Central Financial Acceptance Corp. Announces Acquisition of Mission Savings & Loan and Expansion of Kmart Relationship.

COMMERCE, Calif.--(BUSINESS WIRE)--Feb. 12, 1998--Central Financial Acceptance Corp. (Nasdaq:CFAC) Thursday announced that it has entered into a definitive agreement to acquire Mission Savings & Loan Association, a federally chartered savings association based in Riverside, Calif.

The acquisition is subject to, among other things, the approval of the Office of Thrift Supervision and the approval of the shareholders of the association.

CFAC stated that the acquisition will be for cash and that the cost of the acquisition, which will be an amount equal to 1.47 times the association's adjusted book value at the end of the month immediately preceding the date of acquisition, subject to adjustment, is currently estimated to be approximately $4.7 million.

In commenting on the acquisition, Gary Cypres, chairman and president of CFAC, stated, "Upon consummation and subject to appropriate regulatory approvals, CFAC anticipates that it will expand the operations of the association by opening branches within its present facilities, which primarily provide consumer financing to the low-income Hispanic community in Southern California -- a market which CFAC believes is underserved."

In addition to accepting deposits and providing other financial services, such as checking accounts, to its present customer base, the primary purpose of the acquisition is to expand CFAC's consumer lending business through the issuance of a credit card and to permit its customers to use its Efectiva card in other ATM networks.

Since inception of the Efectiva card in May 1997, CFAC has issued approximately 90,000 Efectiva cards, which provide its customers with the ability to access their established line of credit by withdrawing cash from CFAC through cash-dispensing machines.

CFAC also announced that it has entered into an agreement with Kmart Corp. to install its cash-dispensing machines in 10 Kmart locations, primarily in Southern California, and to allow CFAC employees at the Kmart locations to receive and process applications, and to issue its Efectiva cards to Kmart customers.

CFAC further stated that as a result of the success of this program during the 1997 holiday season, Kmart and CFAC have agreed to expand its relationship and install its cash-dispensing machines in 10 additional Kmart locations, which CFAC anticipates will be implemented by the end of March 1998.

CFAC also indicated that it is in discussion with Kmart to expand into additional locations after March 31, 1998, and to expand the services it offers in such locations to include travel and insurance programs.

In commenting on these developments, Cypres stated that he "was very pleased with the development and implementation of the Efectiva program, and, although CFAC incurred approximately $750,000 of expenses in the fourth quarter of 1997 to introduce this product to the marketplace, CFAC believes that such expenditures will have a long-term payoff for CFAC."

Cypres also stated, "During the coming year, CFAC will concentrate its activities on expanding its Efectiva card program with other major retailers, and accordingly has decided to phase out its relationship with approximately 100 small independent retailers which it provides credit to, and will take a charge of approximately $1,800,000 in the fourth quarter as a result of this decision."

Cypres also stated, "Due to the potential acquisition of the association and other factors, CFAC has decided to withdraw its registration statement which it filed in October 1997 relating to the public offering of cumulative trust preferred securities."

Under the rules of the Securities and Exchange Commission, any expenses incurred in connection with this offering (approximately $400,000) can be deferred for only 90 days, and accordingly CFAC has expended such amount in the fourth quarter of 1997.

Although CFAC has not completed its financial statements for the fourth quarter of 1997, as a result of these aforementioned charges, CFAC anticipates a loss for the fourth quarter of 1997.

Central Financial Acceptance Corp. is a specialized consumer finance company that primarily serves the financing needs of the growing low-income Hispanic population in California. -0-

Certain matters discussed in this news release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and as such may involve known and unknown risks, uncertainties and other factors that may cause the actual results to differ from any estimates contained herein, including, among other factors, (a) contingencies relating to the calculation of the purchase price in the acquisition of the association; (b) the receipt of necessary regulatory and shareholder approval and any requisite third-party consents; (c) any limitations or restrictions on the activities of the association that may be imposed by regulatory authorities; and (d) contingencies relating to finalizing terms on any agreement to expand its installations of cash- dispensing machines and to increase services offered at third-party locations. There can be no assurance that the results described in such forward-looking statements will, in fact, be achieved.

CONTACT: Central Financial Acceptance Corp., Commerce

Gary Cypres/Carol Covert, 213/720-8608