.
Installment contracts purchased during the three months ended March 31, 1996 had
a weighted average non-refundable contract acquisition discount of approximately
10.8%. The portfolio of owned and sold installment contracts is grouped into
pools on a chronological basis (quarterly beginning in 1995) for purposes of
evaluating the non-refundable contract acquisition discount. The non-refundable
contract acquisition discount represents both a credit allowance and yield
enhancement, with the portion necessary to absorb credit losses for each pool
allocated to the allowance for credit losses. The remaining portion of the
non-refundable contract acquisition discount, if any, is allocated to the
unamortized contract acquisition discount and is accreted into finance charge
income over the estimated life of the installment contracts using the
sum-of-the-months'-digits method which approximates the interest method. Since
August 1995, all of the Company's non-refundable contract acquisition discount
has been allocated to the allowance for credit losses. See "-- Credit Loss
Experience."

17
19

The Company records an installment contract on its books as the total of
contractually scheduled payments under such contract, reduced by: (i) unearned
finance charges, which are recognized as income using the interest method; (ii)
unearned insurance commissions, which are recognized as income over the average
terms of the related policies using the sum-of-the-months'-digits method; (iii)
the unamortized contract acquisition discount, which represents the portion of
the non-refundable contract acquisition discount not allocated to the allowance
for credit losses and (iv) that portion of the contract acquisition discount
allocated to the allowance for credit losses. If an installment contract becomes
90 or more days contractually delinquent and no full contractual payment is
received in the month the account reaches such delinquency status, the accrual
of income is suspended until one or more full contractual monthly payments are
received. Late charges, deferment fees and extensions fees are recognized as
income when collected.

As part of its overall funding strategy, the Company has sold finance
receivables under various asset purchase agreements. During the years ended
December 31, 1993 and 1995 and the three months ended March 31, 1996, the
Company sold $12.1 million, $27.5 million and $25.4 million, respectively, under
such agreements. The sales were without recourse and no gain or loss was
recognized for those sales in 1993 and 1995 as they were not material to the
financial statements. A gain was recognized for the sales in the three months
ended March 31, 1996 in the amount of $409,000 primarily due to a decrease in
the fixed rate to the purchaser compared to previous sales. The gain on the
sales of finance receivables was determined by the difference between sales
proceeds and the cost of the finance receivables and adjusted for the present
value of the difference between the estimated future servicing revenues (net of
a fixed rate to the purchaser) and the normal servicing costs ("excess servicing
rights"). The excess servicing rights were capitalized and are being amortized
over the expected life of the finance receivables. In conjunction with the sale
of these receivables, the Company and the purchasers have entered into servicing
agreements whereby the Company retained servicing rights on the installment
contracts sold and receives contractual servicing fees equal to 3% per annum of
the remaining principal balance of the installment contracts sold. Under the
terms of the existing agreements, the Company is also eligible to receive
additional servicing fees, based upon portfolio performance, on the installment
contracts sold ("bonus servicing fees"). The bonus servicing fees represent the
difference between the yield received by the Company and the sum of (i) the
Company's 3% contractual servicing fee, (ii) the yield due to the purchaser and
(iii) the addition or reduction necessary to maintain the purchaser's reserve at
the required level. At March 31, 1996, the outstanding balance of installment
contracts sold and serviced by the Company was $40.9 million. All servicing fees
earned by the Company are recognized in the Company's financial statements as
servicing income.

GROWTH, PROFITABILITY AND RECENT TRENDS

The Company has experienced significant growth since it changed its
operating strategy to focus on the financing of automobile installment
contracts. From December 31, 1992 to March 31, 1996, the Total Portfolio
increased from $6.2 million to $101.5 million. The Company's strategy is to grow
the Total Portfolio by increasing its penetration of existing markets and by
expanding into new market areas. The Company has grown from four branch offices
at December 31, 1992 to 28 branch offices at March 31, 1996.

The principal determinant of the Company's net interest income is the
difference between the finance charge income earned on the Owned Portfolio and
the interest paid on borrowed funds. The laws of most states establish the
maximum finance charge rates and prescribe the types and maximum amounts of
fees, insurance premiums and other amounts that consumers may be charged. As is
common in the non-prime consumer market, the Company's installment contracts
generally bear the maximum allowable interest rates and other charges permitted
under applicable state laws.

The Company's liabilities are generally more interest-rate sensitive than
are its earning assets. As a result, significant increases in the Company's cost
of funds could have a material adverse effect on its profitability and financial
condition. To a degree, the Company can mitigate the adverse effect of an
increase in interest rates by (i) selling or financing portions of its Total
Portfolio with fixed rate liabilities, (ii) focusing on purchasing

18
20

only installment contracts which bear the maximum finance charge rates permitted
by law or which are originated in states where finance charge rate ceilings have
not been established, (iii) expanding into states that permit higher finance
charge rates on consumer installment contracts, (iv) reducing the amount it pays
for an installment contract (e.g., increasing the non-refundable contract
acquisition discount) and (v) entering into interest rate protection agreements.
Additionally, management believes that the improved capitalization resulting
from the Offering should allow the Company to take advantage of financing
structures which may reduce the Company's cost of funds or mitigate interest
rate exposures.

The following table sets forth information with regard to the Company's net
interest spread, which represents the difference between the yield on
installment contracts and the Company's cost of borrowed funds.

THREE MONTHS
ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
--------------------------- ----------------
1993 1994 1995 1995 1996
----- ----- ----- ----- -----

Owned Portfolio yield(1)........................ 25.97% 25.41% 23.99% 25.20% 22.85%
Cost of borrowed funds.......................... 6.58 8.53 11.57 11.60 10.95
------ ------ ------ ------ ------
Net interest spread........................... 19.39% 16.88% 12.42% 13.60% 11.90%
Net interest margin(2).......................... 19.98% 18.10% 13.96% 15.09% 13.32%

- -------------------------
(1) Represents automobile portfolio finance charges as a percentage of the
average Owned Portfolio.

(2) Represents net interest income as a percentage of the average Owned
Portfolio. Interest expense was allocated to the Owned Portfolio based on
the ratio of the average Owned Portfolio to the average total finance
receivables (consisting of both the Owned Portfolio and timeshare
receivables).

As reflected in the preceding table, the Company's yield has decreased
during the period from 1993 through March 31, 1996. This is due primarily to
increased penetration into states which have laws which limit the maximum amount
of finance charges, fees, premiums and other charges that can be charged.
Additionally, the decrease is due to (i) force placed collateral protection
insurance ("CPI") for which the Company does not charge interest, accounting for
a larger percentage of the Owned Portfolio, and (ii) the reduction of accretion
income stemming from the unamortized contract acquisition discount. The
Company's cost of borrowed funds has increased over the same period. The
increase in 1994 was due to rising interest rates and to the repayment of a
portion of subordinated debt bearing interest at 6%. The rate on the Credit
Facility increased from 7.5% at December 31, 1993 to 9.5% at December 31, 1994.
The increase in 1995 was due primarily to the replacement of subordinated debt,
the issuance of new subordinated debt and a higher average cost of borrowed
funds under the Credit Facility in 1995. In December 1994, the Company replaced
$4 million in subordinated debt bearing interest at 6%, with a $4 million
subordinated note bearing interest at 13.5%. Additionally, in September 1995,
the Company issued a new subordinated note for $4.5 million bearing interest at
13%, the proceeds of which were used to pay down borrowings under the Credit
Facility. The average cost of borrowed funds on the Credit Facility increased
from 9.1% in 1994 to 10.5% in 1995. The decrease in cost of funds for the three
months ended March 31, 1996 is primarily due to a decrease in the interest rate
on the Credit Facility. The rate on the Credit Facility decreased from 9.5% at
December 31, 1995 to 9.25% at March 31, 1996.

The Company's profitability is also dependent on its credit loss
experience. See "-- Credit Loss Experience."

THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE MONTHS ENDED MARCH 31, 1995

Net Interest Income

Finance charges and interest increased $1.1 million, or 50.6%, from $2.2
million for the three months ended March 31, 1995 to $3.3 million for the three
months ended March 31, 1996. The growth in finance charges and interest resulted
from an increase in the Owned Portfolio due to an increase in the number of
installment contracts purchased. While installment contracts purchased increased
$18.1 million or 126.2%,

19
21

from $14.3 million for the three months ended March 31, 1995 to $32.4 million
for the three months ended March 31, 1996, the average Owned Portfolio increased
$22.6 million or 65.2%, from $34.7 million to $57.3 million over the same
periods. This is due to the fact that the Company sold $25.4 million in
contracts in the three months ended March 31, 1996 compared to sales of $10.8
million for the three months ended March 31, 1995.

The Company opened three branch offices during the three months ended March
31, 1996, increasing to 28 the number of its branch offices. At March 31, 1995,
the Company operated 19 branch offices.

The average portfolio yield decreased from 25.2% for the three months ended
March 31, 1995 to 22.9% for the three months ended March 31, 1996. This decrease
was primarily attributable to increased penetration in states which have laws
which limit the maximum amount of finance charges, fees, premiums and other
charges that can be charged. The decrease was also attributable to (i) an
increase in CPI for which the Company does not charge interest as a percentage
of the Owned Portfolio for the three months ended March 31, 1996 compared to the
three months ended March 31, 1995, and (ii) accretion of the unamortized
contract acquisition discount of $62,000 into income during the three months
ended March 31, 1995, compared to no accretion into income for the three months
ended March 31, 1996. Receivables relating to CPI as a percentage of the Owned
Portfolio increased from 4.7% at March 31, 1995 to 6.0% at March 31, 1996.

Interest expense increased $486,000 from $871,000 for the three months
ended March 31, 1995 to $1.4 million for the three months ended March 31, 1996.
The increase in interest expense resulted from an increase in borrowings under
the Credit Facility and the issuance of additional subordinated debt. Average
indebtedness increased $19.4 million, or 63.8%, from $30.5 million for the three
months ended March 31, 1995 to $49.9 million for the three months ended March
31, 1996. The average cost of borrowed funds decreased from 11.6% for the three
months ended March 31, 1995 to 11.0% for the three months ended March 31, 1996.
The decrease in the average cost of borrowed funds was due primarily to the
decrease in the rate paid on the Credit Facility. For the three months ended
March 31, 1995, the weighted average rate on the Credit Facility was 9.83% and
for the three months ended March 31, 1996 the weighted average rate on the
Credit Facility was 9.34%. Additionally, in September 1995, the Company issued a
new subordinated note for $4.5 million bearing interest at 13%, the proceeds of
which were used to pay down borrowings under the Credit Facility. See "--
Liquidity and Capital Resources." In addition to the interest rate on the
subordinated debt, the Company is amortizing both the fees associated with the
subordinated debt and the discount related to the detachable warrants attached
to the subordinated debt. Net interest income increased $608,000, or 47.1%, from
$1.3 million for the three months ended March 31, 1995 to $1.9 million for the
three months ended March 31, 1996.

The net interest margin on the Owned Portfolio decreased from 15.1% for the
three months ended March 31, 1995 to 13.3% for the three months ended March 31,
1996, due to the lower average portfolio yield and offset slightly by the
decreased cost of borrowed funds as discussed above.

Provision for Credit Losses

For the three months ended March 31, 1996 the Company made a provision for
credit losses of $400,000. There was no provision for credit losses for the
three months ended March 31, 1995. The provision for credit losses contributed
to the increase in the allowance for credit losses as a percent of the Owned
Portfolio from 8.2% as of March 31, 1995 to 9.0% as of March 31, 1996. See "--
Credit Loss Experience."

Other Income

Other income increased $1.7 million, or 199.4%, from $850,000 for the three
months ended March 31, 1995 to $2.5 million for the three months ended March 31,
1996. The increase in other income was primarily due to increases in servicing
income, the sale of ancillary products, and the recognition of a gain on the
sale of installment contracts.

20
22

Servicing income increased $648,000, or 135.5%, from $478,000 for the three
months ended March 31, 1995 to $1.1 million for the three months ended March 31,
1996. The increase in servicing income was due to the sale of $25.4 million in
installment contracts during the three months ended March 31, 1996 and the sale
of $16.7 million of installment contracts after March 31, 1995 through December
31, 1995 as compared to sales of $10.8 million for the three months ended March
31, 1995. Further, the average balance of sold contracts increased $22.6 million
from $9.3 million for the three months ended March 31, 1995 to $31.9 million for
the three months ended March 31, 1996.

Income from insurance commissions increased $376,000 from $275,000 for the
three months ended March 31, 1995 to $651,000 for the three months ended March
31, 1996. The increase was attributable to the increased sales of insurance
products in connection with the increase in the volume of installment contracts
purchased and the introduction of certain new insurance products in late 1995.

For the three months ended March 31, 1996, the Company recognized a gain on
the sale of $25.4 million of installment contracts in the amount of $409,000.
The gain on the sales of finance receivables was determined by the difference
between sales proceeds and the cost of the finance receivables adjusted for the
present value of the excess servicing rights. The excess servicing rights were
capitalized and are being amortized over the expected life of the finance
receivables in direct proportion to the reduction in the related pool of finance
receivables sold.

Operating Expenses

Operating expenses increased $1.3 million, or 80.6%, from $1.6 million for
the three months ended March 31, 1995 to $3.0 million for the three months ended
March 31, 1996. The increase in operating expenses was due to increases in
salaries and employee benefits, rent and other expenses relating to the opening
of new branch offices as well as the addition of administrative personnel at the
Evanston, Illinois and Enterprise, Alabama offices. Salaries and employee
benefits increased $877,000, or 80.5%, from $1.1 million for the three months
ended March 31, 1995 to $2.0 million for the three months ended March 31, 1996.
Although operating expenses increased for the three months ended March 31, 1996
compared to the three months ended March 31, 1995, the Total Portfolio grew at a
faster rate than the rate of increase in operating expenses. As a result,
operating expenses as a percentage of the average Total Portfolio decreased from
15.1% for the three months ended March 31, 1995 to 13.3% for the three months
ended March 31, 1996.

Income Taxes

Income taxes increased $412,000 from $15,000 for the three months ended
March 31, 1995 to $427,000 for the three months ended March 31, 1996. The
increase is due to the Company terminating its status as an S Corporation
effective on January 1, 1996. As a result, the Company is now subject to federal
and certain state and local income taxes.

Upon termination of its S Corporation status, and in compliance with SFAS
No. 109, the Company recognized a deferred tax benefit of $267,000 for the three
months ended March 31, 1996.

Net Income

Net income increased $439,000, or 89.7%, from $490,000 for the three months
ended March 31, 1995 to $929,000 for the three months ended March 31, 1996. The
increase in net income was primarily attributable to the growth in the Total
Portfolio and related factors as discussed above, as well as the income tax
benefit resulting from the termination of the S Corporation status.

21
23

YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994

Net Interest Income

Finance charges and interest increased $4.4 million, or 85.3%, from $5.2
million in 1994 to $9.6 million in 1995. The growth in finance charges and
interest resulted from an increase in the Owned Portfolio due to an increase in
the number of installment contracts purchased in 1995.

The Company opened eight branch offices in 1995, increasing to 25 the
number of its branch offices. In 1995, the Company purchased 10,021 installment
contracts representing $70.2 million, an increase of 103.1% and 99.7%,
respectively, from the 4,935 installment contracts representing $35.1 million
purchased in 1994.

The average Owned Portfolio increased $20.2 million, or 100.8%, from $20.0
million in 1994 to $40.2 million in 1995. The average portfolio yield decreased
from 25.4% in 1994 to 24.0% in 1995. This decrease was primarily attributable to
increased penetration in 1995 in states which have laws which limit the maximum
amount of finance charges, fees, premiums and other charges that can be charged.

Interest expense increased $2.4 million from $1.6 million in 1994 to $4.0
million in 1995. The increase in interest expense resulted from an increase in
borrowings under the Credit Facility and an increase in the average interest
rate paid on borrowed funds. Average indebtedness in 1995 increased $16.4
million, or 88.9%, from $18.5 million in 1994 to $34.9 million in 1995. The
average cost of borrowed funds was 8.5% and 11.6% in 1994 and 1995,
respectively. The increase in the average cost of borrowed funds was due
primarily to the replacement of subordinated debt at a higher interest rate and
the issuance of new subordinated debt. In December 1994, the Company replaced $4
million in subordinated debt bearing interest at 6% with a $4 million
subordinated note bearing interest at 13.5%. Additionally, in September 1995,
the Company issued a new subordinated note for $4.5 million bearing interest at
13%, the proceeds of which were used to pay down borrowings under the Credit
Facility. See "-- Liquidity and Capital Resources." In addition to the increase
in the interest rate on the subordinated debt, the Company is amortizing both
the fees associated with the debt and the discount related to the detachable
warrants attached to the debt. Net interest income increased $2.0 million, or
54.5%, from $3.6 million in 1994 to $5.6 million in 1995.

The net interest margin on the Owned Portfolio decreased from 18.1% in 1994
to 14.0% in 1995, primarily due to the higher cost of borrowed funds and lower
average portfolio yield as discussed above.

Other Income

Other income increased $2.9 million, or 134.8%, from $2.1 million in 1994
to $5.0 million in 1995. The increase in other income was primarily due to
increases in servicing income and income from the sale of ancillary products.

Servicing income increased $1.8 million, or 130.8%, from $1.3 million in
1994 to $3.1 million in 1995. The increase in servicing income was due to the
sale of $27.5 million in installment contracts in 1995.

Income from insurance commissions increased $792,000, or 144.2%, from
$550,000 in 1994 to $1.3 million in 1995. The increase was attributable to the
increased sales of insurance products in connection with the increase in the
volume of installment contracts purchased.

Operating Expenses

Operating expenses increased $3.1 million, or 60.4%, from $5.1 million in
1994 to $8.2 million in 1995. The increase in operating expenses was due to
increases in salaries and employee benefits, rent and other expenses relating to
the opening of new branch offices in 1995, as well as the addition of
administrative personnel at the Evanston, Illinois and Enterprise, Alabama
offices. Salaries and employee benefits increased

22
24

$1.9 million, or 59.5%, from $3.2 million in 1994 to $5.1 million in 1995.
Although operating expenses increased in 1995, as compared to 1994, the Total
Portfolio grew at a faster rate than the rate of increase in operating expenses.
As a result, operating expenses as a percentage of the average Total Portfolio
decreased from 17.8% in 1994 to 13.8% in 1995.

Net Income

Net income increased $1.7 million, or 259.1%, from $661,000 in 1994 to $2.4
million in 1995. The increase in net income was primarily attributable to the
growth in the Total Portfolio and related factors as discussed above.

YEAR ENDED DECEMBER 31, 1994 COMPARED TO YEAR ENDED DECEMBER 31, 1993

Net Interest Income

Finance charges and interest increased $1.4 million, or 38.7%, from $3.8
million in 1993 to $5.2 million in 1994. The growth in finance charges and
interest was the result of an increase in the Owned Portfolio due to an increase
in the number of installment contracts purchased in 1994.

In 1994, the Company opened nine new branch offices increasing to 17 the
number of its branch offices. In 1994, the Company purchased 4,935 installment
contracts representing $35.1 million, an increase of 83.8% and 82.6%
respectively, from the 2,685 installment contracts representing $19.2 million
purchased in 1993.

The average Owned Portfolio increased $8.4 million, or 73.0%, from $11.6
million in 1993 to $20.0 million in 1994. The average portfolio yield decreased
from 26.0% in 1993 to 25.4% in 1994. This decrease was primarily attributable to
expansion in 1994 into states which have laws which limit the maximum amount of
finance charges, fees, premiums and other charges that can be charged.

Interest expense increased $374,000 from $1.2 million in 1993 to $1.6
million in 1994. The increase in interest expense resulted primarily from rising
interest rates. Average indebtedness increased $228,000 from $18.3 million in
1993 to $18.5 million in 1994. The proceeds from the sale of $10.9 million in
finance receivables in December 1993 were used to reduce the amount outstanding
on the Credit Facility resulting in only a slight increase in average
indebtedness in 1994. The average cost of borrowed funds was 6.6% and 8.5% in
1993 and 1994, respectively. The increase in the average cost of borrowed funds
was due to rising interest rates. The rate charged on the Credit Facility
increased from 7.5% at December 31, 1993 to 9.5% at December 31, 1994 due to an
increase in the bank's reference rate.

Net interest income increased $1.0 million, or 42.2%, from $2.6 million in
1993 to $3.6 million in 1994. The net interest margin decreased from 20.0% for
1993 to 18.1% in 1994, primarily due to the increase in the average cost of
borrowed funds as discussed above.

Other Income

Other income increased $1.2 million, or 128.9%, from $930,000 in 1993 to
$2.1 million in 1994. The increase in other income was primarily due to a $1.1
million increase in servicing income from $227,000 in 1993 to $1.3 million in
1994. The increase in servicing income was due to the sale of $12.1 million in
installment contracts in December 1993.

Operating Expenses

Operating expenses increased $2.7 million, or 110.5%, from $2.4 million in
1993 to $5.1 million in 1994. This increase was primarily the result of expenses
related to (i) the opening of nine new branch offices, (ii) an increase in
salaries and employee benefits of $1.6 million primarily as a result of the
addition of administrative

23
25

personnel in the executive and operations offices, including the creation of two
regional supervisor positions, the addition of personnel to staff new branch
offices and the payment of special bonuses of $160,000, (iii) the cost of
conversion to a new computerized processing system of approximately $280,000 and
(iv) a $47,000 loss on the disposal of computer equipment. Operating expenses as
a percentage of the average Total Portfolio decreased from 19.8% in 1993 to
17.8% in 1994.

Net Income

Net income decreased $372,000 from $1.0 million in 1993 to $661,000 in
1994. The decrease in net income was primarily the result of increases in
operating expenses as discussed above. The Company experienced a net loss of
$266,000 in the fourth quarter of 1994 due primarily to charges against earnings
for the computer conversion and related costs and the payment of the special
bonuses as discussed above.

CREDIT LOSS EXPERIENCE

Installment contracts are generally purchased from dealers at a discount
from the principal amount financed by consumers which is non-refundable to
dealers. The non-refundable contract acquisition discount represents both a
credit allowance and a yield enhancement. The portfolio of owned and sold
installment contracts is grouped into pools on a chronological basis (quarterly
beginning in 1995) for purposes of evaluating the non-refundable contract
acquisition discount. The portion of the non-refundable contract acquisition
discount necessary to absorb estimated credit losses for each pool is allocated
to the allowance for credit losses. The remaining portion of the non-refundable
contract acquisition discount, if any, is allocated to the unamortized contract
acquisition discount and is accreted into finance charge income over the life of
the installment contracts using the sum-of-the-months'-digits method which
approximates the interest method. The adequacy of the allowance for credit
losses is evaluated by management on an ongoing basis through historical credit
loss experience, delinquencies, the value of the underlying collateral, the
level of the finance contract portfolio and general economic conditions and
trends. The Company has found that borrowers under its installment contracts are
payment sensitive rather than interest rate sensitive. Consequently, the Company
does not consider interest rates a predominant risk characteristic for purposes
of evaluating credit losses. The Total Portfolio is grouped into pools on a
chronological basis (quarterly beginning in 1995) for purposes of evaluating
trends and loss experience on a more detailed basis. If management determines
that the allowance for credit losses is not adequate to provide for potential
losses of an individual pool, amounts will be transferred, to the extent
available, from the unamortized contract acquisition discounts for that pool to
the allowance for credit losses. Any remaining shortfall in the allowance for
credit losses would be provided through a charge against income.

Based upon historical analysis and expected future trends, management
changed the allocation of the non-refundable contract acquisition discount to
the allowance for credit losses, such that all non-refundable contract
acquisition discount was allocated entirely to the allowance for credit losses
during 1995. Additionally, after reviewing the adequacy of the allowance for
credit losses, the remaining balance of the unamortized contract acquisition
discount was transferred to the allowance for credit losses on August 1, 1995.
In the first quarter of 1996, the Company increased its allowance for credit
losses by $400,000 through a charge against income based upon continued
historical analysis, particularly evaluation of the earliest pools. Management
will continue to monitor this allocation and may, if appropriate, in the future
allocate portions of the non-refundable contract acquisition discount to
unamortized contract acquisition discount.

24
26

The following table summarizes certain information relating to the
Company's allocation of the non-refundable contract acquisition discount and its
allowance for credit losses and unamortized contract acquisition discount.

THREE MONTHS
YEARS ENDED DECEMBER 31, ENDED MARCH 31,
----------------------------- -----------------
1993 1994 1995 1995 1996
------- ------- ------- ------ -------
(DOLLARS IN THOUSANDS)

ALLOWANCE FOR CREDIT LOSSES:
Allowance for credit losses, beginning of
period...................................... $ 596 $ 522 $ 2,563 $2,563 $ 5,011
Non-refundable contract acquisition discount
obtained on contracts purchased and
allocated to allowance for credit losses.... 1,642 3,249 7,553 1,682 3,319
Discount allocated to finance receivables
sold........................................ (1,213) -- (2,197) (863) (2,137)
Installment contracts charged off, net of
recoveries.................................. (503) (1,208) (3,009) (598) (1,154)
Provision for credit losses...................... -- -- -- -- 400
Transferred from unamortized contract acquisition
discount....................................... -- -- 101 -- --
-------- -------- -------- ------- --------
Allowance for credit losses, end of period..... $ 522 $ 2,563 $ 5,011 $2,784 $ 5,439
======== ======== ======== ======= ========
UNAMORTIZED CONTRACT ACQUISITION DISCOUNT:
Unamortized contract acquisition discount,
beginning of period......................... $ 49 $ 117 $ 229 $ 229 $ --
Non-refundable contract acquisition discount
obtained on contracts purchased, to be
accreted into finance charge income......... 162 322 -- -- --
Accreted into finance charge income............ (94) (210) (128) (62) --
Transferred to allowance for credit losses....... -- -- (101) -- --
-------- -------- -------- ------- --------
Unamortized contract acquisition discount, end
of period................................... $ 117 $ 229 $ -- $ 167 $ --
======== ======== ======== ======= ========

Under the Company's credit policy, the Company suspends the accrual of
finance charge income with respect to an installment contract that is 90 days
past due. An account is charged off against the allowance for credit losses at
the earliest of the time (i) the account's collateral is repossessed, (ii) the
account is 120 days or more past due or (iii) the account is otherwise deemed to
be uncollectable.

The following table summarizes data relating to the Company's charge-off
experience and allowance for credit losses.

THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
----------------------------- ------------------
1993 1994 1995 1995 1996
------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS)

TOTAL PORTFOLIO:
Average Total Portfolio...................... $12,204 $28,553 $59,374 $44,041 $89,235
Net charge-offs(1)........................... 503 1,697 3,834 674 1,597
Net charge-offs as a percentage of average
Total Portfolio........................... 4.1% 5.9% 6.5% 6.1% 7.2%
OWNED PORTFOLIO:
Average Owned Portfolio...................... $11,560 $19,997 $40,153 $34,700 $57,323
Net charge-offs(1)........................... 503 1,208 3,009 598 1,154
Net charge-offs as a percentage of average
Owned Portfolio........................... 4.4% 6.0% 7.5% 6.9% 8.1%
ALLOWANCE FOR CREDIT LOSSES:
Owned Portfolio.............................. $ 7,612 $33,779 $59,495 $33,959 $60,573
Allowance for credit losses.................. 522 2,563 5,011 2,784 5,439
Allowance for credit losses as a percentage
of Owned Portfolio........................ 6.9% 7.6% 8.4% 8.2% 9.0%

- -------------------------
(1) The Company's experience to date is that only nominal amounts are collected
on charged-off accounts.

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27

DELINQUENCY EXPERIENCE

A payment is considered past due if the customer fails to make any full
payment on or before the due date as specified by the terms of the installment
contract. The Company typically contacts delinquent customers within one to two
days after the due date.

The following table summarizes the Company's delinquency experience for
accounts with payments 60 days or more past due on a dollar basis for the Total
Portfolio and Owned Portfolio. The delinquency experience data exclude
automobiles which have been repossessed.

AS OF DECEMBER 31, AS OF MARCH 31,
------------------------------ -------------------
1993 1994 1995 1995 1996
------- ------- -------- ------- --------
(DOLLARS IN THOUSANDS)

TOTAL PORTFOLIO:
Installment contracts, gross............. $26,275 $52,262 $105,881 $64,697 $136,063
Past due contracts, gross:
60 to 89 days......................... 47 159 726 344 597
90 days or more....................... 14 57 454 29 564
------- ------- -------- ------- --------
Total 60 days or more................. $ 61 $ 216 $ 1,180 $ 373 $ 1,161
======= ======= ======== ======= ========
Contracts with payments 60 days or more
past due as a percentage of total
installment contracts, gross.......... 0.23% 0.41% 1.11% 0.58% 0.85%
======= ======= ======== ======= ========
OWNED PORTFOLIO:
Installment contracts, gross............. $10,308 $45,206 $ 79,422 $45,085 $ 82,464
Past due contracts, gross:
60 to 89 days......................... 61 105 509 310 396
90 days or more....................... -- 57 317 29 388
------- ------- -------- ------- --------
Total 60 days or more................. $ 61 $ 162 $ 826 $ 339 $ 784
======= ======= ======== ======= ========
Contracts with payments 60 days or more
past due as a percentage of total
installment contracts, gross.......... 0.58% 0.36% 1.04% 0.75% 0.95%
======= ======= ======== ======= ========

REPOSSESSED COLLATERAL

The Company commences repossession procedures against the underlying
collateral when it determines that collection efforts are likely to be
unsuccessful. Repossession generally occurs after a customer has missed two
consecutive monthly payments. In such cases, the net amount due under the
installment contract is reduced to the estimated fair value of the collateral,
less estimated costs of disposition, through a charge to the allowance for
credit losses. Repossessed collateral is valued at the lower of cost or market,
which on average was approximately 55% of the net balance of the contract at the
time of repossession for repossessions made through December 31, 1995.
Repossessed inventory was valued at $45,000, $222,000 and $543,000 at December
31, 1993, 1994 and 1995, respectively. At March 31, 1996, repossessed inventory
was valued at 60% of the net balance of the installment contract at the time of
repossession. Repossessed inventory was valued at $217,000 and $703,000 at March
31, 1995 and 1996, respectively.

LIQUIDITY AND CAPITAL RESOURCES

The Company has funded its operations, branch office openings and the
growth of the Total Portfolio through six principal sources of funds: (i)
payments received under installment contracts, (ii) borrowings under the Credit
Facility, (iii) proceeds from the issuance of subordinated notes, (iv) proceeds
from the sale of installment contracts, (v) proceeds from an asset
securitization transaction and (vi) proceeds from the liquidation of timeshare
receivables.

Net cash flows provided by operating activities were $1.3 million, $1.1
million, $3.9 million and $881,000 in 1993, 1994, 1995 and the three months
ended March 31, 1996, respectively.

The Company's cash flows used in investing activities since inception have
been used primarily for the purchase of installment contracts. Cash used for the
purchase of installment contracts was $19.2 million, $35.1 million, $70.2
million and $32.4 million for 1993, 1994, 1995 and the three months ended March
31, 1996, respectively. Capital expenditures were $185,000, $543,000, $521,000
and $186,000 for 1993, 1994 and

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1995 and the three months ended March 31, 1996, respectively. Cash used in
investing activities was offset by (i) the collection of principal on
installment contracts of $7.1 million, $11.4 million, $22.0 million and $8.5
million in 1993, 1994, 1995 and the three months ended March 31, 1996,
respectively; (ii) net proceeds of $10.9 million, $24.8 million and $22.9
million from the sales of installment contracts in 1993, 1995 and the three
months ended March 31, 1996, respectively; and (iii) proceeds from the
liquidation of timeshare receivables of $8.6 million, $4.1 million and $266,000
in 1993, 1994 and 1995, respectively.

Cash was provided by financing activities primarily through net borrowings
under the Credit Facility. Net borrowings (net payments) under the Credit
Facility were ($1.2 million), $19.7 million, $17.6 million and ($233,000) in
1993, 1994, 1995 and the three months ended March 31, 1996, respectively. In
addition, cash was provided in 1995 through borrowings on a subordinated basis
in the amount of $4.5 million. Cash provided by financing activities in 1993 was
offset by net payments under the Credit Facility as well as net payments on
subordinated debt of $6.8 million. Also offsetting cash provided from financing
activities were dividends paid of $393,000, $474,000 and $1.5 million in 1993,
1994 and 1995, respectively.

As of the date hereof, the Company had a $62.0 million Credit Facility with
a group of six banks, for which LaSalle acts as agent, and which expires June 1,
1997. The Credit Facility is collateralized by a lien on all the Company's
assets. Interest is payable at the agent bank's reference rate plus 1.0% (9.25%
at March 31, 1996). Borrowings outstanding under the Credit Facility were $43.0
million at March 31, 1996. The Credit Facility requires the Company to maintain
minimum capital funds (as defined) of $6.0 million. The Credit Facility also
requires that total loss reserves be maintained at not less than 8% of net
installment contracts receivable and no more than 3% of net installment
contracts receivable may be more than 60 days past due. The Credit Facility also
requires that earnings before interest and taxes to cash interest expense may
not be less than 125% and the ratio of unsubordinated debt to tangible net worth
plus subordinated debt cannot exceed 5 to 1. At March 31, 1996, the Company was
in compliance with all of these covenants. After giving effect to proceeds from
the Offering, the Company believes these covenants will not materially limit its
business or its expansion strategy.

The Company issued a senior and a junior subordinated note in 1990. Each
note had a face value of $5.0 million, carried an interest rate of 6% and was
unsecured. The senior subordinated note was paid off in 1993. Under the terms of
the junior subordinated note, interest on the note was added to the principal
amount of the note. In addition, the Company granted warrants to the junior
subordinated note holder allowing for the purchase of 51% of the Common Stock of
the Company. In 1993, the Company entered into an agreement to prepay the junior
subordinated note. Under the terms of the agreement, the Company paid $2.1
million in December 1993, comprised of $1.0 million in principal and $1.1
million in interest, and the junior subordinated note holder surrendered 20% of
its warrants. In addition, pursuant to the agreement the Company paid interest
on the note in 1994. In December 1994, the Company paid the remaining principal
balance of $4.0 million on the note and the remaining warrants were surrendered
to the Company.

In December 1994, in order to refinance the junior subordinated note, the
Company issued a subordinated note in the amount of $4.0 million to Michael P.
Harrington, its Chairman, President and Chief Executive Officer. Under the terms
of such note, interest is payable at the end of each quarter at a fixed rate of
13.5% and is due on September 30, 1996. The proceeds were used to retire the
remaining principal balance on the junior subordinated note. Simultaneously, Mr.
Harrington issued a $4.0 million note to LaSalle secured by capital stock in the
Company owned by Mr. Harrington. Under the terms of the note issued to LaSalle,
interest is payable at the end of each quarter at a fixed rate of 13.5% and is
due on September 30, 1996. In connection with this note issuance, the Company
issued to LaSalle a detachable warrant to purchase 193,320 shares of Common
Stock. Prior to the closing of the Offering, LaSalle will transfer its warrant
to an affiliate, LaSalle National Corp. ("LaSalle National"). The warrant may be
exercised in whole or in part to purchase Common Stock at a price of $1.13 per
share and expires on September 1, 1999, or earlier as defined in the warrant.
The warrant contains a put option such that after the payment of the secured
note but before the occurrence of an initial public offering of the Company's
Common Stock, the holder may require the Company to purchase the warrant.
Additionally, the warrant contains a call option such that, after September 1,
1997 but before the expiration date or the occurrence of an initial public
offering of the Company's Common Stock, the Company may require the holder to
sell the warrant to the Company.

On September 21, 1995, the Company issued a subordinated note in the amount
of $4.5 million to Banc One Capital Partners V, Ltd. ("Banc One"). Under the
terms of the agreement, interest is payable monthly at

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a fixed rate of 13%. The note is due on August 31, 1998. In connection with the
issuance of the Banc One note, a detachable warrant to purchase 193,320 shares
of Common Stock was issued to Banc One. The warrant may be exercised in whole or
in part to purchase Common Stock at a price of $1.56 per share and the warrant
expires on September 1, 2000, or earlier as defined in the warrant. The warrant
contains a put option such that after the earlier of August 31, 1998 or the
payment of the subordinated debt, but before the occurrence of an initial public
offering of the Company's Common Stock, Banc One may require the Company to
purchase the warrant. Additionally, the warrant contains a call option such that
after September 1, 1998 but before the expiration date or the occurrence of an
initial public offering of the Company's Common Stock, the Company may require
Banc One to sell the warrant to the Company.

LaSalle National and Banc One are exercising their warrants in connection
with the Offering and are selling the shares of Common Stock acquired thereby in
the Offering. See "Principal and Selling Stockholders."

The Company sold a total of $65.0 million of installment contracts -- $12.1
million in 1993, $27.5 million in 1995 and $25.4 million for the three months
ended March 31, 1996 under various asset purchase agreements and servicing
agreements. Pursuant to these servicing agreements, the Company retains the
servicing rights on the installment contracts sold and receives servicing fees.
At March 31, 1996, the outstanding balance of installment contracts sold and
serviced by the Company was $40.9 million, and such installment contracts were
sold to yield the purchasers, including GECC, a range of 8.9% to 11.0% per
annum. See Notes to Financial Statements. Under an agreement with GECC, the
Company may sell up to $40.0 million of principal amount of outstanding
installment contracts to GECC prior to December 31, 1996, of which a balance of
$38.0 million was outstanding as of March 31, 1996.

In order to meet its 1997 funding needs, the Company will require
additional financing to supplement its expected cash flows from operations, the
anticipated borrowings under its Credit Facility and the net proceeds from the
Offering. The Company has entered into a letter of intent with a placement agent
for the issuance of up to $200 million of securitized notes through a
wholly-owned subsidiary. Initially, on June 18, 1996, a wholly-owned subsidiary
of the Company sold approximately $45.1 million of 6.84% fixed rate Securitized
Notes in an asset securitization transaction (the "Securitization"). The
Securitized Notes were secured by installment contracts and the payments under
the Securitized Notes are guaranteed pursuant to a financial guaranty insurance
policy issued by Financial Security Assurance Inc. The net proceeds of the
Securitization to the Company were used primarily to reduce the outstanding
balance under the Credit Facility. The debt incurred in the Securitization is
reflected on the balance sheet of the Company and did not result in a gain on
sale. The Company has not entered into any agreements with the purchasers of the
Securitized Notes in excess of the $45.1 million of the Securitized Notes sold
and there can be no assurance that any such additional sales will occur. The
Company presently intends to finance additional 1997 funding needs through the
sale of installment contracts and securitization transactions.

IMPACT OF INFLATION

Although the Company does not believe that inflation directly has a
material adverse effect on its financial condition or results of operations,
increases in the inflation rate generally are associated with increased interest
rates. Because the Company borrows funds on a floating rate basis and purchases
installment contracts bearing fixed rates, increased costs of borrowed funds
could have a material adverse impact on the Company's profitability. Inflation
also can affect the Company's operating expenses.

IMPACT OF NEW ACCOUNTING STANDARDS

The Company believes that the provisions of certain Statements of Financial
Accounting Standards ("SFAS") which have not been implemented by the Company
either do not apply to the Company or would not affect the Company's financial
position, results of operations, or disclosures relating thereto. These
statements include SFAS 106 "Employers' Accounting for Postretirement Benefits
Other than Pensions," SFAS 121 "Accounting for the Impairment of Long-Lived
Assets to be Disposed of," and SFAS 122 "Accounting for Mortgage Servicing
Rights."

The Company intends to continue to apply the provisions of Accounting
Principles Board Opinion No. 25 "Accounting for Stock Issued to Employees" in
accounting for stock-based compensation. The Company will provide pro forma net
income and net income per share disclosures as if the fair value based
accounting method in Statement of Financial Accounting Standards No. 123
"Accounting for Stock-Based Compensation" had been used to account for
stock-based compensation.

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BUSINESS

GENERAL

The Company is a specialty finance company primarily engaged in purchasing
and servicing installment contracts originated by dealers for financing the sale
of automobiles. The Company purchases installment contracts which provide
financing for non-prime consumers. The Company also offers, as agent, ancillary
products in conjunction with the installment contracts the Company purchases.
The Company commenced operations in 1990 and began purchasing installment
contracts in May 1992 through three branch offices. As of March 31, 1996, the
Company operated 28 branch offices in eight southeastern states and currently
plans to open at least five additional branch offices by the end of 1996.

THE INDUSTRY

The automobile finance industry is the second largest consumer finance
market in the United States, estimated by the Federal Reserve Board to have been
a $354 billion market in terms of outstanding automobile installment credit at
the end of 1995. Generally, the industry classifies prime and non-prime
consumers based on the creditworthiness of the consumer. The Company does not
further categorize its consumers within the classification of non-prime. Every
non-prime consumer is evaluated by the branch manager and branch personnel in
accordance with the Company's uniform credit guidelines and procedures which are
specifically designed to support its evaluation of non-prime consumers.

The Company believes that the non-prime portion of the automobile finance
market ranges from $30 billion to $50 billion or more and is highly fragmented.
Many large financial service entities, such as commercial banks, savings and
loans, credit unions and captive finance companies do not consistently provide
financing to the non-prime market. The Company believes that some of the factors
contributing to the limited activities of traditional lenders in the non-prime
segment of the market are (i) the higher risk of the obligors and the
installment contracts, (ii) the lack of effective experience in servicing
non-prime consumers, and (iii) the regulatory oversight and capital requirements
imposed by governmental agencies on traditional lenders which limit their
ability to extend credit to such non-prime consumers. In many cases, those
organizations electing to remain in the automobile finance business have
migrated toward higher credit quality customers in order to reduce collection
and processing costs and to maintain higher levels of credit quality. Many of
the largest providers of financing to the non-prime automobile finance market
are the publicly-traded specialty automobile finance companies. The Company
estimates that these companies collectively have less than a 15% market share.
The remainder is primarily comprised of privately held finance companies and
dealers who provide financing programs directly to the consumer.

The Company believes that several demographic and economic trends favor
increased growth in the non-prime segment of the automobile finance industry.
Currently, the average American family must spend a significantly higher
percentage of its income to purchase a new or used automobile than it did
several years ago. According to industry data, the average price of a new
automobile in 1994 represented approximately 51% of the U.S. median family
income for that year, an increase from approximately 44% in 1986. The Company
believes this increase, combined with increases in the average useful life of
automobiles and the number of late-model used automobiles available for sale
(including rental cars and cars that were formerly leased) will continue to
expand the used automobile market.

BUSINESS STRATEGY

The Company's strategy is to grow its Total Portfolio by increasing its
penetration of existing markets and by expanding into new market areas. The
principal components of the Company's strategy include:

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better portfolio quality through personal knowledge of local market
conditions and improves collection rates by requiring collection
activity to be handled through direct local contact with consumers.
Decentralization enhances dealer service by allowing branch managers to
frequently meet one-on-one with local dealers, quickly respond to
contract applications and respond to changes in competitive conditions.
The decentralized structure also enables branch managers to interact
personally with consumers during the origination and servicing of
installment contracts. Decentralization requires more effective
management information systems, internal audit procedures and credit
guidelines to maintain control over the Company's business.

- Focus on Smaller Markets. The Company generally targets smaller markets
with populations of less than 150,000. The Company believes that these
markets tend to be less competitive than larger markets and that dealers
in such markets are more relationship oriented than in larger markets.
Management believes the Company gains a competitive advantage by opening
branch offices headed by experienced branch managers who typically have
established relationships with local dealers and extensive knowledge of
the market. The Company considers the availability of experienced branch
managers with knowledge of the local market to be the most important
factor in selecting additional branch office locations. Other factors
considered in the selection of additional branch office locations include
competition, demographics and the regulatory climate. The Company had 28
branch offices in eight southeastern states as of March 31, 1996. The
Company opened eight new branch offices in 1995 and plans to open at
least five additional branch offices by the end of 1996, some of which
may be in new states.

- Service to Dealers. The Company helps to expand its dealers' customer
bases by providing financing to consumers who otherwise might not be able
to obtain credit. The Company further assists dealers by promptly
responding to credit applications, by providing a consistent source of
financing and by typically paying dealers within 24 hours after receiving
all required documentation. As of March 31, 1996, the Company purchased
installment contracts from a total of 834 dealers in eight southeastern
states and had active relationships with 385 of such dealers. The Company
defines an active relationship with a dealer as one in which the Company
purchases at least five contracts per twelve month period from such
dealer. As of March 31, 1996, no single dealer accounted for more than
3.1% of the Total Portfolio.

- Management Information System. The Company utilizes an on-line, real-time
data processing system of a third party vendor to process its installment
contract transactions, to assist in compliance with its credit policies
and certain applicable laws and regulations and to monitor its
decentralized branch office network. This system has been customized to
meet the Company's processing, compliance and reporting requirements. The
executive, operations and branch offices have immediate access to data
from the management information system. Management believes that the
Company's information system will permit sustained growth in the Total
Portfolio.

BRANCH OFFICES

While the Company generally targets smaller markets with populations of
less than 150,000, the Company has opened and may continue to open branch
offices in larger communities. As of March 31, 1996, the Company had 28 branch
offices in eight southeastern states. Eight new branch offices were opened in
1995

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and the Company plans to open at least five additional branch offices by the end
of 1996. The Company has never closed a branch office.

The following table summarizes certain information regarding the Company's
branch offices.

THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
----------------------------- --------------------
1993 1994 1995 1995 1996
------- ------- ------- ------- -------

Number of New Branch Offices.............. 4 9 8 2 3
Total Number of Branch Offices............ 8 17 25 19 28
Number of Contracts Purchased............. 2,685 4,935 10,021 2,152 4,390
Dollar Amount of Contracts Purchased (in
thousands).............................. $19,248 $35,137 $70,184 $14,341 $32,433

The actual selection of a new branch office location is generally based on
the availability of an experienced branch manager with industry and market
knowledge in the selected community, competition, certain demographic factors
and the regulatory climate. The Company expects to attract additional qualified
managers to staff new branch offices and has recently established a training
program to provide an expanding pool of qualified branch managers.

Branch managers operate their branch offices with a significant degree of
autonomy and accountability. Operating within the guidelines set by the Company,
branch managers are responsible for the development of new dealer relationships,
underwriting of automobile installment contract purchases, servicing and
collection of accounts and implementation of repossession procedures.
Decentralization allows branch managers to frequently meet one-on-one with local
dealers, quickly respond to contract applications and respond to changes in
competitive conditions. This decentralized structure also enables branch
managers to interact personally with the consumers during the origination and
servicing of installment contracts.

After several months of orientation, a branch manager typically opens a new
branch office with two or three employees. Staff is expanded as growth warrants.
The Company's initial capital expenditure for a new branch office is
approximately $15,000, which includes computer equipment, furniture and signs.
Based on previous experience, the Company's branch offices are expected to be
profitable within nine to 12 months of commencing operations. During the startup
period, all costs, net of revenue, are treated as current period operating
expenses. The Company leases all of its branch offices with average monthly rent
of approximately $1,000 per branch office.

MONITORING OF BRANCH OFFICES

The Company monitors the performance of each of its branch offices through
daily and monthly review of operating and financial reports from its management
information system, quarterly site reviews of branch offices by the Company's
two regional supervisors and operational reviews of branch offices by its
internal auditor.

The Company's management information system enables the executive officers
and regional supervisors to immediately access branch and portfolio information.
Some of the more important reports received by management from its information
system include: (i) delinquency reports, (ii) charge-off reports, (iii)
inventory repossession reports, (iv) cash reports, (v) trial balances, (vi)
branch income statements and (vii) volume reports. The Company also uses its
management information system to transfer deposits from its local branch bank
accounts to its central bank utilizing the Automated Clearing House. Branch
disbursement checks are drawn on a central bank account which provides
additional controls.

DEALER RELATIONSHIPS

Generally, for each dealer, branch managers evaluate (i) the level and
quality of the dealer's inventory, (ii) the length of time the dealer has been
in business, (iii) historical financial information to determine financial
viability and (iv) the dealer's reputation in the community. Branch managers
review, on an ongoing basis through the Company's management information system,
the loss experience on the installment contracts purchased from each dealer.

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Generally, the Company enters into a non-exclusive written dealer agreement
(a "Dealer Agreement") with each dealer from which the Company purchases
installment contracts on a continuing basis. The Dealer Agreement does not
obligate the Company to purchase installment contracts from the dealer or the
dealer to offer any installment contracts for sale to the Company. Dealer
Agreements generally provide representations and warranties relating to such
matters as to whether (i) the financed automobile is free of all liens, claims
and encumbrances except the Company's lien, (ii) the down payment specified in
the installment contract has been paid in full and no part of the down payment
was loaned to the consumer by the dealer and (iii) the dealer has complied with
applicable law. Dealer Agreements generally also provide that the dealer shall
indemnify the Company against any damages or liabilities, including reasonable
attorneys' fees and including in certain instances repurchases of the
installment contract on demand, arising out of (i) any breach of a
representation or warranty of the dealer set forth in the Dealer Agreement or
(ii) any claim or defense that a consumer may have against a dealer relating to
an installment contract.

The Company believes it has strong relationships with dealers and that such
relationships will continue. The Company is not affiliated with any dealers, nor
is there common ownership with any dealer. The Company's relationships with
dealers are not regulated at the federal or state level.

CREDIT UNDERWRITING PROCEDURES

If a non-prime consumer elects to finance the purchase of an automobile
through a dealer, the dealer may submit the consumer's credit application to the
Company for review of the consumer's creditworthiness and the proposed
transaction terms. The branch manager reviews the transaction in accordance with
the Company's credit guidelines and procedures, which generally take into
account, among other things, the individual's stability of residence, employment
history, credit history, ability to pay and ratio of debt service payments to
income, the down payment, as well as the value of the collateral. In addition,
the branch manager evaluates a credit bureau report in order to determine if (i)
the individual's credit quality is deteriorating, (ii) the individual's credit
history suggests a high probability of default or (iii) the individual's credit
experience is too limited for the Company to assess the probability of
performance. The branch personnel may also require verification of certain
applicant or dealer provided information prior to making the credit decision.
Such verification is performed solely by Company branch personnel and typically
includes (i) submission of supporting documentation, such as a paycheck stub or
other substantiation of income, (ii) evidence of residency and (iii) proof of
physical damage insurance. Within the parameters set by the Company's credit
guidelines and procedures, the branch manager is permitted to supplement the
data received with subjective judgment and knowledge of local conditions. By
using a wide variety of criteria and the knowledge and experience of the local
branch manager, the Company attempts to reduce its default rate and thus limit
its losses.

After reviewing the credit application and the terms of the sale, the
branch office notifies the dealer whether the Company would be willing to
purchase the installment contract upon sale of the automobile to the applicant.
The Company typically responds to submitted dealer applications on the date
received, and in many cases within two to three hours. For the year ended
December 31, 1995, the Company approved approximately 34% of all submitted
credit applications and approximately 55% of the installment contracts related
to approved credit applications were purchased by the Company. The difference
between the number of applications approved and the number of installment
contracts purchased is primarily due to dealers submitting credit applications
to more than one finance company. In cases where the Company is unwilling to
purchase an installment contract from a dealer under the proposed terms but
believes the applicant has the capacity to meet other repayment obligations, the
branch office will work with the dealer to restructure the terms of the
financing or suggest the sale of an alternative automobile with a price more
suited to the applicant's financial means.

CONTRACT PURCHASE

When the branch manager approves the purchase of an installment contract,
the branch office notifies the dealer by facsimile. Such notice confirms all
pertinent information relating to the terms of the approval, including the
finance charge, the term, information about the automobile to be sold, a list of
ancillary products purchased by the consumer and the amount of non-refundable
contract acquisition discount that the Company will deduct from the initial
principal balance of the installment contract. Since inception of the Company's

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automobile finance activities, the nonrefundable contract acquisition discount
charged by the Company has averaged approximately 10% of the initial principal
balance of the installment contracts. Generally, the amount paid in cash to
dealers for installment contracts ranges between 80% to 110% of the wholesale
value of the automobile, with an average of approximately 100%. The consumer is
typically required to make a down payment of at least 10% of the purchase price.

After the dealer delivers all required documentation to the Company, the
Company remits funds to the dealer, generally within 24 hours. In most cases,
the consumer is contacted directly to verify the terms of the transaction. Upon
purchase of the installment contract, the Company acquires a perfected security
interest in the financed automobile. Each installment contract requires that the
automobile be properly insured against physical damage and that the Company be
named as a loss payee on the insurance policy. Compliance with these
requirements is verified prior to the remittance of funds to the dealer.

The following table summarizes the Company's installment contract volume by
state since 1993.

THREE MONTHS
ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
--------------------------- ----------------
STATE 1993 1994 1995 1995 1996
- ------------------------------------------------ ----- ----- ----- ----- -----

Florida......................................... 46.7% 42.4% 24.8% 25.3% 24.0%
Alabama......................................... 32.5 30.4 25.2 30.3 19.2
Mississippi..................................... -- 2.9 14.0 9.7 18.0
Tennessee....................................... -- 10.3 14.9 12.0 17.2
South Carolina.................................. 7.2 6.9 8.8 8.5 12.2
North Carolina.................................. -- 0.9 8.5 10.4 4.7
Georgia......................................... 13.6 6.2 3.8 3.8 2.9
Virginia........................................ -- -- -- -- 1.8
------ ------ ------ ------ ------
Total...................................... 100.0% 100.0% 100.0% 100.0% 100.0%
====== ====== ====== ====== ======

INSTALLMENT CONTRACT TERMS

The Company purchases precomputed, fixed rate, fully secured, retail
installment contracts on a non-recourse basis. The installment contracts are
purchased from dealers for the principal balance less the non-refundable
contract acquisition discount. The non-refundable contract acquisition discount
is determined based on, among other factors, the competitive condition of the
market, the age and value of the automobile and the creditworthiness of the
consumer.

In 1993, 1994, 1995 and the three months ended March 31, 1996, the Company
purchased 2,685, 4,935, 10,021 and 4,390 installment contracts, respectively,
representing aggregate principal balances of $19.2 million, $35.1 million, $70.2
million and $32.4 million, respectively. Installment contracts purchased in the
three months ended March 31, 1996 had an average initial principal balance of
approximately $7,400, a weighted average contractual APR of approximately 26.1%,
a weighted average non-refundable contract acquisition discount of approximately
10.8% and a weighted average initial contract term of approximately 37 months.

INSTALLMENT CONTRACT SERVICING

The Company's installment contract servicing activities are specifically
tailored for the higher risks associated with non-prime consumers. Each branch
office collects and posts all payments received, responds to consumer inquiries,
takes all necessary action to maintain the security interest granted in the
financed automobiles, investigates delinquencies, communicates with the consumer
to obtain timely payments and, when necessary, contracts with third parties to
recover and sell the financed automobile.

The Company has established a process through which it attempts to educate
consumers, both in writing and by telephone, upon the Company's purchase of
their installment contracts. This process is designed to ensure that consumers
clearly understand their obligations and includes a review of the terms of the
installment contract with particular emphasis on the amount and due date of each
payment obligation, the

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Company's expectations as to the timely receipt of payments, maintenance of
insurance coverage and the Company's delinquency and repossession policies. The
branch offices send their respective customers a payment coupon book prior to
the first payment due date.

Branch office personnel typically contact delinquent consumers within one
to two days after such consumer's due date and collection efforts continue until
payment has been received. The Company believes that early and frequent contact
with the consumer reinforces the consumer's recognition of his or her
contractual obligation and the Company's expectation of timely payment. If early
collection efforts are not successful, branch office personnel design a
collection strategy that includes a specific deadline by which each delinquent
obligation should be collected. Accounts that have not been collected by such
deadline are again reviewed and unless there are specific circumstances which
warrant further collection efforts, such accounts are assigned to an outside
recovery agency for repossession. Only branch managers can authorize
repossession of an automobile. Repossessed automobiles are generally resold
through wholesale auctions. The elapsed time between repossession and resale is
generally 15 to 45 days, including passage of the period during which the law of
the applicable jurisdiction permits the consumer to redeem the automobile.

The Company provides its branch managers with flexibility in working with
consumers in the collection of payments. Specifically, if a consumer is unable
to make a scheduled payment the branch manager can grant a payment deferment.
The consumer must pay a fee and must sign a deferment agreement as acceptance of
the contract modification. The scheduled payment is then deferred for the period
of time agreed upon between the branch manager and the consumer but will not
exceed 30 days. Generally, no more than two deferments may be granted in any 12
month period. The branch manager and consumer may also change the day of the
month that each contractual payment is due. Each contract can have the due date
changed only once and the change cannot be greater than 30 days from the
original due date.

ANCILLARY PRODUCTS

The Company offers to consumers, as agent for unaffiliated providers,
optional credit life and accident and health insurance, extended warranty
coverage and motor club memberships solely in connection with its purchase of
consumer installment contracts. The consumers are obligated to secure physical
damage insurance from any acceptable source. If a consumer fails to maintain
physical damage insurance, under the terms of the installment contract the
Company is permitted to and does force place such insurance with the insurer
that it represents. The Company receives commissions on its sales of all such
ancillary products.

MANAGEMENT INFORMATION SYSTEMS

Management believes that operational information available on a continuous
basis at all levels of management is a key factor in managing the growth and
profitability of a decentralized company in a highly competitive market. The
Company has contracted with a third party, Florida Informanagement Services,
Inc. ("FIS"), to provide daily processing of the Company's installment contract
receivables and all other management reporting and information needs through
December 5, 1999. FIS is required to maintain the data network, provide
customized programming services and provide data backup, recovery and disaster
recovery for the Company's records. The system has been customized by FIS to
process the Company's installment contract transactions, to assist in compliance
with its credit policies and certain applicable laws and regulations and to
monitor its decentralized branch office network. The management information
system provides on-line, real-time data processing that uses personal computers
as terminals with automatic download functions and customized report writer
capability at each branch office location.

All of the Company's offices are connected to the FIS main computer center
in Orlando, Florida. The system provides all of the data processing with respect
to the Company's installment contract transactions, including application
processing, retrieval of credit bureau reports, purchases of installment
contracts, payments to dealers, customer payment posting, credit and collection
monitoring activity and recording and posting of all general ledger information.
The system requires each branch office to balance all daily transactions before
closing out for the day. In addition, each branch office and the Company's
operations headquarters and executive office have selective access to retrieve
data from the system.

The Company's management information system is programmed with Company
guidelines and legal parameters that limit the acceptance of installment
contracts outside such guidelines and parameters. When

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36

certain installment contract information that does not meet these guidelines is
entered into the system, it will be rejected and only accepted after it is
corrected. In addition, all branch office entries are automatically sorted and
classified into the general ledger system. As a result, the Company is able to
compile financial statements promptly at month-end. The system produces monthly
reports related to selected operational functions and administrative activity as
well as maintains a cash management system to control cash on a daily basis.

The Company believes that the system has the capacity to support sustained
growth in the Total Portfolio.

COMPETITION

The automobile finance business is highly fragmented and competitive. The
Company believes that there are numerous competitors providing, or capable of
providing, financing through dealers to non-prime consumers of automobiles and
that many companies have entered the market for non-prime consumers during the
last several years. The Company does not believe that it currently competes, in
any significant manner, with commercial banks, savings and loans, credit unions,
financing arms of automobile manufacturers such as General Motors Acceptance
Corporation, Ford Motor Credit Corporation and Chrysler Credit Corporation, and
other consumer lenders that apply more traditional lending criteria to the
credit approval process. Traditional lenders such as banks and credit unions
generally lend to "prime" consumers. These consumers generally borrow at lower
finance rates, purchase newer model automobiles and have a lower default rate
than non-prime customers. Many of the largest providers of financing to the
non-prime automobile finance market are publicly-traded specialty automobile
finance companies. The Company estimates that these companies collectively have
less than a 15% market share. The remainder of providers is primarily comprised
of privately held finance companies and dealers who provide financing programs
directly to the consumer. The Company believes that it competes principally on
the basis of the service provided and terms offered to participating dealers.

Most non-prime lenders require an acquisition discount for each installment
contract purchased. The Company's non-refundable acquisition discounts are based
on the value and condition of the automobile, the relationship between the
amount financed and the automobile's value and the consumer's creditworthiness
which includes length of employment, net income, stability of residency,
indebtedness and payment history. During the three months ended March 31, 1996,
the average non-refundable acquisition discount charged by the Company was
10.8%.

REGULATION

The Company's business is subject to regulation and licensing under various
federal, state and local statutes and regulations. As of March 31, 1996, the
Company's business operations were conducted with dealers located in eight
states, and, accordingly, the laws and regulations of such states govern the
Company's operations. Most states where the Company operates (i) limit finance
charges, fees and other charges that may be imposed by, or prescribe certain
other terms of, the installment contracts that the Company purchases, (ii)
govern the sale and type of insurance products offered by the Company and the
insurers for which it acts as agent, (iii) define the Company's rights to
repossess and sell collateral and (iv) prohibit the practice of increasing the
cash sale price for consumers who pay for automobiles on credit rather than in
cash ("cash sale differential"). It is the Company's policy not to purchase
installment contracts from dealers who charge a cash sale differential. In
addition, the Company is required to be licensed or registered to conduct its
finance operations in certain states in which the Company purchases installment
contracts. As the Company expands its operations into other states, it will be
required to comply with the laws of such states.

Numerous federal and state consumer protection laws and regulations impose
substantive disclosure requirements upon lenders and services involved in
automobile financing. Some of the federal laws and regulations include the
Truth-in-Lending Act, the Equal Credit Opportunity Act, the Federal Trade
Commission Act, the Fair Credit Reporting Act, the Fair Credit Billing Act, the
Fair Debt Collection Practices Act, the Magnuson-Moss Warranty Act, the Federal
Reserve Board's Regulations B and Z and the Soldiers' and Sailors' Civil Relief
Act.

The Company is subject to state regulations governing insurance agents in
connection with its sales of credit and other insurance, which require that
insurance agents (such as the Company's personnel) be

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37

licensed, govern the commissions that may be paid to agents in connection with
the sale of credit insurance and limit the premium amount charged for insurance.

In addition, the Federal Trade Commission ("FTC") has adopted a
holder-in-due-course rule which has the effect of subjecting persons that
finance consumer credit transactions (and certain related lenders and their
assignees) to all claims and defenses which the consumer could assert against
the seller of the goods and services. With respect to used automobiles
specifically, the FTC's Rule on Sale of Used Automobiles requires that all
sellers of used automobiles prepare, complete and display a Buyer's Guide which
explains the warranty coverage for such automobiles. The Credit Practices Rules
of the FTC impose additional restrictions on sales contract provisions and
credit practices.

LEGAL PROCEEDINGS

The Company is involved from time to time in ordinary routine litigation
incidental to its business. The litigation is generally based upon claims that
certain of the Company's business practices such as acquiring installment
contracts at an acquisition discount, force placing insurance and offering other
insurance products violate laws, including the Alabama Consumer Credit Act, the
Alabama Deceptive Practices Act and the Federal Truth in Lending Act. Two of the
suits pending against the Company as of the date of this Prospectus are
purported class actions. One of the purported class actions was conditionally
certified as a class action, but the other class action has not been so
certified. The Company believes that the ultimate outcome of all pending
litigation as of the date of this Prospectus will not have a material adverse
effect on the Company, its profitability and its financial position. The Company
intends to vigorously defend all such actions.

Due to the consumer-oriented nature of the Company's industry and the
application of certain laws and regulations, industry participants are regularly
named as defendants in litigation alleging violations of federal and state laws
and regulations and consumer law torts, including fraud. Many of these actions
allege violations of consumer protection laws. Therefore, there can be no
assurance that the Company will not be named as a defendant in future suits or
that such suits will not have a material adverse effect on the Company, its
profitability and its financial condition.

PROPERTIES

The principal executive office of the Company is located in Evanston,
Illinois in a leased office facility of approximately 2,600 square feet, and the
lease for such office expires on October 31, 2000. The operations headquarters
is located in Enterprise, Alabama in a leased office facility of approximately
7,200 square feet, and the lease for such office expires on June 30, 1999. As of
March 31, 1996, the Company leased office space for 28 branch offices ranging
from approximately 1,050 square feet to 2,600 square feet, and was obligated
under leases expiring on dates ranging from June 1996 to March 2000.

EMPLOYEES

As of March 31, 1996, the Company employed 161 persons, none of whom is
covered by a collective bargaining agreement. The Company provides medical
insurance and other benefits for eligible employees. The Company generally
considers its relationships with its employees to be good.

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MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

As of May 31, 1996, the directors and executive officers of the Company,
their ages and their present positions with the Company are as follows:

NAME AGE POSITION AND OFFICES HELD
- ----------------------------------- ---- ---------------------------------------------------

Michael P. Harrington.............. 60 Chairman of the Board, President and Chief
Executive Officer
Thomas G. Parker................... 56 President and Chief Operating Officer of First
Enterprise Acceptance Company
Kenneth L. Stucky.................. 58 Vice President and Chief Administrative Officer of
First Enterprise Acceptance Company
Robert J. Harker................... 56 Director, Vice President and Controller
Paul A. Stinneford................. 64 Director, Vice President, Secretary and General
Counsel
Jan W. Erfert...................... 61 Vice President and Treasurer

All directors hold office until the next annual meeting of stockholders of
the Company, and until their successors have been elected and qualified. The
Company's officers are elected annually by and serve at the discretion of the
Board of Directors. There are no family relationships among directors or
executive officers of the Company.

Upon the consummation of the Offering, the Company anticipates naming Mr.
Parker, Mr. Stucky and the following three additional persons, who are not
affiliated with the Company, as directors: Louis J. Glunz, Ph.D., M. William
Isbell and Joseph H. Stegmayer. Upon the consummation of the Offering, Mr.
Harker will resign as a director of the Company.

Michael P. Harrington has served as Chairman of the Board, President and
Chief Executive Officer of the Company since the Company commenced operations in
1990. Prior to the formation of the Company, Mr. Harrington served as President
and Treasurer of First Illinois Finance Company ("First Illinois"), the
predecessor company of Mercury Finance Company ("Mercury") which is a publicly
held company. He was a co-founder of First Illinois in 1983. Prior to the
commencement of First Illinois, Mr. Harrington served as the interim Chief
Executive Officer of General Finance Corporation ("General Finance") and had
previously been Financial Vice President, Treasurer, and a Director of General
Finance.

Thomas G. Parker has served as President and Chief Operating Officer of
First Enterprise Acceptance Company since 1992. In May 1996, Mr. Parker
underwent successful heart by-pass surgery and is expected to return to
full-time employment during August 1996. Prior to joining the Company, Mr.
Parker was employed by Mercury from 1984 to 1992; his last position was as a
District Director. Prior to joining Mercury, Mr. Parker was the Senior Vice
President of Operations for Atlantic Discount Company, a company he had joined
in 1974. From 1963 through 1974 Mr. Parker was employed at General Finance at
which his last capacity was as a Director of Supervision.

Kenneth L. Stucky has served as Vice President and Chief Administrative
Officer of First Enterprise Acceptance Company since 1992. Prior to joining the
Company, Mr. Stucky was a Financial Business Consultant. From 1981 through 1986
he was the Business Manager for a law firm in Jacksonville, FL. From 1975
through 1981 he served as Administrative Vice President for Atlantic Discount
Company, a consumer finance company doing business in several southeastern
states. Prior to joining Atlantic Discount Company, Mr. Stucky was employed at
General Finance for 13 years in a number of administrative, planning and
financial positions.

Robert J. Harker has served as a Vice President and the Controller of the
Company since the Company commenced operations in 1990. Mr. Harker has been a
Director of the Company since 1994. Prior to the formation of the Company, Mr.
Harker was Vice President and Controller of First Illinois, of which he was a
co-founder in 1983. Prior to the commencement of First Illinois, Mr. Harker
served for over 23 years in a number of accounting and finance capacities with
General Finance.

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39

Paul A. Stinneford has served as a Director, Vice President, the Secretary
and the General Counsel of the Company since the Company commenced operations in
1990. Prior to the formation of the Company, Mr. Stinneford was Vice President,
Secretary and General Counsel of Spiegel, Inc. Prior to joining Spiegel, Inc. in
1972, Mr. Stinneford was employed as an attorney with Sears, Roebuck and Co.
which he had joined in 1958.

Jan W. Erfert has served as a Vice President and the Treasurer of the
Company since 1994. Prior to joining the Company, Mr. Erfert served as Chief
Information Officer for The American Hospital Association from 1989 to 1992 and
was Vice President, Management Services for Allied Van Lines, Inc. from 1985 to
1989. His previous experience includes ten years with the American Medical
Association as Vice President and Chief Financial Officer from 1975 to 1985. He
was General Manager, Accounting Division at the U.S. Postal Service from 1973 to
1975 and had a three year association with the Aetna Finance Company subsidiary
of ITT Corporation while serving on the ITT Headquarters Comptrollers Staff from
1965 to 1973. Mr. Erfert is a certified public accountant.

Louis J. Glunz, Ph.D. has been President and Chairman of the Board of Regis
Chemical Company and, subsequently, Regis Technologies, Inc., specialty chemical
companies, since 1956. Dr. Glunz received his Bachelor of Science from Loyola
University of Chicago and his Philosophiae Doctor from the University of Notre
Dame. Dr. Glunz is 65 years old.

M. William Isbell has been a private investor since 1981 and former
Chairman of the Board, President and Chief Executive Officer of Ramada Inns,
Inc. Mr. Isbell is 60 years old.

Joseph H. Stegmayer has been the President and Chief Operating Officer of
Clayton Homes, Inc. ("Clayton") since July 1993. Mr. Stegmayer has been a
Director of Clayton since 1986. Prior to joining Clayton in 1993, Mr. Stegmayer
was employed by Worthington Industries since 1973 and most recently served as
Vice President, Chief Financial Officer and Treasurer. Mr. Stegmayer is a
Director of the Cardinal Funds, a group of mutual investment funds. Mr.
Stegmayer graduated from the University of Louisville and completed graduate
study at Ohio State University. Mr. Stegmayer serves on the boards of The United
Way of Knoxville, Tennessee, The Knoxville Zoo, the Knoxville Chamber of
Commerce and the University of Tennessee Chancellors Associates. Mr. Stegmayer
is 45 years old.

COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors has established a Compensation Committee. The
members of the Compensation Committee are Michael P. Harrington and Paul A.
Stinneford. The Bylaws of the Company provide that the Board of Directors of the
Company may designate one or more other committees which consist of two or more
of the directors of the Company.

After the consummation of the Offering and the election of Messrs. Glunz,
Isbell and Stegmayer, the Company intends to reconstitute its Compensation
Committee and to form an Audit Committee. Each of these committees is intended
to be comprised of two of the directors who are not affiliated with the Company.

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EXECUTIVE COMPENSATION

The following table sets forth certain summary information for the years
indicated concerning the compensation earned for the years shown by the Chief
Executive Officer and the other four most highly compensated executive officers
of the Company (based on combined salary and bonus for 1995) (collectively, the
"Named Executive Officers").

SUMMARY COMPENSATION TABLE

LONG-TERM
ANNUAL COMPENSATION
COMPENSATION(1) ------------
------------------- SECURITIES
SALARY BONUS UNDERLYING
NAME AND PRINCIPAL POSITIONS YEAR $ $ OPTIONS(#)
- --------------------------------------------------- ---- ------- ------- ------------

Michael P. Harrington.............................. 1995 150,000 47,476 --
(Chairman, President and 1994 115,000 40,000 --
Chief Executive Officer) 1993 110,000 25,000 --
Thomas G. Parker................................... 1995 145,000 47,476 --
(President and Chief Operating Officer- 1994 135,000 103,000(2) 64,440
the FEAC Division) 1993 75,120 37,500 206,208
Kenneth L. Stucky.................................. 1995 135,000 33,738 --
(Vice President and Chief Administrative Officer- 1994 125,000 81,412(2) --
the FEAC Division) 1993 64,466 30,000 103,104
Robert J. Harker................................... 1995 78,000 27,000 --
(Vice President, Controller and 1994 71,000 30,000(2) 103,104
Chief Accounting Officer) 1993 57,500 12,500 --
Paul A. Stinneford................................. 1995 83,000 27,000 --
(Vice President and Secretary) 1994 78,000 20,000 --
1993 73,000 12,500 --

- -------------------------
(1) Annual compensation does not include the cost to the Company of certain
benefits. The aggregate amount of such benefits, as to each executive
officer, did not exceed $25,000.

(2) The 1994 bonus amounts for Messrs. Parker, Stucky and Harker include
$68,000, $56,412 and $10,000 respectively, to cover certain expenses
incurred by these officers in connection with the exercise of certain stock
options.

The following table summarizes certain information with respect to stock
options granted to certain of the Named Executive Officers as to the number of
shares covered by both exercisable and unexercisable stock options and options
exercised in 1995. Also reported are the values for the "in-the-money" options
which represent the positive spread between the exercise price of any such
existing stock options and the estimated year-end fair market value of the
Common Stock. There were no stock options granted to Named Executive Officers
during 1995.

AGGREGATE OPTIONS EXERCISED IN FISCAL
YEAR 1995 AND FISCAL YEAR-END OPTION VALUES

AT DECEMBER 31, 1995
---------------------------------------------
VALUE OF
NUMBER OF SECURITIES UNEXERCISED
UNDERLYING IN-THE-MONEY OPTIONS
UNEXERCISED OPTIONS AT FISCAL
SHARES AT FISCAL YEAR-END(#) YEAR-END($)
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
- ---------------------------------- ----------- ----------- --------------------- --------------------

Thomas G. Parker.................. 193,320 $ 209,841 25,776/38,664 $11,084/$16,626
Kenneth L. Stucky................. 128,880 139,894 -- / -- -- / --
Robert J. Harker.................. 15,465 16,787 38,664/64,440 16,626/ 27,710

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EMPLOYMENT AGREEMENTS

The Company has entered into employment contracts with all of its executive
officers. Mr. Harrington's, Mr. Parker's and Mr. Stucky's agreements expire on
December 31, 1999, and the balance of the agreements expire August 1, 1997. All
the agreements are automatically renewable for successive one year periods. The
agreements are subject to termination by either the Company or the executive
officer upon 180 days notice. In addition, the agreements subject the executive
officers to certain covenants restricting solicitation and competition upon
termination of employment.

The agreements provide for minimum annual salaries and annual incentive
compensation awards as defined in the agreements. In the event of illness or
incapacity of an officer, they are entitled to continue to receive their regular
compensation for a period of 180 days. The Company has obtained long-term
disability insurance which compensates them for the period of such illness or
incapacity in excess of 180 days.

STOCK OPTION PLAN

Under the Company's 1992 Stock Option Plan as Amended and Restated (the
"1992 Stock Option Plan") key employees of the Company are granted options to
purchase shares of Common Stock. Options granted under the 1992 Stock Option
Plan with respect to 512,947 shares of Common Stock are outstanding as of March
31, 1996. As of such date 1,029,746 shares of Common Stock had been issued
pursuant to options granted under the 1992 Stock Option Plan and 1,032,334
additional shares of Common Stock may be sold pursuant to options granted under
the 1992 Stock Option Plan.

The exercise price of options granted under the 1992 Stock Option Plan is
determined by the Board of Directors of the Company and is required to be not
less than 100% of the fair market value of such shares on the date of grant. The
aggregate fair market value of the shares with respect to which such options
become exercisable for the first time by a person during any calendar year
cannot exceed $100,000. The Board of Directors of the Company has the authority
in its discretion to prescribe in any option agreement the terms under which
options are exercised, provided that such options must be exercised within ten
years of the date of grant.

Upon the termination of employment or retirement of an optionee, the
optionee may, within three months after such termination or retirement, exercise
options to the extent the options were exercisable on the date of such
termination or retirement. Upon the permanent disability or death of an optionee
while employed by the Company or the death of an optionee within three months
following termination of such optionee's employment, the optionee or the
executor or administrator of his or her estate may, within 12 months after such
event, exercise options to the extent the options were exercisable at the time
of such event.

In the event of a merger, consolidation, reorganization or dissolution of
the Company, or the sale or exchange of substantially all of the Company's
assets, the rights under outstanding options terminate, except to the extent and
subject to such adjustments as may be provided by the Board of Directors of the
Company or by the terms of the plan or agreement of merger, consolidation,
reorganization, dissolution or sale or exchange or such assets.

Options granted pursuant to the 1992 Stock Option Plan are not transferable
other than by will and by the laws of descent and distribution and shall be
exercisable during the optionee's lifetime only by the optionee.

The 1992 Stock Option Plan may not, without the approval of the
stockholders, be amended in any manner that would (i) materially increase the
benefits accruing to participants thereunder, (ii) materially increase the
number of shares which may be issued thereunder or (iii) materially modify the
requirements as to eligibility for participation thereunder.

DIRECTOR STOCK OPTION PLAN

Under the Company's 1995 Nonqualified Director Stock Option Plan (the
"Director Plan") options to purchase shares of Common Stock are available for
grant to non-employee directors of the Company. The Director Plan allows for the
sale of up to 100,000 shares of Common Stock.

The Director Plan is a formula plan under which options to acquire 6,000
shares of Common Stock are to be granted to each non-employee director of the
Company upon the date of his or her first election to the

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42

Board of Directors at a price per share equal to the fair market value of such
stock on the date of such election, provided, however, the non-employee
directors elected upon the consummation of the Offering will be granted their
initial options for 6,000 shares of Common Stock at the initial public offering
price. Thereafter, upon the re-election of any non-employee director of the
Company, such individual shall be granted an option to purchase an additional
2,000 shares of Common Stock at a price per share equal to the fair market value
of such stock on the date of re-election. One-third of any such option shall
vest on each of the one year, two year and three year anniversaries of the date
of grant and no options shall be exercisable after the date which is ten years
from the date of grant.

The number of shares of Common Stock which may be granted under the
Director Plan or subject to any outstanding options will be proportionately
adjusted, to the nearest whole share, in the event of any stock dividend, stock
split, reorganization, merger, consolidation, share combination, or similar
recapitalization involving Common Stock on any spin-off, spin-out, or other
significant distribution of the Company's assets to its stockholders for which
the Company receives no consideration.

Options are non-transferable, other than by will, the laws of descent and
distribution, or pursuant to certain domestic relations orders. Payment for
shares of Common Stock to be issued upon exercise of an option may be made
either in cash, unrestricted shares of Common Stock, or any combination thereof,
at the discretion of the option holder. In the event the option holder's service
as a director is terminated by reason of disability or death, the holder or his
or her representative may exercise the vested portion of the option for a period
of 12 months following such termination. In the event the service of the option
holder is terminated for any other reason, the holder may exercise the vested
portion of his or her option for a period of 30 days following termination. If
the service of the option holder as a director is terminated "for cause" as
defined in the Director Plan, the unexercised Options expire immediately.

In the event of a dissolution or sale of all or substantially all of the
assets of the Company, or a merger or consolidation of the Company in which the
Company is not the survivor, each outstanding option will terminate, unless
there is an express assumption of the option by the surviving corporation.

EMPLOYEE STOCK PURCHASE PLAN

Under the 1995 Employee Stock Purchase Plan (the "Stock Purchase Plan"),
eligible employees will be given the opportunity to purchase Common Stock at a
discount. The Stock Purchase Plan will be effective upon completion of the
Offering. It will be administered by an independent committee of non-employee
directors (the "Committee") and is intended to qualify as an "employee stock
purchase plan" under Section 423 of the Internal Revenue Code of 1986, as
amended (the "Code"). A maximum of 100,000 shares of Common Stock are reserved
for sale under the Stock Purchase Plan.

All employees other than officers of the Company who are employed by the
Company on the first day of the relevant option period will be eligible to
participate in the Stock Purchase Plan for such option period.

Option periods under the Stock Purchase Plan will begin upon the
consummation of the Offering and end on December 31, 1997 and each calendar year
thereafter. Under the Stock Purchase Plan, eligible employees may elect, no
later than 10 days prior to the option period, to contribute on an after-tax
payroll deduction basis as much as 10% of their base salary (as of the first day
of the option period) to be applied at the end of the option period. An eligible
employee may purchase a maximum of 500 shares for each calendar year in which
the option to purchase such shares is outstanding.

As of the trading day coinciding with or prior to the last day of the
option period, employee contributions will be used to purchase Common Stock from
the Company. Participants may not elect to cease deducting or withdraw
contributions or make any other change with respect to the option period. The
price to be paid by participating employees is 85% of the fair market value of
the Common Stock at the beginning of the option period. If a participant holds
the shares for the applicable holding period, the discount is not deductible by
the Company from its taxable income and is not taxable income to the participant
until he or she sells the shares.

The first option period will commence upon the consummation of the Offering
and end on December 31, 1997. The shares of Common Stock purchased at the end of
the first option period will be purchased at 85% of the initial public offering
price.

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RETIREMENT PLAN

During 1994 the Company established a 401(k) salary deferral plan (the
"Plan") in which all employees of the Company who have completed at least 90
calendar days during which they were credited with 250 hours of service are
eligible to participate. Under the plan, the Company provides a matching
contribution of $0.50 for every dollar subject to a limitation of 6% of an
employee's annual compensation, subject to the maximum permitted contribution
under the Code. The Company may make additional discretionary contributions to
the Plan. Total contributions to the Plan for 1995 were approximately $47,000.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

As of March 31, 1996 Michael P. Harrington and Paul A. Stinneford, the
members of the Compensation Committee, are employees of the Company.

CERTAIN TRANSACTIONS

In December 1994, in order to refinance a junior subordinated note, the
Company issued a subordinated note in the amount of $4.0 million to Michael P.
Harrington, its Chairman, President and Chief Executive Officer. Under the terms
of such note, interest is payable at the end of each quarter at a fixed rate of
13.5% and is due on September 30, 1996. Simultaneously, Mr. Harrington issued a
$4.0 million secured note to LaSalle. Under the terms of the note issued to
LaSalle, interest is payable at the end of each quarter at a fixed rate of 13.5%
and is due on September 30, 1996. In connection with this note issuance, the
Company issued to LaSalle a detachable warrant to purchase 193,320 shares of
Common Stock. The warrant may be exercised in whole or in part to purchase
Common Stock at a price of $1.13 per share and expires on September 1, 1999, or
earlier, as defined in the warrant. The warrant contains a put option such that
after the payment of the secured note, but before the occurrence of other events
defined in the warrant, the financial institution may require the Company to
purchase the warrant from the financial institution. Additionally, the warrant
contains a call option such that the Company, after September 30, 1997, but
before the expiration date or the occurrence of other events as defined in the
warrant, may require the financial institution to sell the warrant to the
Company.

The Company has guaranteed loans made by certain financial institutions to
employees in the aggregate amount of approximately $395,000, including $194,000
for Thomas G. Parker and $145,000 for Kenneth L. Stucky. The proceeds of such
loans were used to exercise options. Those loans were for a period of one year
with an original maturity of October 1, 1995 and were renewed for an additional
term of one year with a maturity of October 1, 1996. Such loans are secured by
such employee's interest in the Company and bear interest at the financial
institutions' prime rate (8.25% at March 31, 1996). Those loans that are
guaranteed are classified as a liability of the Company. The Company will be
released from the guarantees upon the consummation of the Offering.

Upon the closing of this Offering, the Company has or will have paid to its
stockholders of record on December 31, 1995, distributions of S Corporation
earnings that have been or will be includable in taxable income of the existing
stockholders. See "S Corporation Distributions" and Notes to the Financial
Statements. Prior to the closing of this Offering, the Company and its existing
stockholders will enter into an indemnification agreement, relating to certain
federal, state and local income tax liabilities of the Company and the existing
stockholders, for the tax years during which the Company had elected to be
treated as an S Corporation. This agreement will generally provide that the
Company will indemnify the existing stockholders, and the existing stockholders
will indemnify the Company, against any increase in the indemnified party's
income tax benefits or liabilities (including interest and penalties and all
expenses, attorneys' fees and accountants' fees incurred in connection
therewith) as a result of any adjustment associated with a return filed with
respect to a period during which the Company was an S Corporation. Payments
under the agreement in favor of its stockholders of record on December 31, 1995,
must be approved by a majority of the directors who are not affiliated with the
Company as being consistent with the terms of the agreement.

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44

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of March 31, 1996, and as adjusted to
reflect the sale of the shares of the Common Stock offered hereby by the Company
(assuming that the Underwriters' over-allotment option is not exercised), by (i)
all stockholders known by the Company to be beneficial owners of more than 5% of
its outstanding Common Stock immediately prior to the Offering, (ii) the Selling
Stockholders, (iii) each director of the Company, (iv) each of the Named
Executive Officers and (v) all executive officers and directors of the Company
as a group.

SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO OWNED AFTER
OFFERING(2) SHARES OFFERING(2)
--------------------- BEING ---------------------
STOCKHOLDER(1) NUMBER PERCENT OFFERED NUMBER PERCENT
- -------------------------------------------- --------- ------- ------- --------- -------

Michael P. Harrington....................... 1,366,128 44.39% -- 1,366,128 27.52%
Paul A. Stinneford.......................... 541,296 17.59 -- 541,296 10.90
Thomas G. Parker............................ 438,192 14.12 -- 438,192 8.78
Kenneth L. Stucky........................... 309,312 10.05 -- 309,312 6.23
Robert J. Harker............................ 244,872 7.96 -- 244,872 4.93
LaSalle National Corp....................... 193,320 6.28 193,320 -- --
Banc One Capital Partners V, Ltd............ 193,320 6.28 193,320 -- --
Jan W. Erfert............................... 20,620 0.67 -- 20,620 0.42
All directors and officers as a group (6
persons).................................. 2,920,420 94.10 -- 2,920,420 58.52

- -------------------------
(1) The address of all stockholders who are executive officers, excluding Thomas
G. Parker and Kenneth L. Stucky, is 500 Davis Street, Suite 1005, Evanston,
Illinois 60201. The address of Mr. Parker and Mr. Stucky is 1032 Boll Weevil
Circle, P.O. Box 1420, Enterprise, Alabama 36331. The address of LaSalle
National Corp. is 120 South LaSalle Street, Chicago, Illinois 60690. The
address of Banc One Capital Partners V, Ltd. is 90 North High Street,
Columbus, Ohio 43215.

(2) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission (the "Commission") and generally includes
voting or investment power with respect to securities. Shares of Common
Stock subject to options or warrants exercisable or convertible within 60
days are deemed outstanding for computing the percentage of the person or
group holding such options or warrants, but are not outstanding for
computing the percentage of any other person. Except as indicated in the
footnotes to this table and subject to applicable community property laws,
the persons named in the table have sole voting and investment power with
respect to all share of Common Stock beneficially owned.

43
45

DESCRIPTION OF CAPITAL STOCK

The following description of the Company's capital stock is a summary and
is qualified in its entirety by applicable Illinois law and the provisions of
the Company's Articles of Incorporation ("Articles") and Bylaws ("Bylaws") which
have been filed as exhibits to the Company's Registration Statement, of which
this Prospectus is a part.

The authorized capital stock of the Company consists of 20,000,000 shares
of Common Stock, par value $0.01 per share.

COMMON STOCK

Holders of the Common Stock are entitled to one vote per share on all
matters to be voted upon by the stockholders. Holders of the Common Stock do not
have cumulative voting rights, and therefore holders of a majority of the shares
voting for the election of directors can elect all of the directors. In such
event, the holders of the remaining shares will not be able to elect any
directors.

Holders of the Common Stock are entitled to receive such dividends as may
be declared from time to time by the Board of Directors out of funds legally
available therefor. In the event of the liquidation, dissolution or winding up
of the Company, holders of the Common Stock are entitled to share ratably in all
assets remaining after payment of liabilities.

The Common Stock has no preemptive rights and is not subject to further
call for assessments by the Company. The shares of Common Stock currently
outstanding are, and the shares of Common Stock to be issued in connection with
the Offering will be, validly issued, fully paid and nonassessable.

The transfer agent and registrar for the Common Stock is LaSalle National
Trust, N.A., Chicago, Illinois.

WARRANTS

In connection with the LaSalle Note and the Banc One Note, the Company
issued (i) a warrant to LaSalle to acquire 193,320 shares of Common Stock and
(ii) a warrant to Banc One to acquire 193,320 shares of Common Stock.
Simultaneously with the consummation of the Offering, LaSalle National and Banc
One intend to exercise the warrants to acquire an aggregate of 386,640 shares of
Common Stock and sell such shares of Common Stock in the Offering.

CERTAIN PROVISIONS OF THE ARTICLES OF INCORPORATION AND BYLAWS AND ILLINOIS
BUSINESS CORPORATION ACT

Directors

The Bylaws provide that the number of directors is three, subject to change
from time to time as determined by the Board of Directors or the stockholders,
and that vacancies on the Board of Directors (including vacancies created by an
increase in the number of directors) may be filled by the Board of Directors,
acting by a majority of the remaining directors then in office. Officers are
elected annually by and serve at the pleasure of the Board of Directors.

Limitation of Liability and Indemnification

As permitted by the Illinois Business Corporation Act, the Articles provide
that directors of the Company shall not be personally liable to the Company or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the Company or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 8.65 of the Illinois Business Corporation Act or (iv)
for any transaction from which the director derives an improper personal
benefit. In addition, the Bylaws provide that the Company shall, to the fullest
extent authorized by the Illinois Business Corporation Act, as amended from time
to time, indemnify all directors and officers and may, at the election of the
Company as determined by the Board of Directors, indemnify all other persons
serving at the request of the Company as a director, officers, employee or agent
of another corporation or of a partnership, trust or other enterprise.

44
46

The Company has also entered into indemnification agreements in the form
described below with each person who is currently a member of its board of
directors and will enter into such agreements with persons who in the future
become directors of the Company. Such indemnification agreements provide for
indemnification against any and all expenses incurred in connection with, as
well as any and all judgments, fines and amounts paid in settlement resulting
from, any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (collectively an "Action"), by
reason of the fact that such director is or was a director, officer, employee or
agent of the Company, or is or was serving at the request of the Company as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise. The indemnification agreements provide that
if any payment, advance or indemnification of the director requires that he or
she acted in good faith, in a manner he or she reasonably believed to be for or
not opposed to the best interest of the Company or without reasonable cause to
believe his or her conduct was unlawful, then it shall be presumed that he or
she so acted unless proven otherwise by clear and convincing evidence. The
indemnification agreements also provide for the advancement of all expenses,
including reasonable attorneys' fees, arising from the investigation of any
claim, preparation for the defense or defense of settlement of an Action. The
indemnification agreements authorize the Company to participate in the defense
of any Action and to assume the defense thereof, with counsel who shall be
reasonably satisfactory to the director, provided that the director shall be
entitled to separate counsel of his or her choosing if he or she reasonably
believes that (i) there exists conflicting interests between himself or herself
and the Company or other party (the defense of whom the Company shall have
assumed) or (ii) there is any substantial likelihood that the Company will be
financially or legally unable to satisfy its obligations under the
indemnification agreements. The indemnification agreements provide that a
director's rights under such contract are not exclusive of any other
indemnification rights he or she may have under any provision of law, the
Articles or Bylaws of the Company, the vote of the Company's stockholders or
disinterested directors, other agreements or otherwise. (Insofar as
indemnification by the Company for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, the Company has been advised that such
indemnification is considered by the Commission to be against public policy and,
therefore, unenforceable.)

Certain Statutory Provisions

Following the Offering, the Company will be subject to Section 7.85 of the
Business Corporation Act of Illinois ("Section 7.85"), Section 7.85 prohibits a
publicly held Illinois corporation from engaging in a "business combination"
with an "interested shareholder," unless the proposed "business combination"
receives (i) the affirmative vote of the holders of at least 80% of the combined
voting power of the then outstanding shares of all classes and series of the
corporation entitled to vote generally in the election of directors (the "Voting
Shares"), voting together as a single class and (ii) the affirmative vote of a
majority of the combined voting power of the then outstanding Voting Shares held
by disinterested shareholders voting together as a single class. For purposes of
Section 7.85 and Section 11.75 described below, a "business combination"
includes a merger, asset sale or other transaction resulting in a financial
benefit to the interested shareholder and, for purposes of Section 7.85, an
"interested shareholder" is a person who, together with affiliates and
associates, owns (or, within the prior two years, did own) 10% or more of the
combined voting power of the outstanding Voting Shares.

Further, the Company is also subject to Section 11.75 of the Business
Corporation Act of Illinois ("Section 11.75") which prohibits "business
combinations" with "interested shareholders" for a period of three years
following the date that such shareholder became an "interested shareholder,"
unless (i) prior to such date, the Board of Directors approved the transaction
which resulted in the shareholder becoming an "interested shareholder," or (ii)
upon consummation of such transaction, the "interested shareholder" owned at
least 85% of the Voting Shares outstanding at the time such transaction
commenced (excluding shares owned by directors who are also officers and shares
reserved under an employee stock plan), or (iii) on or after such date, the
"business combination" is approved by the Board of Directors and authorized at a
meeting of the shareholders by 66 2/3% of the outstanding Voting Shares not
owned by the "interested shareholder." For purposes of Section 11.75, an
"interested shareholder" is a person who, together with affiliates and
associates, owns (or, within the prior three years, did own) 15% of the Voting
Shares.

45
47

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this Offering, the Company will have outstanding
4,964,289 shares of Common Stock (5,247,285 shares if the Underwriters'
over-allotment option is exercised in full). Of such shares, the 1,886,640
shares sold in this Offering (2,169,632 shares if the over-allotment option is
exercised in full) will be freely tradeable without restrictions or further
registration under the Securities Act, unless acquired by an affiliate of the
Company, in which case those shares will be subject to the resale limitations of
Rule 144. The remaining 3,077,649 shares of Common Stock are "restricted
securities" within the meaning of Rule 144 (the "Restricted Shares").

Except as provided below, the Restricted Shares will be eligible for sale
in the public market, in accordance with Rule 144, 90 days following the date of
this Prospectus, subject to certain volume and other limitations, except for
shares acquired upon the exercise of employee stock options which will be
registered under the Securities Act as soon as practicable after the
consummation of the Offering and may be sold without limitation after the
effective date of such registration. The Company and its directors and executive
officers (being the holders of all of the Restricted Shares), have agreed with
the Underwriters not to sell any Common Stock for 180 days from the date of this
Prospectus without the prior written consent of the Underwriters'
Representatives. See "Underwriting."

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned Restricted Shares for at
least two years, including persons who may be deemed to be "affiliates" of the
Company, as that term is defined under Rule 144, may sell within any three-month
period a number of Restricted Shares that does not exceed the greater of one
percent of the then outstanding shares of the Common Stock (estimated to be
49,643 shares after completion of this Offering, or 52,473 shares if the
Underwriters' over-allotment option is exercised in full) or the average weekly
trading volume of the Common Stock on the open market during the four calendar
weeks preceding such sale. Sales under Rule 144 are also subject to certain
manner-of-sale limitations, notice requirements, and the availability of current
public information about the Company. Pursuant to Rule 144(k), a person (or
persons whose shares are aggregated) who is deemed not to have been an
"affiliate" of the Company at any time during the three months preceding a sale,
and who has beneficially owned Restricted Shares for at least three years, would
be entitled to sell such shares under Rule 144 without regard to volume
limitations, manner-of-sale provisions or notice requirements. The 2,062,080
Restricted Shares that have met such three-year holding period requirement, are
all deemed beneficially owned by persons who will be deemed to be "affiliates"
of the Company after the Offering.) Restricted Shares properly sold in reliance
upon Rule 144 are thereafter freely tradeable without restrictions or
registration under the Securities Act, unless thereafter held by an "affiliate"
of the Company.

Prior to this Offering there has been no market for the Common Stock, and
no prediction can be made as to the effect, if any, that sales of Restricted
Shares, or availability of Restricted Shares for sale, by existing stockholders
in reliance upon Rule 144 or otherwise will have on the market price of Common
Stock. The sale by the Company or the stockholders referred to above of a
substantial number of shares of Common Stock after this Offering could adversely
affect the market price for the Common Stock. The Company is not obligated to
register any Restricted Shares for sale under the Securities Act or otherwise.
Upon the consummation of the Offering, the Company intends to register, under
the Securities Act, the sale of the shares of Common Stock issued in connection
with the employee and director stock option and stock plans described under
"Management."

46
48

UNDERWRITING

Pursuant to the Underwriting Agreement and subject to the terms and
conditions thereof, the Underwriters named below (the "Underwriters"), acting
through J.C. Bradford & Co. and The Chicago Corporation as representatives of
the several Underwriters (the "Representatives"), have agreed, severally, to
purchase from the Company and the Selling Stockholders the respective number of
shares of Common Stock set forth below opposite their names.

NAME OF UNDERWRITER NUMBER OF SHARES
-------------------------------------------------------------- ----------------

J.C. Bradford & Co. ..........................................
The Chicago Corporation.......................................
Total......................................................... 1,886,640
=========

In the Underwriting Agreement, the Underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase all the shares of Common
Stock offered hereby (other than those subject to the over-allotment option
described below) if any such shares are purchased. In the event of a default by
any Underwriter, the Underwriting Agreement provides that the purchase
commitments of the non-defaulting Underwriters may be increased if the number of
shares of Common Stock any defaulting Underwriter agreed but failed or refused
to purchase is not more than one-tenth of the aggregate number of shares of
Common Stock offered hereby. If the non-defaulting Underwriters fail to purchase
such shares, the Underwriting Agreement may be terminated.

The Representatives have advised the Company and the Selling Stockholders
that the several Underwriters propose initially to offer the shares of Common
Stock to the public at the public offering price set forth on the cover page of
this Prospectus and to certain dealers at such price less a concession not in
excess of $ per share. The Underwriters may allow, and such
dealers may reallow, a concession not in excess of $ per share to
certain other dealers. After the Offering, the public offering price and such
concessions may be changed. The Representatives have informed the Company that
the Underwriters do not intend to confirm sales to accounts over which they
exercise discretionary authority.

The Offering of the Common Stock is made for delivery when, as and if
accepted by the Underwriters and subject to prior sale and to withdrawal,
cancellation or modification of the offer without notice. The Underwriters
reserve the right to reject any offer for the purchase of shares.

The Company has granted the Underwriters an option, exercisable not later
than 30 days from the date of the effectiveness of the Offering, to purchase up
to an aggregate of 282,996 additional shares of Common Stock from the Company to
cover over-allotments, if any. To the extent that the Underwriters exercise such
option, each Underwriter will have a firm commitment, subject to certain
conditions, to purchase approximately the same percentage thereof which the
number of shares of Common Stock to be purchased by it shown in the table above
bears to the total number of shares in such table and the Company will be
obligated, pursuant to the option, to sell such shares to the Underwriters. If
purchased, the Underwriters will sell these additional shares on the same terms
as those on which the 1,886,640 shares are being offered.

Prior to the Offering, there has been no public market for the Common
Stock. The initial public offering price will be determined by negotiation among
the Company, the Selling Stockholders and the Representatives. In determining
such price, consideration will be given to, among other things, the financial
and operating history and trends of the Company, the experience of its
management, the position of the Company in its industry, the Company's prospects
and the Company's financial results. In addition, consideration will be given to
the status of the securities markets, market conditions for new offerings of
securities and the prices of similar securities of comparable companies.

The Underwriting Agreement provides that the Company and the Selling
Stockholders will indemnify the Underwriters and controlling persons, if any,
against certain civil liabilities, including liabilities under the Securities
Act, or will contribute to payments the Underwriters or any such controlling
persons may be required to make in respect thereof.

The Company, its directors and executive officers and certain stockholders
of the Company have each agreed with the Underwriters that they will not offer,
sell or contract to sell, or otherwise dispose of directly or

47
49

indirectly, or announce the offering of, or exercise any registration rights
with respect to, or register, cause to be registered or announce the
registration or intended registration of, any shares of Common Stock, or any
stock option or other security or agreement convertible with or exchangeable
for, any shares of Common Stock for a period of 180 days from the date of this
Prospectus, without the prior written consent of the Representatives, except for
(a) the Common Stock offered hereby; (b) in the case of the Company, (i) Common
Stock issued pursuant to any employee or director benefit plan; or (ii)
issuances of Common Stock upon the conversion of securities or the exercise of
warrants outstanding on the date the Underwriting Agreement is executed; (c) in
the case of directors, executive officers and certain stockholders of the
Company, the exercise of stock options pursuant to benefit plans described
herein and shares of Common Stock disposed of as bona fide gifts; and (d) in the
case of certain stockholders, registered shares of Common Stock acquired in the
public market.

The Chicago Corporation is a wholly-owned subsidiary of ChiCorp, Inc.,
which signed a definitive agreement on May 7, 1996 to be acquired by a
subsidiary of ABN AMRO Bank N.V. ("ABN"). LaSalle, a lender to the Company, and
LaSalle National, a Selling Stockholder, are wholly-owned subsidiaries of ABN.
As a result of this acquisition, this Offering is governed by the provisions of
Schedule E of the National Association of Securities Dealers, Inc.'s Bylaws.
J.C. Bradford & Co. is acting as "qualified independent underwriter" as such
term is defined in Schedule E and is assuming the responsibilities of acting as
a qualified independent underwriter in determining the public offering price and
conducting due diligence.

LEGAL MATTERS

The validity of the Common Stock offered hereby will be passed upon for the
Company by Rudnick & Wolfe, Chicago, Illinois. Counsel for the Underwriters is
Nelson Mullins Riley & Scarborough, L.L.P., Atlanta, Georgia.

EXPERTS

The financial statements of the Company for each of the years in the
three-year period ended December 31, 1995 included in this Prospectus have been
audited by Grant Thornton LLP, independent certified public accountants, as
stated in their report appearing herein, and have been included in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.

AVAILABLE INFORMATION

The Company has filed with the Commission a registration statement on Form
S-1 (the "Registration Statement") under the Securities Act with respect to the
shares of Common Stock offered hereby. This Prospectus, which constitutes a part
of the Registration Statement, does not contain all of the information set forth
in the Registration Statement, certain items of which are contained in schedules
and exhibits to the Registration Statement and have been omitted pursuant to
rules and regulations of the Commission. For further information with respect to
the Company and the shares of Common Stock offered hereby, reference is made to
such Registration Statement and the exhibits and schedules thereto. Statements
contained in this Prospectus as to the contents of any contract or any other
document referred to are complete in all material respects; with respect to each
such contract or other document filed as an exhibit to the Registration
Statement reference is made to the exhibit for a more complete description of
the matters involved, and each such statement shall be deemed qualified in its
entirety by such reference.

Following the consummation of the Offering, the Company will be subject to
the informational requirements of the Exchange Act and in accordance therewith
will be required to file reports and other information with the Commission. The
Company intends to furnish its stockholders with annual reports containing
audited financial statements reported on by independent public accountants
following the end of each fiscal year. A copy of the Registration Statement,
including exhibits and schedules thereto, filed by the Company with the
Commission may be inspected without charge at the public reference facility
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the following Regional Offices of the
Commission: New York Regional Office, Seven World Trade Center, 13th Floor, New
York, New York 10048; and Chicago Regional Office, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of such material may be obtained
from the Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549 upon the payment of fees prescribed by the Commission.
The Commission maintains a Web site that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission. The address of the Commission's Web site is:
http://www.sec.gov.

48
50

FIRST ENTERPRISE FINANCIAL GROUP, INC.

INDEX TO FINANCIAL STATEMENTS

PAGE
----

Report of Independent Certified Public Accountants.................................... F-2
Balance Sheets as of December 31, 1994 and 1995, and March 31, 1996 (unaudited)....... F-3
Statements of Income for the Years Ended December 31, 1993, 1994 and 1995, and for the
Three Months Ended March 31, 1995 and 1996 (unaudited).............................. F-4
Statements of Changes in Stockholders' Equity for the Years Ended December 31, 1993,
1994
and 1995, and for the Three Months Ended March 31, 1996 (unaudited)................. F-5
Statements of Cash Flows for the Years Ended December 31, 1993, 1994 and 1995, and for
the Three Months Ended March 31, 1995 and 1996 (unaudited).......................... F-6
Notes to Financial Statements......................................................... F-8

F-1
51

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors
First Enterprise Financial Group, Inc.

We have audited the accompanying balance sheets of First Enterprise
Financial Group, Inc. (the "Company") as of December 31, 1994 and 1995, and the
related statements of income, stockholders' equity, and cash flows for each of
the years in the three year period ended December 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of First Enterprise Financial
Group, Inc. as of December 31, 1994 and 1995, and the results of its operations
and its cash flows for each of the years in the three year period ended December
31, 1995, in conformity with generally accepted accounting principles.

GRANT THORNTON LLP

Chicago, Illinois
February 1, 1996 (except for Note K as to

which the date is June 18, 1996)

F-2
52

FIRST ENTERPRISE FINANCIAL GROUP, INC.

BALANCE SHEETS

MARCH 31, 1996 (UNAUDITED)
DECEMBER 31, -----------------------------------------
-------------------------- PRO FORMA
1994 1995 AS STATED PRO FORMA AS ADJUSTED
----------- ----------- ----------- ----------- -----------

ASSETS
Cash..................................... $ 714,445 $ 1,703,320 $ 1,167,317 $ 1,167,317 $ 1,527,610
Finance receivables:
Net principal balance.................. 33,778,690 59,495,368 60,572,740 60,572,740 60,572,740
Unamortized contract acquisition
discounts............................ (228,617) -- -- -- --
Unearned insurance commissions......... (255,919) (189,737) (130,113) (130,113) (130,113)
----------- ----------- ----------- ----------- -----------
Automobile finance receivables......... 33,294,154 59,305,631 60,442,627 60,442,627 60,442,627
Allowance for credit losses............ (2,562,723) (5,010,919) (5,438,740) (5,438,740) (5,438,740)
----------- ----------- ----------- ----------- -----------
30,731,431 54,294,712 55,003,887 55,003,887 55,003,887
Timeshare receivables.................. 266,323 -- -- -- --
----------- ----------- ----------- ----------- -----------
30,997,754 54,294,712 55,003,887 55,003,887 55,003,887
Property and equipment -- at cost........ 628,384 881,713 983,826 983,826 983,826
Repossessed assets....................... 222,287 542,841 702,594 702,594 702,594
Deferred tax asset....................... -- -- 459,000 459,000 459,000
Other assets............................. 537,665 988,194 2,203,514 2,203,514 2,204,580
----------- ----------- ----------- ----------- -----------
TOTAL ASSETS......................... $33,100,535 $58,410,780 $60,520,138 $60,520,138 $60,881,497
=========== =========== =========== =========== ===========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Senior debt.............................. $25,640,000 $43,267,000 $43,034,000 $43,034,000 $41,151,500
Subordinated debt........................ 3,850,000 8,354,541 8,382,789 8,382,789 --
Accounts payable -- dealers.............. 621,320 1,937,710 2,882,758 2,882,758 2,882,758
Other accounts payable and accrued
expenses............................... 826,442 1,577,189 1,716,021 1,716,021 1,275,356
S Corporation distribution payable....... -- -- -- 2,069,811 2,069,811
Other liabilities........................ 284,789 460,271 650,296 650,296 650,296
----------- ----------- ----------- ----------- -----------
Total liabilities.................... 31,222,551 55,596,711 56,665,864 58,735,675 48,029,721
Commitments and contingencies............ -- -- -- -- --
Common stock warrants.................... 150,000 649,300 807,018 807,018 --
Stockholders' equity:
Common stock, $.01 par value;
20,000,000 shares authorized;
2,062,080 shares issued and
outstanding.......................... 20,621 20,621 20,621 20,621 49,643
Class B common stock, $.01 par value,
non-voting; 2,262,080 shares
authorized; 547,740 and 917,625 and
1,015,569 issued and outstanding at
December 31, 1994 and 1995, and March
31, 1996 (unaudited) respectively.... 5,477 9,176 10,156 10,156 --
Additional paid-in capital............. 1,031,477 1,201,718 1,311,621 1,311,621 13,510,273
Retained earnings (accumulated
deficit)............................. 911,015 1,328,405 2,100,009 30,198 (312,989)
Guaranteed loans of stockholders....... (240,606) (395,151) (395,151) (395,151) (395,151)
----------- ----------- ----------- ----------- -----------
Total stockholders' equity........... 1,727,984 2,164,769 3,047,256 977,445 12,851,776
----------- ----------- ----------- ----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY............................. $33,100,535 $58,410,780 $60,520,138 $60,520,138 $60,881,497
=========== =========== =========== =========== ===========

The accompanying notes are an integral part of these statements.

F-3
53

FIRST ENTERPRISE FINANCIAL GROUP, INC.

STATEMENTS OF INCOME

THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
-------------------------------------- ------------------------
1993 1994 1995 1995 1996
---------- ---------- ---------- ---------- ----------
(UNAUDITED)

Finance charges and interest....... $3,753,780 $5,205,150 $9,644,486 $2,161,827 $3,255,953
Interest expense................... 1,201,457 1,575,923 4,038,900 871,408 1,357,580
---------- ---------- ---------- ---------- ----------
Net interest income........... 2,552,323 3,629,227 5,605,586 1,290,419 1,898,373
Provision for credit losses........ -- -- -- -- 400,000
---------- ---------- ---------- ---------- ----------
Net interest income after
provision for credit
losses...................... 2,552,323 3,629,227 5,605,586 1,290,419 1,498,373
Other income:
Servicing income................. 227,259 1,322,604 3,051,952 477,973 1,125,729
Insurance commissions............ 534,012 549,682 1,342,099 275,342 650,907
Fees and other income............ 169,161 257,257 606,202 96,324 357,950
Gain on sale of finance
receivables................... -- -- -- -- 409,000
---------- ---------- ---------- ---------- ----------
Total other income............ 930,432 2,129,543 5,000,253 849,639 2,543,586
---------- ---------- ---------- ---------- ----------
Income before operating
expenses.................... 3,482,755 5,758,770 10,605,839 2,140,058 4,041,959
Operating expenses:
Salaries and employee benefits... 1,634,489 3,194,775 5,095,792 1,088,383 1,965,040
Rent expense..................... 103,394 212,310 355,420 71,354 113,173
Depreciation and amortization.... 46,672 137,365 267,962 59,055 83,580
Professional services............ 75,180 229,176 472,480 58,022 74,918
Other expenses................... 560,864 1,321,620 1,980,433 358,326 715,926
---------- ---------- ---------- ---------- ----------
Total operating expenses...... 2,420,599 5,095,246 8,172,087 1,635,140 2,952,637
---------- ---------- ---------- ---------- ----------
Income before income taxes.... 1,062,156 663,524 2,433,752 504,918 1,089,322
Income taxes....................... 30,000 2,500 60,000 15,000 427,000
Deferred income tax effect of S
Corporation termination.......... -- -- -- -- (267,000)
---------- ---------- ---------- ---------- ----------
Net income.................... $1,032,156 $ 661,024 $2,373,752 $ 489,918 $ 929,322
========= ========= ========= ========= =========
Unaudited pro forma data (note M):
Pro forma net income per common
and common equivalent shares
outstanding................... $0.46
=========
Supplemental pro forma net income
per common and common
equivalent shares
outstanding................... $0.43 $0.21
========= =========
Weighted average number of common
and common equivalent shares
outstanding used for:
Pro forma..................... 3,244,844
=========
Supplemental pro forma........ 5,131,484 5,397,383
========= =========

The accompanying notes are an integral part of these statements.

F-4
54

FIRST ENTERPRISE FINANCIAL GROUP, INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995
AND THREE MONTHS ENDED MARCH 31, 1996 (UNAUDITED)

CLASS B ADDITIONAL GUARANTEED
COMMON COMMON PAID-IN RETAINED LOANS OF
STOCK STOCK CAPITAL EARNINGS STOCKHOLDERS TOTAL
------- ------- ---------- ----------- ------------ -----------

Balance January 1, 1993...... $20,621 $ -- $ 779,379 $ 84,634 $ -- $ 884,634
Net income................... -- -- -- 1,032,156 -- 1,032,156
Dividends paid............... -- -- -- (392,772) -- (392,772)
-------- -------- ----------- ------------ ---------- ------------
Balance December 31, 1993.... 20,621 -- 779,379 724,018 -- 1,524,018
Net income................... -- -- -- 661,024 -- 661,024
Dividends paid............... -- -- -- (474,027) -- (474,027)
Exercise of options to
acquire 547,740 shares of
Class B common stock....... -- 5,477 252,098 -- (240,606) 16,969
-------- -------- ----------- ------------ ---------- ------------
Balance December 31, 1994.... 20,621 5,477 1,031,477 911,015 (240,606) 1,727,984
Net income................... -- -- -- 2,373,752 -- 2,373,752
Dividends paid............... -- -- -- (1,549,125) -- (1,549,125)
Appreciation of common stock
warrants................... -- -- -- (407,237) -- (407,237)
Exercise of options to
acquire 384,062 shares of
Class B common stock....... -- 3,841 176,765 -- (154,545) 26,061
Repurchase of 14,177 shares
of Class B common stock.... -- (142) (6,524) -- -- (6,666)
-------- -------- ----------- ------------ ---------- ------------
Balance at December 31,
1995....................... 20,621 9,176 1,201,718 1,328,405 (395,151) 2,164,769
Net income (unaudited)....... -- -- -- 929,322 -- 929,322
Appreciation of common stock
warrants (unaudited)....... -- -- -- (157,718) -- (157,718)
Exercise of options to
acquire 97,944 shares of
Class B common stock
(unaudited)................ -- 980 109,903 -- -- 110,883
-------- -------- ----------- ------------ ---------- ------------
Balance at March 31, 1996
(unaudited)................ $20,621 $10,156 $1,311,621 $ 2,100,009 $ (395,151) $ 3,047,256
======== ======== =========== ============ ========== ============

The accompanying notes are an integral part of these statements.

F-5
55

FIRST ENTERPRISE FINANCIAL GROUP, INC.

STATEMENTS OF CASH FLOWS

THREE MONTHS ENDED MARCH
YEARS ENDED DECEMBER 31, 31,
------------------------------------------ ---------------------------
1993 1994 1995 1995 1996
------------ ------------ ------------ ------------ ------------
(UNAUDITED)

Cash flows from operating
activities:
Net income................ $ 1,032,156 $ 661,024 $ 2,373,752 $ 489,918 $ 929,322
Adjustments to reconcile
net income to net cash
provided by operating
activities
Depreciation and
amortization......... 46,672 137,365 364,566 84,510 134,099
Provision for credit
losses............... -- -- -- -- 400,000
Deferred income
taxes................ -- -- -- -- (192,000)
Deferred income tax
effect of S
Corporation
termination.......... -- -- -- -- (267,000)
Gain on sale of finance
receivables.......... -- -- -- -- (409,000)
Loss on disposal of
property and
equipment............ -- 47,458 -- -- --
Accretion of contract
acquisition
discounts............ (94,304) (209,940) (127,797) (62,454) --
Changes in assets and
liabilities:
Repossessed assets... (28,684) (176,971) (320,554) 5,729 (159,753)
Other assets......... (267,042) (47,115) (888,653) (254,501) (828,591)
Accounts payable and
accrued
expenses.......... 139,557 486,272 479,123 (36,745) (334,833)
Income taxes
payable........... -- -- -- -- 473,665
Other liabilities.... 427,626 223,250 2,047,075 674,783 1,135,073
------------ ------------ ------------ ------------ ------------
Total
adjustments..... 223,825 460,319 1,553,760 411,322 (48,340)
------------ ------------ ------------ ------------ ------------
Net cash provided
by operating
activities...... 1,255,981 1,121,343 3,927,512 901,240 880,982
Cash flows from investing
activities:
Automobile installment
contracts purchased.... (19,247,660) (35,136,768) (70,184,351) (14,340,816) (32,433,070)
Proceeds from sale of
automobile installment
contracts.............. 10,898,374 -- 24,777,933 9,709,606 22,856,863
Principal collections on
automobile installment
contracts.............. 7,124,437 11,444,010 21,970,934 4,559,005 8,467,032
Principal collections on
timeshare
receivables............ 8,628,666 4,059,978 266,323 64,740 --
Capital expenditures...... (184,645) (542,644) (521,291) (164,457) (185,693)
------------ ------------ ------------ ------------ ------------
Net cash provided
by (used in)
investing
activities...... 7,219,172 (20,175,424) (23,690,452) (171,922) (1,294,868)

F-6
56

FIRST ENTERPRISE FINANCIAL GROUP, INC.

STATEMENTS OF CASH FLOWS -- CONTINUED

Cash flows from financing
activities:
Borrowings under senior
debt................... $ 7,598,000 $ 25,278,000 $ 50,385,000 $ 11,194,000 $ 22,660,000
Payments on senior debt... (8,832,000) (5,604,000) (32,758,000) (11,420,000) (22,893,000)
Proceeds from issuance of
subordinated debt...... -- 4,000,000 4,500,000 -- --
Payments on subordinated
debt................... (6,776,712) (4,000,000) -- -- --
Proceeds from issuance of
common stock........... -- 257,575 180,606 -- 110,883
Payments on repurchase of
common stock........... -- -- (6,666) -- --
Dividends paid............ (392,772) (474,027) (1,549,125) (191,700) --
------------ ------------ ------------ ------------ ------------
Net cash provided
by (used in)
financing
activities...... (8,403,484) 19,457,548 20,751,815 (417,700) (122,117)
------------ ------------ ------------ ------------ ------------
INCREASE
(DECREASE)
IN CASH......... 71,669 403,467 988,875 311,618 (536,003)
Cash at beginning of
period.................... 239,309 310,978 714,445 714,445 1,703,320
------------ ------------ ------------ ------------ ------------
Cash at end of period....... $ 310,978 $ 714,445 $ 1,703,320 $ 1,026,063 $ 1,167,317
============ ============ ============ ============ ============
Supplemental disclosures of
cash flow information:
Cash paid during the year
for:
Interest............... $ 1,989,833 $ 1,459,751 $ 3,767,277 $ 873,010 $ 1,330,000
Income taxes........... -- 43,149 34,213 34,100 153,000
Supplemental schedule of
non-cash financing
activities:
Interest added to
principal on
subordinated debt...... $ 290,845 $ -- $ -- $ -- $ --
Issuance of common stock
warrants in connection
with subordinated
debt................... -- 150,000 92,063 -- --
Guaranteed loans of
stockholders for the
purchase of common
stock.................. -- 240,606 154,545 -- --

The accompanying notes are an integral part of these statements.

F-7
57

FIRST ENTERPRISE FINANCIAL GROUP, INC.

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1993, 1994 AND 1995
AND MARCH 31, 1996 (UNAUDITED)

NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF THE BUSINESS

First Enterprise Financial Group, Inc. (formerly known as Centre Capital
Funding Corp.), which operates under the name First Enterprise Acceptance
Company (the "Company"), is a specialty finance company engaged primarily in
purchasing and servicing installment sales contracts originated by automobile
dealers for financing the sale of used automobiles, vans and light trucks.

The accounting policies of the Company conform to generally accepted
accounting principles and to the general practice within the automobile finance
company industry. The preparation of financial statements in conformity with
generally accepted accounting principles 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 revenues and expenses during the
reporting period. Actual results could differ from those estimates.

ACCOUNTING CHANGES

In connection with the proposed initial public offering ("IPO") of common
stock, the Company has performed a comprehensive evaluation of its accounting
policies. As a result of this review and in accordance with the provisions of
Accounting Principles Board Opinion No. 20, "Accounting Changes," the Company
has retroactively adopted an accounting change which the Company believes is
more consistent with prevailing industry practices regarding non-refundable
contract acquisition discounts. Non-refundable contract acquisition discounts
arise from the purchase of installment contracts from dealers at amounts less
than the principal amounts of such contracts. These discounts are allocated to
the allowance for credit losses in an amount necessary to absorb estimated
credit losses with the remaining amount, if any, allocated to unamortized
contract acquisition discounts and accreted into finance charge income over the
estimated average life of the installment contracts.

CONCENTRATION OF CREDIT RISK

The Company's installment contract receivables are primarily with
individuals located in the southeastern United States. As of December 31, 1995,
approximately 28.2% and 27.9% of automobile finance receivables were purchased
from dealers located in Alabama and Florida, respectively.

REVENUE RECOGNITION

Finance charges on automobile installment contracts are credited to
unearned finance charges at the time the contracts are acquired. The finance
charges are recognized over the life of the installment contracts using the
interest (actuarial) method to produce constant rates of interest (yields).

If an installment contract becomes 90 or more days contractually delinquent
and no full contractual payment is received in the month the account reaches
such delinquency status, the accrual of income is suspended until one or more
full contractual monthly payments are received. Late charges, deferment fees and
extension fees are recognized as income when collected.

The Company, as agent for unaffiliated insurers, offers credit life and
accident and health insurance to borrowers under financing contracts purchased
from automobile dealers. Commissions earned on these insurance products are
recognized as income over the average terms of the related policies using the
sum-of-the-months'-digits method.

F-8
58

FIRST ENTERPRISE FINANCIAL GROUP, INC.

NOTES TO FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1993, 1994 AND 1995
AND MARCH 31, 1996 (UNAUDITED)

NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- CONTINUED
SERVICING INCOME

Contractual servicing income on sold receivables is recognized over the
life of the related receivables as a percentage of receivables outstanding.
Bonus servicing fees are recognized when earned and are based on the difference
between the yield received by the Company and the sum of the Company's 3%
contractual servicing fee, the yield due to the purchase and the addition or
reduction necessary to maintain the purchaser's reserve at the required level.
Gain or loss on sale of finance receivables is determined by the difference
between sales proceeds and the cost of the finance receivables and adjusted for
the difference, if any, between the estimated future servicing revenues and
normal servicing costs ("excess servicing rights"). The excess servicing rights,
if any, are capitalized and amortized over the expected repayment life of the
sold finance receivables.

NON-REFUNDABLE CONTRACT ACQUISITION DISCOUNTS

Installment contracts are generally purchased from dealers at a discount
from the principal amounts financed by the consumer and are non-refundable to
the dealers ("non-refundable contract acquisition discount"). This discount,
which represents both a credit allowance and a yield enhancement, is negotiated
by the Company and the dealers. The portfolio of owned and sold loans is grouped
into pools on a chronological basis (quarterly beginning in 1995) for purposes
of evaluating the non-refundable contract acquisition discount. The portion of
the non-refundable contract acquisition discount necessary to absorb estimated
credit losses for each pool is allocated to the allowance for credit losses. The
remaining contract acquisition discount ("unamortized contract acquisition
discount") for each pool, if any, is reflected as a reduction of the net
principal balance and accreted into finance charge income over the estimated
average life of the installment contracts using the sum-of-the-months'-digits
method, which approximates the interest method.

ALLOWANCE FOR CREDIT LOSSES

The allowance for credit losses is established through an allocation of the
non-refundable contract acquisition discount based upon amounts necessary to
absorb credit losses in the installment contract portfolio, as previously
discussed. The adequacy of the allowance for credit losses is evaluated by
management on an ongoing basis through historical credit loss experience,
delinquencies, the value of the underlying collateral, the level of the
installment contract portfolio and general economic conditions and trends. The
Company has found that borrowers under its installment contract receivables are
payment sensitive rather than interest rate sensitive. Consequently, the Company
does not consider interest rates a predominant risk characteristic for purposes
of evaluating credit losses. The portfolio of owned and sold loans is grouped
into pools on a chronological basis (quarterly beginning in 1995) for purposes
of evaluating trends and loss experience. If management determines that the
allowance for credit losses is not adequate to provide for potential losses of
an individual pool, amounts will be transferred, to the extent available, from
the unamortized contract acquisition discounts for that pool to the allowance
for credit losses. Any remaining shortfall in the allowance for credit losses
would be provided through a charge against income. If management determines that
the allowance for credit losses is in excess of amounts required to provide for
losses of an individual pool, the allowance for credit losses charged to income,
if any, will be reduced or the contract acquisition discounts will be amortized
over the remaining life of the installment contracts in the pool.

An account is charged off against the allowance for credit losses at the
earliest of the time the account's collateral is repossessed, the account is 120
days or more past due or the account is otherwise deemed to be uncollectible.

REPOSSESSED ASSETS

Repossessed collateral is valued at the lower of cost or market value.

F-9
59

FIRST ENTERPRISE FINANCIAL GROUP, INC.

NOTES TO FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1993, 1994 AND 1995
AND MARCH 31, 1996 (UNAUDITED)

NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- CONTINUED
PROPERTY AND EQUIPMENT

Property and equipment are stated at cost less accumulated depreciation and
amortization. Depreciation and amortization are provided in amounts sufficient
to relate the cost of depreciable assets to operations over their estimated
lives, generally ranging from five to seven years. Leasehold improvements are
amortized over the lives of the respective leases or the service lives of the
improvements, whichever is shorter. The straight-line method of depreciation is
followed for all assets for financial reporting purposes, and accelerated
methods are used for income tax purposes.

INCOME TAXES

The Company has elected to be taxed as an S Corporation under the Internal
Revenue Code. As a result of the election, income of the Company is taxable to
its stockholders, and no provision is made for federal income taxes in the
accompanying financial statements. If the Company had not made the election, a
total income tax provision of approximately $408,000, $264,000 and $948,000
would have been required for the years ended December 31, 1993, 1994 and 1995,
respectively (see note E). Dividends are declared and paid solely to reimburse
shareholders for their personal tax liability.

The provision for income taxes represents State Replacement Income Tax
(Illinois), as well as state income taxes for the various states in which the
Company operates. These taxes are the responsibility of the Company.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company's financial instruments include cash, finance receivables and
debt. The estimated fair value of finance receivables approximates their
carrying value due to the duration of the receivables as well as the interest
rates negotiated. Estimated fair value of finance receivables is based upon the
average contractual lives of the receivables less expected prepayments and
estimated interest rates on similar receivables. The estimated fair value of the
senior debt with floating interest rates approximates its carrying value. The
fair value of the subordinated debt obligations approximates their carrying
value based upon current quoted market prices.

PROPOSED INITIAL PUBLIC OFFERING AND REORGANIZATION

Effective February 1, 1996, the Company, in connection with its filing of a
Registration Statement on Form S-1 with the Securities and Exchange Commission
for an offering of its common stock, has increased its authorized capital stock
to 20,000,000 shares of common stock, par value $.01 per share through a
reincorporation. Existing Class A common stock and Class B common stock have
been exchanged for 1,288.8 shares of common stock and Class B common stock,
respectively, and all options and warrants have been converted at the same
exchange rate. Concurrent with the consummation of the offering of the Company's
stock, Class B common stock will be exchanged for common stock on a share for
share basis. The financial statements have been restated to reflect the
reincorporation and stock split. Historical net earnings per share are not
presented as such data are not meaningful. The outstanding warrants will be
exercised and sold in the initial public offering. The Company intends to sell
1,500,000 shares of the common stock and will grant the Underwriters a 30-day
option to purchase an additional 282,996 shares to cover over-allotments.

INTERIM FINANCIAL INFORMATION (UNAUDITED)

The unaudited interim financial statements have been prepared in conformity
with generally accepted accounting principles and include all adjustments, all
of which were normal and recurring in nature, which, in the opinion of
management, are necessary for a fair presentation of the interim periods
presented. Results of

F-10
60

FIRST ENTERPRISE FINANCIAL GROUP, INC.

NOTES TO FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1993, 1994 AND 1995
AND MARCH 31, 1996 (UNAUDITED)

NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- CONTINUED
operations for the three months ended March 31, 1996 are not necessarily
indicative of the results to be expected for the full year.

NOTE B -- FINANCE RECEIVABLES

Finance receivables are summarized as follows:

DECEMBER 31,
--------------------------
1994 1995
----------- ----------- MARCH 31,
1996
-----------
(UNAUDITED)

Contractual payments due............................... $45,205,509 $79,422,000 $82,464,062
Unearned finance charges............................... (11,426,819) (19,926,632) (21,891,322)
------------ ------------ ------------
Net principal balance.................................. 33,778,690 59,495,368 60,572,740
Unamortized contract acquisition discounts............. (228,617) -- --
Unearned insurance commissions......................... (255,919) (189,737) (130,113)
------------ ------------ ------------
Automobile finance receivables......................... 33,294,154 59,305,631 60,442,627
Allowance for credit losses............................ (2,562,723) (5,010,919) (5,438,740)
------------ ------------ ------------
30,731,431 54,294,712 55,003,887
Timeshare receivables.................................. 266,323 -- --
------------ ------------ ------------
$30,997,754 $54,294,712 $55,003,887
============ ============ ============

AUTOMOBILE FINANCE RECEIVABLES

Automobile finance receivables are accounted for on a discount basis and
generally have terms of 24 to 36 months, with a maximum term of 54 months.
Contractual maturities of the automobile finance receivables by year are not
readily available as of December 31, 1995 and March 31, 1996, but the Company's
experience has shown that such information is not significant in that
receivables may be paid in full prior to contractual maturity. Principal
collections on finance receivables were $11,444,010, $21,970,934 and $8,467,032
for the years ended December 31, 1994 and 1995, and for the three months ended
March 31, 1996, respectively. The principal cash collections as a percentage of
the average receivable balance, net of unearned finance charges, was 57.2%,
54.7% and 59.1% for the years ended December 31, 1994 and 1995, and for the
three months ended March 31, 1996, respectively.

A summary of the activity in the unamortized contract acquisition discounts
is as follows for the years ended December 31, 1993, 1994, and 1995, and the
three months ended March 31, 1996.

DECEMBER 31,
------------------------------------ MARCH 31,
1993 1994 1995 1996
-------- --------- --------- -----------
(UNAUDITED)

Balance at beginning of year.................. $ 49,223 $ 117,274 $ 228,617 $--
Additions from new business................... 162,355 321,283 -- --
Accreted into finance charge income........... (94,304) (209,940) (127,797) --
Transferred to allowance for credit losses.... -- -- (100,820) --
--------- --------- --------- ----
Balance at end of year........................ $117,274 $ 228,617 $ -- $--
========= ========= ========= ====

F-11
61

FIRST ENTERPRISE FINANCIAL GROUP, INC.

NOTES TO FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1993, 1994 AND 1995
AND MARCH 31, 1996 (UNAUDITED)

NOTE B -- FINANCE RECEIVABLES -- CONTINUED
A summary of the activity in allowance for credit losses is as follows for
the years ended December 31, 1993, 1994, and 1995, and the three months ended
March 31, 1996.

DECEMBER 31,
------------------------------------------- MARCH 31,
1993 1994 1995 1996
----------- ----------- ----------- -----------
(UNAUDITED)

Balance at beginning of year.......... $ 596,340 $ 522,368 $ 2,562,723 $ 5,010,919
Additions from new business........... 1,641,586 3,248,531 7,553,059 3,318,944
Related to finance receivables sold... (1,212,611) -- (2,196,577) (2,137,420)
Finance receivables charged off, net
of recoveries....................... (502,947) (1,208,176) (3,009,106) (1,153,703)
Transferred from unamortized contract
acquisition discounts............... -- -- 100,820 --
Provision for credit losses........... -- -- -- 400,000
----------- ----------- ----------- -----------
Balance at end of year................ $ 522,368 $ 2,562,723 $ 5,010,919 $ 5,438,740
=========== =========== =========== ===========

The Company has entered into $40 million and $5 million Asset Purchase
Agreements and Servicing Agreements to sell automobile finance receivables. As
of December 31, 1995, approximately $22.7 million is available for future sales
prior to December 31, 1996 under the $40 million agreement. All sales under the
agreements have been without recourse to the Company and accounted for as sale
of receivables.

The Company sold $12.1 million, $10.8 million, $2.6 million and $9.1
million of automobile finance receivables under the $40 million Asset Purchase
Agreement and Servicing Agreement on December 10, 1993, February 24, 1995, June
7, 1995 and June 29, 1995, respectively. The purchaser is entitled to earn a
fixed rate (9.5%, 11.0%, 9.8% and 9.8%, respectively). In addition, on May 22,
1995, the Company sold $5 million of receivables under the $5 million Asset
Purchase Agreement and Servicing Agreement entitling the purchaser to earn a
fixed rate of 10.25%. Ten percent of the purchase price of each sale is being
retained by the purchaser as a reserve for potential losses. No gains or losses
were recognized upon these sales of finance receivables as they were not
material to the financial statements.

Under the terms of all the above agreements, the Company retains the
servicing rights for the sold receivables and receives a contractual annualized
servicing fee equal to 3% of the net outstanding receivables from the purchaser.
The outstanding balance of all receivables sold and serviced by the Company
totaled $20,765,687 and $40,946,800 at December 31, 1995, and March 31, 1996,
respectively. Contractual servicing income amounted to $27,284, $269,998,
$573,812 and $244,578 for the years ended December 31, 1993, 1994 and 1995, and
the three months ended March 31, 1996, respectively. The Company is eligible to
receive additional bonus servicing fees based upon portfolio performance. The
bonus servicing fees represent the difference between the yield received by the
Company and the sum of the Company's 3% contractual servicing fee, the yield
retained by the purchaser and the addition or reduction necessary to maintain
the purchaser's reserve at the required level. Bonus servicing fees amounted to
$199,975, $1,052,606, $2,478,140 and $881,151 for the years ended December 31,
1993, 1994 and 1995, and the three months ended March 31, 1996, respectively.

TIMESHARE RECEIVABLES

Timeshare receivables are financed through hypothecation loans to timeshare
developers, with such loans being evidenced by a promissory note from the
developer and collateralized by the assignment of underlying consumer
receivables. In September 1992, the last outstanding timeshare commitment was
funded and these receivables were allowed to liquidate.

F-12
62

FIRST ENTERPRISE FINANCIAL GROUP, INC.

NOTES TO FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1993, 1994 AND 1995
AND MARCH 31, 1996 (UNAUDITED)

NOTE C -- PROPERTY AND EQUIPMENT

Property and equipment consist of the following at:

DECEMBER 31,
----------------------
1994 1995
-------- ----------

Furniture and fixtures................................................ $195,744 $ 267,773
Equipment............................................................. 478,898 861,417
Leasehold improvements................................................ 153,666 218,538
-------- -----------
828,308 1,347,728
Less accumulated depreciation and amortization........................ 199,924 466,015
-------- -----------
$628,384 $ 881,713
======== ===========

NOTE D -- SENIOR DEBT AND SUBORDINATED DEBT

Senior debt and subordinated debt consist of the following at:

DECEMBER 31,
--------------------------
1994 1995
----------- -----------

Senior Debt:
$50,000,000, senior secured Credit Facility, due June 1, 1997,
with interest at the reference rate as defined in the
agreement, plus 1.0%, which was 9.5% at December 31, 1995..... $25,640,000 $43,267,000
=========== ===========
Subordinated Debt:
$4,000,000, subordinated note, unsecured, due September 30, 1996,
with interest at 13.5% (net of unamortized allocation of
$62,046 to common stock warrants)............................. $ 3,850,000 $ 3,937,954
$4,500,000, subordinated note, unsecured, due August 31, 1998,
with interest at 13.0% (net of unamortized allocation of
$83,413 to common stock warrants)............................. -- 4,416,587
----------- -----------
$ 3,850,000 $ 8,354,541
=========== ===========

SENIOR DEBT

The Company has established a Credit Facility. This facility is renewable
annually and expires June 1, 1997. To fund this facility, the Company has
entered into an agreement that permits the Company to borrow up to $50,000,000.
The agreement requires the Company to execute a collateral and security
agreement to secure payment in full of the principal and interest on all
indebtedness owed to the participants.

Borrowings under the Revolving Credit Facility are collateralized by all
finance receivables and certain other assets. The agreement requires the
maintenance of certain financial covenants which include, among others, ratio of
debt to net worth and ratio of reserves to the finance receivable portfolio. The
Company was in compliance with all financial covenants at December 31, 1995 and
March 31, 1996.

F-13
63

FIRST ENTERPRISE FINANCIAL GROUP, INC.

NOTES TO FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1993, 1994 AND 1995
AND MARCH 31, 1996 (UNAUDITED)

NOTE D -- SENIOR DEBT AND SUBORDINATED DEBT -- CONTINUED
SUBORDINATED DEBT

In December 1994, the Company issued a subordinated note in the amount of
$4,000,000 to its principal shareholder. Under the terms of the agreement,
interest is payable at the end of each quarter at a fixed rate of 13.5%. The
note is unsecured and is due on September 30, 1996. The proceeds were used to
retire a junior subordinated note. Simultaneously, the Company's principal
shareholder issued a $4,000,000 secured note to a financial institution. Under
the terms of the agreement, interest is payable at the end of each quarter at a
fixed rate of 13.5% and is due on September 30, 1996. The Company issued to the
financial institution a detachable warrant to purchase 193,320 shares of
non-voting Class B common stock. The warrant may be exercised in whole or in
part at a price of $1.13 per share and expires on September 1, 1999, or earlier
as defined in the warrant. The warrant contains a put option such that after the
payment of the secured note but before the occurrence of other events defined in
the warrant, the financial institution may require the Company to purchase the
warrant from the financial institution at fair value. The put option is
terminated, under the terms of the warrant, upon the issuance of the Company's
stock in an IPO. Additionally, the warrant contains a call option such that the
Company, after September 30, 1997 but before the expiration date or the
occurrence of other events as defined in the warrant, may require the financial
institution to sell the warrant to the Company. Upon issuance, the $150,000 fair
value of the warrant was recorded as a discount against the Company's
subordinated note, which will be amortized as interest expense. The warrant will
be adjusted on a quarterly basis to the estimated repurchase value through an
adjustment to retained earnings.

On September 21, 1995, the Company issued a subordinated note in the amount
of $4,500,000 to an investment partnership. Under the terms of the agreement,
interest is payable monthly at a fixed rate of 13%. The note is unsecured and is
due on August 31, 1998. The note contained a detachable warrant to purchase
193,320 shares of non-voting Class B common stock. The warrant may be exercised
in whole or in part at a price of $1.56 per share and the warrant expires on
September 1, 2000, or earlier as defined in the warrant. The warrant contains a
put option such that after the earlier of August 31, 1998 or the payment of the
subordinated debt, but before the occurrence of other events defined in the
warrant, the investment partnership may require the Company to purchase the
warrant from the investment partnership at fair value. The put option is
terminated, under the terms of the warrant, upon the issuance of the Company's
stock in an IPO. Additionally, the warrant contains a call option such that the
Company, after September 1, 1998 but before the expiration date or the
occurrence of other as defined in the warrant, may require the investment
partnership to sell the warrant to the Company. Upon issuance, the $92,063 fair
value of the warrant was recorded as a discount against the subordinated note,
which will be amortized as interest expense as an adjustment to yield over the
term of the note. The warrant will be adjusted on a quarterly basis to the
estimated repurchase value through an adjustment to retained earnings.

NOTE E -- INCOME TAXES

The Company is an S Corporation for federal and state income tax purposes.
As an S Corporation, the Company generally is not responsible for the payment of
income taxes. Instead, the stockholders are taxed on the Company's taxable
income at the stockholders' individual federal and state income tax rates.

The Company terminated its status as an S Corporation effective January 1,
1996 and, accordingly, the Company is subject to federal and state income taxes.
As of the date of the termination, the Company has recognized, under the
provisions of Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes," a deferred tax asset of $267,000 representing the cumulative
temporary differences between the financial reporting and tax basis of its
assets and liabilities.

F-14
64

FIRST ENTERPRISE FINANCIAL GROUP, INC.

NOTES TO FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1993, 1994 AND 1995
AND MARCH 31, 1996 (UNAUDITED)

NOTE E -- INCOME TAXES -- CONTINUED
Income taxes are comprised of the following for the three months ended
March 31, 1996:

Federal.................................................................. $ 516,000
State.................................................................... 103,000
----------
619,000
Deferred................................................................. (192,000)
----------
$ 427,000
==========

Deferred tax assets and liabilities consist of the following at March 31,
1996:

Deferred tax assets:
Income accreted for tax not book...................................... $ 637,000
Income recognized for tax not book.................................... 267,000
Provision for credit losses........................................... 160,000
Other................................................................. 1,000
-----------
$1,065,000
===========
Deferred tax liabilities:
Charge-offs for tax not book.......................................... $ (451,000)
Excess servicing rights............................................... (155,000)
-----------
$ (606,000)
===========

Prior to the closing of the offering, and in anticipation of the offering,
the Company will have paid to the existing stockholders distributions of S
Corporation earnings that have been or will be includable in the taxable income
of the existing stockholders. The Company and its existing stockholders will
enter into an indemnification agreement, relating to federal and certain state
and local income tax liabilities of the Company and the existing stockholders,
for the tax years during which the Company had elected to be treated as an S
Corporation. This agreement generally provides that the Company will indemnify
the existing stockholders, and the existing stockholders will indemnify the
Company, against any increase in the indemnified party's income tax benefits or
liabilities (including interest and penalties and all expenses, attorneys' fees
and accountants' fees incurred in connection therewith) as a result of any
adjustment associated with a return filed with respect to a period during which
the Company was an S Corporation. Payments under the agreement in favor of the
existing stockholders must be approved by a majority of the Company's
independent Directors as being consistent with the terms of the agreement.

NOTE F -- STOCKHOLDERS' AGREEMENT

Under the terms of an agreement with the common stock stockholders, no
stockholder may sell, pledge or otherwise transfer, dispose of or encumber any
of his or her shares without giving prior notice to the Company and allowing the
other common stock stockholder and the Company to exercise their option to
repurchase these shares, as defined in the agreement.

If a stockholder dies or becomes permanently disabled, his or her shares
must be offered for sale to the Company under the "Right of First Refusal," as
defined in the agreement. The purchase price is the lesser of the fair market
value per share as of the valuation date, or net book value per share, as
defined in the agreement. The stockholder agreement is terminated upon the
consummation of a public offering of the Company's stock.

F-15
65

FIRST ENTERPRISE FINANCIAL GROUP, INC.

NOTES TO FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1993, 1994 AND 1995
AND MARCH 31, 1996 (UNAUDITED)

NOTE G -- COMMITMENTS AND CONTINGENCIES

OFFICE LEASES

The Company leases various office facilities under operating leases with
initial terms ranging from three to five years. These leases generally require
the Company to reimburse the landlord for certain common area expenses, such as
real estate taxes and maintenance; such expenses are included in rent expense.
Total minimum rentals under non-cancelable operating leases as of December 31,
1995 are as follows:

Years ending December 31,
1996.......................................................... $365,000
1997.......................................................... 284,000
1998.......................................................... 180,000
1999.......................................................... 119,000
2000.......................................................... 65,000

In the normal course of business, it is expected that office leases will
expire and be renewed or replaced with leases for other locations. Rent expense
for the years ended December 31, 1993, 1994 and 1995 and the three months ended
March 31, 1996 was $103,394, $212,310, $355,420 and $113,173, respectively.

DATA PROCESSING AGREEMENT

The Company entered into a five year contract for data processing services
in December 1994. The contract, which expires December 1999, is payable monthly.
The fees are based upon servicing volume.

EMPLOYMENT AGREEMENTS

The Company has entered into employment contracts with six of its officers.
Three of the agreements expire on August 31, 1997, and three of the agreements
expire December 31, 1999. The agreements are automatically renewable for
successive one year periods and are subject to termination by the Company or the
officers.

The agreements provide for minimum annual salaries and annual incentive
compensation awards. The agreements allow the Company to apply for, and take
out, in its own name and as beneficiary, and at its own expense, life, health,
accident or other insurance or annuity contracts on the officers. In the event
of illness or incapacity of an officer, they are entitled to continue to receive
their regular compensation for a period of 180 days. The Company has obtained
long-term disability insurance which compensates them for the period of such
illness or incapacity in excess of 180 days.

NOTE H -- STOCK OPTIONS

The Company has established an Incentive Stock Option and a Non-qualified
Stock Option Plan. As amended, these plans reserve 2,062,080 shares of
non-voting Class B common stock for issuance to key employees. Options may be
granted at a price no less than the fair market value of such shares on the date
on which such options are granted, and expire ten years from the date of grant.
The options generally vest over a three year period. The Company intends to
continue to apply the provisions of Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees," in the computation of employee
compensation expense. The Company will provide pro forma net income and income
per share disclosures as if the fair value based accounting method in Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," had been used to account for stock-based employee compensation
expense.

F-16
66

FIRST ENTERPRISE FINANCIAL GROUP, INC.

NOTES TO FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1993, 1994 AND 1995
AND MARCH 31, 1996 (UNAUDITED)

NOTE H -- STOCK OPTIONS -- CONTINUED
The following table summarizes the Company's stock option plans for the
three years ended December 31, 1995 and the three months ended March 31, 1996.

OPTION PRICE
SHARES PER SHARE
-------- ------------

Options outstanding at January 1, 1993................................. 628,934 $ 0.47
Options changes -- 1993
Granted.............................................................. 309,312 0.47
--------
Options outstanding at December 31, 1993............................... 938,246 0.47
Option changes -- 1994
Granted.............................................................. 527,120 1.13
Exercised............................................................ (547,740) 0.47
--------
Options outstanding at December 31, 1994............................... 917,626 0.47-1.13
Option changes -- 1995
Granted.............................................................. 83,771 1.36
Exercised............................................................ (384,062) 0.47
Canceled............................................................. (6,444) 0.47
--------
Options outstanding at December 31, 1995............................... 610,891 1.13-1.36
Option changes -- three months ended March 31, 1996
Exercised (unaudited)................................................ (97,944) 1.13
--------
Options outstanding at March 31, 1996 (unaudited)...................... 512,947 1.13-1.36
========

As of December 31, 1995 and March 31, 1996, respectively, 203,630 and
105,686 options were exercisable under the plans.

The Company has guaranteed loans made by a financial institution to certain
stockholders, the proceeds of which were used to exercise stock options. The
loans are for a period of one year with a maturity of October 1, 1996 and bear
interest at the financial institution's prime rate (8.50% at December 31, 1995).
The guaranteed loans are included in Other Liabilities and are treated as a
reduction of Stockholders' Equity on the balance sheet at December 31, 1994 and
1995.

NOTE I -- EMPLOYEE BENEFIT PLAN

During 1994, the Company established a 401(k) plan covering substantially
all employees who have worked over 90 calendar days during which they were
credited with 250 hours of service. Contributions from participants are
voluntary and are limited to the Internal Revenue Code maximum contribution. The
plan requires the Company to match 50% of the first 6% of earnings of
participants contributing. Total contributions to the plan for the years ended
December 31, 1994 and 1995 were $50,712 and $47,062, respectively.

NOTE J -- LITIGATION

The Company is involved from time to time in ordinary routine litigation
incidental to its business. The litigation is generally based upon claims that
certain of the Company's business practices, such as acquiring installment
contracts at a discount, force placing insurance and offering other insurance
products, violate laws, including the Alabama Consumer Credit Act, the Alabama
Deceptive Practices Act and the Federal Truth in Lending Act. Management
believes that the ultimate outcome of all pending litigation will not have a
material adverse effect on the Company's financial condition or results of
operations. The Company intends to vigorously defend any such actions.

F-17
67

FIRST ENTERPRISE FINANCIAL GROUP, INC.

NOTES TO FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1993, 1994 AND 1995
AND MARCH 31, 1996 (UNAUDITED)

NOTE K -- SUBSEQUENT EVENTS

The Company sold $15.7 million and $9.7 million of finance receivables
under the $40 million Asset Purchase Agreement (Note B) on January 30, 1996 and
March 8, 1996, respectively. The purchaser is entitled to earn a fixed rate of
8.89% (4.25% plus 90% of the two year U.S. Treasury Bill rate at the time of the
sale). The Company recognized gains on the sales of finance receivables of
$254,000 and $155,000 on the January 30, 1996 and March 8, 1996 sales,
respectively.

On April 9, 1996, the Company sold $9.9 million of automobile finance
receivables under a separate Asset Purchase Agreement and Servicing Agreement.
The purchaser is entitled to earn a fixed rate of 9.25%. The Company recognized
a gain on the sale of the finance receivables of approximately $97,000. Ten
percent of the purchase price was retained by the purchasers on each of the
sales as a reserve for potential losses. The sales were without recourse and
were accounted for as sales of receivables.

The Company has entered into a letter of intent with a placement agent for
the issuance of up to $200 million of unregistered securitized notes through a
newly formed wholly-owned subsidiary of the Company. The Company has sold
approximately $45.1 million of such notes on June 18, 1996.

On March 18, 1996, the Company's senior debt credit facility was amended to
permit the Company to borrow up to $52,000,000. On May 7, 1996, the facility was
amended permitting the Company to borrow up to $62,000,000. As of March 31,
1996, borrowings under the facility amounted to $43,034,000.

NOTE L -- QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

The following table sets forth certain unaudited operating results for each
of the twelve quarters ended December 31, 1995. This information has been
prepared on the same basis as the audited financial statements and includes all
adjustments (which consist solely of normal recurring adjustments) necessary to
present fairly the financial information for such periods.

FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTAL
---------- ---------- ---------- ---------- ----------

Year ended December 31, 1993
Net interest income.............. $ 463,689 $ 587,854 $ 708,535 $ 792,245 $2,552,323
Other income..................... 128,758 167,543 162,096 472,035 930,432
Net income....................... 172,856 240,268 228,334 390,698 1,032,156
Year ended December 31, 1994
Net interest income.............. 515,497 804,393 1,097,113 1,212,224 3,629,227
Other income..................... 761,079 625,869 507,440 235,155 2,129,543
Net income (loss)................ 346,683 301,751 278,332 (265,742) 661,024
Year ended December 31, 1995
Net interest income.............. 1,290,419 1,125,495 1,422,941 1,766,731 5,605,586
Other income..................... 849,639 1,391,371 1,565,573 1,193,670 5,000,253
Net income....................... 489,918 614,007 774,375 495,452 2,373,752

F-18
68

FIRST ENTERPRISE FINANCIAL GROUP, INC.

NOTES TO FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1993, 1994 AND 1995
AND MARCH 31, 1996 (UNAUDITED)

NOTE M -- PRO FORMA DATA (UNAUDITED)

BALANCE SHEET

The pro forma balance sheet gives effect to the planned distributions of S
Corporation earnings as if the distributions had been declared on March 31,
1996. The pro forma, as adjusted, balance sheet gives effect to the use of
proceeds of the Offering and to the exercise of the common stock warrants (see
note D) and the concurrent sale of the common stock by the warrant holders in
the Offering since such transactions occur as part of the Offering. The effect
of the common stock warrants include the proceeds from exercise ($520,000); the
value at March 31, 1996 of the warrants ($807,000); and an estimated income tax
benefit of $928,000 representing the difference between the Offering price of
$7.50 per share and the exercise prices of the warrants being sold in the
Offering, at an assumed effective tax rate of 39%. The exercise and sale
constitutes a taxable event giving rise to a deduction for the Company. The
benefit is reflected as an increase in additional paid-in-capital, rather than
as a deduction for financial statement purposes, similar to accounting for
nonqualified stock options, with a corresponding effect on income tax balances
(Note D).

INCOME DATA

The pro forma income data gives effect to the reduction in interest expense
net of income taxes.

NET INCOME PER SHARE

Pro forma and supplemental pro forma net income per share are based upon
the actual weighted average number of common and common equivalent shares of
Common Stock outstanding and the pro forma net income, plus the following
additional adjustments for the use of proceeds from the Offering assuming an
offering price of $7.50 per share, as follows:

WEIGHTED
AVERAGE EARNINGS
SHARES NET INCOME PER SHARE
--------- ---------- ---------

YEAR ENDED DECEMBER 31, 1995
Income before income taxes................................... $2,433,752
Pro forma provision for income taxes @ 39%................... 948,000
-----------
Before pro forma effect of the Offering...................... 3,244,844 1,485,752 $ 0.46
---------- ----------- -------
Adjustments for reduction in interest expense and shares
required to repay Offering costs, and debt of
$10,383,000........................................... 1,886,640 734,000 (0.03)
---------- ----------- -------
Supplemental pro forma....................................... 5,131,484 $2,219,752 $ 0.43
========== =========== =======
THREE MONTHS ENDED MARCH 31, 1996
Before pro forma effect of the Offering...................... 3,510,743 $ 929,322 $ 0.26
---------- ----------- -------
Adjustments for reduction in interest expense and
effect of shares required to pay Offering costs,
and debt of $10,383,000.......................... 1,886,640 197,000 (0.05)
---------- ----------- -------
Supplemental pro forma....................................... 5,397,383 $1,126,322 $ 0.21
========== =========== =======

F-19
69

FIRST ENTERPRISE FINANCIAL GROUP, INC.

NOTES TO FINANCIAL STATEMENTS -- CONTINUED
DECEMBER 31, 1993, 1994 AND 1995
AND MARCH 31, 1996 (UNAUDITED)

NOTE M -- PRO FORMA DATA (UNAUDITED) -- CONTINUED

In computing the supplemental pro forma net income per share, pro forma net
income was increased by $734,000 to $2,219,752 and $197,000 to $1,126,322 for
the year ended December 31, 1995 and the three months ended March 31, 1996,
respectively to reflect the reduction of interest expense (net of pro forma
income tax expense) because of the assumed payment, as of January 1, 1995 and
1996, respectively, of the subordinated notes payable and a portion of
borrowings under the revolving line of credit.

F-20
70

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

NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY,
ANY SELLING STOCKHOLDER OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE COMMON STOCK IN
ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION
THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO
THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE SUCH DATE.

UNTIL , 1996 (25 DAYS FROM THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK OFFERED HEREBY, WHETHER OR
NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.

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

TABLE OF CONTENTS

PAGE
----

Prospectus Summary...................... 3
Risk Factors............................ 7
The Company............................. 11
Dividend Policy......................... 11
Use of Proceeds......................... 12
S Corporation Distributions............. 12
Dilution................................ 13
Capitalization.......................... 14
Selected Financial and Operating Data... 15
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................ 17
Business................................ 29
Management.............................. 37
Certain Transactions.................... 42
Principal and Selling Stockholders...... 43
Description of Capital Stock............ 44
Shares Eligible for Future Sale......... 46
Underwriting............................ 47
Legal Matters........................... 48
Experts................................. 48
Available Information................... 48
Index to Financial Statements........... F-1

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

1,886,640 SHARES

FIRST ENTERPRISE
FIRST ENTERPRISE LOGO FINANCIAL GROUP, INC.

COMMON STOCK

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

PROSPECTUS
-------------------------

J.C. BRADFORD & CO.

THE CHICAGO CORPORATION

, 1996

------------------------------------------------------
------------------------------------------------------
71

PART II -- INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table itemizes the expenses incurred by the Company in
connection with the registration, issuance and distribution of the securities
being registered hereby, other than underwriting discounts and commissions. All
the amounts shown are estimates except the Securities and Exchange Commission
registration fee, the NASD fee and the Nasdaq listing fee.

ITEM AMOUNT
------------------------------------------------------------------- --------

Registration Fee -- Securities and Exchange Commission............. $ 8,978
NASD Fee........................................................... 3,104
Nasdaq Listing Fee................................................. 30,821
Transfer Agent and Registrar's Fees................................ 7,500
Printing and Engraving Fees and Expenses........................... 60,000
Legal Fees and Expenses (other than Blue Sky)...................... 175,000
Accounting Fees and Expenses....................................... 175,000
Blue Sky Fees and Expenses (including fees of counsel)............. 30,000
Miscellaneous Expenses............................................. 9,597
--------
Total.............................................................. $500,000
========

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 8.75 of the Illinois Business Corporation Act authorizes
indemnification of directors, officers, employees and agents of the Company;
allows the advancement of costs of defending against litigation; and permits
companies incorporated in Illinois to purchase insurance on behalf of directors,
officers, employees and agents against liabilities whether or not in the
circumstances such companies would have the power to indemnify against such
liabilities under the provisions of the statute.

The Company's Articles, incorporated by reference as Exhibit 3.1, and its
Bylaws, incorporated by reference as Exhibit 3.2, provide for indemnification of
its officers and directors to the full extent permitted by the Illinois Business
Corporation Act. The Articles of the Company eliminate, to the fullest extent
permitted by Illinois law, liability of a director to the Company or its
stockholders for monetary damages for breach of such director's fiduciary duty
of care except for liability where a director (a) breaches his or her duty of
loyalty to the Company or its stockholders, (b) fails to act in good faith or
engages in intentional misconduct or knowing violation of law, (c) authorizes
payment of an illegal dividend or stock repurchase or (d) obtains an improper
personal benefit. While liability for monetary damages has been eliminated,
equitable remedies, such as injunctive relief or recision remain available. In
addition, a director is not relieved of his responsibilities under any other
law, including the federal securities laws.

The Company has entered into indemnification agreements in the form
described below with each person who is currently a member of its board of
directors and will enter into such agreements with persons who in the future
become directors of the Company. Such indemnification agreements provide for
indemnification against any and all expenses incurred in connection with, as
well as any and all judgments, fines and amounts paid in settlement resulting
from, any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (collectively an "Action"), by
reason of the fact that such director is or was a director, officer, employee or
agent of the Company, or is or was serving at the request of the Company as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise. The indemnification agreements provide that
if any payment, advance or indemnification of the director requires that he or
she acted in good faith, in a manner he or she reasonably believed to be for or
not opposed to the best interest of the Company or without reasonable cause to
believe his or her conduct was unlawful, then it shall be presumed that he or
she so acted unless proven otherwise by clear and convincing evidence. The
indemnification agreements also provide for the advancement of all expenses,
including reasonable attorneys' fees, arising from the investigation of any
claim, preparation for the defense or settlement of an Action. The
indemnification agreements authorize the Company to participate in the defense
of any Action and to assume the defense thereof, with counsel who shall be
reasonably satisfactory to the director, provided that the director shall be
entitled to separate counsel of his or her choosing if he or she

II-1
72

reasonably believes that (i) there exist conflicting interests between himself
or herself and the Company or other party (the defense of whom the Company shall
have assumed) or (ii) there is any substantial likelihood that the Company will
be financially or legally unable to satisfy its obligations under the
indemnification agreements. The indemnification agreements provide that a
director's rights under such contract are not exclusive of any other
indemnification rights he or she may have under any provision of law, the
Articles or Bylaws of the Company, the vote of the Company's stockholders or
disinterested directors, other agreements or otherwise. (Insofar as
indemnification by the Company for liabilities arising under the Securities Act
of 1933, as amended (the "Securities Act") may be permitted to directors,
officers and controlling persons of the Company pursuant to the foregoing
provisions, the Company has been advised that such indemnification is considered
by the Commission to be against public policy and therefore unenforceable.)

Pursuant to the terms of the Underwriting Agreement, the Underwriters are
obligated, under certain circumstances, to indemnify directors and officers of
the Company against certain liabilities, including liabilities under the
Securities Act. Reference is made to the form of Underwriting Agreement filed as
Exhibit 1.1 to this Registration Statement.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

The following is a summary of transactions by the Company during the last
three years involving sales of the Company's securities that were not registered
under the Securities Act:

(a) On October 4, 1994, August 31, 1995, January 2, 1996, January 3,
1996 and January 8, 1996, 547,740, 384,062, 46,396, 38,664 and 12,888
shares of Common Stock were sold, respectively, pursuant to options granted
under the Company's 1992 Stock Option Plan, as Amended and Restated, to
employees of the Company at $0.47, $0.47, $1.13, $1.13 and $1.13 per share,
respectively.

(b) On December 9, 1994, the Company issued a warrant to purchase
193,320 shares of Common Stock at a price of $1.13 per share to LaSalle in
connection with the LaSalle Note.

(c) On September 21, 1995, the Company issued a warrant to purchase
193,320 shares of Common Stock at a price of $1.56 per share to Banc One in
connection with the Banc One Note.

Exemption from the registration provisions of the Securities Act for the
transactions described above was claimed under Section 4(2) of the Securities
Act and the rules and regulations promulgated thereunder on the basis that such
transactions did not involve any public offering, the purchasers were
sophisticated with access to the kind of information registration would provide
and that such purchasers acquired such securities without a view toward the
distribution thereof. In addition, for the transaction referred to in paragraph
(a), exemption from the registration provisions of the Securities Act was
claimed under Section 3(b) of the Securities Act on the basis that such
securities were sold pursuant to written compensatory benefit plans or pursuant
to a written contract relating to compensation and not for capital raising
purposes under Rule 701 of the Securities Act.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits

II-2
73

+10.5.3 Employment Agreement by and between First Enterprise Financial Group, Inc. and
Thomas G. Parker
+10.5.4 Amendment No. 1 to Employment Agreement by and between First Enterprise Financial
Group, Inc. and Thomas G. Parker
+10.5.5 Employment Agreement by and between First Enterprise Financial Group, Inc. and
Kenneth L. Stucky
+10.5.6 Amendment No. 1 to Employment Agreement by and between First Enterprise Financial
Group, Inc. and Kenneth L. Stucky
+10.5.7 Employment Agreement by and between First Enterprise Financial Group, Inc. and Paul
A. Stinneford
+10.5.8 Employment Agreement by and between First Enterprise Financial Group, Inc. and
Robert J. Harker
+10.5.9 Employment Agreement by and between First Enterprise Financial Group, Inc. and Jan
W. Erfert
+10.6.1 Third Amended and Restated Revolving Credit Agreement
+10.6.2 First Amendment to the Third Amended and Restated Revolving Credit Agreement
+10.6.3 Second Amendment to the Third Amended and Restated Revolving Credit Agreement
+10.6.4 Third Amendment to the Third Amended and Restated Revolving Credit Agreement
+10.6.5 Fourth Amendment to the Third Amended and Restated Revolving Credit Agreement
+10.6.6 Fifth Amendment to the Third Amended and Restated Revolving Credit Agreement
+10.7.1 Warrant Certificate issued to LaSalle National Bank
+10.7.2 Warrant Certificate issued to Banc One Capital Partners V, Ltd.
+10.8 Amended and Restated Asset Purchase Agreement by and between General Electric
Capital Corporation and First Enterprise Financial Group, Inc.
+10.8.1 Amendment #1 to Amended and Restated Asset Purchase Agreement by and between
General Electric Capital Corporation and First Enterprise Financial Group, Inc.
+10.9 Amended and Restated Servicing Agreement by and between General Electric Capital
Corporation and First Enterprise Financial Group, Inc.
+10.9.1 Amendment #1 to Servicing Agreement by and between General Electric Capital
Corporation and First Enterprise Financial Group, Inc.
+10.10 Asset Purchase Agreement by and between Liberty Bank and First Enterprise Financial
Group, Inc.
+10.11 Servicing Agreement by and between Liberty Bank and First Enterprise Financial
Group, Inc.
+10.12 Information Processing Agreement by and between Florida Informanagement Services,
Inc. and First Enterprise Financial Group, Inc.
+10.13 Amended and Restated Senior Subordinated Note in the principal amount of $4,000,000
made by First Enterprise Financial Group, Inc. to Michael P. Harrington
+10.14 Agreement among Michael P. Harrington, First Enterprise Financial Group, Inc. and
LaSalle National Bank
+10.15 Asset Purchase Agreement by and between Liberty Bank and First Enterprise Financial
Group, Inc.
+10.16 Servicing Agreement by and between Liberty Bank and First Enterprise Financial
Group, Inc.
+10.17 Sale and Servicing Agreement by and between First Enterprise Financial Group, Inc.,
First Enterprise Securitization Corp. and LaSalle National Bank
+10.18 Form of Tax Indemnification Agreement
+21 Subsidiaries of First Enterprise Financial Group, Inc.
**23.1 Consent of Grant Thornton LLP
+23.3 Consent of Rudnick & Wolfe (included in Exhibit 5.1 hereof)
+24 Power of Attorney
+27.1 Financial Data Schedule
+27.2 Financial Data Schedule
+99.1 Consents of persons named to become directors

- -------------------------
* To be filed by amendment
** Filed with this Amendment
+ Previously filed
(b) Financial Statement Schedules

II-3
74

ITEM 17. UNDERTAKINGS

The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the underwriting agreements, certificates in such
denomination and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Act, may be
permitted to directors, officers, and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any election, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

The undersigned Registrant hereby undertakes that:

1. For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) and (4) or
497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

2. For purposes of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.

II-4
75

SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly
caused this amendment to registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Evanston, State of
Illinois, on July 19, 1996.

FIRST ENTERPRISE FINANCIAL GROUP,
INC.

By: /s/ MICHAEL P. HARRINGTON
----------------------------------
Michael P. Harrington
Chairman of the Board and
President

Pursuant to the requirements of the Securities Act of 1933, this amendment
to registration statement has been signed by the following persons in the
capacities and on the dates indicated.

NAME TITLE DATE
- ------------------------------------- ------------------------------------- ---------------------

/s/ MICHAEL P. HARRINGTON Chairman of the Board and President July 19, 1996
- ------------------------------------- (chief executive officer)
Michael P. Harrington

/s/ ROBERT J. HARKER Director, Vice President and July 19, 1996
- ------------------------------------- Controller (chief accounting
Robert J. Harker officer)

/s/ PAUL A. STINNEFORD Director, Vice President, Secretary July 19, 1996
- ------------------------------------- and General Counsel
Paul A. Stinneford

/s/ JAN W. ERFERT Vice President and Treasurer July 19, 1996
- ------------------------------------- (chief financial officer)
Jan W. Erfert

By: /s/ MICHAEL P. HARRINGTON Individually and as Attorney-in-Fact July 19, 1996
- -------------------------------------
Michael P. Harrington

II-5
76

EXHIBIT INDEX

EXHIBIT SEQUENTIAL
NUMBER DOCUMENT DESCRIPTION PAGE NO.
- ----------- -------------------- ----------

+ 1.1 Form of Underwriting Agreement
+ 3.1 Articles of Incorporation of First Enterprise Financial Group, Inc.
+ 3.2 Bylaws of First Enterprise Financial Group, Inc.
+ 4 Specimen Common Stock Certificate of First Enterprise Financial Group,
Inc.
+ 5.1 Opinion of Rudnick & Wolfe
+ 9.1.1 Shareholders Agreement
+ 9.1.2 Amendment to Shareholders Agreement
+ 9.1.3 Amendment No. 2 to Shareholders Agreement
+ 9.1.4 Amendment No. 3 to Shareholders Agreement
+ 10.1 Form of Director Indemnification Agreement
+ 10.2 1992 Stock Option Plan, as Amended and Restated
+ 10.3 1995 Nonqualified Director Stock Option Plan
+ 10.4 1995 Employee Stock Purchase Plan
+ 10.5.1 Employment Agreement by and between First Enterprise Financial Group,
Inc. and Michael P. Harrington
+ 10.5.2 Amendment No. 1 to Employment Agreement by and between First Enterprise
Financial Group, Inc. and Michael P. Harrington
+ 10.5.3 Employment Agreement by and between First Enterprise Financial Group,
Inc. and Thomas G. Parker
+ 10.5.4 Amendment No. 1 to Employment Agreement by and between First Enterprise
Financial Group, Inc. and Thomas G. Parker
+ 10.5.5 Employment Agreement by and between First Enterprise Financial Group,
Inc. and Kenneth L. Stucky
+ 10.5.6 Amendment No. 1 to Employment Agreement by and between First Enterprise
Financial Group, Inc. and Kenneth L. Stucky
+ 10.5.7 Employment Agreement by and between First Enterprise Financial Group,
Inc. and Paul A. Stinneford
+ 10.5.8 Employment Agreement by and between First Enterprise Financial Group,
Inc. and Robert J. Harker
+ 10.5.9 Employment Agreement by and between First Enterprise Financial Group,
Inc. and Jan W. Erfert
+ 10.6.1 Third Amended and Restated Revolving Credit Agreement
+ 10.6.2 First Amendment to the Third Amended and Restated Revolving Credit
Agreement
+ 10.6.3 Second Amendment to the Third Amended and Restated Revolving Credit
Agreement
+ 10.6.4 Third Amendment to the Third Amended and Restated Revolving Credit
Agreement
+ 10.6.5 Fourth Amendment to the Third Amended and Restated Revolving Credit
Agreement
+ 10.6.6 Fifth Amendment to the Third Amended and Restated Revolving Credit
Agreement
+ 10.7.1 Warrant Certificate issued to LaSalle National Bank
+ 10.7.2 Warrant Certificate issued to Banc One Capital Partners V, Ltd.
+ 10.8 Amended and Restated Asset Purchase Agreement by and between General
Electric Capital Corporation and First Enterprise Financial Group, Inc.

SEQUENTIAL
EXHIBIT DOCUMENT DESCRIPTION PAGE NO.
NUMBER DOCUMENT DESCRIPTION PAGE NO.
- ----------- -------------------- ----------

+ 10.8.1 Amendment #1 to Amended and Restated Asset Purchase Agreement by and
between General Electric Capital Corporation and First Enterprise
Financial Group, Inc.
+ 10.9 Amended and Restated Servicing Agreement by and between General Electric
Capital Corporation and First Enterprise Financial Group, Inc.
+ 10.9.1 Amendment #1 to Servicing Agreement by and between General Electric
Capital Corporation and First Enterprise Financial Group, Inc.
+ 10.10 Asset Purchase Agreement by and between Liberty Bank and First Enterprise
Financial Group, Inc.
+ 10.11 Servicing Agreement by and between Liberty Bank and First Enterprise
Financial Group, Inc.
+ 10.12 Information Processing Agreement by and between Florida Informanagement
Services, Inc. and First Enterprise Financial Group, Inc.
+ 10.13 Amended and Restated Senior Subordinated Note in the principal amount of
$4,000,000 made by First Enterprise Financial Group, Inc. to Michael P.
Harrington
+ 10.14 Agreement among Michael P. Harrington, First Enterprise Financial Group,
Inc. and LaSalle National Bank
+ 10.15 Asset Purchase Agreement by and between Liberty Bank and First Enterprise
Financial Group, Inc.
+ 10.16 Servicing Agreement by and between Liberty Bank and First Enterprise
Financial Group, Inc.
+ 10.17 Sale and Servicing Agreement by and between First Enterprise Financial
Group, Inc., First Enterprise Securitization Corp. and LaSalle National
Bank
+ 10.18 Form of Tax Indemnification Agreement
+ 21 Subsidiaries of First Enterprise Financial Group, Inc.
** 23.1 Consent of Grant Thornton LLP
+ 23.3 Consent of Rudnick & Wolfe (included in Exhibit 5.1 hereof)
+ 24 Power of Attorney
+ 27.1 Financial Data Schedule
+ 27.2 Financial Data Schedule
+ 99.1 Consents of persons named to become directors

- -------------------------
* To be filed by amendment

** Filed with this Amendment

+ Previously filed