White River Capital, Inc. Announces Results for the Third Quarter 2007

Business Wire,  Oct 29, 2007  

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* Net Income for the Third Quarter of 2007 Totaled $1.5 million

* Net Income for the First Nine Months of 2007 Totaled $10.2 million

* Book Value per Share $29.33; Tangible Book Value per Share $20.30

INDIANAPOLIS -- White River Capital, Inc. (AMEX: RVR) ("White River") today announced net income for the third quarter 2007 was $1.5 million, or $0.38 per diluted share, compared to third quarter 2006 net income of $8.1 million, or $2.09 per diluted share. The results for the third quarter of 2007 are due to the following:

* $2.0 million of earnings from operations contributed by the Coastal Credit LLC ("Coastal Credit") subsidiary,

* $1.1 million of earnings from operations contributed by the Union Acceptance Company LLC ("UAC") subsidiary,

* $(0.7) million of interest and expenses at the holding company, and

* an income tax expense of $(0.8) million.

Net income for the nine months ended September 30, 2007, was $10.2 million, or $2.58 per diluted share, compared to net income of $12.9 million, or $3.33 per diluted share, for the same period of 2006.

Mark Ruh, President and Chief Operating Officer, stated, "During the third quarter, Coastal Credit continued its excellent earnings performance which included an increase in its allowance for loan loss reserves. Coastal's allowance for loan losses to total loans was 6.28% on September 30, 2007 compared to 5.84% on June 30, 2007. Coastal's net charge offs remained stable while 30+ day delinquency slightly increased but is still comfortably within historical ranges. Also during the quarter, Coastal Credit opened a new office in Denver, Colorado."

Mr. Ruh continued, "The UAC portfolio continues its stable and orderly liquidation. The recovery cash flows from this portfolio remain strong resulting in net portfolio recoveries for the last eight consecutive months, and we expect these net portfolio recoveries to continue. As anticipated, delinquency in the portfolio continues to rise as the managed portfolio nears the end of its life. The remaining $19.7 million balance of the managed portfolio represents 0.3% of $5.66 billion in originally securitized receivables. Thus, as the total portfolio balance continues to rapidly decline, even slight increases in the amount of delinquent receivables will appear as sizable changes in the delinquency percentage. We are comfortable with the trends in this portfolio and confident it will liquidate as expected."

Martin Szumski, Chief Financial Officer, commented, "White River now has equity of $112.7 million, and tangible equity is now $78.0 million. These values translate into a book value per share of $29.33 and a tangible book value per share of $20.30, while our tangible equity is now 52.4% of tangible assets."

Mr. Szumski continued, "On October 15, White River prepaid the remaining $9.4 million balance of its holding company secured note payable. This note had an interest rate of 10.75% and its prepayment will result in significant future interest expense reductions. At the end of this quarter, White River had $7.0 million in cash and cash equivalents and $27.6 million in line of credit availability. This gave White River $34.6 million of cash at its disposal for both future opportunities and to pay company obligations at the end of the third quarter of 2007, before the October 15 prepayment of the secured note."

ACCRETION AND OTHER INTEREST

Accretion and other interest decreased to $1.4 million compared to $8.1 million for the third quarters of 2007 and 2006, respectively. Accretion and other interest decreased compared to $10.3 million during the first quarter of 2007; it increased compared to $1.0 million during the second quarter of 2007. Accretion and other interest will continue to be volatile as the result of UAC's recognition of accretion income in anticipation of cash being released, or cash actually being released, from the UAC Master Trust account.

PROVISION FOR ESTIMATED CREDIT LOSSES

Provision for estimated credit losses was $1.5 million compared to $20,000 for the quarters ended September 30, 2007 and 2006, respectively.

The provision at Coastal Credit for the third quarters of 2007 and 2006 was $2.0 million and $1.2 million, respectively. The increase in provision for estimated credit losses at Coastal Credit reflects management's assessment of the reserves necessary for the current credit environment. During both quarters ended September 30, 2007 and 2006, UAC partially offset these provisions for estimated credit losses with recoveries. The UAC recoveries were due to the stable performance of its contracting securitized finance receivable portfolio during these periods.

CHARGE TO MASTER TRUST, NET

The charge to Master Trust, net was $540,000 for the third quarter 2007 compared to $5.6 million for the third quarter 2006.

Charge to Master Trust, net is an expense related to future transfers of funds to the Master Trust from on balance sheet securitized finance receivables of UAC. As the performance of UAC's on balance sheet securitized finance receivables has improved and stabilized, there has been a recovery for estimated credit losses, and interest income has increased. However, as the UAC portfolio has significantly decreased in size, the amounts related to future transfers of funds owed to the Master Trust have decreased resulting in a decrease in the charge to Master Trust, net.