<PAGE>

                                   FORM 10-Q


                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
                          OF THE SECURITIES ACT OF 1934


For Quarter Ended:  June 30, 1998

Commission File Number:  2-95465-S


                     WESTAR FINANCIAL SERVICES INCORPORATED
                                  successor to
                         REPUBLIC LEASING INCORPORATED
             (Exact name of registrant as specified in its charter)


              Washington                             91-1715252
    (State or other jurisdiction of     (IRS Employer Identification Number)
     Incorporation or organization)


            The Republic Building;  Olympia, WA               98501
          (Address of principal executive office)          (Zip Code)


Registrant's telephone number, including area code:  (360) 754-6227


Indicate by check mark whether the registrant (1) has filed all reports 
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act 
of 1934 during the preceding 12 months and (2) has been subject to such 
filing requirements for the past 90 days.

                       Yes:  X          No
                            ---             ---

Indicate the number of shares outstanding of each of the issuer's classes of 
common stock as of the latest practicable date:

             Common Stock                             2,187,300
                Class              Number of Shares Issued at January 31, 1999

<PAGE>

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Westar Financial Services Incorporated and Subsidiaries
Consolidated Balance Sheet
as of June 30, 1998 and March 31, 1998

<TABLE>
<CAPTION>
                                                        June 30       March 31
                                                      (Unaudited)
                                                       ---------      --------
<S>                                                 <C>            <C>
Cash                                                $    985,535   $    475,275
Accounts receivable, net of allowance
  for credit losses                                      188,665        147,092
Credit enhancement receivable, net of
  allowance for credit losses                            823,329        855,848
Net investment in direct finance leases, net of
  allowance for credit losses                         25,524,157     18,533,096
Deferred tax asset                                     3,186,426      2,936,206
Less: valuation allowance                             (3,186,426)    (2,936,206)
Other assets                                             491,427        484,066
                                                      ----------    -----------
                                                    $ 28,013,113   $ 20,495,377
                                                      ----------    -----------
                                                      ----------    -----------

Accounts payable                                    $    349,540   $    692,126
Notes payable - bank                                  25,845,351     19,057,701
Notes payable - other                                  6,524,315      2,756,635
Other liabilities                                        833,453        722,401
                                                      ----------    -----------
                                                      33,552,659     23,228,863
                                                      ----------    -----------

Redeemable preferred stock                             2,048,000      4,073,000
                                                      ----------    -----------

Common stock, no par value                             3,239,795      3,239,795
Paid in capital - stock warrants                         371,495        371,495
Accumulated deficit                                  (11,198,836)   (10,417,776)
                                                      ----------    -----------
                                                      (7,587,546)    (6,806,486)
                                                      ----------    -----------
                                                    $ 28,013,113   $ 20,495,377
                                                      ----------    -----------
                                                      ----------    -----------

</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>

Westar Financial Services Incorporated and Subsidiaries 
Consolidated Statement of Operations 
For the three months and year to date June 30, 1998 and 1997
(Unaudited)

<TABLE>
<CAPTION>
                                                          Three Months Ended
                                                            1998      1997
<S>                                                      <C>         <C>
Revenues:
Earned income-direct financing
  leases                                                 $ 435,279   $ 214,457
Revenues from sales and
  securitizations                                          376,313     133,366
Administrative fee income                                  117,423      52,938
Service fee income                                          26,246      23,870
Other income                                                 7,998       5,939
                                                         ---------   ---------
Gross revenues                                             963,259     430,570
                                                         ---------   ---------
Direct Costs:
Interest                                                   452,705     221,743
Costs related to sales and
  securitizations                                          385,368     118,582
Provision for credit losses                                 41,900      25,315
Other                                                       81,860      39,494
                                                         ---------   ---------
Total direct costs                                         961,833     405,134
                                                         ---------   ---------
Operating revenues                                           1,426      25,436

General and
  administrative expenses                                  737,367     508,583
                                                         ---------   ---------
Operating loss before other expense
  and income tax benefit                                  (735,941)   (483,147)

Non-cash interest expense                                             (154,282)
                                                         ---------   ---------
Loss before income tax benefit                            (735,941)   (637,429)

Income tax benefit                                         250,220     216,726
Less: valuation allowance                                 (250,220)
                                                         ---------   ---------
Net Loss                                                  (735,941)   (420,703)

Dividends on redeemable
  preferred stock                                          (45,119)    (98,235)
                                                         ---------   ---------
Net loss applicable to
  common stock                                           $(781,060)  $(518,938)
                                                         ---------   ---------
                                                         ---------   ---------

Net loss per common share                                    $(.35)      $(.30)
                                                             -----       -----
                                                             -----       -----
Weighted average number
  of shares                                              2,187,300   1,736,633
                                                         ---------   ---------
                                                         ---------   ---------
</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>

Westar Financial Services Incorporated and Subsidiaries 
Consolidated Statement of Cash Flows 
For the three months and year to date ended June 30, 1998 and 1997
(Unaudited)

<TABLE>
<CAPTION>
                                                          1998          1997
                                                          ----          ----
<S>                                                  <C>           <C>
Net cash used in operating activities                $(7,832,033)  $(4,529,749)
                                                      ----------    ----------

Cash flows from investing activities:
Other                                                    (39,413)       16,613
                                                      ----------    ----------
Net cash provided by (used in)
  investing activities                                   (39,413)       16,613
                                                      ----------    ----------

Cash flows from financing activities:
Proceeds from(redemption of) redeemable
preferred stock                                       (2,025,000)
Proceeds from issuance of common stock                                 106,000
Additions to notes payable to banks                    7,848,946     4,624,733
Payments on notes payable to banks                    (1,061,297)   (1,080,157)
Additions to notes payable - other                     4,408,886     1,515,690
Payments on notes payable - other                       (641,205)     (463,889)
Dividends paid on preferred stock                       (115,793)      (98,235)
Origination costs                                        (32,831)
                                                      ----------    ----------
Net cash provided by financing activities              8,381,706     4,604,142
                                                      ----------    ----------
Net increase in cash                                     510,260        91,006

Cash:
Beginning of period                                      475,275       191,380
                                                      ----------    ----------
End of period                                        $   985,535   $   282,386
                                                      ----------    ----------
                                                      ----------    ----------

</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

BASIS OF PRESENTATION

The Company's consolidated annual financial statements presented in the 1998 
Annual Report on Form 10-K of the Company includes a summary of significant 
accounting policies and should be read in conjunction with this Form 10-Q. 
The consolidated financial statements include the accounts of Westar 
AutoHolding Co., Inc. ("WestAH"), a 100%-owned subsidiary of the Company, 
WestarAuto Finance L.L.C. ("WestAF"), a limited liability company owned 99% 
by the Company and 1% by WestAH, and Westar Lease Origination Trust, a 
Washington Massachusetts business trust beneficially owned by WestAF. The 
statements for the three months ended June 30, 1998 and 1997, are unaudited, 
condensed and do not contain all information required by generally accepted 
accounting principles to be included in a full set of annual financial 
statements. In the opinion of Management, all adjustments (consisting only of 
normal recurring adjustments) necessary to present fairly the results of 
operations for such periods are included. All significant inter-company 
balances and transactions have been eliminated. The results of operations for 
the three months ended June 30, 1998, are not necessarily indicative of the 
results of operations for the entire year. This information included in this 
Form 10-Q should be read in conjunction with Management's Discussion and 
Analysis and financial statements and notes thereto included in Westar 
Financial Services Incorporated's 1998 Annual Report on Form 10-K.

INTEREST PAID

The Company paid cash for interest of $389,648 and $122,101 for the three 
months ended June 30, 1998 and 1997, respectively. The change is due to 
increased warehouse financing costs, which is a result of increased lease 
origination volume.

EARNINGS PER SHARE

Earnings (loss) per share is computed using the weighted-average number of 
common shares outstanding for the three months ended June 30, 1998 and 1997, 
respectively. Net loss used in the computation of earnings per share has been 
increased to include the redeemable preferred stock dividends. The 
outstanding shares used in the earnings per share calculation have been 
adjusted for the 2-for-1 stock split paid in June 1996. Earnings per share 
does not include common stock warrants or common stock options as the effect 
is anti-dilutive.

FEDERAL INCOME TAX

The Company recorded a 100% valuation allowance against its deferred tax 
asset in the 4th quarter of Fiscal 1998. Recording the valuation allowance 
resulted in (non-cash) net income tax expense in that year as compared to tax 
benefits recorded in prior years. The deferred tax asset is available for an 
average of 12 years to offset future reported tax liabilities.

PREFERRED STOCK REDEMPTION

In May 1998, the Company announced that preferred shareholders accepted the 
Company's offer to redeem or exchange their shares of Series 1, Series 2 and 
Series 3 Preferred at face value. Originally, the 2,823 shares of Series 1, 2 
and 3 Preferred Stock were to be redeemed by December 31, 2000. The Company 
redeemed 1,088, 231 and 631 shares for Series 1, 2 and 3, respectively at par 
value in the amount of $1,950,000 using the proceeds from the issuance of 
subordinated convertible debt in May 1998. As part of the redemption, the 
preferred shareholders exercised their warrants to purchase Westar's common 
stock.

<PAGE>

In May 1998, the Company entered into an agreement with an officer to redeem 
his Series 3 Preferred Stock with a par value of $500,000 for a note payable 
in the amount of $500,000. The note bears interest at the rate of 9.25% which 
is paid quarterly. The note matures on April 1, 1999. As part of the 
redemption, the preferred shareholder exercised its warrants to purchase 
Westar's common stock

SUBORDINATED DEBT ISSUANCE

In April 1998, the Company entered into an agreement with PLMC, LLC, which is 
owned by two directors and other unrelated parties, to borrow $400,000 in the 
form of subordinated debt. The note was to be repaid no later than June 30, 
1998 with interest at the rate of 9%. This note was repaid in full on May 13, 
1998.

In May 1998, the Company issued $4,000,000 in subordinated convertible notes 
to PLMC, LLC, which is owned by two directors and other unrelated parties. 
The note is due May 2003 and bears interest at the rate of 10.5% per annum. 
The note is convertible into 20% of the Company's common stock.

WAREHOUSE FACILITY

In June 1998, Bank One amended the revolving warehouse credit facility to 
increase the $25 million line to $26 million. The facility was paid in full 
in August 1998.

SUBSEQUENT EVENTS

In July 1998, agreements were reached with Bank One which set the warehouse 
line at $15,000,000 and for Bank One to purchase $25 million of Westar's 
leases in a securitized transaction.

In July 1998, the Company agreed with T&W Financial Corporation, a related 
entity, to establish a $2 million non-recourse lease repurchase credit 
facility. In July, the company sold $1.6 million of leases into the facility 
at an average interest rate of 9.5% per year. The Company repurchased the 
$1.6 million of leases in August 1998.

In August 1998, the Company's origination/issuer/titling securitization 
structure, Westar Lease Origination Trust, completed its third securitization 
of $27.5 million of automobile lease-backed securities in a private-placement 
offering. The Company's cash proceeds from the securitization were reduced by 
a reserve in the amount of $273,000, which is anticipated to be received out 
of future cash flows from the pool of contracts sold. The Company continues 
to service the leases securitized. Because the leases sold in the August 
transaction were finance leases rather than operating leases, they are 
accounted for in accordance with SFAS 125.

In November 1998, the Company's origination/issuer/titling securitization 
structure, Westar Lease Origination Trust, completed its fourth 
securitization of $14.4 million of automobile lease-backed securities in a 
private-placement offering. The Company's proceeds from the securitization 
were reduced by a reserve in the amount of $94,000, which is to be received 
in 60 monthly payments in the amount of $1,572. The Company continues to 
service the leases securitized. Because the leases sold in the November 
transaction were operating leases rather than finance leases, they are 
accounted for in accordance with SFAS 13.

In December 1998, the Company's origination/issuer/titling securitization 
structure, Westar Lease Origination Trust, completed its fifth and sixth 
securitization of $5.2 and $5.9 million, respectively of automobile 
lease-backed securities in private-placement offerings. The Company's 
proceeds from the securitization were reduced by a reserve in the amount of 
$34,000 and $39,400, respectively, which will be received 

<PAGE>

in 60 monthly payments in the amount of $563 and $656, respectively. The 
Company continues to service the leases securitized. Because the leases sold 
in the December transaction were operating leases rather than finance leases, 
they are accounted for in accordance with SFAS 13.

<PAGE>

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

RESULTS OF OPERATIONS AND CHANGES IN FINANCIAL POSITION

Three months ended June 30, 1998 compared to three months ended 
  June 30, 1997
-----------------------------------------------------------------------------

Westar Financial Services Inc. and Subsidiaries provides prime credit quality 
consumer automobile lease financing through franchised automobile dealers in 
the Northwest Region of the United States. Westar has designed and developed 
a number of financing, lease servicing and risk management innovations. The 
Company has invested significant personnel, time and resources towards its 
Dealer Direct Retail Leasing ("DDRL") program. While the Company's statement 
of operations reports a net loss of approximately $736,000 and $421,000 for 
the three months ended June 30, 1998 and 1997, respectively, it is 
management's opinion that DDRL is one of the most sophisticated and 
marketable retail leasing programs currently available and a valuable 
investment in the Company's future.

Volumes of lease originations increased for the 3rd consecutive quarter, from 
164 leases costing $4.8 million in the prior year to 286 leases costing $8.0 
million in the current period. The face value of leases serviced increased 
from $32 million to $44 million. The credit quality of originated leases 
improved, with average FICO scores of 680 in the prior period compared to 695 
in the current period.

Total revenues for the quarter increased by approximately $532,700, from 
$430,600 to $963,300. The increase is primarily caused by an increase in 
sales of vehicles at lease termination of $242,900, an increase in earned 
income from direct financing leases held of $220,800, and an increase of 
other income of $69,000. The Company did not complete any securitizations or 
sales of leases during the period. The increase in direct financing lease 
income is due to an increase in the volume of leases warehoused prior to 
sale. Other revenues increased primarily due to increased administrative and 
service fee income, a result of the increased volumes of lease originations.

Direct costs increased by $556,700, from $405,100 to $961,800. The increase 
was caused by an increase in costs related to sales of vehicles of 
approximately $266,800, an increase in interest expense of $231,000, and an 
increase in other expenses of $58,900. The increase in costs related to sales 
is due primarily to an increase in the number of vehicles sold. Interest 
costs increased due to the increased volume of leases originated and 
warehoused prior to sale or securitization.

General and administrative expenses increased by approximately $229,000, from 
$509,000 to $738,000. Interest expense increased by $76,000, salaries and 
wages increased by $57,100 due to additional personnel, primarily in Risk 
Management. Accounting expense increased by $43,700 due to the timing of 1998 
audit billings. Consulting expense increased $38,500 due to improvements and 
innovations in LASIR, the Company's proprietary risk and accounting system. 

LIQUIDITY AND CAPITAL RESOURCES

<PAGE>

The Company requires substantial cash to implement its business strategy. 
Cash is used to: (i) acquire leases and the underlying vehicles; (ii) pay 
operating expenses; (iii) satisfy working capital requirements; (iv) pay debt 
service; (v) pay sales and securitization costs, including amounts required 
for credit enhancement, if any; and (vi) pay preferred stock dividends. Many 
of these cash requirements increase as the Company's volumes of lease 
origination increase. A substantial portion of the Company's revenues in any 
period might represent revenues from sales or securitizations of leases, if 
any, but a portion of the cash underlying such revenues is generally received 
over the life of the leases. The Company retains the servicing of securitized 
leases and receives the related servicing income for the securitized pools.

The Company has historically been successful in meeting its liquidity needs, 
principally through borrowings from financial institutions under its 
warehouse line, securitizations and whole lease sales, portfolio sales and 
sales of equity and debt securities.

Westar was the third company in the nation to structure a free standing lease 
securitization, an accomplishment of a limited number of companies. The 
Company was the first to originate multiple securitizations from within a 
single special purpose entity and to originate a tax benefit transfer from 
within a securitization. The Company believes that its unique bankruptcy 
remote structure, its "Carlson Trust," is more efficient and cost effective 
than alternative structures in use by others.

The Company plans to continue to sell leases as they are produced, through 
securitizations in the institutional capital markets, private placements on a 
"whole lease" basis with commercial banks or other sophisticated investors, 
or on a flow basis with commercial banks.

The revolving credit facility provided by Bank One is the primary source of 
cash to finance the acquisition of vehicle leases until they are sold. Westar 
and Bank One have agreed to a warehouse facility of $15 million on a 
non-recourse basis as well as a "whole lease" purchase facility of $25 
million (in November, 1998), both in addition to the $28 million 
securitization completed in August. After repayment of borrowings from Bank 
One under the warehouse line, the net proceeds from sales or securitizations 
provide a source of cash for future acquisition of vehicle leases and general 
and administrative expenses. Each of Westar's sales and securitizations in 
fiscal 1999 produced positive cash flow.

Though there can be no assurance of their success, the Company is currently 
in negotiations to obtain additional financings to provide for planned growth 
over the next several years.

It is the opinion of management that, as of June 30, 1998, the liquidity 
sources discussed above are sufficient to meet the Company's immediate cash 
flow needs in the normal course of business.

PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

None

ITEM 2.  CHANGES IN SECURITIES

None

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

<PAGE>

None

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

None

ITEM 5.  OTHER INFORMATION

None

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

        (a)  Index to Exhibits

              2.  Plan of acquisition, reorganization, arrangement, liquidation
                  or succession

                  2.1  Plan and Agreement of Merger between Westar Financial
                       Services Incorporated and Republic Leasing Incorporated
                       incorporated by reference to the Exhibit to Form 10-K
                       dated June 11, 1996.

              3.  Articles of Incorporation and Bylaws

                  3.1  The Articles of Incorporation of Westar Financial
                       Services Incorporated filed on February 13, 1996
                       incorporated by reference to the Exhibit to Form 10-K
                       dated June 11, 1996.

                  3.2  The Bylaws of Westar Financial Services Incorporated
                       adopted on February 21, 1996 incorporated by reference to
                       the Exhibit to Form 10-K dated June 11, 1996.

              4.  Instruments defining the rights of security holders, including
                  indentures.

                  4.1  Designation of Rights and Preferences of Republic Leasing
                       Incorporated Series 1 Preferred Stock incorporated by
                       reference to the Exhibit to Form 10-K dated June 11,
                       1996.

                  4.2  Designation of Rights and Preferences of Republic Leasing
                       Incorporated Series 2 Preferred Stock incorporated by
                       reference to the Exhibit to Form 10-K dated June 11,
                       1996.

                  4.3  Designation of Rights and Preferences of Republic Leasing
                       Incorporated Series 3 Preferred Stock incorporated by
                       reference to the Exhibit to Form 10-K dated June 11,
                       1996.

                  4.4  Designation of Rights and Preferences of Republic Leasing
                       Incorporated Series 4 Preferred Stock incorporated by
                       reference to the Exhibit to Form 10-K dated June 11,
                       1996.

             10.  Material Contracts.

<PAGE>

                  10.1  Republic Leasing Incorporated 1994 Stock Option Plan
                        incorporated by reference to the Exhibit to Form 10-K
                        dated June 11, 1996.

                  10.2  The Letter Agreement between Republic Leasing
                        Incorporated and The Industrial Bank of Japan, Limited
                        dated March 3, 1995 incorporated by reference to the
                        Exhibit to Form 10-K dated June 11, 1996.

                  10.3  Revolving Credit Agreement among Westar Auto Finance,
                        L.L.C. as Borrower, Republic Leasing Incorporated as
                        Guarantor and Bank One, Columbus, N.A., as the lender
                        dated July 12, 1995 incorporated by reference to the
                        Exhibit to Form 10-K dated June 11, 1996.

                  10.4  Amendment, dated February 15, 1996, to the Revolving
                        Credit Agreement with Bank One, Columbus, N.A., dated
                        July 12, 1995 incorporated by reference to the Exhibit
                        to Form 10-K dated June 11, 1996.

                  10.5  The Promissory Note between Westar Financial Services
                        Incorporated and Mud Bay Holdings Ltd., as the lender
                        dated January 15, 1997 incorporated by reference to the
                        Exhibit to Form 10-K dated September 9, 1997.

                  10.6  The Promissory Note between Westar Financial Services
                        Incorporated and & Capital Inc., as the lender dated
                        April 15, 1997 incorporated by reference to the Exhibit
                        to Form 10-Q dated September 22, 1997.

                  10.7  The Amended and Restated Revolving Credit Loan agreement
                        between Westar Financial Services Incorporated and Bank
                        One, as the lender dated July 22, 1997 incorporated by
                        reference to the Exhibit to Form 10-Q dated November 13,
                        1997.

                  10.8  The Amended agreement between Westar Financial Services
                        Incorporated and & Capital, Partners, L.P., as the
                        lender dated October 20, 1997 incorporated by reference
                        to the Exhibit to Form 10-Q dated November 13, 1997.

                  10.9  The Amended agreement between Westar Financial Services
                        Incorporated and & Capital, Partners, L.P., as the
                        lender dated February 9, 1998 incorporated by reference
                        to the Exhibit to Form 10-Q dated February 17, 1998.

                  10.10 The Amended agreement between Westar Financial Services
                        Incorporated and Bank One as the lender dated October 
                        27, 1997 incorporated by reference to the Exhibit to 
                        Form 10-Q dated February 17, 1998.

                  10.11 The Amended agreement between Westar Financial Services
                        Incorporated and Bank One, as the lender dated March 31,
                        1998 incorporated by reference to the Exhibit to Form 
                        10-K dated February 17, 1999.

                  10.12 The Amended agreement between Westar Financial Services

<PAGE>

                        Incorporated and Mud Bay, as the lender dated August
                        31, 1998 incorporated by reference to the Exhibit to
                        Form 10-K dated February 17, 1999.

                  10.13 The Amended agreement between Westar Financial Services
                        Incorporated and Cathy Carlson, as the lender dated
                        April 30, 1998 incorporated by reference to the
                        Exhibit to Form 10-K dated February 17, 1999.

                  10.14 The Amended agreement between Westar Financial Services
                        Incorporated and & Capital, Inc., as the lender dated
                        August 31, 1998 incorporated by reference to the
                        Exhibit to Form 10-K dated February 17, 1999.

                  10.15 The Amended agreement between Westar Financial Services 
                        Incorporated and & Capital, Inc., as the lender dated
                        August 31, 1998 incorporated by reference to the
                        Exhibit to Form 10-K dated February 17, 1999.

                  10.16 The promissory note between Westar Financial Services 
                        Incorporated and Summit Capital as the lender dated
                        May 1, 1998 incorporated by reference to the Exhibit
                        to Form 10-K dated February 17, 1999.

                  10.17 The promissory note between Westar Financial Services
                        Incorporated and PLMC, LLC, as the lender dated 
                        April 30, 1998.

                  10.18 The promissory note between Westar Financial Services 
                        Incorporated and PLMC, LLC as the lender dated 
                        May 11, 1998.

                  10.19 The Amended agreement between Westar Financial Services 
                        Incorporated and Bank One, as the lender dated 
                        June 25, 1998.


             27.  Financial Data Schedule

        (b)  Reports on Form 8-K

             None

<PAGE>

                              SIGNATURES

Pursuant to the requirement of the Securities Exchange Act of 1934, the 
Registrant has duly caused this Report to be signed on its behalf by the 
undersigned, thereunto duly authorized.


                                       WESTAR FINANCIAL SERVICES INCORPORATED


March 1, 1999               R. W. Christensen, Jr., President
(Date)                          (Signature)


March 1, 1999               Warren Kornfeld, Senior Vice President, Finance
(Date)                          (Signature)