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



 

SCHEDULE 14A
(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934



 
Filed by the Registrant x
Filed by a Party other than the Registrant o

Check the appropriate box:

o Preliminary Proxy Statement
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
x Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to §240.14a-12

UNITED PANAM FINANCIAL CORP.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

x No fee required.
o Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

o Fee paid previously with preliminary materials.
o Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed:

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UNITED PANAM FINANCIAL CORP.



 

NOTICE OF 2008 ANNUAL MEETING OF SHAREHOLDERS
AND
PROXY STATEMENT



 
DATE: Wednesday, September 24, 2008
TIME: 9:00 a.m.
PLACE: United PanAm Financial Corp.
18191 Von Karman Avenue, Suite 300
Irvine, CA 92612

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[GRAPHIC MISSING]   18191 Von Karman Avenue
Irvine, CA 92612
Phone: (949) 224-1917
Fax: (949) 224-1912
       
       
       
       
       

August 26, 2008

Dear Shareholder:

It is my pleasure to invite you to United PanAm Financial Corp.’s (“UPFC”) 2008 Annual Meeting of Shareholders.

We will hold the meeting on Wednesday, September 24, 2008 at 9:00 a.m., at our corporate headquarters, 18191 Von Karman Avenue, Suite 300, Irvine, CA 92612. In addition to the formal items of business, I will review the major developments of 2007 and answer your questions.

This booklet includes the Notice of Annual Meeting, the Proxy Statement, and a copy of the 2007 Annual Report to Shareholders. The Proxy Statement describes the business that we will conduct at the meeting and provides information about UPFC.

Your vote is important. Whether or not you plan to attend the meeting, please complete, date, sign and return the enclosed proxy card promptly in the enclosed postage paid envelope so that your shares will be represented at the meeting. If you receive more than one proxy card because you own shares registered in different names or at different addresses, please be sure to separately complete and return each proxy card. If you attend the meeting and prefer to vote in person, you may do so.

We look forward to seeing you at the meeting.

Sincerely,

    [GRAPHIC MISSING]

Guillermo Bron
Chairman of the Board

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UNITED PANAM FINANCIAL CORP.



 

NOTICE OF 2008 ANNUAL MEETING OF SHAREHOLDERS



 
DATE: Wednesday, September 24, 2008
TIME: 9:00 a.m.
PLACE: United PanAm Financial Corp.
18191 Von Karman Avenue, Suite 300
Irvine, CA 92612

Dear Shareholders:

At our 2008 Annual Meeting, we will ask you to:

• Elect three (3) directors to serve terms of two years;
• Ratify the selection of Grobstein, Horwath & Company LLP as our independent accountants for 2008; and
• Transact any other business that may properly be presented at the Annual Meeting.

If you were a shareholder of record at the close of business on August 4, 2008, you may vote at the Annual Meeting.

IT IS IMPORTANT THAT ALL SHAREHOLDERS VOTE. WE URGE YOU TO SIGN AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE, REGARDLESS OF WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON. IF YOU DO ATTEND THE MEETING, YOU MAY THEN WITHDRAW YOUR PROXY AND VOTE IN PERSON. IN ORDER TO FACILITATE THE PROVIDING OF ADEQUATE ACCOMMODATIONS, PLEASE INDICATE ON THE PROXY CARD WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING.

By Order of the Board of Directors

[GRAPHIC MISSING]

James Vagim
President, Chief Executive Officer

Irvine, California
Dated: August 26, 2008

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  Page
INFORMATION ABOUT THE ANNUAL MEETING AND VOTING     1  
Why Did You Send Me This Proxy Statement?     1  
Who is Entitled to Vote?     1  
What Constitutes a Quorum?     1  
How Many Votes Do I Have?     1  
How Do I Vote My Shares?     1  
If Shares Are Registered in My Name, But I Do Not Make Specific Choices on My Proxy Card, How Will My Shares Be Voted?     2  
May I Change My Vote After I Return My Proxy?     2  
What Vote is Required to Approve Each Proposal?     2  
How Many Directors Have Been Nominated?     3  
How Are Directors Nominated?     3  
What Are the Costs of Soliciting These Proxies?     3  
How Do I Obtain an Annual Report on Form 10-K?     4  
INFORMATION ABOUT UPFC STOCK OWNERSHIP     5  
Which Shareholders Own 5% or More of UPFC’s Common Stock?     5  
How Much of UPFC’s Common Stock is Owned by Directors and Executive Officers?     6  
BOARD MATTERS     8  
Board Qualification and Selection Process     8  
Consideration of Shareholder Nominees     8  
Executive Sessions     8  
Attendance at Annual Meetings     8  
Communications With the Board     9  
Code of Ethics     9  
INFORMATION ABOUT DIRECTORS AND EXECUTIVE OFFICERS     10  
Board of Directors     10  
Director Independence     10  
Committees of the Board     10  
Audit Committee     10  
Compensation Committee     10  
Nominating Committee     11  
Compensation Committee Interlocks and Insider Participation     11  
Section 16(a) Beneficial Ownership Reporting Compliance     11  
Transactions With Related Persons     11  
Biographical Information of Directors and Nominees     12  
Nominees for Election at 2008 Annual Meeting (Class I)     12  
Directors With Terms Expiring in 2009 (Class II)     12  
Biographical Information of Executive Officers     13  
Director Compensation     13  
Compensation Discussion and Analysis     15  
Compensation Committee Report     22  
Summary of Compensation Table     23  
Grants of Plan-Based Awards     24  
Outstanding Equity Awards at Fiscal Year End     25  
Option Exercises and Stock Vested     26  
Nonqualified Deferred Compensation     26  

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PROXY STATEMENT FOR UNITED PANAM FINANCIAL CORP.
2008 ANNUAL MEETING OF SHAREHOLDERS

INFORMATION ABOUT THE ANNUAL MEETING AND VOTING

Why Did You Send Me This Proxy Statement?

We sent you this Proxy Statement and the enclosed proxy card because our Board of Directors is soliciting your proxy to vote at the 2008 Annual Meeting of Shareholders. This Proxy Statement summarizes the information you need to know to cast an informed vote at the Annual Meeting. However, you do not need to attend the Annual Meeting to vote your shares. Instead, you may simply complete, sign, date and return the enclosed proxy card.

Along with this Proxy Statement, we are also sending you the United PanAm Financial Corp. (“UPFC”) 2007 Annual Report, which includes our financial statements.

Who is Entitled to Vote?

We will begin sending this Proxy Statement, the attached Notice of Annual Meeting and the enclosed proxy card on August 26, 2008 to all shareholders entitled to vote. Shareholders who owned UPFC common stock at the close of business on August 4, 2008 are entitled to vote. On this record date, there were 15,737,399 shares of UPFC common stock outstanding. UPFC common stock is our only class of voting stock. We are also authorized to issue up to 2,000,000 shares of preferred stock, but have not yet chosen to do so.

What Constitutes a Quorum?

A majority of our outstanding shares as of the record date must be present, in person or represented by proxy, in order to hold the Annual Meeting and conduct business. This is called a quorum. Your shares are counted as present in person or represented by proxy at the Annual Meeting if you are present in person at the meeting or if you have properly submitted a proxy by telephone, Internet or mail. We will include proxies marked as abstentions and broker non-votes in determining the number of shares present at the meeting.

How Many Votes Do I Have?

Each share of UPFC common stock that you owned at the close of business on August 4, 2008 entitles you to one vote. The proxy card indicates the number of votes that you have.

How Do I Vote My Shares?

You can vote your shares as described below.

Registered Shareholders .  Registered shareholders may vote in person at the annual meeting or by one of the following methods:

• By Mail .  Complete, sign and date the enclosed proxy card and return it in the prepaid envelope provided;
• By Telephone .  Call the toll-free telephone number on the proxy card and follow the recorded instructions;
• By Internet .  Access UPFC’s secure website registration through the Internet at http://www.investorvote.com/UPFC and follow the instructions.

Please note that the Internet and telephone voting facilities for registered shareholders will close at 1:00 a.m., central time, on September 24, 2008.

Street Name Shareholders .  If your shares are held by a broker, bank or other nominee, you must follow the instructions on the form you receive from your broker, bank or other nominee in order for your shares to be voted. Please follow their instructions carefully. Also, please note that if the holder of record of your shares is a broker, bank or other nominee and you wish to vote in person at the annual meeting, you must request a legal proxy from the bank, broker or other nominee that holds your shares and present that proxy and proof of identification at the annual meeting to vote your shares.

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Based on instructions provided by the broker, bank or other holder of record of their shares, street name shareholders may generally vote by one of the following methods:

• By Mail . You may vote by signing, dating and returning your voting instruction card in the enclosed pre-addressed envelope.
• By Methods Listed on Voting Instruction Card . Please refer to your voting instruction card or other information forwarded by your bank, broker or other holder of record to determine whether you may vote by telephone or electronically on the Internet, and follow the instructions on the voting instruction card or other information provided by the record holder;
• In Person With a Proxy From the Record Holder . A street name shareholder who wishes to vote at the annual meeting will need to obtain a legal proxy from his or her bank or brokerage firm. Please consult the voting instruction card sent to you by your bank or broker to determine how to obtain a legal proxy in order to vote in person at the annual meeting.

If Shares Are Registered in My Name, But I Do Not Make Specific Choices on My Proxy Card, How Will My Shares Be Voted?

If you properly fill in your proxy card and send it to us in time to vote, your “proxy” (one of the individuals named on your proxy card) will vote your shares as you have directed. If you sign the proxy card but do not make specific choices, your proxy will vote your shares as recommended by the Board of Directors as follows:

• “FOR” the election of three (3) nominees for director (see page 30 );
• “FOR” ratification of the selection of Grobstein, Horwath & Company LLP as independent accountants for 2008 (see page 30 ).

If any other matter is presented, your proxy will vote in accordance with the recommendation of the Board of Directors, or, if no recommendation is given, in accordance with his best judgment. At the time this Proxy Statement was sent, we knew of no matters which needed to be acted on at the Annual Meeting other than those discussed in this Proxy Statement.

May I Change My Vote After I Return My Proxy?

Yes. If you fill out and return the enclosed proxy card, you may change your vote at any time before the vote is conducted at the Annual Meeting. You may change your vote in any one of three ways:

• You may send to UPFC’s Secretary another completed proxy card with a later date;
• You may notify UPFC’s Secretary in writing before the Annual Meeting that you have revoked your proxy; or
• You may attend the Annual Meeting and vote in person.

What Vote is Required to Approve Each Proposal?

For Proposal 1, the election of three Class I directors, the three nominees receiving the highest number of affirmative votes of the outstanding shares of our common stock, present or represented by proxy and entitled to vote, will be elected as directors to serve until the annual meeting of shareholders to be held in 2010, or until election of their successors, or until they resign. Our Articles of Incorporation do not permit cumulative voting. Abstentions will have no effect on the outcome of the election of nominees for director. Additionally, the election of directors is a matter on which a broker or other nominee is generally empowered to vote, and therefore no broker non-votes are expected to exist in connection with Proposal 1.

Approval of Proposal 2, the ratification of the selection of independent accountants, requires a vote that satisfies two criteria: (i) the affirmative vote must constitute a majority of the voting power present or represented by proxy and voting on the proposal, and (ii) the affirmative vote must constitute a majority of the voting power required to constitute the quorum. For purposes of these proposals, abstentions and broker non-votes will not affect the outcome under clause (i), which recognizes only actual votes cast for or against the proposal. However, abstentions and broker non-votes may affect the outcome under clause (ii) because

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abstentions and broker non-votes are counted for purposes of determining the quorum and have the effect of a vote against the proposal. The ratification of the appointment of the independent accountants for 2008 is a matter on which a broker or other nominee is generally empowered to vote. Accordingly, no broker non-votes are expected to exist in connection with Proposal 2.

How Many Directors Have Been Nominated?

Our Bylaws provide that the number of directors shall be not less than five nor more than nine, with the exact number fixed from time to time by an amendment to our Bylaws or by resolution of the Board of Directors. The Board of Directors, by resolution, has fixed the number of directors at six. Pursuant to our Bylaws, the Board of Directors is divided into two classes. Three directors serve as Class I directors, and three directors serve as Class II directors. The directors of each class are elected each year for a two-year term. The Board of Directors has nominated three individuals to stand for election as Class I directors at the Annual Meeting.

How Are Directors Nominated?

The Board of Directors, upon the unanimous recommendation of its independent members, nominated the individuals standing for election as directors at this meeting. Nominations for directors may be made by any UPFC shareholder pursuant to Section 2.11 of our Bylaws. Section 2.11 of our Bylaws provides that any shareholder may nominate individuals for election as directors as long as the shareholder complies with the timely notice provisions set forth in Section 2.11 (as well as any additional requirements under any applicable law or regulation). The timely notice provisions of Section 2.11 state as follows:

“A shareholder’s notice shall be delivered to or mailed and received at the principal executive offices of the corporation . . . not less than one hundred twenty (120) days prior to the day and month on which, in the immediately preceding year, the corporation’s proxy statement was released to shareholders or if the date of the annual meeting has been changed by more than thirty (30) days from the date contemplated at the time of the previous year’s proxy statement, no later than the close of business on the tenth (10 th ) day following the day on which such notice of the date of the annual meeting was mailed. Such shareholder’s notice shall set forth (A) as to each person whom the shareholder proposes to nominate for election or re-election as a director, (i) the name, age, business address and residence address of such person and (ii) the principal occupation or employment of such person and the class and number of shares of the corporation which are beneficially owned by such person that are required to be disclosed in solicitations of the proxies with respect to nominees for election as directors, pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (including, without limitation, such person’s written consent to being named in the proxy statement as a nominee and to serving as a directors, if elected); (B) as to each action item required to be included on the agenda, a description, in sufficient detail, of the purpose and effect of the proposal to the extent necessary to properly inform all shareholders entitled to vote thereon prior to any such vote; and (C) as to the shareholder giving the notice, (i) the name and address, as they appear on the corporation’s books, of such shareholder and the class and (ii) number of shares of the corporation which are beneficially owned by such shareholder.”

No person nominated by a shareholder shall be elected as a director of UPFC unless nominated in accordance with the procedures set forth in Section 2.11 of our Bylaws. Based on our Bylaws, any shareholder desiring to nominate directors at this meeting should have sent notice by February 6, 2008.

What Are the Costs of Soliciting These Proxies?

We will pay all the costs of soliciting these proxies. In addition to sending proxy-soliciting material, our directors, officers and employees also may solicit proxies in person, by telephone or by other electronic means of communication for which they will receive no compensation. We will ask banks, brokers and other institutions, nominees and fiduciaries to forward the proxy materials to their principals and to obtain authority to execute proxies. We will then reimburse them for their reasonable expenses. In addition, we may pay for and use the services of individuals or companies specializing in the solicitation of proxies in connection with the solicitation of proxies, if the Board of Directors determines this is advisable. We have retained the services of our transfer agent, Computershare, to assist in the distribution and tabulation of proxies at an estimated cost of $2,000, plus certain out-of-pocket expenses.

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How Do I Obtain an Annual Report on Form 10-K?

If you would like a copy of our Annual Report on Form 10-K for the year ended December 31, 2007 that we filed with the Securities and Exchange Commission (“SEC”), we will send you one without charge. Please write to:

United PanAm Financial Corp.
18191 Von Karman Avenue, Suite 300
Irvine, California 92612
Attention: Nancy LeBaron, Assistant Secretary

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INFORMATION ABOUT UPFC STOCK OWNERSHIP

Which Shareholders Own 5% or More of UPFC’s Common Stock?

The following table shows, as of August 4, 2008, all persons (including “groups” as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) we know to be “beneficial owners” of more than five percent (5%) of our common stock. This information is based on reports regarding such ownership filed by such person with the SEC in accordance with Section 13(d) and 13(g) of the Securities Exchange Act of 1934, as amended.

   
  Common Stock Beneficially Owned (1)
Name and Address of Beneficial Owner   Number of
Shares (2) 		  Percent of
Class (3)
Guillermo Bron (4)
1901 Avenue of the Stars, Suite 470
Los Angeles, California 90067 		    6,768,357       40.37 %  
PAFGP, LLC (5)
1901 Avenue of the Stars, Suite 470
Los Angeles, California 90067 		    5,079,357       32.28 %  
Pan American Financial, L.P.
1901 Avenue of the Stars, Suite 470
Los Angeles, California 90067 		    5,079,357       32.28 %  
Wasatch Advisors, Inc. (6)
150 Social Hall Avenue
Salt Lake City, Utah 84111 		    1,526,002       9.70 %  
Ray Thousand (7)
2103 Yacht Grayling
Newport Beach, CA 92660 		    1,198,000       7.09 %  

(1) “Beneficial ownership” is a technical term broadly defined by the SEC to mean more than ownership in the usual sense. For example, a person has beneficial ownership of a share not only if he or she owns the share in the usual sense, but also if he or she has the power to vote, sell or otherwise dispose of the share. Beneficial ownership also includes that number of shares which a person has the right to acquire within 60 days of August 4, 2008, except for Mr. Thousand whose beneficiary ownership includes the number of shares which he has the right to acquire within 30 days of July 25, 2008.
(2) Except as otherwise noted below, each of the persons identified above has sole voting and investment power over the shares of common stock shown as beneficially owned, subject to community property laws where applicable.
(3) Shares of common stock issuable upon exercise of stock options exercisable within 60 days of August 4, 2008 are deemed outstanding for computing the percentage of the person holding such securities but are not deemed outstanding for computing the percentage of any other person.
(4) Mr. Bron is the record owner of 659,000 shares and has the right to acquire within 60 days of August 4, 2008, 1,030,000 shares upon exercise of stock options granted pursuant to the UPFC Amended and Restated 1997 Employee Stock Incentive Plan, as amended (the “Stock Incentive Plan”). Mr. Bron beneficially owns 5,079,357 shares through his ownership in and control of PAFGP, LLC, which is the sole general partner of Pan American Financial, L.P. (“PAFLP”).
(5) PAFGP, LLC is not the record owner of any such shares. PAFGP, LLC beneficially owns all such shares in its capacity as the sole general partner of PAFLP.
(6) The number of shares owned by Wasatch Advisors, Inc. was based on SC 13G/A filed on August 11, 2008.
(7) Mr. Thousand is the record owner of 28,000 shares and has the right to acquire within 30 days of July 25, 2008, 1,170,000 shares upon exercise of stock options granted pursuant to the Stock Incentive Plan. On July 25, 2008, Mr. Thousand was terminated as Chief Executive Officer of UPFC. Mr. Thousand also resigned as a director of UPFC effective as of July 25, 2008.

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How Much of UPFC’s Common Stock is Owned by Directors and Executive Officers?

The following table shows, as of August 4, 2008, beneficial ownership of our common stock by each of our directors, named executive officers and for all current directors and executive officers as a group.

   
  Common Stock Beneficially Owned (1)
Name of Beneficial Owner   Number of
Shares (2) 		  Percent of
Class (3)
Guillermo Bron (4)     6,768,357       40.37 %  
James Vagim (5)     150,000       *  
Mitchell G. Lynn (6)     240,822       1.53 %  
Luis Maizel (7)     282,569       1.78 %  
Giles H. Bateman (8)     72,223       *  
Julie Sullivan (9)     2,894       *  
Mario Radrigan (10)     346,033       2.17 %  
Arash Khazei (11)     73,961       *  
Ray C. Thousand (12)     1,198,000       7.09 %  
Stacy M. Friederichsen (13)     20,100       *  
All current directors and executive officers as a group (10 people) (14)     10,680,961       49.85 %  

* Less than one percent.
(1) “Beneficial ownership” is a technical term broadly defined by the SEC to mean more than ownership in the usual sense. For example, a person has beneficial ownership of a share not only if he or she owns the share in the usual sense, but also if he or she has the power to vote, sell or otherwise dispose of the share. Beneficial ownership also includes that number of shares which a person has the right to acquire within 60 days of August 4, 2008, except for Mr. Thousand and Ms. Friederichsen whose beneficiary ownership includes the number of shares which each of them has the right to acquire within 30 days of July 25, 2008.
(2) Except as otherwise noted below, each of the persons identified above has sole voting and investment power over the shares of common stock shown as beneficially owned, subject to community property laws where applicable.
(3) Shares of common stock issuable upon exercise of stock options exercisable within 60 days of August 4, 2008 are deemed outstanding for computing the percentage of the person holding such securities but are not deemed outstanding for computing the percentage of any other person.
(4) Includes (i) 5,079,357 shares beneficially owned through his ownership interest in and control of PAFGP, LLC, and (ii) 1,030,000 shares issuable upon the exercise of stock options granted pursuant to the Stock Incentive Plan, which options are exercisable within 60 days of August 4, 2008.
(5) No stock options exercisable within 60 days of August 4, 2008. On July 25, 2008, Mr. Vagim was appointed Chief Executive Officer of UPFC.
(6) Includes 52,500 shares issuable upon the exercise of stock options granted pursuant to the Stock Incentive Plan, which options are exercisable within 60 days of August 4, 2008.
(7) Includes 117,500 shares issuable upon the exercise of stock options granted pursuant to the Stock Incentive Plan, which options are exercisable within 60 days of August 4, 2008. Includes 7,000 shares held by LM Advisors Profit Sharing Plan, which Mr. Maizel disclaims beneficial ownership in, except to the extent of his pecuniary interest therein. Includes 103,623 shares of common stock held by PAFLP, which a trust related to Mr. Maizel is entitled to receive pursuant to the terms of the PAFLP partnership agreement. Mr. Maizel disclaims beneficial ownership of the shares of common stock held by PAFLP except to the extent of his pecuniary interest therein.
(8) Includes 11,250 shares issuable upon the exercise of stock options granted pursuant to the Stock Incentive Plan, which options are exercisable within 60 days of August 4, 2008.
(9) No stock options exercisable within 60 days of August 4, 2008.
(10) Includes 190,000 shares issuable upon the exercise of stock options granted pursuant to the Stock Incentive Plan, which options are exercisable within 60 days of August 4, 2008.

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(11) Includes 36,700 shares issuable upon the exercise of stock options granted pursuant to the Stock Incentive Plan, which options are exercisable within 60 days of August 4, 2008.
(12) Includes 1,170,000 shares issuable upon the exercise of stock options granted pursuant to the Stock Incentive Plan, which options are exercisable within 30 days of July 25, 2008. On July 25, 2008, Mr. Thousand was terminated as Chief Executive Officer of UPFC. Mr. Thousand also resigned as a director of UPFC effective as of July 25, 2008.
(13) Includes 20,100 shares issuable upon the exercise of stock options granted pursuant to the Stock Incentive Plan, which options are exercisable within 30 days of July 25, 2008. On July 25, 2008, Ms. Friederichsen was terminated as Chief Operating Officer of UPFC.
(14) Includes 1,437,950 shares issuable upon the exercise of stock options granted pursuant to the Stock Incentive Plan, which options are exercisable within 60 days of August 4, 2008 and 1,190,100 shares issuable upon the exercise of stock options granted pursuant to the Stock Incentive Plan, which options are exercisable within 30 days of July 25, 2008.

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BOARD MATTERS

The Board of Directors is committed to good business practices, transparency in financial reporting and the highest level of corporate governance. To that end, the Board has engaged in a regular process of reviewing our corporate governance policies and practices in light of proposed and adopted laws and regulations, including the Sarbanes-Oxley Act of 2002, the rules of the SEC, and the rules and regulations of The NASDAQ Global Market.

Board Qualification and Selection Process

Nominations to the Board of Directors are either selected or recommended for the Board’s selection by a majority of the Board’s independent members. Each member of the Board should possess the highest personal and professional ethics and integrity and be devoted to representing the best interests of UPFC and its shareholders. The goal of the Board is to maintain a strong and experienced Board by continually assessing the Board’s business background, current responsibilities, level of independence, community involvement and expected period of time available for service. In evaluating director nominees, the Board considers a variety of factors, including the mix of skills, experience, contacts and other qualities. Other important factors to be considered by the Board in the selection of nominees for the position of director include current knowledge and contacts in UPFC’s industry and other industries relevant to UPFC’s business, ability to work together as an effective group and ability to commit adequate time to serve as a director. The Board has the authority to retain a search firm to identify director candidates.

Consideration of Shareholder Nominees

The policy of the Board of Directors is to consider properly submitted shareholder recommendations for candidates for membership on the Board of Directors. In evaluating potential nominees, the Board will look at the same factors described under the heading “Board Qualification and Selection Process” above. Recommendations for director nominees must be submitted in writing, should meet the requirements of Section 2.11 of our Bylaws and should be sent to:

Nancy LeBaron, Assistant Secretary
United PanAm Financial Corp.
18191 Von Karman Avenue, Suite 300
Irvine, CA 92612

The Board of Directors will then screen potential candidates to determine if they meet the qualification criteria. For those candidates who meet the criteria, the Board will conduct a due diligence review of the candidates’ qualifications. Additional procedures for shareholders to directly nominate directors is set forth above under the heading “How Are Directors Nominated?”

Executive Sessions

Executive sessions of independent directors will be held from time to time. The Board contemplates that executive sessions will occur at least twice a year in conjunction with regularly scheduled Board meetings.

Attendance at Annual Meetings

Although we do not have a formal policy regarding attendance by members of our Board of Directors at our annual meetings, it is customary for all of our directors to attend such meetings. At our annual meeting of shareholders held in 2007, we had 6 acting directors all of whom attended the meeting. Mr. Vagim was elected a director after our 2007 annual meeting and, thus, did not attend our 2007 annual meeting of shareholders.

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Communications With the Board

Individuals may communicate directly with the Board of Directors by writing to the Chairman of the Board at the following address:

United PanAm Financial Corp.
Attn: Chairman of the Board
18191 Von Karman Avenue, Suite 300
Irvine, CA 92612
Phone 949-224-1917 / Fax 949-224-1912

The communication may be mailed, delivered by personal delivery, messenger, courier, facsimile or regular, certified or registered mail.

Code of Ethics

We have adopted a Code of Personal Business Conduct and Ethics governing activities by all directors, officers and employees. The Code of Personal Business Conduct and Ethics is available on our website at www.upfc.com. In addition, printed copies of the Code of Personal Business Conduct and Ethics are available, without charge, upon written request to:

Nancy LeBaron, Assistant Secretary
United PanAm Financial Corp.
18191 Von Karman Avenue, Suite 300
Irvine, CA 92612

Any amendments or waivers to the Code of Personal Business Conduct and Ethics will promptly be disclosed by posting on our website.

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INFORMATION ABOUT DIRECTORS AND EXECUTIVE OFFICERS

Board of Directors

The Board of Directors oversees our business and monitors the performance of management. In accordance with corporate governance principles, the Board does not involve itself in day-to-day operations. The directors keep themselves informed through, among other things, discussions with the Chief Executive Officer, other key executives and our principal external advisers (legal counsel, outside auditors, investment bankers and other consultants), by reading reports and other materials that we send them and by participating in Board and committee meetings.

The full Board met 14 times during 2007. Each director attended at least 75% of the aggregate of (i) the total number of meetings of the Board held during the period for which he or she served as a director, and (ii) the total number of meetings of the committees on which he or she served.

Director Independence

The Board of Directors and its various committees must have participation by members who are “independent” as defined by the applicable rules and regulations of The NASDAQ Global Market, including Rule 4200(a)(15) of the Marketplace Rules of The NASDAQ Stock Market LLC. The Board of Directors has determined that each of Mr. Bateman, Mr. Lynn, Mr. Maizel and Ms. Sullivan is independent under such rules and regulations.

Committees of the Board

The Board may delegate portions of its responsibilities to committees of its members. These “standing committees” of the Board meet at regular intervals to attend to their particular areas of responsibility. Our Board has three standing committees: an Audit Committee, a Compensation Committee, and an Investment Committee.

Audit Committee

The Audit Committee operates under a written charter adopted by the Board of Directors. Among other things, the purpose of the Audit Committee is to oversee and monitor the integrity of our financial statements and our internal accounting and financial controls, our independent auditor’s qualifications, independence and compensation, the performance of our internal audit function and independent auditors, and our compliance with legal and regulatory requirements.

The Audit Committee is chaired by Ms. Julie Sullivan, and consists of Ms. Sullivan and Messrs. Bateman and Lynn. The Board has determined that each of Ms. Julie Sullivan, Mr. Bateman and Mr. Lynn is an “audit committee financial expert” as defined by the rules of the SEC. The Board has also determined that each of Ms. Sullivan, Mr. Bateman and Mr. Lynn is “independent” and meets each of the other requirements for Audit Committee members under the applicable rules and regulations of The NASDAQ Global Market.

The Audit Committee held 4 formal meetings in 2007. A copy of the current charter for the Audit Committee is available on our website at www.upfc.com. The charter is reviewed annually. The report of the Audit Committee for the 2007 fiscal year is found on page 28 of this Proxy Statement.

Compensation Committee

The Compensation Committee operates under a written charter adopted by the Board of Directors. Among other things, the purpose of the Compensation Committee is to oversee our compensation and employee benefit plans and practices, including our executive compensation plans and our incentive-compensation and equity-based plans, review and recommend to the Board of Directors the salaries, bonuses and perquisites of our executive officers, determine the individuals to whom, and the terms upon which, awards under our Stock Incentive Plan, management incentive plans and 401(k) plan are granted, make periodic reports to the Board of Directors as to the status of such plans, and review and recommend to the Board of Directors additional compensation plans.

The Compensation Committee is chaired by Mr. Bateman, and consists of Messrs. Bateman, Lynn and Maizel. The Board has determined that each of Mr. Bateman, Mr. Lynn and Mr. Maizel is independent as defined under the applicable rules and regulations of The NASDAQ Global Market.

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The Compensation Committee held 7 formal meetings in 2007. A copy of the current charter for the Compensation Committee is available on our website at www.upfc.com. The charter is reviewed annually. The report of the Compensation Committee for the 2007 fiscal year is found on page 22 of this Proxy Statement.

Nominating Committee

We do not have a nominating committee. Nominations to the Board of Directors are either selected or recommended for the Board’s selection by a majority of the Board’s independent members. The Board of Directors has determined that it is appropriate for the Company not to have a nominating committee based on the small size of the existing Board. Based on this determination, the Board dissolved its nominating committee on July 10, 2007.

Compensation Committee Interlocks and Insider Participation

All decisions involving executive officer compensation are made by our Compensation Committee, consisting of Messrs. Bateman, Lynn and Maizel. None of the members of the Compensation Committee is or has been an officer or employee of UPFC or any of its subsidiaries. None of our executive officers currently serves as a director or member of the compensation committee of another entity that has one or more executive officers serving as a member of our Board of Directors or Compensation Committee, and no such interlocking relationship existed during fiscal year 2007.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors, executive officers and persons who own more than 10% of our common stock to file reports of ownership and changes in ownership with the SEC. These persons are required to provide us with copies of all Section 16(a) reports that they file. Based solely upon a review of these reports and written representations from our directors and executive officers, we believe that our directors, executive officers and 10% owners complied with all Section 16(a) filing requirements applicable to them during the year ended December 31, 2007, with the exception of Guillermo Bron, our Chairman, who filed a late Form 4 on July 17, 2007 (covering one transaction reporting a restricted stock grant), Giles Bateman, a director, who filed a late Form 4 on July 13, 2007 (covering one transaction reporting a restricted stock grant), Mitchell Lynn, a director, who filed a late Form 4 on July 13, 2007 (covering one transaction reporting a restricted stock grant), Luis Maizel, a director, who filed a late Form 4 on July 13, 2007 (covering one transaction reporting a restricted stock grant) and August 16, 2007 (covering one transaction reporting his acquisition of UPFC common stock), Julie Sullivan, a director, who filed a late Form 4 on July 16, 2007 (covering one transaction reporting a restricted stock grant), Ray Thousand, our former Chief Executive Officer and a former director, who filed a late Form 4 on July 13, 2007 (covering one transaction reporting a restricted stock grant), Arash Khazei, our Chief Financial Officer and Executive Vice President, who filed a late Form 4 on July 16, 2007 (covering one transaction reporting a restricted stock grant), Mario Radrigan, our Chief Marketing Officer and Executive Vice President, who filed a late Form 4 on July 16, 2007 (covering one transaction reporting a restricted stock grant), and Stacy Friederichsen, our former Chief Administrative Officer and Executive Vice President, who filed a late Form 4 on July 19, 2007 (covering one transaction reporting a restricted stock grant).

Transactions With Related Persons

The Board of Directors has adopted a Related Person Transaction Policy, which was recommended for approval by the Audit Committee. The Related Person Transaction Policy, which supplements the conflict of interest provisions in our Code of Personal Business Conduct and Ethics, covers any transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships), in which UPFC (including any of its subsidiaries) was, is or will be a participant and the amount involved exceeds $25,000, and in which any related person had, has or will have a direct or indirect interest. The Related Person Transaction Policy requires that such transactions be approved by the Audit Committee.

The Related Person Transaction Policy requires that directors and officers report relationships, potential conflicts and potential related party transactions to our Chief Financial Officer, who will then screen the information and determine if the transaction must be submitted to the Audit Committee.

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There were no transactions during the fiscal year ended December 31, 2007, and there are no currently proposed transactions, in which UPFC is to be a participant, in which the amount involved exceeds $120,000, and in which any related person of UPFC had or will have a direct or indirect material interest.

Biographical Information of Directors and Nominees

The following table identifies our directors and provides their respective ages and current positions with UPFC as of August 4, 2008. Messrs. Bron and Maizel and Ms. Sullivan were each elected to our Board of Directors at our annual meeting of shareholders held in 2007 for a two-year term that will continue until our annual meeting of shareholders to be held in 2009 or until the director’s successor has been elected and qualified or until the director’s death, resignation or removal, and Messrs. Bateman and Lynn were each elected to our Board of Directors at our annual meeting of shareholders held in 2006 for a two-year term that will continue until our annual meeting of shareholders to be held in 2008 or until the director’s successor has been elected and qualified or until the director’s death, resignation or removal. Mr. Vagim was appointed a director on August 1, 2008. Biographical information for each of our directors is provided below.

     
Name   Position   Age   Director
Since
Guillermo Bron   Chairman of the Board   56   1994
James Vagim   President and Chief Executive Officer   45   2008
Giles H. Bateman   Lead Director   63   2006
Mitchell G. Lynn   Director   59   2001
Luis Maizel   Director   57   1997
Julie Sullivan   Director   50   2007

Nominees for Election at 2008 Annual Meeting (Class I)

Giles H. Bateman.   Mr. Bateman has served as a director of UPFC since April 2006 and currently serves as Chairman of UPFC’s Compensation Committee. Mr. Bateman was a co-founder of The Price Company in 1976 and served as Chief Financial Officer and Vice Chairman there until 1991. Mr. Bateman served as non-executive chairman of CompUSA Inc., a publicly traded retailer of computer hardware, software, accessories and related products, from 1994 until he retired in 2000. Mr. Bateman serves as a director, and the chair of the audit committee, of WD-40 Company and as a director of Lifetime Fitness, Inc. He also serves as a director of three private companies.

Mitchell G. Lynn.   Mr. Lynn has served as a director of UPFC since April 2001. Mr. Lynn also served as a director of Pan American Bank, FSB (the “Bank”), a federally chartered savings association and former wholly-owned subsidiary of UPFC from 2001 until its dissolution in February 2005. Since 1995, Mr. Lynn has been founder and President of CRI2000, LP and several subsidiaries which engage in a variety of activities, but primarily the design, development and manufacturing of consumer products for wholesale distribution. From 1979 to 1994, Mr. Lynn held various senior executive level positions including member of the board of directors and executive committee with the Price Company and Price/Costco. Mr. Lynn is currently a director of Bodega Latina, a warehouse grocery retailer focusing on the Hispanic market in the Southwest.

James Vagim has served as a director of UPFC since August 1, 2008 and has served as President and Chief Executive Officer since July 25, 2008. Mr. Vagim was formerly president and director of Westlake Services, Inc., a privately held near-prime to sub-prime automobile finance company. Mr. Vagim acted as president and director since 1997 until his resignation in February 2007. Since that time, Mr. Vagim had been consulting and pursuing private investment opportunities. Mr. Vagim has more than 20 years of experience in the automobile finance industry.

Directors with Terms Expiring in 2009 (Class II)

Guillermo Bron.   Mr. Bron has served as Chairman of the Board and a director of UPFC since April 1994, and as a director of the Bank from 1994 until its dissolution in February 2005. Mr. Bron is a Managing Director of Acon Funds Management LLC, a private equity firm, and the Managing Member of PAFGP, LLC, the sole general partner of Pan American Financial, L.P. From 2000 to 2002, Mr. Bron was a director of Telemundo Group, Inc. Mr. Bron founded UPFC and organized a Hispanic investor group that

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acquired certain assets and assumed certain liabilities of the Bank’s predecessor from the Resolution Trust Corporation in April 1994. From 1994 to 2003, Mr. Bron was an officer, director and principal stockholder of a general partner of Bastion Capital Fund, L.P., a private equity investment fund. Previously, Mr. Bron was a Managing Director of Corporate Finance and Mergers and Acquisitions at Drexel Burnham Lambert.

Luis Maizel.   Mr. Maizel has served as a director of UPFC since October 1997, and currently serves as Chairman of UPFC’s Investment Committee. Mr. Maizel has been President of LM Capital Group, LLC since 1989 and LM Advisors, Inc. since 1984. Mr. Maizel currently serves as a director of both such companies, which are pension fund management and financial consulting firms. From 1980 to 1984, Mr. Maizel was President of Industrias Kuick, S.A. and Blount Agroindustras, S.A., manufacturers of agribusiness equipment.

Julie Sullivan.   Ms. Sullivan has served as a director of UPFC since July 2007, and currently serves as Chairman of UPFC’s Audit Committee. Ms. Sullivan has served as Member of the Audit Committee, Chair of the Audit Committee and Member of the Governance and Nominating Committee of Applied Micro Circuits Corporation since February 2005. Ms. Sullivan has been the Provost and Vice President for Academic Affairs at University of San Diego since July 2005. From July 2003 to July 2005, Ms. Sullivan was a professor at the University of California, San Diego, Rady School of Management. From July 1998 to June 2003, Ms. Sullivan was the Interim Dean and Senior Associate Dean at the University of North Carolina at Chapel Hill, Kenan-Flagler Business School.

Biographical Information of Executive Officers

The following table identifies our executive officers and provides their respective ages and current positions with UPFC as of August 4, 2008. Biographical information for each such person, other than Guillermo Bron and James Vagim, whose biographies are provided above under the heading Directors of United PanAm Financial Corp.,” is provided below.

   
Name   Age   Position
James Vagim   45   President and Chief Executive Officer
Guillermo Bron   56   Chairman
Arash A. Khazei   40   Executive Vice President and Chief Financial Officer
Mario Radrigan   47   Executive Vice President and Chief Marketing Officer

Arash A. Khazei.   Mr. Khazei has served as Executive Vice President and Chief Financial Officer of UPFC since April 2007, as Senior Vice President and Chief Financial Officer of UPFC from July 2006 to April 2007, and as Vice President and Corporate Controller of UPFC from May 2005 to July 2006. From December 2002 to April 2005, Mr. Khazei served as Senior Consultant with RHI International, a consulting company, working directly with companies such as British Petroleum, GMAC and Nokia Corporation. From October 1999 to December 2002, Mr. Khazei served as Managing Consultant with RTM Norden, Inc., an information system consulting company. Prior to October 1999, Mr. Khazei worked for companies including Arthur Andersen LLP and The Walt Disney Company. Mr. Khazei is a Certified Public Accountant and Chartered Accountant.

Mario Radrigan.   Mr. Radrigan has served as Executive Vice President and Chief Marketing Officer of UPFC since April 2007, as Executive Vice President and Chief Administrative Officer of UPFC from June 2004 to April 2007, as Senior Vice President of UPFC from July 2001 to June 2004, and as Executive Vice President, Senior Vice President and Vice President of Marketing of UACC since February 1996. Mr. Radrigan also served as Senior Vice President of the Bank from July 2001 until its dissolution in February 2005. From September 1993 to February 1996, Mr. Radrigan served as Finance Director of Webb Automotive Group. Mr. Radrigan also served as Finance Director of Peyton Cramer Automotive Group from June 1988 to September 1993, as Senior Credit Analyst for Toyota Motor Credit Corporation from February 1986 to June 1988, and as Account Representative for General Motors Acceptance Corporation from August 1981 to February 1986.

Director Compensation

Non-employee director compensation is determined by the Board of Directors, based on the recommendations from the Compensation Committee. We use a combination of cash and stock-based incentive

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compensation to attract and retain qualified candidates to serve on the Board who will act on behalf of shareholders. The compensation approach is intended to provide compensation that is competitive with the market. The philosophy is reviewed annually by the Compensation Committee and adjusted, as appropriate.

For the year ended December 31, 2007, members of the Board who are not UPFC employees received annual cash compensation of $30,000 per year. In addition, the lead director received an additional $65,000 per year and the Chairman of the Audit Committee received an additional $20,000 per year. Starting in 2008, the lead director compensation has been reduced to an additional $20,000 per year from $65,000 per year. Directors who are UPFC employees receive no compensation for their services as directors except for Mr. Bron who is employed as Chairman of UPFC and receives compensation for that role and for his role as Chairman of the UPFC Board. Mr. Bron’s total compensation is set forth in the table below.

On July 10, 2007 Mr. Bateman, the lead director was granted 3,618 shares of restricted stock that vested in full at July 10, 2008. The other non-employee directors serving on the board were each granted 2,894 shares of restricted stock that vested in full at July 10, 2008 and Mr. Bron was also granted 2,894 shares of that vested in full at July 10, 2008.

             
             
Name
(a) 		  Fees Earned
or Paid in
Cash ($)
(b) 		  Stock Awards
($) (1)
(c) 		  Option Awards ($) (2)
(d) 		  Non-Equity
Incentive Plan
Compensation ($)
(e) 		  Change in
Pension Value
and Nonqualified
Deferred
Compensation
Earnings ($) (3)
(f) 		  All Other
Compensation ($) (4)
(g) 		  Total ($)
(h)
Guillermo Bron   $ 85,000 (5)     $ 19,072     $ 0              $ 35,608     $ 5,022     $ 144,702  
Giles H. Bateman   $ 111,250 (6)     $ 23,840     $ 31,753                                $ 166,843  
Ron R. Duncanson (7)   $ 45,000 (8)     $ 19,072     $ 24,766                                $ 88,838  
Mitchell G. Lynn   $ 30,000 (9)     $ 19,072     $ 24,766                                $ 73,838  
Luis Maizel   $ 30,000 (10)     $ 19,072     $ 24,766                                $ 73,838  
Julie Sullivan   $ 20,000 (11)     $ 19,072     $ 0                                $ 39,072  

(1) The amounts in the column reflect dollar amount recognized for financial statement reporting purposes for 2007 in accordance with SFAS 123(R) for restricted stock awards granted to our directors in 2007.
(2) The amounts in the column reflect dollar amount recognized for financial statement reporting purposes for 2007 in accordance with SFAS 123(R), and thus includes amounts from awards granted in and prior to 2007. As of December 31, 2007, each director has the following number of options outstanding: Giles H. Bateman: 13,125; Ron R. Duncanson: 107,500; Mitchell G. Lynn: 52,500; Luis Maizel: 137,500.
(3) The amount in this column reflects the costs incurred for post-retirement compensation for Mr. Bron under Mr. Bron’s Salary Continuation Agreement dated October 1, 1997.
(4) The amount in this column reflects the amount of all compensation paid to Mr. Bron that is not reported in any other column of the table, and includes $2,400 car allowance and $2,622 401(k) match.
(5) The fees earned reflect compensation for Mr. Bron’s service as Chairman of the Board of Directors and pursuant to his employment as Chairman of UPFC.
(6) The fees paid reflect compensation of $30,000 in Mr. Bateman’s capacity as a director and additional compensation of $65,000 in Mr. Bateman’s capacity as the lead director for 2007. The fees paid also reflect additional compensation of $16,250 in Mr. Bateman’s capacity as the lead director for his partial year service for 2006.
(7) Mr. Duncanson resigned as a director effective December 5, 2007. Amounts shown reflect compensation paid to Mr. Duncanson through December 5, 2007.
(8) The fees earned reflect compensation of $30,000 in Mr. Duncanson’s capacity as a director and additional compensation of $15,000 in Mr. Duncanson’s capacity as the Chairman of the Audit Committee for his partial year service through December 5, 2007.
(9) The fees earned reflect compensation for Mr. Lynn’s service as a director.
(10) The fees earned reflect compensation for Mr. Maizel’s service as a director.
(11) Ms. Sullivan was appointed a director on July 10, 2007. The fees earned reflect compensation for her partial year service.

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Compensation Discussion and Analysis

Overview of Compensation Program

The Compensation Committee of the Board of Directors (the “Committee”) has responsibility for establishing, implementing and continually monitoring adherence to the UPFC compensation philosophy. The Committee believes it ensures that the total compensation paid to the executive officers is fair, reasonable and competitive. Generally, the types of compensation and benefits provided to executive officers, including the actively-employed named executive officers, are similar to those provided to other executive officers at comparable companies.

Throughout this Compensation Discussion and Analysis, the individuals who served as Chief Executive Officer and Chief Financial Officer during 2007, as well as Chief Marketing Officer and Chief Operating Officer at December 31, 2007, are referred to as the “named executive officers” or “NEOs.” The Chief Executive Officer and the Chief Operating Officer acted in such capacities through December 31, 2007, but were terminated from those positions effective as of July 25, 2008. Accordingly, in the tables below, we refer to these officers as the former Chief Executive Officer and the former Chief Operating Officer. The tables following the Compensation Discussion and Analysis include compensation information for Sonu Singh, who is not an executive officer of UPFC, but is included in the tables only because he is a highly compensated employee. Because Mr. Singh is not an executive officer, his compensation is not discussed and analyzed in the Compensation Discussion and Analysis.

Process for Evaluating Executive Officer Performance and Compensation

Pursuant to its charter, the Committee meets at least twice each year to review and discuss executive compensation issues. The Committee also meets periodically throughout the year as it deems appropriate.

In February 2007, the Committee engaged Compensia, Inc., an independent compensation consulting firm, to conduct a study of executive compensation practices for the assumed NEOs for fiscal year 2007 (which did not include the Chairman of the Board). The aim of the study was to provide the foundation for creating a more formalized compensation structure, which is reflective of UPFC’s competitive environment. Compensia reports directly to the Committee. The Committee also sought ad hoc advice on regional pay differentials from other compensation consulting firms.

As of December 31, 2007, the Committee was comprised of Messrs. Giles Bateman, Mitchell Lynn and Luis Maizel. Mr. Bateman is the Chair of the Committee, and each of the Committee members is “independent” as defined by the applicable rules and regulations of The NASDAQ Global Market, including Rule 4200(a)(15) of the Marketplace Rules of The NASDAQ Stock Market LLC.

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Compensation Benchmarking

In February 2007, UPFC identified, with the assistance of its independent compensation consulting firm, a peer group of companies, which are referred to as the “Compensation Peer Group,” for purposes of benchmarking executive compensation. These companies, which are listed below, are comparable to UPFC in terms of industry focus and financial scope, and represent UPFC’s labor market competition.

     
•     Advanta   •     Encore Capital Group
•     America’s Car-Mart   •     Financial Federal
•     Asset Acceptance Capital   •     Marlin Business Services
•     Asta Funding   •     Medallion Financial
•     Consumer Portfolio Services   •     Nicholas Financial
•     Credit Acceptance   •     World Acceptance

The companies in the Compensation Peer Group had the following profile as of March 1, 2007:

           
  Last Four Quarters Revenue/Interest
and Non-Interest Income 		  Market Capitalization   Employee Size
     Range   Median   Range   Median   Range   Median
Peer Group   $ 46.8M – $507.7M     $ 228.8M     $ 110.6M – $1,218.7M     $ 360.8M       99 – 2,214       760  
UPFC   $ 197.0M              $ 208.9M                950           

Executive Compensation Philosophy and Framework

UPFC designs its compensation program to attract, motivate and retain high-quality executives by providing rewards that are performance-based and competitive with the labor market in its industry. UPFC’s philosophy is to provide its executives with incentive compensation opportunities that both advance the interests of shareholders and deliver levels of compensation to executives that are commensurate with performance.

UPFC designs its compensation program to:

1. Support its business strategy and business plan by clearly communicating what is expected of executives with respect to goals and results, and by aligning rewards with achievement.

2. Ensure that it can attract the highly skilled executive talent required to deliver favorable business results.

3. Strongly align the interests of its executives with the long-term interests of shareholders through the use of equity compensation.

Employment Agreements

UPFC had entered into employment agreements with each of the NEOs.

Mr. Thousand’s employment agreement, dated July 30, 2007, was originally anticipated to remain effective through December 31, 2009, and provides for base salary of $555,556 per annum between January 1, 2007 and December 31, 2007, $656,250 per annum between January 1, 2008 and December 31, 2008, and $689,063 per annum between January 1, 2009 and December 31, 2009, a target annual cash bonus of up to 60%, 40% and 40% of base salary for fiscal 2007, fiscal 2008 and fiscal 2009, respectively, based upon the satisfaction of specified performance goals approved annually by the Board of Directors, with an additional 20% discretionary bonus for a total of 120%, and severance benefits as described below in “Potential Payments Upon Termination or Change in Control.” Mr. Thousand’s employment agreement (except those provisions that have continuing obligations) terminated as of July 25, 2008 and he entered into a Severance Package and Release Agreement dated July 29, 2008, which was described and filed as an exhibit to a Current Report on Form 8-K filed with the SEC on July 31, 2008.

Mr. Khazei’s employment agreement, dated July 30, 2007, remains effective through December 31, 2009, and provides for base salary of $220,000 per annum between January 1, 2007 and December 31, 2007, $270,000 per annum between January 1, 2008 and December 31, 2008, and $283,500 per annum between January 1, 2009 and December 31, 2009, a target annual cash bonus of up to 50%, 40% and 40% of base

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salary for fiscal 2007, fiscal 2008 and fiscal 2009, respectively, based upon the satisfaction of specified performance goals approved annually by the Board of Directors, and severance benefits as described below in “Potential Payments Upon Termination or Change in Control.”

Mr. Radrigan’s employment agreement, dated July 30, 2007, remains effective through December 31, 2009, and provides for base salary of $225,000 per annum between January 1, 2007 and December 31, 2007, $236,250 per annum between January 1, 2008 and December 31, 2008 and $248,063 per annum between January 1, 2009 and December 31, 2009, a target annual cash bonus of up to 35% of base salary for fiscal 2007, fiscal 2008 and fiscal 2009, based upon the satisfaction of specified performance goals approved annually by the Board of Directors, and severance benefits as described below in “Potential Payments Upon Termination or Change in Control.”

Ms. Friederichsen’s employment agreement, dated May 5, 2008, was originally anticipated to remain effective through December 31, 2009, and provides for base salary of $225,000 per annum between January 1, 2007 and December 31, 2007, $335,000 per annum between January 1, 2008 and December 31, 2008, and $351,750 per annum between January 1, 2009 and December 31, 2009, a target annual cash bonus of up to 35% of base salary for fiscal 2007, and 10% for fiscal 2008 and fiscal 2009, based upon the satisfaction of specified performance goals approved annually by the Board of Directors, and severance benefits as described below in “Potential Payments Upon Termination or Change in Control.” Ms. Friederichsen’s employment agreement (except those provisions that have continuing obligations) terminated as of July 25, 2008 and she entered into a Severance Package and Release Agreement dated July 30, 2008, which was described and filed as an exhibit to a Current Report on Form 8-K filed with the SEC on July 31, 2008.

Evaluation of Executive Officer Compensation

Target Pay/Pay Mix

After reviewing competitive compensation practices in 2007, the Committee determined that the overall below-market positioning for cash compensation combined with a disproportionate emphasis on variable cash compensation and large periodic equity awards, while historically appropriate, required revision in order for UPFC to remain competitive in recruiting and retaining executive talent. UPFC redesigned its compensation program in early 2007 to bring cash compensation into line with market practices. The changes resulted in an overall average at approximately the Compensation Peer Group 60 th percentile in base and target cash incentive compensation. As a result, all NEOs received increases in base salary. The Market data was also used to determine the appropriate proportion of the various pay elements to the overall mix.

The former Chief Executive Officer’s incentive bonus target was also lowered at that time, from 120% to 80% for 2007, to 60% for 2008 and 60% for 2009. The Committee believes this total cash compensation opportunity better balances annual operating performance objectives with the need to create shareholder value over the long-term.

As a result of the changes introduced in early 2007, the mix of fixed to variable cash compensation for fiscal year 2007 was as follows:

   
Executive Officer   Title   Pay Mix
(Fixed/Variable)
Ray C. Thousand   Former President and Chief Executive Officer   56%/44%
Arash A. Khazei   Executive Vice President and Chief Financial Officer   67%/33%
Mario Radrigan   Executive Vice President and Chief Marketing Officer   74%/26%
Stacy M. Friederichsen   Former Executive Vice President and Chief Operating Officer   74%/26%

UPFC has not historically made annual stock option grants. Instead, larger awards were made at the time executives renewed their employment agreements with UPFC. The awards have generally been intended to cover a five year period, and UPFC has attempted to grant awards which, when annualized over the five year period, are above median competitive levels.

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Base Salary and Incentive Bonus

Base salary is the primary fixed compensation element in the executive pay program, and is used to attract, motivate and retain highly qualified executives. UPFC’s annual bonus program is an “at-risk” compensation arrangement designed to reward executives for achieving key operational goals that UPFC believes will provide the foundation for creating longer-term shareholder value.

In addition to market competitiveness, the Committee assesses the following factors when determining annual compensation levels for executives:

• The responsibilities and criticality of the position
• The performance of the executive
• The qualifications and experience of the executive
• UPFC’s financial performance (including return on equity, asset growth, revenue, growth, portfolio management, levels of general and administrative expense and budget variances) for the previous year
• The specific contributions of the executive (or his/her department) to achievement of corporate goals
• The executive’s total compensation during the previous year
• The executive’s length of service at UPFC
• The executive’s effectiveness in dealing with external and internal audiences
• Anticipated future contribution of the executive

As discussed above, in early 2007 the Committee engaged Compensia to conduct a review of executive compensation practices at key market and labor competitors. The results of this study were evaluated, along with company performance data, when the Committee met in March 2007 to discuss the 2006 performance and compensation for the NEOs.

In January 2008, the Committee met to discuss the 2007 performance and compensation for the NEOs. The Committee recommended to the Board of Directors that the NEOs, be granted discretionary bonuses in the amounts set forth in the following table, and such discretionary bonuses were approved by the Board of Directors and granted by the Company:

           
           
Executive Officer   Title   2007
Base
Salary 		  Percent
Increase
Over FY06 		  2007
Target
Bonus
Percentage 		  Bonus
Payment 		  Percent of
Target Bonus
Ray C. Thousand     Former President and Chief
Executive Officer 		    $ 555,556       59 %       80 %     $ 0       0 %  
Arash A. Khazei     Executive Vice President and
Chief Financial Officer 		    $ 220,000       26 %       50 %     $ 38,500       35 %  
Mario Radrigan     Executive Vice President and
Chief Marketing Officer 		    $ 225,000       18 %       35 %     $ 0       0 %  
Stacy M. Friederichsen     Former Executive Vice President
and Chief Operating Officer 		    $ 225,000       29 %       35 %     $ 27,563       35 %  

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Subsequent to the Committee’s evaluation of the results of the compensation study conducted by Compensia (which did not include comparisons for the Chairman of the Board), the Committee recommended to the Board of Directors that the NEOs receive cash compensation for the years 2007-2009 as set forth in the following table, and such cash compensation was approved by the Board of Directors:

             
             
    Base Salary   Target Incentive Bonus
Executive Officer   Title   2007   2008   2009   2007   2008   2009
Ray Thousand   Former President and Chief
Executive Officer 		  $555,556   $656,250   $689,062   80%   60%   60%
Arash A. Khazei   Executive Vice President and
Chief Financial Officer 		  $220,000   $270,000   $283,500   50%   40%   40%
Mario Radrigan   Executive Vice President and
Chief Marketing Officer 		  $225,000   $236,250   $248,063   35%   35%   35%
Stacy M. Friederichsen (1)   Former Executive Vice President and Chief Operating Officer   $225,000   $236,250   $248,063   35%   35%   35%

(1) On May 5, 2008, the Company entered into an Amendment to Executive Employment Agreement with Stacy M. Friederichsen (the “Amendment”), pursuant to which Ms. Friederichsen agreed to serve as Chief Operating Officer and Executive Vice President of the Company and the Company’s automobile finance subsidiary, United Auto Credit Corporation. In addition, pursuant to the Amendment, Ms. Friederichsen would (i) receive a base salary at the rate of $335,000 per annum for the remainder of 2008 and $351,750 per annum from January 1, 2009 to December 31, 2009, and (ii) be eligible to receive an annual bonus of 10% of her base salary for fiscal 2008 and fiscal 2009, or such greater amount as may be approved by the Board of Directors, which annual bonus will be based upon the satisfaction of performance goals approved annually by the Board of Directors. This Amendment (except those provisions that have continuing obligations) terminated as of July 25, 2008 and Ms. Friederichsen entered into a Severance Package and Release Agreement dated July 30, 2008, which was described and filed as an exhibit to a Current Report on Form 8-K filed with the SEC on July 31, 2008.

Equity Compensation

UPFC’s Amended and Restated 1997 Employee Stock Incentive Plan provides for equity awards to NEOs. The Committee believes stock awards create a critical linkage between executive and shareholder interests, and enhance UPFC’s ability to attract, motivate and retain key executives. Historically, equity awards have not been made on an annual basis, but periodically based upon an executive’s employment agreement renewal or promotion.

Beginning in 2007, the Committee decided to move away from the granting of large, periodic awards and instead adopted a program of smaller annual grants. The Committee believes this type of program will provide a more consistent base of unvested equity value and enhance the retention value of the compensation program. In light of the changes in the equity grant process, as well as changes in the competitive market, UPFC has begun providing annual equity compensation in the form of restricted stock. The restricted stock awards are based on a fixed at a dollar amount. The number of shares awarded determined on the grant date is determined by dividing the applicable fixed dollar amount by the then-current fair market value of the stock. The fixed dollar amounts are determined based on data obtained from the Compensation Peer Group, on each NEOs individual performance and UPFC’s operating results. The Committee does not consider stock ownership of the NEOs in setting the fixed dollar amounts.

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In March 2007, the Committee recommended to the Board of Directors that the NEOs receive equity compensation for the years 2007-2009 as set forth in the following table, and such equity compensation was approved by the Board of Directors:

       
    Fixed Value Restricted Stock Grant
Executive Officer   Title   2007 (1)   2008   2009
Ray C. Thousand     Former President and Chief Executive Officer     $ 275,000     $ 275,000     $ 275,000  
Arash A. Khazei     Executive Vice President and Chief Financial Officer     $ 150,000     $ 150,000     $ 150,000  
Mario Radrigan     Executive Vice President and Chief Marketing Officer     $ 75,000     $ 75,000     $ 75,000  
Stacy M. Friederichsen     Former Executive Vice President and Chief Operating Officer     $ 75,000     $ 75,000     $ 75,000  

(1) The 2007 grants were made on July 10, 2007.

With the exception of the 2007, it is anticipated that the grant dates for restricted stock will be February 1 of the applicable year. For 2007, the number of shares issued under the restricted stock grants were determined by dividing the fixed value amounts reflected in the table above by $14.30, which was the closing price of UPFC’s common stock on February 1, 2007. Restricted stock awards will begin to vest on the 3 rd anniversary of the grant date and the becomes fully vested on the 5 th anniversary, subject to acceleration in the event of a change of control. For Mr. Thousand only, at the time of the grant there was a performance requirement of achieving 10% growth rate on an annual basis in pre-tax income from 2007.

Additionally, UPFC will continue to use stock options as a supplemental equity award vehicle in certain circumstances. The Committee awarded 25,000 stock options to each of Mr. Khazei and Ms. Friederichsen on July 10, 2007, as set forth in the following table, as a result of their promotions from Senior Vice President to Executive Vice President:

         
         
Executive Officer   Current Title   Stock
Options 		  Date
Granted 		  Strike
Price 		  Black-
Scholes
Value
Ray C. Thousand     Former President and Chief Executive Officer       N/A       N/A       N/A       N/A  
Arash A. Khazei     Executive Vice President and Chief Financial
Officer 		      25,000       07/10/07     $ 13.82     $ 163,000  
Mario Radrigan     Executive Vice President and Chief Marketing
Officer 		      N/A       N/A       N/A       N/A  
Stacy M. Friederichsen     Former Executive Vice President and Chief
Operating Officer 		      25,000       07/10/07     $ 13.82     $ 163,000  

Benefits and Perquisites

Benefits provided to NEOs are substantially the same for all employees at UPFC, with the following exceptions:

• All NEOs receive a car allowance. Mr. Thousand, Mr. Khazei and Mr. Radrigan receive $200 per month under their employment agreements. Ms. Friederichsen receives $350 per month.

All NEOs participate in UPFC’s 401(k) Plan, which is available to most employees. The 401(k) Plan permits participants to make 401(k) contributions on a pretax basis. Participants can contribute up to 60% of their pretax compensation to the 401(k) Plan annually, subject to legal limitations. The 401(k) Plan also provides that UPFC and its subsidiaries will make a matching contribution on behalf of each eligible participant equal to 50% of the 401(k) contributions made by participants, up to 6% of their individual compensation.

Post-Employment Obligations

All NEOs would be entitled to full vesting of any unvested stock options or restricted stock awards upon a change in control of UPFC. Messrs. Khazei and Radrigan have severance arrangements under their current employment agreements in the event of termination without cause and Mr. Thousand and Ms. Friederichsen had severance arrangements under their previous employment agreements, which agreements (except those provisions that have continuing obligations) terminated as of July 25, 2008. For more information, see “Employment Agreements” above. Under these agreements, upon a termination without cause, the executive

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would be entitled to payment equal to 12 months salary at the then current base salary, plus prorated bonus through the date of termination based on the following rates: Mr. Thousand, 40% of base salary; Mr. Khazei, 40% of base salary; Mr. Radrigan, 35% of base salary; and Ms. Friederichsen, 35% of base salary. As discussed above in “Employment Agreements,” Mr. Thousand’s employment agreement provided for base salary of $555,556 per annum between January 1, 2007 and December 31, 2007, $656,250 per annum between January 1, 2008 and December 31, 2008, and $689,063 per annum between January 1, 2009 and December 31, 2009, Mr. Khazei’s current employment agreement provides for base salary of $220,000 per annum between January 1, 2007 and December 31, 2007, $270,000 per annum between January 1, 2008 and December 31, 2008, and $283,500 per annum between January 1, 2009 and December 31, 2009, Mr. Radrigan’s current employment agreement provides for base salary of $225,000 per annum between January 1, 2007 and December 31, 2007, $236,250 per annum between January 1, 2008 and December 31, 2008, and $248,063 per annum between January 1, 2009 and December 31, 2009, and Ms. Friederichsen’s employment agreement provided for base salary of $225,000 per annum between January 1, 2007 and December 31, 2007, $236,250 per annum between January 1, 2008 and December 31, 2008, and $248,063 per annum between January 1, 2009 and December 31, 2009.

Tax Considerations

Section 162(m) of the Internal Revenue Code of 1986 limits the deductibility of compensation payable in any tax year to the Chief Executive Officer and the other four most highly compensated executive officers. Section 162(m) stipulates that a publicly-held company cannot deduct compensation to its top officers in excess of $1 million. Compensation that is “performance-based” compensation within the meaning of the Internal Revenue Code of 1986 does not count toward the $1 million limit. No NEO compensation in 2007 exceeded the limits of Section 162(m). UPFC structures its executive compensation to comply with Section 162(m).

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Compensation Committee Report

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.

The COMPENSATION COMMITTEE

Giles H. Bateman, Chair
Mitchell G. Lynn
Luis Maizel

The foregoing report of the Compensation Committee is not deemed to be “soliciting material” or to be incorporated by reference by any general statement incorporating this Proxy Statement by reference into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, except to the extent that we specifically incorporate this information by reference, and is not otherwise deemed filed under these Acts.

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Summary Compensation Table

The following table summarizes information about compensation paid to or earned by our Chief Executive Officer, our current Chief Financial Officer and the two other most highly compensated executive officers who were serving as executive officers at December 31, 2007. The table also shows the compensation for Sonu Singh, who is not an executive officer but was one of the most highly compensated employees of UPFC as of December 31, 2007. Because Mr. Singh is not an executive officer, his compensation is not discussed and analyzed in the Compensation Discussion and Analysis which precedes these tables. The Chief Executive Officer and the Chief Operating Officer, who are named in the table below, acted in such capacities through December 31, 2007, but were terminated from those positions effective as of July 25, 2008. Accordingly, in the tables below, we refer to these officers as the former Chief Executive Officer and the former Chief Operating Officer.

                 
                 
Name and Principal
Position (a) 		  Year
(b) 		  Salary ($) (1)
(c) 		  Bonus ($) (2)
(d) 		  Stock Awards ($) (3)
(e) 		  Option Awards ($) (4)
(f) 		  Non-Equity
Incentive
Plan
Compensation ($)
(g) 		  Change in
Pension Value
and Nonqualified
Deferred
Compensation
Earnings ($)
(h) 		  All Other
Compensation ($) (5)
(i) 		  Total ($)
(j)
Ray C. Thousand, Former Chief Executive Officer and President   2007   $555,556   $0   $17,103   $0             $19,833   $592,492
Arash A. Khazei, Chief Financial Officer and Executive Vice
President 		  2007   $220,000   $38,500   $9,324   $197,079             $9,150   $474,053
Mario Radrigan, Executive Vice President and Chief Marketing Officer   2007   $225,000   $0   $4,662   $6,550             $14,012   $250,224
Stacy M. Friederichsen, Former Executive Vice President and Chief Operating Officer   2007   $225,000   $27,563   $4,662   $82,240             $10,950   $350,415
Sonu Singh, Senior Vice President   2007   $139,329   $27,866   $0   $27,852             $8,497   $203,544

(1) The amounts in column (c) reflect cash earned during 2007 salary.
(2) UPFC’s performance did not meet the criteria for bonus payouts for 2007 overall corporate performance; however, the Compensation Committee concluded that certain named executive officers did meet their own personal performance targets. Accordingly, at the recommendation of the Compensation Committee, the Board of Directors authorized the grant of bonuses to certain named executive officers.
(3) The amounts in column (e) reflect the dollar amount recognized for financial statement reporting purposes for 2007 in accordance with SFAS 123 (R) for restricted stocks granted to our named executive officers.
(4) The amounts in column (f) reflect the dollar amount recognized for financial statement reporting purposes for 2007 in accordance with SFAS 123 (R) for stock options held by our named executive officers, and thus include amounts from awards granted in and prior to 2007. For information regarding significant factors, assumptions and methodologies used in determining the fair value of our stock options, see Note 10 to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2007.

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(5) Column (i) represents the amount of all compensation paid to the named executive officers and Mr. Singh that is not reported in any other column of the table, as detailed in the table below.

           
Name   Year   401(k)
Match 		  Car
Allowance 		  Life
Insurance
Premiums Paid
by the Company 		  Unused
Vacation
Payouts 		  Total
Ray C. Thousand     2007     $ 6,750     $ 2,400     $ 0     $ 10,683     $ 19,833  
Arash A. Khazei     2007     $ 6,750     $ 2,400     $ 0     $ 0     $ 9,150  
Mario Radrigan     2007     $ 6,750     $ 2,400     $ 535     $ 4,327     $ 14,012  
Stacy M. Friederichsen     2007     $ 6,750     $ 4,200     $ 0     $ 0     $ 10,950  
Sonu Singh     2007     $ 5,818     $ 0     $ 0     $ 2,679     $ 8,497  

Grants of Plan-Based Awards

The following table summarizes information about grants of plan-based awards for each of our named executive officers and Mr. Singh during 2007.

                     
                     
      
  
  
  
  
Estimated Future Payouts under
Non-Equity Incentive
Plan Awards (1) 		    
  
  
  
  
Estimated Future Payouts
under Equity Incentive
Plan Awards 		  All Other
Stock
Awards:
Number
of Shares
of Stock
or Units (#) (2)
(i) 		  All Other
Option
Awards:
Number of
Securities
Underlying
Options (#) (3)
(j) 		  Exercise
or Base
Price of
Option
Awards ($/Sh)
(k) 		  Grant Date
Fair Value
of Stock
and Option
Awards
(l)
Name
(a) 		  Grant
Date
(b) 		  Threshold
($)
(c) 		  Target
($)
(d) 		  Maximum
($)
(e) 		  Threshold
(#)
(f) 		  Target
(#)
(g) 		  Maximum
(#)
(h)
Ray C. Thousand     N/A     $ 0     $ 333,333     $ 444,444                                                                 
       7/10/2007                                                             19,231              $ 14.30       275,000  
Arash A. Khazei     N/A     $ 0     $ 110,000     $ 110,000                                                                 
       7/10/2007                                                                      25,000     $ 13.82       163,000  
       7/10/2007                                                             10,490              $ 14.30       150,000  
Mario Radrigan     N/A     $ 0     $ 78,750     $ 78,750                                                                 
                                                                      5,245              $ 14.30       75,000  
Stacy M. Friederichsen     N/A     $ 0     $ 78,750     $ 78,750                                                                 
       7/10/2007                                                             5,245              $ 14.30       75,000  
       7/10/2007                                                                      25,000     $ 13.82       163,000  
Sonu Singh     N/A     $ 0     $ 55,732     $ 55,732                                                                 

(1) Cash Bonus. The amounts in these columns represent threshold (no threshold for Mr. Thousand, Mr. Khazei, Mr. Radrigan, Ms. Friederichsen, and Mr. Singh), target (100% for Mr. Thousand, Mr. Khazei, Mr. Radrigan, Ms. Friederichsen, and Mr. Singh) and maximum (120% for Mr. Thousand, 100% for Mr. Khazei, Mr. Radrigan, Ms. Friederichsen, and Mr. Singh) amounts of cash bonuses that were payable to our named executive officers and Mr. Singh for 2007 performance. The terms of the cash bonus arrangement for each named executive officer identified above are set forth in the employment agreement of each such named executive officer.
(2) The amounts reported in this column represent restricted stocks granted to our named executive officers and Mr. Singh during 2007.
(3) The amounts reported in this column represent stock options granted to our named executive officers and Mr. Singh during 2007. Options to Mr. Khazei and Ms. Friederichsen were granted on July 10, 2007 and vest 20% annually commencing on December 31, 2007. These options have a ten-year term.

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Outstanding Equity Awards at Fiscal Year End

The following table summarizes information about the number and estimated value of outstanding stock options and unvested stock awards held by our named executive officers and Mr. Singh on December 31, 2007.

                 
                 
  Option Awards   Stock Awards
Name
(a) 		  Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
(b) 		  Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
(c) 		  Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
(d) 		  Option
Exercise
Price ($)
(e) 		  Option
Expiration
Date
(f) 		  Number of
Shares or
Units of
Stock
That Have
Not Vested
(#)
(g) 		  Market
Value of
Shares or
Units of
Stock
That Have
Not Vested (#)
(h) 		  Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested (#)
(i) 		  Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested ($)
(j)
Ray C. Thousand     270,000       0              $ 4.39       3/31/2011                                      
       200,000       0              $ 10.00       7/31/2011                                      
       700,000       0              $ 10.00       9/25/2011                                      
       0       300,000 (1)              $ 30.00       3/23/2016                                      
                                                    19,231 (14)     $ 14.30              $ 275,000  
Arash A. Khazei     3,000       2,000 (2)              $ 22.20       5/9/2015                                      
       8,700       5,800 (3)              $ 23.14       5/24/2015                                      
       20,000       30,000 (4)              $ 30.85       7/3/2016                                      
       5,000       20,000 (5)              $ 13.82       7/10/2017                                      
                                                    10,490 (14)     $ 14.30              $ 150,000  
Mario Radrigan     180,000       0              $ 10.00       3/31/2011                                      
       8,000       2,000 (6)              $ 10.00       5/9/2013                                      
                                                    5,245 (14)     $ 14.30              $ 75,000  
Stacy M. Friederichsen     3,000       2,000 (7)              $ 20.10       3/10/2015                                      
       3,900       2,600 (8)              $ 23.14       5/24/2015                                      
       4,200       2,800 (9)              $ 21.42       11/17/2015                                      
       4,000       6,000 (10)              $ 30.69       4/5/2016                                      
       5,000       20,000 (11)              $ 13.82       7/10/2017                                      
                                                    5,245 (14)     $ 14.30              $ 75,000  
Sonu Singh     1,300       0              $ 6.07       4/22/2012                                      
       6,400       1,600 (12)              $ 17.91       3/1/2014                                      
       6,000       4,000 (13)              $ 22.29       10/13/2015                                      
      

(1) These options were granted on March 23, 2006 and vest 100% on December 7, 2010. These options have a ten-year term with performance requirements of 10% growth rate on an annual basis in pre-tax income from 2006 over a five-year term.
(2) These options were granted on May 9, 2005 and vest 20% annually commencing on December 31, 2006. These options have a ten-year term.
(3) These options were granted on May 24, 2005 and vest 20% annually commencing on December 31, 2006. These options have a ten-year term.
(4) These options were granted on July 3, 2006 and vest 20% annually commencing on December 31, 2006. These options have a ten-year term.
(5) These options were granted on July 10, 2007 and vest 20% annually commencing on December 31, 2007. These options have a ten-year term.
(6) These options were granted on May 9, 2003 and vest 20% annually commencing on May 9, 2004. These options have a ten-year term.
(7) These options were granted on March 10, 2005 and vest 20% annually commencing on December 31, 2006. These options have a ten-year term.
(8) These options were granted on May 24, 2005 and vest 20% annually commencing on December 31, 2006. These options have a ten-year term.

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(9) These options were granted on November 17, 2005 and vest 20% annually commencing on December 31, 2006. These options have a ten-year term.
(10) These options were granted on April 5, 2006 and vest 20% annually commencing on December 31, 2006. These options have a ten-year term.
(11) These options were granted on July 10, 2007 and vest 20% annually commencing on December 31, 2007. These options have a ten-year term.
(12) These options were granted on March 1, 2004 and vest 20% annually commencing on December 31, 2004. These options have a ten-year term.
(13) These options were granted on October 13, 2005 and vest 20% annually commencing on December 31, 2005. These options have a ten-year term.
(14) These restricted stock awards were granted on July 10, 2007, vest 33.33% on February 1, 2010, 33.33% on February 1, 2011 and 33.33% on February 1, 2012. These restricted stock awards are subject to acceleration in the event of a change of control. For Mr. Thousand only, there is a performance requirement of achieving 10% growth rate on an annual basis in pre-tax income from 2007.

Option Exercises and Stock Vested

The following table summarizes information about stock option exercises and stock vested for each of our named executive officers and Mr. Singh during 2007.

       
  Option Awards   Stock Awards
Name
(a) 		  Number of
Shares
Acquired on
Exercise (#)
(b) 		  Value Realized
upon Exercise ($)
(c) 		  Number of
Shares
Acquired on
Vesting (#)
(d) 		  Value Realized
on Vesting ($)
(e)
Ray C. Thousand     —       —       —       —  
Arash A. Khazei     —       —       —       —  
Mario Radrigan     —       —       —       —  
Stacy M. Friederichsen     —       —       —       —  
Sonu Singh     —       —       —       —  

Nonqualified Deferred Compensation

The following table summarizes information about nonqualified deferred compensation for each of our named executive officers and Mr. Singh during 2007.

         
Name
(a) 		  Executive
Contributions
in Last FY ($)
(b) 		  Registrant
Contributions
in Last FY ($)
(c) 		  Aggregate
Earnings
in Last FY ($)
(d) 		  Aggregate
Withdrawals/
Distributions ($)
(e) 		  Aggregate
Balance at
Last FYE
($)
(f)
Ray C. Thousand     —       —       —       —       —  
Arash A. Khazei     —       —       —       —       —  
Mario Radrigan     —       —       —       —       —  
Stacy M. Friederichsen     —       —       —       —       —  
Sonu Singh     —       —       —       —       —  

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Potential Payments Upon Termination or Change in Control

The following table summarizes the potential payments that were payable to our named executive officers and Mr. Singh on December 31, 2007 upon an involuntary termination without cause or upon a change in control of the Company, assuming that such involuntary termination without cause or change in control of the Company occurred on December 31, 2007.

               
               
Name   Payment Trigger Event   Salary
Severance 		  Bonus
Severance 		  Benefits/
Perquisites 		  Equity
Acceleration 		  Tax
Gross-Up 		  Other
Payments 		  Total
Value
Ray C. Thousand (1)   Involuntary Termination Without
Cause Change in Control 		  $555,556
— 		  $333,333
— 		                      $888,889
—
Arash A. Khazei (1)   Involuntary Termination Without
Cause Change in Control 		  $220,000
— 		  $110,000
— 		                      $330,000
—
Mario Radrigan (1)   Involuntary Termination Without
Cause Change in Control 		  $225,000
— 		  $78,750
— 		                      $303,750
—
Stacy M. Friederichsen (1)   Involuntary Termination Without
Cause Change in Control 		  $225,000
— 		  $78,750
— 		                      $303,750
—
Sonu Singh (2)   Involuntary Termination Without
Cause Change in Control 		  —
— 		  —
— 		                      —
—

(1) We have entered into employment agreements with Mr. Thousand, Mr. Khazei, Mr. Radrigan and Ms. Friederichsen. Pursuant to these agreements, we will owe compensation to these named executive officers if they are terminated without cause. There are no post-termination benefits payable in the event of a voluntary termination. If termination without cause occurs, the payment will be equal to 12 months salary at the then current base salary, plus prorated bonus through the date of termination. Mr. Thousand’s employment agreement (except those provisions that have continuing obligations) terminated as of July 25, 2008 and he entered into a Severance Package and Release Agreement dated July 29, 2008, which was described and filed as an exhibit to a Current Report on Form 8-K filed with the SEC on July 31, 2008. Pursuant to Mr. Thousand’s severance agreement, we paid Mr. Thousand certain termination payments in 2008 as further described in his severance agreement and in the July 31, 2008 Current Report on Form 8-K. In addition, Ms. Friederichsen’s employment agreement (except those provisions that have continuing obligations) terminated as of July 25, 2008 and she entered into a Severance Package and Release Agreement dated July 30, 2008, which was described and filed as an exhibit to a Current Report on Form 8-K filed with the SEC on July 31, 2008. Pursuant to Ms. Friederichsen’s severance agreement, we paid Ms. Friederichsen certain termination payments in 2008 as further described in her severance agreement and in the July 31, 2008 Current Report on Form 8-K.
(2) We did not enter into an employment agreement with Mr. Singh for 2007.

Equity Compensation Plan Information

The following table summarizes information as of December 31, 2007 relating to our equity compensation plans pursuant to which grants of options, restricted stock or other rights to acquire shares may be acquired from time to time.

     
Plan Category   Number of
Securities
to Be Issued
Upon Exercise
of Outstanding
Options, Warrants
and Rights
(a) 		  Weighted Average
Exercise Price
of Outstanding
Options, Warrants
and Rights
(b) 		  Number of
Securities Remaining
Available for
Future Issuance
under Equity
Compensation Plans
(Excluding Securities
Reflected in Column
(a))
Equity compensation plans approved by security holders     4,110,335     $ 14.02       631,386  
Equity compensation plans not approved by security holders     —       —       —  
Total     4,110,335     $ 14.02       631,386  

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Audit Committee Report

The following Report of the Audit Committee of the Board of Directors shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933 or under the Securities Exchange Act of 1934, except to the extent that we specifically incorporate the information contained in the report by reference, and shall not otherwise be deemed filed under such acts.

The Audit Committee of UPFC’s Board of Directors (the “Committee”) operates under a written charter adopted by the Board of Directors.

The Committee met and held discussions with management and the independent accountants regarding current audit activities and the plans and results of selected internal audits. Management has the primary responsibility for UPFC’s systems of internal controls and the financial reporting process. The independent accountants are responsible for performing an independent audit of UPFC’s consolidated financial statements in accordance with generally accepted accounting standards and to issue a report thereon. The Committee’s responsibility is to monitor and oversee these processes. The Committee also provides guidance in matters regarding ethical considerations and business conduct and monitors compliance with laws and regulations. The Committee relies, without independent verification, on the information provided to it and on the representations made by management and the independent accountants.

The Committee appointed UPFC’s independent accountants, subject to shareholder ratification. UPFC’s independent accountants also provided to the Committee the written disclosures and the letter required by Independence Standards Board Standard No. 1 (Independent Discussions with Audit Committees), and the Committee discussed with the independent accountants that firm’s independence.

Management represented to the Committee that UPFC’s consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America, and the Committee has reviewed and discussed the consolidated financial statements with management and the independent accountants. The Committee discussed with the independent accountants matters required to be discussed by Statement on Auditing Standards No. 61 (Communications with Audit Committees). Based on these discussions and reviews, the Committee recommended that the Board of Directors include the audited consolidated financial statements in UPFC’s Annual Report on Form 10-K for the year ended December 31, 2007 for filing with the Securities and Exchange Commission.

AUDIT COMMITTEE
Julie Sullivan, Chairman
Giles H. Bateman
Mitchell G. Lynn

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Independent Public Accountant

Principal Accountant Fees and Services

The Audit Committee has selected Grobstein, Horwath & Company LLP as our independent public accounting firm for the fiscal year ending December 31, 2008. The following is a summary of the fees billed to us by our independent public accounting firm, Grobstein, Horwath & Company LLP, for professional services rendered for the fiscal years ended December 31, 2007 and December 31, 2006:

   
Types of Fees   2007   2006
Audit Fees   $ 473,334     $ 938,241  
Audit-Related Fees     94,244       91,250  
Tax Fees     5,127       90,788  
All Other Fees     24,075       —  
Total Fees   $ 596,780     $ 1,120,279  

In the above tables, “Audit Fees” include fees for professional services rendered for the integrated audit of our consolidated financial statements included in our annual reports on Form 10-K and of our internal control over financial reporting, review of the unaudited financial statements included in our quarterly reports on Form 10-Q, preparation of agreed-upon-procedure reports associated with our securitization activities, consents, assistance with documents filed with the SEC, and accounting and reporting consultation in connection with the audit and/or quarterly reviews. “Audit-Related Fees” are fees for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements, and include fees for professional services rendered in the preparation of comfort letters associated with documents filed with the SEC. “Tax Fees” include fees for tax compliance and tax planning. “All Other Fees” are fees for any services not included in the first three categories.

Pre-Approval Policies and Procedures

The Audit Committee has adopted a policy that requires advance approval of all audit, audit-related, tax services, and other services performed by the independent auditors. The policy provides for pre-approval by the Audit Committee of specifically defined audit and non-audit services. Unless the specific service has been previously pre-approved with respect to that year, the Audit Committee must approve the permitted service before the independent auditors are engaged to perform it. The Audit Committee has delegated to the Chair of the Audit Committee authority to approve permitted services provided that the Chair reports any decisions to the Committee at its next scheduled meeting.

The Audit Committee considered the compatibility of the provision of other services by its independent auditors with the maintenance of such independent auditors’ independence. The Audit Committee approved all audit and non-audit services provided by Grobstein, Horwath & Company LLP in 2007.

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DISCUSSION OF PROPOSALS RECOMMENDED BY THE BOARD

Proposal 1: Elect Three Directors

At the Annual Meeting, three Class I directors are to be elected to serve until the annual meeting of shareholders to be held in 2010, or until election of their successors, or until they resign. The Board of Directors has nominated three individuals to stand for election as Class I directors. Each of these nominees has been unanimously recommended by the Board’s independent members for election to the Board of Directors, and the Board of Directors has approved these nominees for such nomination. We know of no reason why any nominee may be unable to serve as a director if elected. If any nominee is unable to serve, your proxy may vote for another nominee proposed by the Board. If for any reason these nominees prove unable or unwilling to stand for election, the Board will nominate alternates.

The following sets forth the names of the three (3) persons nominated by the Board to serve as Class I directors:

Class I Nominees

Giles H. Bateman
Mitchell G. Lynn
James Vagim

For information about these nominees, please refer to the biographies set forth above.

The Board recommends that you vote “FOR” the election of all three Class I nominees for director.

Proposal 2: Ratify Selection of Independent Public Accountants for 2008

The Audit Committee has appointed Grobstein, Horwath & Company LLP (“Grobstein”) as our independent public accountants for the year ending December 31, 2008, and shareholders are being asked to ratify the appointment. Grobstein, our accountants for the year ended December 31, 2007, performed audit services for 2007 which included the examination of the consolidated financial statements and services related to filings with the SEC. All professional services rendered by Grobstein during 2007 were furnished at customary rates and terms. Representatives of Grobstein will be present at the Annual Meeting, will have the opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions from shareholders.

The Board recommends that you vote “FOR” ratification of the selection of Grobstein as Independent Public Accountants for the year ending December 31, 2008.

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OTHER BUSINESS

We know of no other business which will be presented for consideration at the Annual Meeting other than as stated in the Notice of Meeting. If, however, other matters are properly brought before the meeting, it is the intention of the persons named as proxies in the enclosed proxy card to vote the shares represented thereby in accordance with their best judgment and in their discretion, and authority to do so is included in the proxy.

INFORMATION ABOUT SHAREHOLDER PROPOSALS

Under certain circumstances, shareholders are entitled to present proposals at shareholder meetings. We may hold our 2009 Annual Meeting in September 2009 or we may advance it to July 2009. If you wish to submit a proposal to be included in our 2009 proxy statement and we hold the meeting in September 2009, we must receive the proposal, in a form which complies with the applicable securities laws, on or before May 27, 2009. In addition, in the event a shareholder proposal is not submitted to us on or before August 10, 2009, the proxy to be solicited by the Board of Directors for the 2009 Annual Meeting will confer authority on the holders of the proxy to vote the shares in accordance with their best judgment and discretion if the proposal is presented at the 2009 Annual Meeting without any discussion of the proposal in the proxy statement for such meeting. However, if we advance the date of the 2009 Annual Meeting to July 2009, then we must receive the proposal on or before March 3, 2009 for it to be included in our proxy statement and if it is not submitted on or before May 17, 2009 then the holders of the proxy will have authority to vote the shares in their discretion if the proposal is submitted at the 2009 Annual Meeting. Please address your proposals to: United PanAm Financial Corp., 18191 Von Karman Avenue, Suite 300, Irvine, California, 92612 Attn: Corporate Secretary.

By Order of the Board of Directors,

[GRAPHIC MISSING]

James Vagim
President and Chief Executive Officer

August 26, 2008

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